If you work in tech or startups these days, you’ve probably heard the term OKR. For those not familiar, it stands for Objectives and Key Results. It’s a way to structure goal setting and quantify achievement within an organization.
Invented by Intel, OKRs really came in vogue in 2014 when Google lifted the veil on their internal work processes. The idea is that individual employees have a clear plan to see how their work is contributing to the overall company strategy.
No one-size-fits-all approach to OKRs
So let’s say your marketing team’s quarterly objective is to have a successful launch of a new feature – a solid, achievable goal that everyone in the organization can understand. But what does success mean here? The key results indicating success could be getting 5 pieces of media coverage, publishing 10 customer testimonials, and driving a 10% increase in traffic to the company homepage.
Most companies set and evaluate OKRs on a quarterly and yearly basis, with an agreed-upon measure of successful performance like 70% or 2 of 3 key results achieved.
Sounds like a perfect solution to your management needs, right? So why isn’t everyone implementing OKRs?
The fact is, OKRs are not always worth the hassle – particularly if you’re a small or medium-sized business. They require effective education throughout your organization, constant evaluation, and a commitment to seeing the performance review process through.
Are they right for what your team needs? Let’s take a look at the pros and cons.
OKR pros and cons
Goal Awareness Throughout the Company. Done perfectly, OKRs help companies align their goals and focus on the big picture. Each team knows what its objectives are and what are the measurable key results that will indicate the objective is being achieved – and the transparency of the process means all the other teams know, too. This is especially important in larger organizations where day-to-day communication between various teams is harder to maintain.
Measurement Accountability. OKRs give everyone a common basis for accountability, regardless of their work emphasis. All work performed by every department, from customer support to engineering, has clearly stated and measurable goals that are visible within the department as well as throughout the company, and all align to overall company goals, each from their own angle.
Focus and Prioritization. The cross-company alignment that’s a necessary part of the OKR process essentially requires that everyone identifies the important priorities for that quarter, year, or other segment. If your company seems to be constantly starting new projects and it isn’t always clear if they’re contributing to forward movement, then OKRs provide a concrete way to get everyone on the same page about what work is actually relevant.
A Hefty Investment: While you can find many resources out there on how to set up an OKR-based system, they’re not exactly turnkey solutions. For this type of business framework to be successful, everyone on the team needs to understand how OKRs work, why they’re being implemented, and how their work is being evaluated. That can mean a substantial investment from company leadership to get the full scope of priorities set up and learn how to set achievable OKRs, as well as building in time for trial and error. We recently spoke with one company that first implemented OKRs 18 months ago, and still hasn’t fully integrated their usage throughout every team. That’s why even proponents of OKRs caution that they may not be optimal for smaller companies or earlier stage startups.
The Agility Challenge. Work environments can change fast, especially in startups. The goalposts within an organization can always change, so goals should be at least somewhat malleable and not too rigid. In the worst-case scenario, you’ll find yourself at the end of the quarter being evaluated toward progress on a now-obsolete goal that was set three months prior. This is, of course, also a challenge with any objective, but because OKRs are much more involved and detailed, change can look “worse” than with normal objectives: “Didn’t we agree (and spend many days) defining the OKRs? Why the change then?” Some companies set shorter-term OKRs, on a monthly basis, to try and combat this – but then dedicating executive team hours each month to OKR planning can turn into a substantial time commitment.
Misplaced Priorities. Similarly, sticking to something just because you planned on it and documented it can make you blind to new opportunities. OKRs can, in this case, be limiting if your bonus and evaluation are based on achieving certain objectives with their specific key results. Meanwhile, the company as a whole might have benefited from taking a different approach that wasn’t an original OKR. While some suggest not having OKRs for research-focused or experimental departments of the company that need to be more explorative, that can create confusion when if certain parts of the business are evaluated on different standards than others.
Alternatives to OKRs?
We’re particularly partial to the “lean objectives” approach, which asks the following questions: Where do you need to go? How will you know you’re getting there? What will you do to get there? We find this works well for encouraging bottom-up goal-setting and empowering employees throughout an organization.
We also feel that the evaluation of objectives should share equal weight with the rest of the feedback process. So yes, one’s work toward a specific goal is important, but so are other components of employee performance, like 360 reviews and ongoing 1-on-1s.
Here are some more helpful resources on OKRs:
- Pros and cons for implementing OKRs – Bits and Bites
- OKR Mistakes (and how to fix them) – Eleganthack
- How I’d Change Google’s Goal Setting Process – Hunter Walk
- How to Make OKRs Actually Work at Your Startup – First Round Review
- All About OKRs: How To Set Them, Achieve Them, And Track Them In Trello – Trello
At Small Improvements, we see plenty of successful companies structure their objectives and goal-setting in a variety of ways that don’t hew to the rigid OKR format. We offer a turnkey solution so you can quickly get up and running with your objectives and goals, but at the same time, we made our Objectives tool completely customizable. If you’re interested in learning more, watch our product tour.