In this week's article, I wanted to cover a model I have come across very often in international sources, especially while working on performance management and goal design recently. Beyond performance management, it is also used as "the company's core management methodology" at technology firms whose practices we all follow closely, and particularly at start-ups.
The model is called "OKR – Objectives & Key Results".
We can't really say it is a brand-new model, as it is rooted in Peter Drucker's "Management by Objectives" methodology. OKR is still a goal-based method, but it aims to work with much shorter-term and much more specific and clear objectives. In other words, agility and the agile approach are the main source of this method. That is why it stands out as an extremely useful and indispensable methodology, especially for companies in a period of rapid growth and development and for start-ups.
Let's take a closer look.
What Kind of Methodology Are We Talking About?
Objectives and Key Results (OKR) is a goal-setting framework, and at the same time a management methodology, that helps companies align their goals and enables employees to work collaboratively and in harmony by concentrating on the objectives that truly matter. I insist on calling it a management methodology, because I think it would be unfair to treat OKRs merely as a "goal design or goal management method". We are talking about a method with the potential to bring countless benefits to companies' leadership teams in terms of management and strategy as well. Otherwise, companies such as Intel, Google and Spotify would hardly have integrated this method so widely into their business processes.
There is another nice gift here that I particularly value. This methodology lets all employees know what their work serves and how it contributes to the company's main goal, and see much more transparently where they fit into the "big picture" we always talk about. This contributes very positively both to employee motivation and engagement and to a much deeper indicator of engagement that we call "meaningful work". Let's add that as a note.
There are 2 things we always say:
1.You can't measure everything. Instead of 10 KPIs, you need to prioritize the 1-2 most important ones that will get you to your main goal. "Focusing intensively and holistically on what will truly get you to the goal", knowing and defining what really matters, and tracking it by measuring it regularly should be our 1st priority.
2.The era of long-term measurement is over. With the trend toward real-time and short-term measurement, you need to move forward by measuring the "what really matters" you have defined in a way that gets you results much more often and faster.
This is exactly where the OKR Method sits: at the intersection of these 2 important trends. Defining what really matters and tracking it continuously by measuring it more often is the main focus of this approach.
Now for the Real Question: How Do You Build a Good OKR?
Working through an example will make this much easier to explain.
For example: You have a company and you have reviewed your marketing strategies. You have decided to prioritize digital media channels and invest in this area. In this context:
Your Objective: Let's say it is "to increase your digital strength by making your company more visible and better known on social media channels".
What matters in the objectives section is defining your goal as clearly as possible.
Key Results: This section is where you need to focus on what will get you to your objective and what truly matters. You first need to determine what these are, and then analyze them taking the current situation into account and make them as number- and data-driven as possible. What do I mean?
In this example, our priority resources for reaching our objective are "Social Media Channels". Because our real objective, "increasing our digital strength, visibility and awareness", can only be achieved by working on them.
- Increasing the average views of the content you share on YouTube from 5,000 to 8,000
- Increasing organic traffic to your website by 20% over the next 3 months
- Increasing your Instagram followers by 10,000 within 2 months
The numbers here are examples, but these key results show us what a good OKR looks like. Because they are all designed to be specific, numerical and measurable.
And If We Had Built a Bad OKR, What Would It Look Like?
Let's stick with the same example.
- Preparing videos for YouTube and getting them watched
- Improving SEO for the website
- Gaining more Instagram followers
What we have defined as Key Results in this example leads to a bad OKR. Because they are not specific and they lack data. Nor are they numerical and measurable. Each of these could perhaps be a goal, but because they don't have the characteristics of a "key result", they make the OKR wrong.
You might think that OKRs are an approach parallel to the "goal-sub-goal" breakdown we are already used to in companies. That isn't wrong, but what really matters here is that the key results must be the most important anchors that will take us to our main objective, and they must be as specific and numerical as possible.
Otherwise, if we look at it from a goal-sub-goal perspective and work from the example below:
Goal: Increase view rates on YouTube
Sub-goal: Prepare varied, engaging videos
This can be seen as a goal and sub-goal. The sub-goal serves the achievement of the goal, but it is definitely not an OKR.
But if we had said:
Objective: Increase view rates on YouTube
Key Result: Produce at least 2 varied and engaging videos every week, each no shorter than 5 minutes, on topics chosen to appeal to Generation Z
then this would be a good example of an OKR. Because we are talking about a key result that is highly focused, specific and backed by data.
At this point, let's underline a few more important points:
1.It is useful, at least in your first attempts, not to define too many key results under one objective. I believe that more than 3 key results stop being "key" and risk taking us off our main path. Since we need to focus on the key points that will truly take us to our main objective, there shouldn't be many of them. Defining 3 to 5 key results under an objective, and not going above 5, is appropriate. My ideal is 3😊
2.Second, we need to look at, review and, if necessary, revise OKRs within 3- or 6-month periods. Here too, while 6-month periods may be appropriate at first, this can drop to 3 months as you progress. Because the defining feature of this method is that it is as short-term, dynamic and living a measurement methodology as possible.
3.Another important point is that the percentage contribution of each key result to achieving the main objective must be tracked. In other words, "the individual progress of key results and how they serve the whole" is also extremely critical for us. This will give us valuable data on whether we built the key result correctly, whether we chose the right key result, and what changes we need to make in the following periods.
In this article, we discussed in general terms what the OKR model is and how it should be built. In the next article, we will look for answers to these questions:
- What should sit beneath Key Results in the OKR Model?
- The Benefits of OKRs
- What are the differences between OKRs and KPIs?
Until the next article,
Stay healthy.
