A Practical OKR Primer

Summary

Brett Knowles from PM Square Consulting provides an overview of Objectives and Key Results (OKRs). OKRs have evolved from management science and gained popularity in companies like Google and Intel. They help align employee actions with company strategy through clear, measurable goals. The process involves cascading mission and vision into annual goals, quarterly objectives, and key results. Best practices include setting challenging, time-bound objectives, maintaining a limited number of goals, and fostering a measurement culture to ensure all efforts are aligned and focused. OKRs enhance strategic communication and employee engagement, leading to improved performance.

Takeaways

• 📚 OKRs (Objectives and Key Results) have a long history in management science, dating back to 1953 with Peter Drucker's work.
• 🌐 The concept of OKRs has evolved and been influenced by various management strategies such as SMART indicators, KPIs, and the Balanced Scorecard.
• 🚀 OKRs gained significant traction in the early 2010s, notably being adopted by companies like Google.
• 📉 OKRs are part of a cascading framework starting from mission and vision down to strategic goals, objectives, key results, and finally, tasks and tactics.
• 🔑 The mission and vision provide a long-term view, while annual goals and quarterly objectives offer a more immediate focus.
• 🤔 Many employees struggle to understand their company's strategy, leading to a lack of engagement and low satisfaction levels.
• 🎯 OKRs aim to provide clear, time-bound, and actionable objectives supported by measurable goals, improving clarity and engagement.
• 🏆 Companies like Oracle, LinkedIn, Google, Sears, and Intel have achieved success using OKRs, highlighting their effectiveness.
• 📝 Good OKRs should be specific, measurable, and time-based, with a focus on both quantitative and qualitative improvements.
• 🛠 OKRs are not strict rules but flexible guidelines that should be adapted to fit the organization's needs.
• 📉 OKRs can fail if they become too burdensome, so it's recommended to limit the number of objectives and key results per quarter.
• 🔄 The annual and quarterly setting of OKRs aligns with evaluation timeframes used by boards and external stakeholders.

Q & A

What is the purpose of the video by Brett Knowles from PM Square Consulting?

The video provides an overview of Objectives and Key Results (OKRs), explaining their history, how they fit into organizational strategy, and their benefits.

Who is credited with the initial concept that led to the development of OKRs?

Peter Drucker is credited with the initial concept in 1953, which later evolved into the OKR framework.

Why did organizations like Google start using OKRs?

Google started using OKRs in the early 2011 to 2013 period because they found them effective in aligning their workforce with the company's strategic goals.

What is the typical timeframe for setting OKRs?

OKRs are typically set on an annual basis and then cascaded down to quarterly objectives and key results.

How does the OKR framework help in aligning an organization's strategy with its day-to-day activities?

The OKR framework helps by cascading the mission and vision down to strategic goals, then to quarterly objectives, key results, and finally to daily and weekly activities.

What is the significance of having a quarterly time horizon for OKRs?

A quarterly time horizon is significant because it allows organizations to set and achieve measurable goals within a short enough period to maintain focus and momentum.

Why is it important for employees to understand the company's overall strategy?

It's important for employees to understand the company's strategy so they can work towards it, feel engaged, and contribute effectively to the organization's goals.

What are some best practices for setting effective OKRs?

Best practices include setting time-bound, actionable objectives supported by measurable key results, and ensuring that objectives are challenging yet achievable.

How many objectives and key results should a team or organization ideally have per quarter according to the video?

A team or organization should ideally have no more than five objectives, with each objective having four or fewer key result areas per quarter.

What are some examples of key results that can be used to measure progress towards an objective?

Examples include specific numerical goals for increasing revenue, employee engagement scores from surveys, or milestones such as implementing a user testing process.

What are the benefits of implementing an OKR system according to the video?

The benefits include disciplined thinking about strategic objectives, improved communication about organizational priorities, establishment of a measurement culture, and underpinning an employee engagement process critical for executing strategy.

Outlines

00:00

📈 Introduction to Objectives and Key Results

In this introductory paragraph, Brett Knowles from PM Square Consulting explains that the video provides an overview of objectives and key results (OKRs). He mentions that OKR knowledge is crowd-sourced from various practitioners and highlights the historical context of OKRs, starting with Peter Drucker's work in 1953. The evolution of management concepts such as SMART indicators, KPIs, and balanced scorecards is briefly discussed, leading to the emergence of OKRs in the 1990s and their adoption by companies like Google in the early 2010s.

05:01

🗂️ Structure and Importance of OKRs

This paragraph outlines the cascading structure of organizational goals from mission and vision down to daily tasks. It emphasizes the importance of quarterly objectives and key result areas, which align short-term actions with long-term strategies. The breakdown includes annual goals derived from the mission and vision, quarterly objectives, and the activities and processes that support these goals. The paragraph also stresses the importance of employees understanding the company's strategy to improve engagement and performance.

🎯 Benefits and Best Practices of OKRs

The benefits of implementing an OKR system are detailed in this paragraph. OKRs help organizations define and communicate strategic priorities, fostering a measurement culture and improving employee engagement. The author mentions best practices, such as setting time-based goals and ensuring they are challenging but achievable. Companies like Oracle, LinkedIn, Google, Sears, and Intel are cited as examples of successful OKR users. The importance of having a limited number of objectives and key results to avoid overcomplication is also highlighted.

📅 Implementing and Managing OKRs

This paragraph describes the annual and quarterly process of setting and managing OKRs. The need for objectives to be challenging yet defined is emphasized, with a focus on quantifiable results. The cyclical nature of the OKR process is likened to playing a game, with quarterly reviews and adjustments ensuring continuous alignment with organizational strategy. The process allows for four learning cycles per year, promoting ongoing strategic refinement and alignment with current performance and future expectations.

Keywords

💡OKRs

OKRs, or Objectives and Key Results, are a goal-setting framework used to define and track objectives and their outcomes. In the video, they are presented as a tool that organizations like Google, Oracle, and LinkedIn use to align and measure their goals, enhancing productivity and engagement by providing clear, time-bound, and actionable targets.

💡Objectives

Objectives refer to specific goals that an organization aims to achieve. They are the 'what' in the OKR framework, representing the targets set at various levels within a company. In the script, objectives cascade down from the mission and vision to annual goals and quarterly objectives, ensuring alignment and focus across all organizational levels.

💡Key Results

Key Results are measurable outcomes that indicate how well the objectives are being achieved. They are the 'how' in the OKR framework. In the video, key results are described as specific numerical goals or milestones that help track progress towards achieving the broader objectives, such as increasing revenue or enhancing employee engagement.

💡Peter Drucker

Peter Drucker was a management consultant, educator, and author who wrote extensively about management practices. In the video, he is mentioned as having introduced the concept of management by objectives (MBOs) in 1953, which laid the groundwork for later goal-setting frameworks like OKRs.

💡Balanced Scorecard

The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization. In the script, it is mentioned alongside other performance management tools, emphasizing its role in helping organizations balance financial and non-financial measures to track progress.

💡Mission and Vision

Mission and Vision statements define an organization's purpose and long-term goals. In the video, these are described as the starting point for cascading objectives down through the organization, from annual goals to quarterly objectives and daily tasks, ensuring that all activities are aligned with the overarching strategic direction.

💡Employee Engagement

Employee Engagement refers to the level of enthusiasm and commitment employees feel towards their work and organization. The video highlights that OKRs help improve employee engagement by providing clear, measurable goals, which help employees understand their role in achieving the company's strategy, thereby increasing satisfaction and productivity.

💡SMART Indicators

SMART Indicators are specific, measurable, achievable, relevant, and time-bound criteria used to set clear and attainable goals. In the video, SMART indicators are mentioned as part of the evolution of performance management tools, leading to more structured and effective goal-setting practices like OKRs.

💡Cascading Goals

Cascading Goals is the process of breaking down higher-level objectives into more specific, lower-level goals across different levels of an organization. The video describes how goals cascade from the mission and vision down to annual and quarterly objectives, ensuring alignment and clarity throughout the organization.

💡Measurement Culture

Measurement Culture refers to an organizational environment that prioritizes the use of metrics and data to track performance and make informed decisions. The video emphasizes that OKRs help establish a measurement culture by providing clear, quantifiable goals that allow organizations to track progress and make adjustments as needed.

Highlights

Objectives and Key Results (OKRs) have a long history in management science, dating back to 1953 with Peter Drucker's work.

OKRs have evolved alongside other management concepts such as SMART indicators, KPIs, and the Balanced Scorecard.

Google and other organizations began using OKRs in the early 2010s, which increased their popularity.

OKRs help in cascading strategy from mission and vision to strategic goals, objectives, key results, and tasks.

The mission and vision provide a long-term view, while annual goals and quarterly objectives offer a more immediate focus.

OKRs are designed to be time-bound and actionable, supported by measurable goals and key results.

Few employees understand their company's overall strategy, which affects engagement and productivity.

OKRs provide clarity and help employees understand their purpose and how to achieve mastery at work.

Best practices for OKRs include setting them annually and quarterly, aligning with board and stakeholder evaluations.

OKRs should not exceed five objectives with four or fewer key results each to avoid overwhelming teams.

Challenging objectives motivate people to work harder towards achieving them.

Key results should be clearly defined, quantifiable, and agreed upon by all stakeholders.

OKRs benefit organizations by disciplining strategic thinking, improving communication, and fostering a measurement culture.

OKRs underpin employee engagement, which is critical for executing strategy.

An annual OKR process involves setting plans, drafting objectives, living through the quarter, and resetting for the next.

This process creates four learning cycles within a year, allowing for strategy refreshment and adaptation to performance.

OKRs are gaining traction in various organizations, including Oracle, LinkedIn, Sears, Intel, and more.

Transcripts

hello I'm Brett Knowles from PM square

consulting this short video is an

overview of objectives and key results

it's important to note there is no one

core source of ok our knowledge it's

being crowd formed by a number of

practitioners around the world and all

I've done is harvested some of the

powerful visuals that they have put

together and created my own voiceover to

give you a practical view of what they

are so let's talk about ok ours for a

second they have a long history in

management science way back in 1953

Peter Drucker wrote a book about or a

paper about um MBAs which became the

effective executive book in 67 and since

then there's been an emergence of other

related concepts the idea of smart

indicators the idea of KPIs the huge

body of work around balanced scorecard

leading lagging measures financial

non-financial and so forth and ok ours

began to emerge in 1990 although they've

been growing steadily since then in the

early 2011 to 2013 period organizations

like Google started using them and they

receive received more and more popular

press so what are they well we all know

our strategy gets cascaded down from you

know mission vision down to strategic

goals down to objectives down to tasks

and tactics and that drill down looks a

bit like this we start off with our

mission and vision and from that we

should be able to create annual goals

and those goals themselves get cascaded

down to quarterly objectives and those

in turn get cascaded down to key result

areas and then finally the activities we

do the processes and projects inside the

organization so the mission vision that

sort of a long-term view 25 years out

annual is focused on this year's goals

but those two cheechee goals probably

last up to five years but their priority

shifts over time these quarterly

activities obviously describe what we're

doing this quarter to move

head and then the tactics and tasks our

daily weekly activities so that's the

breakdown and of course objectives and

key results fit in this timeframe of a

quarterly time horizon so it's important

to note these are concepts that we've

all been using in our organizations

we're just getting better definition and

guidelines about how to use them why

well it turns out that very few

employees understand the company's

overall strategy and of course they

don't understand the strategy they can't

work towards it then it doesn't get

cascaded down or communicated by our

manager very clearly and therefore we're

not engaged we don't understand what our

purpose is at work or how do we achieve

mastery and therefore there is a low

satisfaction level in the organization

and that of course is our productivity

and performance train on the company so

objectives and key results come in as a

way to give us clear time-bound

actionable things we can work on

supported by measurable goals and and

key our eyes these are gaining traction

all over the place and the most popular

press talks about how oracle LinkedIn

Google Sears Intel and so on have been

using these to achieve their great

success there are a number of best

practices out there these aren't rules

they're just guidelines and it's all

about being time-based and understanding

that these aren't intended that you

achieve a hundred percent of the success

examples of good okrs let's talk about

increasing our revenue as an objective

and the key results are you know

specific numerical goals that we should

be able to move towards or creating

employee engagement something that we

normally think is not quantifiable but

maybe do employee surveys to get hard

numbers we have specific activities we

can make sure our curring and we've got

specific milestones or implementing a

user testing process again broken down

to what can we

do this quarter so what are the benefits

of a no care system well first off they

discipline our thinking about our

strategic objectives our priorities and

how they cascade down to what we need to

get done this quarter and this week

towards success and therefore it allows

us to communicate accurately about what

is important to the organization so that

we can all relate to it and it begins to

establish a measurement culture that

allows us to describe how we're doing in

ways that we can talk to each other

about and therefore focuses our effort

so that we're all pulling in the same

direction and then finally it underpins

an employee engagement process which is

critical to getting a strategy executed

now again these aren't rules but

guidelines first we need to set these

goals annually and quarterly why well

quarter and yearly timeframes are things

in which we can actually see something

getting achieved and more importantly

these are also the timeframes used by

boards and external stakeholders to

evaluate your organization now okrs can

fail for the same reason as any other

system but in addition they crumble

under their own weight we add too many

in so any team or organization should

have no more than five objectives and

each one should have four or fewer key

result areas per quarter now we need to

make these objectives challenging

because research and experience proves

if we make them challenging people work

harder towards achieving them and then

finally we need to make sure that the

key result is defined it may be

quantitative but it needs to be defined

so that we can all see and agree on that

particular performance so if we go back

to that time horizon of executing our

mission and vision down to tax and

tasked tactics what it means is we end

up with an annual process that looks

like this we're going to set our planned

summer to how we currently do and then

we're

going to draft our actual objectives for

that quarter and live through that

quarter we typically describe that as

almost like a game then based on that we

reset what our draft objectives and key

results will be for the following

quarter and then play the second game

and so forth

so now we end up with basically four

learning cycles in the same period of

time that most organizations have won

this allows us to not only refresh our

strategy on an ongoing basis but make

sure our objectives and key results are

current with our historic performance

and what we can expect on this coming

quarter I hope this has been useful to

you as an overview of what objectives

and key results are