You might know the situation: You are sitting in one of those company meetings where all employees are informed about news regarding different departments. Suddenly you hear that every team is talking about OKRs. It seems to be the latest trend. And you wonder, what is this anyway and why is everyone doing it, all of a sudden?
We explain to you why OKRs are so popular and why you should definitely give it a try, too.
What does OKR actually mean?
OKR stands for objectives and key results.
The introduction of OKRs enables an organization to become more agile, to create more transparency, to focus on the immediately important goals and to increase the motivation of its employees.
The Objective is formulated as a qualitative goal and is thus seen as strongly motivating. The key results on the other hand are formulated as quantitative goals in order to make them measurable.
An example: Your pizzeria in Munich
Let's imagine you own a pizzeria in Munich's Glockenbachviertel district and want to increase the popularity of your restaurant. You could formulate your objective including key results as follows:
- Objective: Become the pizzeria with the highest customer satisfaction in your district until the end of the year.
- Key result 1: Best customer satisfaction rating of all pizzerias in Glockenbach at your local food portal.
- Key result 2: Increase of the current satisfaction rating from 3.9 to 4.5 stars on Google reviews.
- Key result 3: Increase of the regular customer rate from 40% to 50%.
Pretty simple, isn't it? And it comes with some benefits as well.
Here is another example: You probably know the problem with New Year's resolutions. Most of the time these are goals like "eat healthier", "exercise more", and so on. Studies have shown that a very high percentage of resolutions fail. Why is that?
As you can see, New Year's goals usually don't have measurable key results, nor do they include timelines. Accordingly, it's difficult to measure when the goal is considered met. What does it mean to "exercise more"? When will I have achieved the goal?
People also tend to push goals further and further into the year and find excuses why they haven't started yet (after all, they have until next New Year's Eve to do it).
Achieving your goals
The following factors are essential to helping you achieve your goals:
- Transparency: Share your goals with your team so everyone is moving in the same direction.
- Measurable key results: Formulate your key results in a way that they can be quantitatively measured. That way you have guidance and know exactly when the goal is met.
- Timelines: Set a specific timeline so you don't lose sight of your goal, but keep on track.
- Focus on immediate important goals within a short period of time. This way you stay focused and reach your goal in small steps.
- Adaptation: Reflect on your goals in regular intervals and adjust them accordingly if needed.
- Short-term goals: It is best to formulate your goals on a quarterly basis. This way they remain manageable and easier to follow.
I already use KPIs. Does that make OKRs obsolete?
In short: no. KPIs and OKRs can complement each other, but KPIs should not replace OKRs.
KPI stands for Key Performance Indicator and as the name suggests, KPIs are used to measure performance. KPIs are quantitative in nature and are oriented towards output, while OKRs depict qualitative goals and are oriented towards outcome.
Output describes which work result is achieved with a specific activity. This refers to all visible respectively material products. In a Scrum environment, output would be e.g. the number of tickets achieved in a sprint.
Outcome means the actual added value created by a concrete activity. In the Scrum environment, outcome would be the question of whether the sprint goal has been achieved.
In summary, outcomes are goals that you want to achieve with your company. The output is the result of specific activities or initiatives that you undertake to make progress towards achieving these goals.
KPIs should thus be used as part of OKRs, because they allow you to map and measure your key results. To return to the pizzeria example given earlier: The KPI for key result 2: "Increase of the current satisfaction rating from 3.9 to 4.5 stars on Google reviews" would be the number of stars my restaurant has on Google.
Goals for your daily work
Now let's take a look at the corporate context: Every organization has a vision and usually something like a 5-year plan. As an individual in such an organization, it is often difficult to understand and see the value in one's own contribution in relation to the vision and the longer-term plan.
However, if I set myself and my team small, short-term goals with key achievements that lead towards the overall vision, everyone knows what contribution they can make towards the "big goal". This way, we achieve higher motivation and more agility, because we move transparently and in small steps towards the companies vision. We are also able to react and adjust our objectives depending on influencing factors.
Just give it a try - and feel free to get in touch if we can support - or share your own OKR experiences with us. We are looking forward to it!
For the full story read our blog-post why anarcon joins Scandio.