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- Herausgeber: BRASPORT
- Kategorie: Fachliteratur
- Serie: Jornada Colaborativa
- Sprache: Englisch
Learn concepts and practices in OKR with the experiences of 42 people leading the adoption of OKRs in various sectors of the Brazilian and international market. Learn about the challenges and best practices in a journey of OKR implementation. "In this work, another goal of this fantastic initiative called Jornada Colaborativa, we have a deepening of the concepts, context-based applications and, mainly, real market cases, which will surely help you in this VUCA/BANI world where short-term objectives are increasingly necessary." - Vitor Massari, preface A Jornada Colaborativa Together we are smarter and more lives are transformed! Once upon a time there was a university professor who dreamed of releasing a book when he finished his master's degree in 2007. After some ideas for publication on topics such as Microsoft certification, project management and service management, the dream began to be fulfilled in 2017 with the book "Jornada DevOps" (DevOps Journey), but some obstacles stopped its evolution after the definition of the final structure for the official EXIN certification and the writing of three chapters. In September 2018, during a lecture at PUC Minas, a click emerged: "would other people passionate about DevOps help with collaborative writing?" Dozens of people accepted the invitation and the book was released to 350 people on June 6, 2019 at the SulAmérica Convention Center in Rio de Janeiro, after intense coordinated work with people from several cities who had never worked together before. After this successful experience with many learning experiences, the team's escalation created great friendships, new initiatives and a donation of R$ 251,500.00 to institutions, with 11 books launched. We dream of transforming more lives with collective intelligence and the support of friendly companies... Antonio Muniz Founder of Jornada Colaborativa, organization and curation of 20 books. Carla Krieger Organizing team leader for the book, curating and technical review. Co-authors Adriana Brandão Alessandro Seixas Antonio Muniz Bruna Milare Bruno Tadeu França Bruno Tarsis Bruno Urakawa Carla Krieger Carlos Eduardo R. Cruz Dani Dias Daniel Moro Eriveldo Madureira Fabio Cruz Fernando Fernandes Flavia Silva Francisco Medeiros Gabriel Francisco Pistillo Fernandes Hermann Rego Jamile Marques Júnior Rodrigues Leandro Mattoso Leonardo Santos Luciana Moreira Luiz Eduardo Labriola Márcia Maximiano Marcos Afonso Dias Maria Angélica Castellani Maria Heloiza Rodrigues Magrin Marília Maragno Marlon Bastida Pedro Signorelli Queli Silva Rafael Vilela Renata de Podestá Gaspar Roberta Altermann Rodrigo do Vale Ronaldo Menezes Victor Patané Walther Krause Werther Krause Yuri Bilinski Escarião Yussif Barcelos Dutra
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Organization and curationAntonio MunizCarla KriegerVictor PatanéWalther KrauseWerther Krause
OKR Journey in Practice
Joining practices and experiencesto enhance results
Rio de Janeiro 2022
Copyright© 2022 by Brasport Livros e Multimídia Ltda.
All rights reserved. No part of this book may be reproduced in any form, especially photocopying (xerox), without the written permission of the Publisher.
Editor: Sergio Martins de Oliveira
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ISBN 978-65-88431-76-4 (Ebook)
Technique and a lot of attention went into the production of this book. However, typing and/or printing errors may occur. For any questions, including concepts, please email to [email protected], so that our team, together with the author, can clarify. Brasport and the author(s) do not assume any responsibility for any damages or losses to persons or property arising from the use of this book.
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Preface
It is with great affection that I write the preface to this work composed by several students, former students, partners and friends, and even more about a topic that has fascinated me in recent years: OKR.
While OKR is a simple matter to explain, it is tremendously complicated to put into practice, as many companies still work on what I sarcastically call the “McDonald’s Production System”. In other words, it’s a pure ordering, operational efficiency, and delivery system, without really understanding the problem we’re trying to solve and how to measure it.
When facilitating and guiding students and clients, I have already faced several challenges and scenarios such as “Deliver XPTO Project” indicated as Objective and “Until 12/31” as KR. I go back a few steps and ask: “why does the company need to deliver the XPTO project? What business problem is it solving? What is the current indicator that it has a problem? What will be our target indicator?”
For settings like the one I have described, I always support and get excited about works on the OKR theme that come out of what I call “more of the same”. In this work, another great goal of this fantastic initiative called Jornada Colaborativa (Collaborative Journey), we have a deepening of the concepts, context based applications and, mainly, real market cases, which will certainly help you in this VUCA/BANI world where short-term objectives are increasingly needed.
I remember 2020, where we had a get-together in my place and shared the “great” and “genius” (sarcasm in the air!) strategic planning of the year for my company. I usually say that the only thing left from that day was the memory of the heat, the barbecue and the beer, because we had to throw those plans in the trash can with the arrival of the COVID-19 pandemic. From that moment on, OKR, a subject that I used to teach and facilitate in organizations, became the driving force behind my company.
And this work will certainly be part of my bedside literature to support me in terms of what should be done and to seek inspiration from the cases and difficulties of those who are on the “battlefield”!
Let’s go together on this OKR Journey with the Jornada Colaborativa Team!
Good reading to all.
Vitor Massari
CEO and Founding Partner of the Hiflex Group, bestselling author on agility, father and spare time rocker!
Foreword
It is clear the longer I am involved in Agile that the operational impediments that Agile was created to remove are fighting back. There is perhaps no more of a key battleground for this reintroduction of madly complex and pointless processes than in OKRs. Objectives and Key Results are point of guidance towards the outcomes, they are not the outcomes themselves. Do I need to say that again? They only need to be good enough for the first few iterations and should evolve to support the flow of work. If anything, the refinement of OKRs over time will indicate a healthy engagement with teams, product owners and the end customer as their needs and desires are met.
Like Agile itself and agility in general OKRs are intended to be lightweight guidance that can be discarded if needed and replaced based around discovery and the passage of time. Since there are no programmes or projects in Agile the guiderails for continuous delivery of work are OKRs instead of milestones and endpoint delivery. Evolutionary and adaptive working can only really maintain pace and trajectory if efforts have a transparent focus in outcomes and boundaries in OKRs.
Everyone needs help with OKRs. Workers need to be empowered by them and management needs to be buffered by them so that workers are once again enabled to make decisions without the need for committees. After all none of the previous design boards, signoff processes are needed once agile cadences, activities and roles are active.
Let’s all learn together and never think we know anything, true knowledge is a shared experience.
Karl Smith
Co-Founder Agile World Incorporated, UX/CX and Ways of Working Transformation Consultant, Key Opinion Leader, Author, Artist and Teller of Tales!
Jornada Colaborativa Community - The Collaborative Journey
Together we are smarter and more lives are transformed!
Once upon a time there was a university professor who dreamed of releasing a book when he finished his master’s degree in 2007.
After some ideas for publication on topics such as Microsoft certification, project management and service management, the dream began to be fulfilled in 2017 with the book “Jornada DevOps” (DevOps Journey), but some obstacles stopped its evolution after the definition of the final structure for the official EXIN certification and the writing of three chapters.
In September 2018, during a lecture at PUC Minas, a click emerged: “would other people passionate about DevOps help with collaborative writing?” Dozens of people accepted the invitation and the book was released to 350 people on June 6, 2019 at the SulAmérica Convention Center in Rio de Janeiro, after intense coordinated work with people from several cities who had never worked together before.
After this successful experience with many learning experiences, the team’s escalation created great friendships, new initiatives and a donation of R$ 251,500.00 to institutions, with 11 books launched.
We dream of transforming more lives with collective intelligence and the support of friendly companies...
Book organization
The book has been organized so that the reader can navigate the different perspectives that make up a journey of implementing OKRs in practice.
PART I. ORIGIN AND PURPOSE OF OKR
Part I of this book tells the story from the emergence of OKR to its expansion in use today.
Chapter 1 — The history of OKR. This chapter covers where it all started, what OKR is, and the motivators that led to its idealization.
Chapter 2 — Why use OKRs. This chapter presents what is expected of an Objective definition and its Key Results and what benefits the organization can have by adopting this approach.
Chapter 3 — OKR and agility. In this chapter, the main points of convergence of OKR are discussed with some agility practices, which fostered its use.
Chapter 4 — OKRs in digital transformation. This chapter aims to share many years of research and experience in the area of digital transformation using OKR as a guide, with a very practical view.
Chapter 5 — Understanding metrics and indicators. This chapter addresses the concepts and complementarities between metrics and indicators, as well as the use of the Balanced Scorecard (BSC).
PART II. HOW TO PREPARE FOR THE BEGINNING OF THE JOURNEY
Part II of this book deals with aspects relevant to the organization’s preparation to enter the OKR adoption journey.
Chapter 6 — Planning to deploy OKRs. This chapter provides tips on how to plan the implementation of OKRs.
Chapter 7 — OKR sprint. In this chapter, some practices are discussed to unfold the strategy in monitoring Key Results that are aligned with the objectives and purpose of the organization.
Chapter 8 — Boosting culture and engagement. This chapter reflects on the culture challenge and how to know if people are engaged with some tips on how to boost these aspects.
Chapter 9 — Autonomy in OKRs. This chapter addresses the importance of employees having autonomy in defining their OKRs, without losing sight of the organization’s OKRs, bringing some examples of how this can be elaborated.
Chapter 10 — Understanding the company context. This chapter addresses aspects of a common failure in the implementation of OKRs, which is when we only consider best practice recommendations and/or follow examples from other companies, while context is an extremely relevant factor.
Chapter 11 — Customer focus: OKRs and BPM. This chapter presents some of the challenges in mapping customer focus by bringing synergy between OKRs and practices such as BPM.
PART III. HOW TO APPLY AND WHAT NOT TO DO
This part addresses aspects of good practices and common failures in OKR adoption.
Chapter 12 — Creating OKRs. This chapter covers assumptions and practices for the OKR writing process.
Chapter 13 — Creating alignment between teams. This chapter brings some factors that minimize the risks of having isolated OKRs, enabling sharing between teams.
Chapter 14 — Facilitation dynamics and techniques. In this chapter, some facilitation dynamics for the co-creation of OKRs in organizations are presented.
Chapter 15 — How to work OKRs and goals in the organization. This chapter presents the risks of the OKR approach linked to goals and remuneration, leading to the reflection that we should choose the path that makes the most sense for the organization context.
Chapter 16 — Enabling and training is essential. This chapter deals with the issue of strong synergy between all layers and areas of the company when adopting OKRs and the importance of people being able to act in this new way of managing results.
Chapter 17 — Main failures in the implementation of OKRs. This chapter presents the main failures in the implementation of OKRs, so that your organization can mitigate the occurrence of these errors.
Chapter 18 — OKRs don’t match command and control. This chapter addresses issues related to the culture of command and control and the importance of empowerment and autonomy for decision making.
Chapter 19 — OKRs for personal goals. This chapter brings tips on how to create OKRs for personal goals and some common mistakes on this journey.
PART IV. MANAGING WITH OKR
This part deals with aspects related to managing OKRs.
Chapter 20 — The OKR lifecycle. This chapter presents an OKR deployment lifecycle, covering the demonstration, training and execution phases.
Chapter 21 — How to know if we are close to the goal. This chapter addresses the importance of monitoring OKRs to see if we are on the right track and enable adaptations that are necessary as soon as possible.
Chapter 22 — Keeping OKRs alive. This chapter brings actions and follow-ups of paramount importance that will make all the difference in OKR adoption.
Chapter 23 — The engagement power of OKR. In this chapter, some fundamental points for people’s engagement are highlighted.
Chapter 24 — OKR at all levels. This chapter covers OKRs at the four levels that can be set in an organization, from strategic to individual OKRs.
Chapter 25 — The OKR leader’s competencies in managing goals and results. This chapter presents the challenges of achieving autonomy in teams, addressing Tuckman’s team formation curve.
Chapter 26 — Market approaches. This chapter addresses how the market treats the OKR management process from a standpoint that seeks to reconcile management of practices’ objectives, strategy, and evolution.
Presentation of the OKR Journey in Practice
On a sunny morning in Rio de Janeiro, on March 16, 2021, I had a very lively conversation with my great friend Sérgio Martins at Brasport publishing house. Among the various topics about the books in progress, Jornada Summit events and the launch of the Jornada Club, Sérgio asked me the following question: “Muniz, where is the OKR book?”.
Although the OKR theme was on my backlog, I confess that it was not the priority book in our strategy with the Journey series, but I decided to do some experiments with our team to assess whether it would be worth anticipating this release…
I had a meeting on that same evening with Werther Krause to arrange my participation in PMCaseDay 2021 and I invited him to join the organizing team due to his strong engagement in the Journey as a co-author and supporter of our events. During that conversation, I mentioned that I would invite Carla Krieger to lead the book team, and Werther was even more excited by the friendship that exists between the two of them.
As usual, Carla quickly responded to my WhatsApp audio, which this time was not a podcast (lol). In addition to being super excited about this new invitation, she suggested two names with great experience in the subject to compose the organizing team: Victor Patané and Walther Krause.
After learning from the first books, we are choosing the participants of the organizing team with more objective criteria, as the success of collaborative writing depends on highly engaged people with strong emotional intelligence to relate to co-authors and avoid unnecessary conflicts. The great confidence I have in Carla’s leadership made me feel comfortable in immediately accepting her suggestions.
The choice of people for the team of co-authors with diversified experiences was a great positive surprise and we had a quick adhesion of incredible people with Carla’s aggregating leadership, which was a great catalyst for this result.
I have reinforced in my lectures and initiatives that it is essential to adapt the practices that work in Silicon Valley to our reality. We are very proud to launch a book with Brazilian experiences to contribute to everyone who is following the OKR journey in their organizations.
Congratulations to the organizing team and co-authors for the excellent result!
Antonio Muniz
Founder of Collaborative Journey and JornadaCast and Creator of the LiderProExpert program.
Summary
Preface
Foreword
Jornada Colaborativa Community - The Collaborative Journey
Book organization
Presentation of the OKR Journey in Practice
PART I. ORIGIN AND PURPOSE OF OKR
1. The history of OKR
Where it all began...
How to set an OKR?
2. Why use OKRs?
What are the OKR differentiators?
The OKR structure
Examples of an OKR
OKRs are aspirational and seek engagement
Why companies prefer OKR
Conclusion
3. OKR and agility
4. OKRs in digital transformation
Purpose
Objective
Key results
5. Understanding metrics and indicators
Balanced Scorecard (BSC)
Relationship between BSC and OKR
Metrics or indicators
Relationship between KPIs and OKRs
Goal plan x metrics plan
Planning and follow-up
PART II. HOW TO PREPARE FOR THE BEGINNING OF THE JOURNEY
6. Planning the deployment of OKRs
Objective (O)
Key Results (KR)
Main characteristics of a good OKR
Implementing OKRs in your company
7. OKR Sprint
Strategic planning
8. Boosting culture and engagement
Engagement is necessary!
Are we engaged?
Adjusted and engaged in culture
How to generate engagement with OKRs?
9. Autonomy in OKRs
10. Understanding the company context
Analyzing the company context
11. Customer Focus: OKRs and BPM
PART III. HOW TO APPLY AND WHAT NOT TO DO
12. Creating OKRs
What to consider before you start writing your OKRs?
How to write good objectives?
How to write good key results?
How to write good initiatives?
What is the difference between a KR and a KPI?
How to calculate the progress of your OKRs? (based on the IKAR method)
Good check-in meetings
13. Creating alignment between teams
Putting strategy into practice
Tactical OKRs and teams
14. Facilitation dynamics and techniques
The first step is to have an inspiring purpose
The second step is to transform this purpose into a strategic objective
The third step is the decomposition of the strategic objective into tactical objectives
The fourth step is the decomposition of each tactical objective into key results
Conclusion
15. How to work OKRs and goals in the organization
Organizational goals
OKRs
Traditional goals vs OKRs
Individual performance vs OKRs
Remuneration risks linked to OKR
How to avoid the risks
16. Enabling and training is essential
The KSA for an OKR culture
And why empowering and training is essential?
17. Main failures in the implementation of OKRs
Define your OKRs well
Set cadences
Define roles and responsibilities
Train your collaborators
More failures in implementing OKRs
18. OKRs don’t match command and control
Introduction
The command and control culture
Leadership and empowerment in decision making
OKRs to lead strategically in an agile way
Conclusion
19. OKRs for personal goals
PART IV. MANAGING WITH OKR
20. The OKR lifecycle
21. How to know if we are close to the objective
22. Keeping OKRs alive
1. Follow-up of results
2. Breakdown of OKRs into initiatives/tasks
3. Working with key performance indicators (KPI)
4. Be open to adaptations
5. Have a leader and some champions
6. Team recognition
7. Stimulate continuous improvement
23. The engagement power of OKR
But what does engagement mean?
And what aspects are evaluated for this rating on engagement?
Actions that favor the engagement of people at work
An OKR culture and engagement
24. OKR at all levels
What are OKR levels? And how to define them at company levels?
Enterprise-level OKRs
Department level OKRs
Cross-functional team-level OKRs
Individual OKRs
Now, what is the best practice?
25. The OKR leader’s competencies in managing goals and results
26. Market approaches
27. JornadaCast Cases
APPENDICES
Appendix A. FAQ
Appendix B. Book experiments
References
Dedication and acknowledgments
About the authors and curators
PART I.ORIGIN AND PURPOSE OF OKR
1. The history of OKR
Marlon BastidaHermann RegoMárcia Maximiano
Where it all began...
Taylor and Fayol, considered to be the fathers of management, began the treatment of business management as a science. William LaFollette and Richard J. Fleming, in their article “The Historical Antecedents of Management by Objectives” (1977), mention that “in 1916, Henri Fayol identified five functions of management: planning, organization, command, coordination and control. Fayol considered that the planning function consisted of visualizing the desired end (that is, the objective or goal), the action plan to be followed and the methods to be used”.
Cecil Mace, around 1935, performed the first experiments involving goals, proving that goals could improve the performance of workers. At that time, Mace ended up discovering some of the basic principles that are still valid, propagated and taught on this topic, such as:
1. Performance is dependent on the existence of goals.
2. Goals can be assigned to individuals and unless they are very hard to reach (unrealistic), will be accepted as yours by those individuals.
3. Goals can be assigned to a variety of results: for any performance criterion that can be measured, a goal can be defined.
4. A strict and specific goal will lead to greater increments in performance than a loosely specified, “do your best” instruction.
5. Goals increase performance less through intensifying effort and more through prolonging effort.
6. In the absence of intrinsic motivation on the part of the employee, performance will be worse if there are no goals.
In addition, Mace found that individuals needed feedback on their performance against goals, that is, in addition to being set, goals also needed to be closely monitored to be effective.
After Mace, Locke et al (1981) ended up writing the “bible” on the subject of performance goals.
In 1950, Peter Drucker created the MBO (Management by Objectives and Self-Control) methodology, which focused on project management using goals. Drucker understood that managers should set goals — around productivity improvements and other measurable results — and follow them at a certain cadence, in order to increase productivity and improve results, facing this scenario in a process of continuous improvement. This concept was described in the book “The Practice of Management” (1954) and was adopted and used by companies such as HP, DuPont, General Mills and General Electric.
Drucker understood MBO as a management philosophy that is capable of establishing teamwork, aligning individual goals with the collective result, considering the common vision, responsibility and strength of each individual. At that time, Drucker advocated that goals should be set by each manager and not by top management, giving them co-participation and responsibility for the result. It is up to the top management to evaluate and approve (or not) the defined objectives.
Thereafter, in the mid-1960s, Deming and Japanese industrialists worked together to improve the quality of products developed in the post-war period by the Japanese economy, which was undergoing reconstruction. TQC (Total Quality Control) and the Toyota Method are the fruits of that time and these actions. Hoshin Kanri, orPolicy Deployment, has the same proposal. In this methodology, which belonged to the total quality management scenario, the corporate goals had consequences for each area of the company. The adoption of business management by goals comes from that time.
During the 1960s, psychologist Edwin Locke developed the theory of goal setting with the aim of explaining the need to work towards a goal as a source of motivation at work. Key studies used Locke’s study as a basis to develop theories and concepts related to the establishment of goals and objectives to increase performance. A study by Locke et al (1981), known as the “Goal Setting Theory”, concluded that specific or more difficult goals result in higher levels of effort and better performance.
Andy Grove started the idea of OKRs — Objectives and Key Results — in the 1970s, applying it at Intel. The concept was shared in the book “High Performance Management” (2020), where Grove describes the functioning of Intel’s goal and employee management, giving an overview of the embryonic OKR. This management by goals was actually called iMBO or “Intel Management by Objectives”, using Drucker’s MBO as a reference and using periodic SMART1 goals (quarterly and annually). iMBO incorporated action plans (composed of individual actions called “Key Results”) to targets. This “innovation” of treating action plans and goals together was already practiced at Hoshin Kanri.
In Grove’s opinion, Key Results (KRs) were milestones that would make it possible for someone to identify the achievement of goals, and should be measurable and belong to an action plan. It is also believed that Grove came from the definition that OKRs (goals and actions) should be defined bidirectionally, also involving employees in the definitions and adding engagement and commitment in the process. Thus, Intel employees should define their goals considering the alignment with the company’s goals, which are in fact the reference, adjusting and adapting them with the participation of their managers. Finally, it is understood that Grove also came up with the need to have ambitious/difficult to achieve OKRs, creating the concept of stretch goals.
Because it is a collaborative contribution from several sources, and in view of all this history, it can even be said that the OKR system does not have a single creator. In this scenario, and considering everything that has happened in the last 20 years, each company customizes its version and contributes to the evolution of the model as a whole. A great example was the best-known milestone in the market, when, near the turn of the 20th century to the 21st, John Doerr — at that time a partner at Kleiner Perkins Caufield Byers, one of the most renowned venture capital companies in the world — showed the methodology (which he used at Intel like any other employee) to some Kleiner Perkings companies, including the start-up Google. Larry Page and Sergey Brin, Google founders, decided to adopt OKRs as a management methodology. Google’s success and the importance of OKR to that success, propagated in the market by the company’s own founders, made OKR grow more and more in the technology market and also in the market in general.
Considering its beginnings as an internal management tool, to the present day, in which it is considered one of the most efficient management models, OKR has developed and grown in the same proportion as its use has supported the growth of several companies. John Doerr brings in the book “Measure What Matters” (2018) the history of OKRs and how they can sustain the growth of companies.
Figure 1.1. Chronology of target systems.
Source: Hermann Rego (author).
It is worth mentioning the enthusiasm of Larry Page, one of Google founders, when Doerr introduces him to the idea of OKR. Page says he wished he had had this vision at the beginning of Google, at its founding, 19 years ago. He wasn’t used to processes, so when Doerr comes up with an idea from a company that had already shown results, OKR definitely goes to Google.
According to Larry, Doerr decisively helped the company to grow tenfold, helping to fulfill an extremely daring mission of organizing all kinds of desired information and getting close to the achievable, keeping Google on the right path when they needed it most.
How to set an OKR?
OKR is basically the combination of two components: Objectives and Key Results. Objectives are definitions of what you want to achieve. It should be qualitative, short, inspiring and engaging. It must motivate, challenge and give a sense of purpose to the organization, as well as to the team and people.
On the other hand, Key Results can be defined as a small set of metrics that regulate progress towards the Objective. Each key result must be quantitative and measurable, that is, if there is no number, it cannot be considered a key result.
At first, it is necessary to define what the Objective is. That is, what you want to achieve.
Objective example: To be a collaborative community of amazing technology and innovation by 2022.
Then, break down the Objective into key results. Examples of key results:
[OKR 1] Write 20 books
[OKR 2] Record 15 podcasts
[OKR 3] Agility for 100% of volunteer teams
[OKR 4] Two hundred new subscribers to Jornada Club
Key results are quantitative, measurable and help us to know if we are moving towards our objective. They must define balanced results that lead the team to the expected results. It is important that each objective has two to five key results. With less than two it is difficult to know if, in fact, we are heading towards the objective and more than five is complex to manage.
The big difference between OKR and other goal setting models is that OKR is extremely simple, agile, flexible and decentralized. It can be used for goal setting at any organizational level (operational, tactical and strategic). Because it’s so effective, companies like Spotify, LinkedIn, Twitter, Nubank and, of course, Google don’t give up using it.
1 SMART means S — specific; M — measurable; A — achievable; R — relevant; T — timely.
2. Why use OKRs?
Walther Krause
The goal setting theory was proposed by Locke et al (1981), as we saw in the previous chapter. For Locke et al, difficult, challenging goals, when accepted by employees, result in even higher performance than easy goals. People are motivated by established goals: well-defined and clear goals are stimulating. As long as there is capacity and acceptance, the more ambitious the goal, the greater the yield. Objectives can stimulate people’s behavior, demonstrating value for what is aimed.
The definition of goals and objectives, as advocated by Locke et al (1981), reflects on motivation, as it allows people to assimilate more quickly what results should be obtained.
The MBO (Management by Objectives and Self-Control) methodology, devised by Peter Drucker (1954), put into practice the concepts of the theory of goal setting by Locke et al. MBO became popular in leading companies, which leveraged good results through this model. The larger the organization, the greater the benefits gained from MBO.
If MBO was so good, why adopt OKR?
The changes that have taken place in society and in organizations, demanding ever shorter cycles in strategic planning and greater agility/adaptability in the development of actions to carry out the strategy, required a goal management model that was more adhering to the new scenario. The emergence of OKR took up the space, as the MBO was in decline.
OKRs are often defined, measured and evaluated in short cycles. OKR is a simple, paced and participative process.
Like MBO, the OKR exists to create alignment and to set the cadence for the organization. The objective is to ensure that everyone is moving in the same direction, with clear priorities, at a pace adjusted to the conditions of the moment.
What are the OKR differentiators?
The OKR model is not a one-size-fits-all recipe. Each organization and team can and should adjust the model to its reality and scenario.
The main benefits of using OKRs are:
Agility/Adaptability: one of the main benefits; short goal cycles bring better adaptation to change, reducing risk.
Focus and discipline: the goals, few in number, ensure the focus on obtaining results and greater discipline in the organization.
Engagement: everyone’s participation in setting goals connects employees to the company’s objectives, increasing engagement and commitment to results.
Alignment and cooperation: shared goals encourage collaboration between teams, resolving interdependencies and creating synergies between different initiatives.
Communication: transparency and simplicity make communication clearer, facilitating the understanding of the organization’s goals and priorities.
Autonomy and responsibility: when applied with self-management, teams receive clear direction and are free to choose how to achieve OKRs. Autonomy increases agility in decision-making and the search for the best ways to achieve the objectives.
Ambitious goals: decoupling OKRs from compensation makes it possible for the team to set ambitious and challenging goals, avoiding the temptation of unethical attitudes to obtain results.
The OKR structure
An OKR consists of an Objective and a set ofKey Results (KRs). The objective represents where you want to go, what you want to improve. It is described by a short, clear, qualitative and aspirational sentence. It could be a problem to be solved or an opportunity.
Each objective can have two to five key results. Key results represent how you will measure progress towards the defined objective. Key results must always contain a relevant metric to achieve the objective.
Examples of an OKR
Objective: Delight consumers of our products
Key results:
KR 1: Increase NPS from 6.5 to 8
KR 2: Increase the number of hits to the site from 5,000 to 8,000.
KR 3: Increase the repurchase rate from 15% to 25%.
Key results define what success is through quantitative metrics.
Objective: Improve my fitness this year
Key results:
KR 1: Reduce cholesterol from 170 to 90
KR 2: Reduce the weight from 110 kg to 80 kg
Initiatives (to achieve key results):
Go to the gym three times a week
Perform aerobic activity twice a week
Eat up to 1,800 calories a day
Reduce salt and sugar in juices and foods
OKRs are aspirational and seek engagement
OKR is a model to support business growth and customer value creation. As the objectives are challenging, achieving them is not always the most important thing, at the individual level. The wish is that teams do their best, learn fast and the organization grows. The risk of making mistakes is part of the process and is positive, as long as it generates learning and evolution.
