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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Your one-stop guide to implement Objectives and Key Results (OKRs) effectively In business, OKRs--that's short for Objectives and Key Results--are the gold standard for communicating and delivering on what you want to accomplish and how you'll get there. OKRs For Dummies provides you with step-by-step guidance for following in the footsteps of some of the world's leading organizations. Drive focus on what matters most, align and engage teams, and generally maximize the benefits OKRs have to offer, thanks to this easy-to-use guide. You'll learn how to roll out an OKR system that closes the gap between strategy and execution, and helps people at every level organize their daily decisions around shared and important goals. It's time to get strategic with OKRs. * Understand the OKR methodology and determine the benefits for your organization * Learn how to craft sound OKRs for every level and department of your business * Discover best practices and common pitfalls to ensure success when applying OKRs * Focus on the three aspects of the OKRs process: Adoption, Engagement, and Alignment Business owners, team leaders, C-suite executives, and coaches will love this friendly how-to manual for joining the OKR movement.
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Veröffentlichungsjahr: 2023
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OKRs For Dummies®
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ISBN 978-1-394-18348-7 (pbk); ISBN 978-1-394-18350-0 (ebk); ISBN 978-1-394-18349-4 (ebk)
OKRs For Dummies®
To view this book's Cheat Sheet, simply go to www.dummies.com and search for “OKRs For Dummies Cheat Sheet” in the Search box.
Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1: Introducing OKRs
Chapter 1: Achieving Goals with OKRs
OKRs Are a Goal-Setting System
Seeing the Value in Goal Setting
Examining the Components of OKRs
Comparing OKRs to Other Goal-Setting Systems
Chapter 2: The Benefits of OKRs
Overcoming Common Organizational Challenges with OKRs
Understanding How Your People Will Benefit from OKRs
Part 2: Preparing to Create OKRs
Chapter 3: First Things First: Identify Why You Are Creating OKRs
Knowing How
Not
to Kick Off Your OKRs Journey
Getting to Your “Why” for Creating OKRs
Chapter 4: Filling Vital OKRs Roles within the Organization
Securing an Executive Sponsor: A Critical Component
Understanding Executive Sponsorship and Why It’s Important
Choosing Your OKRs Champion: A Vital Role for OKRs success
Bringing OKRs Ambassadors On Board
Understanding the Role of an OKRs Ambassador
Outlining the Profile of an OKRs Ambassador
Maximizing OKRs Success with Ambassadors
Chapter 5: Determining Where and When to Create OKRs
Determining When to Use OKRs
Creating OKRs at the Company Level Only
Creating OKRs at Both the Company-and Team Levels
Creating Individual OKRs for the Entire Organization
Considering Other Options for Where to Create OKRs
Setting the Right Cadence for OKRs
Chapter 6: The Raw Materials of OKRs: Mission, Vision, and Strategy
Agreeing on the Definitions of “Mission,” “Vision,” and “Strategy”
Mission: Stating Why Your Business Exists
Vision: Creating Your Picture of the Ideal Future
Strategy: Getting Your Priorities Straight
Part 3: Creating OKRs
Chapter 7: Preparing to Create OKRs
Training Your Organization for OKRs Success
Working with the Training Curriculum
Determining Your OKRs Philosophy
Chapter 8: Rolling Up Your Sleeves, Part 1: Creating Objectives
Working with the Various Types of Objectives
Walking through the Process for Creating Objectives
Exploring Other Ways to Help You Set Objectives
Incorporating the Characteristics of Effective Objectives
Chapter 9: Rolling Up Your Sleeves, Part 2: Creating Key Results
Looking at the Types of Key Results
Walking through the Process of Creating Key Results
Incorporating the Characteristics of an Effective Key Result
Chapter 10: Making Your OKRs Even Stronger
Ensuring Alignment among OKRs
Answering Some FAQs about OKRs that You’re Sure to Get
Part 4: Managing with OKRs
Chapter 11: Holding OKRs Review Meetings
Determining Your Meeting Cadence
Getting the Most from Your OKRs Meetings
Chapter 12: Scoring and Analyzing OKRs Results
Scoring OKRs
Understanding What and How to Score
Analyzing OKRs results
Knowing What to Look for in Selecting OKRs Software
Chapter 13: Making OKRs Stick
Laying the Foundation for OKRs Success
Knowing What to Look for in a Consultant
Maximizing Your OKRs Success
Part 5: The Part of Tens
Chapter 14: Ten Common Questions about OKRs
Do OKRs Link to Performance Reviews?
Should You Link OKRs to Incentive Compensation?
How Many OKRs Should You Have?
How Do You Overcome Resistance to OKRs?
What’s in It For Me? Why Should I Care about OKRs?
Where Can I Find a Library of Potential OKRs for My Business?
What Do We Do When We Can’t Control the Key Results?
How Do You Balance Stretch OKRs with a High-Achievement Culture?
How Do You Know Whether OKRs Are Right for Your Organization?
Can Business-as-Usual (BAU) Activities Serve As OKRs?
Chapter 15: Ten “Musts” to Ensure OKRs Success
Know Why You’re Implementing OKRs
Have an Executive Sponsor, Champion, and Ambassadors in Place
Provide Training (and Lots of It) to Those Who Will Be Creating OKRs
Create an OKRs Playbook
Don’t Go Too Far Too Fast
Ensure Consistency in How Your Teams Write OKRs
Don’t Set Them and Forget Them
Go Beyond the Numbers to Learn from OKRs
Learn and Evolve over Time
Get Professional Help If You Need It
Chapter 16: Ten Tips for Creating Effective OKRs
Know the Organization’s Strategy
Learn How to Write a Technically Sound OKR
Make Objectives a CRAFT Project
Be Specific
Always Tell the Story of Success with Key Results
Don’t Look for Perfect Key Results
Balance the Equation
Align Vertically and Horizontally
Make It a Collaborative Effort
Focus on What Really Matters
Index
About the Author
Advertisement Page
Connect with Dummies
End User License Agreement
List of Tables
Chapter 1
TABLE 1-1 Comparing and Contrasting OKRs and KPIs
Chapter 7
TABLE 7-1 The OKRs Training Curriculum
Chapter 8
TABLE 8-1 Common Themes for Company-Level Objectives
TABLE 8-2 The Process for Selecting Objectives
Chapter 9
TABLE 9-1 Steps in the Process of Creating Key Results
TABLE 9-2 The Characteristics of an Effective Key Result
Chapter 10
TABLE 10-1 What to Do Before, During, and After an Alignment Meeting
List of Illustrations
Chapter 11
FIGURE 11-1: Key result updating template.
FIGURE 11-2: A meeting evaluation form.
Chapter 12
FIGURE 12-1: Color-coded OKRs scores.
FIGURE 12-2: OKRs software from Inspire.
Guide
Cover
Title Page
Copyright
Table of Contents
Begin Reading
Index
About the Author
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Introduction
Hi, I’m Paul, and it’s my pleasure (really, I love this stuff) to serve as your guide to the brilliant world of objectives and key results, which I abbreviate as OKRs throughout the book.
I have no idea when you’re reading this. It could be during an economic boom time with job growth accelerating, the stock market escalating to record highs and, to quote Herbert Hoover, a chicken in every pot (apologies to vegans). Or perhaps you’ve picked up this book in an anxious period of economic turmoil, with corporate profits plummeting, layoffs dominating the headlines, and nothing but instant ramen noodles in every pot (apologies to anyone who eats).
Although I can’t predict the economic conditions that exist as you peruse these pages, one thing I can be sure of is that, regardless of the circumstances you’re currently facing, staying committed to what matters most to execute your organization’s strategy will be of paramount importance to you, your employees, and those you serve. To help you with that commitment, you have no better tool than OKRs to drive focus, alignment, and engagement.
Tools are powerful things when used with proper care and guidance. A chainsaw is a tool, but you wouldn’t want to be in the vicinity of someone with no training wielding one in your backyard (“I’m pretty sure I can reach that branch … aaaah!!”) Although poorly implemented OKRs are unlikely to end in catastrophe, if you don’t develop the program with care, it can drain significant human and financial resources. A poor OKRs implementation can also deprive you of a critical differentiator in any economic environment: the laser-like focus on those things, and only those things, that will catapult your organization to the next level.
I wrote this book so that you don’t squander that opportunity. OKRs For Dummies is your definitive guide on how to design and implement a successful and sustainable OKRs program, one that will provide lasting benefits in the form of intense focus, enhanced engagement, and top-to-bottom alignment.
About This Book
OKRs have become an immensely popular framework, relied on by organizations of all types and sizes, all around the globe, to effectively execute their strategies. There are many reasons for the system’s rise to prominence, a primary one being its relative simplicity. When it comes to OKRs, you don’t need a magnifying glass to follow the arrows, boxes, and concentric circles that make up some of today’s elaborate and overly complex management solutions. OKRs contain just two concepts: objectives (what you aspire to do) and key results (how you’ll demonstrate achieving that objective). But simple doesn’t mean simplistic. Numerous potential pitfalls and challenges lurk about, ready, willing, and very able to stall your OKRs progress to a halt. That’s why you need this book.
As with any popular management system, you’ll find no shortage of OKRs advice floating around — some of it valuable, much of it questionable, and a portion of it downright wrong. I’ve been working in this field for close to three decades and have chronicled in these pages the lessons learned from working with hundreds of organizations of every conceivable industry, size, and location. Throughout these pages, I map the entire OKRs journey for you to ensure that regardless of whether this is your first attempt at implementing OKRs, or you’ve tried and struggled with the system in the past, you can find the right information at the right time to maximize your use of the OKRs framework.
To make the content as accessible as possible, I’ve divided the book into five parts.
Part 1
: Introducing OKRs:
In this part, I’ll share the power of goal setting, provide a brief but illuminating peek into the history of OKRs, and give you an overview of the basics. Because a number of “wannabe” systems may be vying for your attention, I also compare OKRs with other frameworks and demonstrate the many benefits OKRs have to offer.
Part 2
: Preparing to create OKRs:
Whether you’re sprinting from the starting line in a Formula 1 auto race, starting a new project at work, or embarking on OKRs, getting off to a good start is vital. The chapters of this part equip you with everything you need to begin your OKR effort on the right foot. You see how determining your “why” for OKRs is the very first thing you should do, outline critical OKRs roles for people within your organization to play, receive guidance on where and when to create OKRs, and discover insights on the raw materials used to develop OKRs.
Part 3
: Creating OKRs:
Let the games begin! This part of the book is devoted to providing you with all the tools, tips, and techniques (and maybe even some other things that start with
t
) that you need to create a powerful set of OKRs. This part begins with why training is critical to the success of OKRs and then walks you step by step through the process of creating OKRs, including formulas, characteristics, and insider tips to write powerful OKRs. You’ll probably have a few questions along the way, so I end this part with a set of frequently asked questions on OKRs.
Part 4
: Managing with OKRs:
You’re not going to let all that hard work of creating OKRs go to waste, are you? Not a chance! In this part of the book, I pass along the information you need to ensure that you don’t “set and forget” your OKRs. You discover how to run OKRs review meetings that maximize learning, learn how to score your OKRs, and find tips and advice on how to ensure that OKRs become ingrained in the culture of your organization.
Part 5
: The Part of Tens:
If you’re looking for some quick inspiration, this is the place to go. The chapters in this part offer my top ten lists on common questions about OKRs that you’re likely to field from your team, must-do items to ensure OKRs success, and tips for creating dynamic and impactful OKRs.
Foolish Assumptions
In writing this book, I’m assuming that you’re a human being who cares enough to not simply go to ChatGPT or any other AI tool and type “Give me OKRs for my business.” Or maybe you tried that and it didn’t yield the results you were looking for, which led you to this book. If so, welcome!
I’m also assuming that you’re implementing OKRs for an organization of some type, whether a for-profit company or a nonprofit or government organization. However, having said that, the advice in these pages can, for the most part, apply to individuals and even families.
Icons Used in This Book
Throughout the book, you find icons in the margins that highlight certain types of valuable information. Following are the icons you’ll encounter, along with a brief description of each:
The Tip icon marks tips and shortcuts that you can use to make OKRs easier. They’re practical in nature and include specific steps you can take to improve the OKRs process.
The Remember icon marks ideas or information to always keep in mind.
The Warning icon tells you to watch out! It marks important information that may save you headaches when planning for, creating, and managing with OKRs.
Beyond the Book
In addition to the abundance of information and guidance related to OKRs that this book provides, you get access to even more help and information online at Dummies.com. Check out this book’s online Cheat Sheet by going to www.dummies.com and entering OKRs For Dummies Cheat Sheet in the search box.
Where to Go from Here
Where to go from here very much depends on where you are on your own OKRs journey, and of course your personal reading style. Whether I’m reading a novel, business book, or shampoo label, I’m the type of person who likes to read from end to end in sequential order. But not everyone is like that, and like all For Dummies books, this book is designed for you to be able to jump to the sections that are immediately relevant to you.
If your organization is new to OKRs, I recommend that you do read the chapters in order, because they guide you chronologically through the process. You may be tempted to skip over early chapters that cover topics such as the “why” of OKRs, or determining key OKRs roles, and get to the meat of writing objectives and key results, but you’ll be better served in the long run if you take the time to understand and aptly apply all the principles covered in the early part of the book.
If you’re reading this book because you’ve attempted OKRs in your organization but hit some hurdles, you may want to dive into specific chapters that address your pain points. But reading from the beginning can help to ensure that you don’t make the same mistakes twice, and will therefore pay considerable dividends in the end. Whatever you choose, I hope you enjoy the book, and I would love to hear from you. You can reach me at [email protected]. Good luck, and have fun!
Part 1
Introducing OKRs
IN THIS PART …
Objectives and key results (OKRs) is a powerful goal-setting and strategy-execution framework embraced by organizations of all types and sizes the world over. Its wide applicability and proven effectiveness are two of the many attractions of the system.
In this part, you discover the value of goal setting and dip briefly into stories of the people who brought the OKRs framework to life. You find out the core components of the OKRs system and compare it with other goal-setting tools. This part also details the many benefits OKRs have to offer an organization, including focus, alignment, engagement, accountability, visionary thinking, and the management of growth.
Chapter 1
Achieving Goals with OKRs
IN THIS CHAPTER
Seeing how OKRs translate aspirations into action
Showing how to write an objective and a key result
Differentiating between OKRs and other goal setting systems
You’ve probably set many goals in your life. In fact, setting ambitious goals is a hallmark of the human experience. As a species, humans are ardent strivers. Whether the goal is to conquer space, cure debilitating diseases, or perform five push-ups every morning, people are constantly working toward desired results. In many ways, the pursuit of goals gives life meaning and purpose through the articulation of what you want, the planning to meet it, the execution of that plan, and, ultimately, the very rewarding experience of achieving your goals.
Organizations are avid goal setters as well, and OKRs is the framework of choice for successful goal setting around the globe in every possible type of organization: startups, nonprofits, government agencies at all levels, small- and medium-sized enterprises, and Fortune 500 conglomerates. OKRs stands for Objectives and Key Results, a simple and proven system for translating your aspirations into reality. OKRs provide the structure necessary to create goals that are crystal clear and will keep you laser-focused on concentrating your efforts on what matters most to deliver the outcomes you want.
This chapter introduces the OKRs framework in broad strokes. I talk about the value of goal setting, examine the components of OKRs, and briefly compare the OKRs approach to other goal-setting systems you may be familiar with.
OKRs Are a Goal-Setting System
As noted previously, humans are avid goal setters, constantly striving to improve our performance regardless of the field or endeavor we choose. Perhaps you have experience in setting goals in some of these domains:
Family:
Partner, children, extended relations
Physical:
Health, fitness, and wellbeing
Work:
Career, volunteering
Spiritual:
Religious or other spiritual affiliations
Relationships:
With friends or others
Hobbies:
Interests beyond work
Some of my goal-setting memories bring me a few chuckles, such as my goal of winning a “Best Screenplay” Academy Award after taking one screenwriting class. I even pictured Steven Spielberg having the honor of bestowing the Oscar on me. Hey, the more specific a goal the better, right? I talk a lot more about the value of specific goals in this book.
Your company probably has goals related to sales, customer satisfaction, retaining the best people, and a host of other elements designed to propel you past your competition. Whether people have their companies or themselves in mind, there is little doubt that setting goals is a very healthy and positive activity, one that everyone should pursue with rigor. Problems occur, however, in how people go about writing and constructing those goals. That’s where many people, whether crafting goals for companies or themselves, get stopped in their tracks almost instantly.
It’s common, for instance, to write goals that are vague and nebulous: “Get more fit.” “Be the best company in our industry.” They sound good — and few would argue with the merits of either of those examples — but the quality that specifically marks real success is missing from both. A number of other pitfalls loom out there in the goal world as well, such as
Setting unrealistic goals that you have no genuine chance to achieve
Having too many goals at one time
Failing to account for any assistance you’ll require from others in achieving your goals
Goal setting is perceived by most people to be a relatively easy notion, one that requires little in the way of preparation or study. I return to this topic throughout the book, but for now, just be aware that in order to effectively implement OKRs in your organization, you need to change the way people think about the process of goal setting.
Despite the potential challenges, goal setting is one of the most powerful things you can do in your organization (and your life). You just need a better, more reliable system, and that’s where OKRs come in.
Sounds good, huh? Maybe if I’d have known about OKRs back when I was practicing that Oscar speech, I’d actually be clutching a gold statue now. The good news for me and you is that it’s never too late to succeed, so go ahead and get started!
Seeing the Value in Goal Setting
The title of this section makes it sound as if I’m trying to convince you that goal setting has something to offer. But maybe you’re already convinced and are a believer in the power of setting ambitious goals, with a lifetime of experience to back up that claim. If so, great — we have that in common. On the other hand, perhaps you do need to be convinced of goal setting’s value. You may be reading this book because your boss placed a bulk order, handing out a copy to every manager in the company with strict orders to read it, and over the weekend no less. Maybe you came up in the school of hard knocks and don’t believe in the woo-woo world of setting goals. Well, I’ve got news for you: Goal setting, especially with the use of OKRs, really works, and I’m going to win you over to this idea, I promise.
Back in 1968, when the Beatles song “Hey Jude” was dominating the airwaves, a little-known professor from the University of Maryland named Edwin Locke published a blockbuster article that would revolutionize the field of goal setting. “Toward a Theory of Task Motivation and Incentives,” based on Locke’s pioneering research, showed that setting goals led to higher performance in a wide range of domains. Whether it concerned office workers toiling in smoke-infested offices (it was the 1960s, remember), loggers felling timber in northern British Columbia, or truckers rolling along the blacktop, Locke demonstrated that setting goals improved performance in a statistically significant fashion. It wasn’t uncommon, for example, to see performance gains of more than 200 percent! Forget free love and flower children; the real revolution of the 1960s was goal setting.
Locke went on to collaborate with a professor from the University of Toronto named Gary Latham. Together they conducted hundreds of studies on goal setting and reviewed hundreds more, all culminating in their 1990 magnum opus, A Theory of Goal Setting & Task Performance. Although it’s not a page turner a là Dan Brown or Agatha Christie, it’s a revelation. Locke and Latham demonstrated unequivocally that setting goals led to improved results, and as an added bonus, working toward a goal boosted motivation.
Locke and Latham made clear that certain types of goals are better than others. Specific and challenging (but not too challenging) goals were critical to improved performance. Both of these characteristics (specificity and challenge) are vital to OKRs, as you discover in the chapters ahead. Speaking of OKRs, I think I’ve kept you waiting long enough, so let me know introduce the star of our show, “Objectives and Key Results.”
FROM MBOs TO OKRs – THE PEOPLE AND IDEAS WHO BROUGHT OKRs TO LIFE
OKRs are not a business fad, but are based on, and have since improved upon, a number of common-sense, historically proven business principles. Here’s a brief sketch of some major players in bringing the OKRs framework to where it is today:
Peter Drucker: Considered by many to be the greatest management thinker of the 20th century, Peter Drucker was a true management rock star and writer of more than 30 ground-breaking books. In his 1954 title The Practice of Management, he introduced the concept of Management by Objectives, or MBOs. Very briefly, the idea was that all employees need objectives that spell out what contributions are expected of them and their teams. Drucker tied the idea of having objectives to the company’s strategy (goals of the business) and said they should be cross-functional in nature when necessary. Drucker had a huge and influential megaphone, and companies from coast to coast began creating MBOs.
Andy Grove: As CEO of Intel from 1987 to 1998, Andy Grove was behind much of the growth of Intel, leading the company from manufacturing memory chips to being the globe’s foremost supplier of microprocessors. Grove had a keen interest in management and recognized the potential benefits of a well-constructed and implemented version of Drucker’s MBO system. Grove boiled it all down to just two questions to be answered: 1) Where do I want to go (the objective); and 2) How will I pace myself to see if I am getting there? He eventually called the answer to the second question your key result. So when we use the acronym OKRs today, we owe it to Grove. Thank you, Andy!
Grove also experimented with the cadence of settings goals: Out were annual goals, and in were quarterly and sometimes even monthly objectives. Fast feedback and agility were critical in staying ahead of the competition, so OKRs had to be consistent with that goal. Grove also believed that the concept of stretch was vital with OKRs.
John Doerr: Doerr was a partner at the Silicon Valley venture capital firm Kleiner Perkins Caulfield & Byers when they made crafty bets on a number of startups destined to become household names. Ever heard of a little outfit called Amazon? Kleiner Perkins netted a tidy billion-dollar return on their investment of 8 million dollars. Doerr also worked at Intel in the early 1970s and was introduced to OKRs in a course conducted by Andy Grove. The framework became a key tool in Doerr’s toolkit for working with entrepreneurs and their companies, including the company of our final two names. Doerr’s popular book Measure What Matters offers a number of inspirational stories on the use OKRs from the likes of Bono and Bill Gates that you can use to demonstrate the power of OKRs. That book doesn’t provide step-by-step guidance on creating OKRs (hence the need for this book).
Larry Page and Sergey Brin: These are the creators of Google. Like many startups that eventually rose to global prominence, they started humbly, in that most Silicon Valley of ways, in a garage. However, they were fortunate enough to move early board meetings to a much more sophisticated location — a small office above an ice cream shop in downtown Palo Alto. There, John Doerr introduced the duo to OKRs, and Google decided to use the system from day one. Brin, Page, and subsequent leaders have consistently pointed to the system as a guiding force in the company’s never-ending upward trajectory.
Examining the Components of OKRs
The heading of this section sounds cold and clinical, but the fact of the matter is that goal setting, especially using OKRs, can be … wait for it … fun. As Locke and Latham (see the previous section) made clear, goal setting improves motivation, and who doesn’t like the feeling of being motivated to pursue something you care about?
More good news is that OKRs is a terminology-light framework. The framework involves just three terms: objectives, key, and results. Actually, it’s three words and a conjunction. Yes, I looked it up; “and” is a conjunction. But really it’s just two terms: objectives and key results, more commonly referred to as OKRs. In the upcoming section, I define these terms and look at an example.
Terminology matters in any kind of change initiative, including OKRs. You may find that some people will abbreviate the acronym to OKR, omitting the s. There is no agreed-upon acronym, but in this book I use the plural OKRs and suggest that you do the same. However, what’s most important is that whatever acronym you choose, you use it consistently throughout your organization.
Defining an “objective”
An objective is a statement of a broad, qualitative goal designed to propel the organization forward in a desired direction. There are a few things to unpack in that simple definition. The first is the word qualitative. This word points to the fact that objectives are aspirational statements and don’t include numbers. (As you find out shortly, numbers are the domain of the key results.)
The second word to put under the microscope is organization. You can, and most likely will, create OKRs at multiple levels of your organization: the company-level; business unit; department team; and so on. Thus, the word organization in the definition is meant to be generic.
Finally, the last part of the definition notes propelling the organization forward in a desired direction. This is the essence of an objective, which, to keep things nice and simple, asks, “What do we want to do?”
Writing a basic objective
Now comes one of the hardest tasks I faced in writing this book: providing the very first example of an objective. Why was it so difficult? Because no matter what field or industry I draw on, there is a risk that some people will think, “Oh, so OKRs are for only those types of companies.” Or, “Well, that doesn’t apply to me.” Oy! Always remember that you can use OKRs anywhere and everywhere, from writing pop songs to ending malaria. So don’t read too much into the following example.
Say that your company has a mobile app that has been crashing lately, much to users’ chagrin. That’s a strategic problem, and OKRs are very well-suited to help you overcome strategic challenges. So here’s a possible objective:
Reduce mobile app crashes in order to increase user satisfaction.
Ta-da! You’ve just had your first exposure to an actual OKR-style objective. Exciting, isn’t it? (Surely it’s one of those “remember where you were moments” as you soak this in.) This example objective is a relatively simple statement, but it is composed of three parts that all effective objectives have in common:
It starts with a verb. By its very nature, an objective is action oriented, so you always want to begin one with a verb.
Your verb choice will depend on the objective you’re striving toward, but every word matters in the objective, and the verb you choose sets the stage for the rest of the statement.
The verb is followed by a description of what you want to do.
In this case, you want to reduce mobile app crashes. Now, a lot of people would stop right there. “Reduce mobile app crashes” sounds like a worthy objective. But, and this is one of the most important
but
s in this entire book, there is a third component to a well-written objective, and that is …
The “in order to” or “so that.”
This final part captures the business impact of the first two components of the objective. Why is it important to reduce mobile app crashes? Because you believe that it will lead to increased user satisfaction. That final component is the most important, because it makes clear the strategic relevance of the objective: why it matters. I’ll bet you could stop reading right now and quickly brainstorm a dozen things you’d like to get done in the next few months. Doing that is relatively easy, but when you add that third component of
why
the objective is strategically important now, you quickly recognize what really matters, and which objectives are the critical ones to pursue.
Share this formula for writing an objective with your team:
Verb + what you want to do + in order to / so that (business impact)
Some people bristle at formulas and a paint-by-number approach to objective creation, but goal setting is not a natural muscle for most people. They need all the help they can get in writing effective OKRs, especially in the beginning. Providing a formula or template simply gives people a leg up on the task without inhibiting their creativity in any way. After all, the formula doesn’t dictate what verb to use, or why their objective is important. It simply provides a path for creating objectives that will be technically sound and add value.
Defining a key result
Now you can turn your attention to key results. A key result is a quantitative statement that measures the achievement of a given objective. The key results answer the question, “How will you know you’ve achieved the objective?” Of course, the most important word in the definition of “key result” is quantitative. A key result should consist of raw numbers, dollar amounts, percentages, or even dates, which you will use in the case of milestone key results.
Writing key results
In the earlier “Writing a basic objective” section, the example objective was “Reduce mobile app crashes in order to increase user satisfaction.” Now you have to decide what set of key results will demonstrate the achievement of that objective. You may want to try these:
Study app crashes and determine the three most common causes by May 15th.
Develop fixes and update the app by June 1st.
Decrease the number of mobile app crashes from 5 to 1.
Increase app store rating from 4.2 to 4.8.
A question I get frequently is, “How many key results should we have for each objective?” Although there is no absolute right or wrong answer to the question, a good rule of thumb (as rules of thumb go) is three to five. But beyond the number, you should think in terms of telling a story with your key results. By that I mean that the key results should work together in a coordinated way to demonstrate the success of the objective.
Continuing with the example objective, if you’re going to reduce mobile app crashes, you first need to find out why the app is crashing by determining the common causes. That topic provides a good opening “chapter” in your story of success for this objective. This key result is a milestone, which is binary – either you achieve it or you don’t. Milestones are like hurdles that you need to get over in order to measure the ultimate business impact outlined in the objective.
A milestone key result always includes a date — how quickly you believe you can achieve the milestone without sacrificing quality.
After studying the reasons for the crashes, your next key result is devoted to developing fixes and updating the app. Think again of your story: First you study the causes, and then you develop fixes. This, too, is a milestone key result.
Now things get interesting. Your third key result measures the reduction of mobile app crashes from five to one. This is a metric key result because it has numbers. This key result also slots nicely into your story. You’ve studied the crashes, applied a fix, and your hypothesis is that by doing so, you’ll see a reduction in app crashes.
Hypothesis is a critical word in the context of OKRs, and in measurement in general. Whenever you measure anything, you’re making your best guess that it is related to your desired outcome.
The final key result, “Increase app store rating from 4.2 to 4.8,” is also a metric, again because it has numbers. It also holds the distinction of being the most important of the example’s key results because it directly measures the business impact of increasing users’ satisfaction that was identified in the objective. Therefore, it’s a great and logical ending to a strategic story.
I strongly encourage you to use the story concept when constructing your set of key results. Begin with the end in mind by identifying your business impact key result and then work backward, asking what drives, or leads to, that key result. Doing so will help you craft a comprehensive and cohesive set of key results.
Well, that pretty much sums up OKRs. It has been a pleasure serving as your guide; I hope you enjoyed reading the book, and please do leave a review on Amazon … Hold on. Wait a minute — there is definitely a lot more to say about OKRs. It’s a framework that is — cliché alert — simple but not simplistic. But hey, I can’t give away all the secrets in Chapter 1.
Read on to get the whole fun and exciting story of how to make OKRs work for your organization.
Comparing OKRs to Other Goal-Setting Systems
OKRs aren’t the only game in town when it comes to organizational goal-setting frameworks. Over the years, a host of systems have been applied by companies anxious to reap the benefits of setting and meeting audacious goals. Some are still used today; many have faded into the history books; and still others have disappeared without a trace. In the sections that follow, I compare and contrast OKRs to some of the more popular frameworks you may have used in the past, or indeed may be using now. Spoiler alert: I show you how OKRs tops them all.
OKRs versus SMART goals
If you’ll pardon the mixed metaphors, I want to jump right into the deep end and address the elephant in the room: aren’t OKRs just another way of writing SMART goals? On the surface, this may seem to be the case, but in reality, no, not at all. The acronym SMART, and the associated method of goal setting, can be attributed to a 1981 paper by consultant George T. Doran. In the years since that time, SMART goals have maintained a consistent popularity in management circles. Typically, the letters stand for Specific, Measurable, Attainable, Relevant, and Time-bound. I say “typically” because over the years, various definitions have been applied to some of the SMART letters. For example, the R can represent results-based, realistic, or reasonable. That’s one of the troubles with SMART: Nobody is exactly sure what it stands for.
At first glance, a well-written OKR seems to have much in common with a SMART goal. For example, in OKRs, both objectives and key results must be specific in order to drive the actions necessary for achievement. Each of the other elements of SMART are always present with OKRs as well. But to say that a SMART goal is the same as an OKR is off base. SMART goals — and this is an important distinction — don’t include accompanying objectives, so there is no context for the goal; you don’t know why you’re pursuing it.
Another significant difference between the two is one of scope. SMART is a stand-alone idea that has no accompanying structure. In the end, that makes it more a helpful rule of thumb than a rigorous strategy-execution system. OKRs, on the other hand, include a set of underlying management practices that are absent from SMART goals. Robust OKRs systems are governed by a carefully crafted management review cadence, one that recognizes the operating reality of the organization and constantly challenges the status quo by focusing on stretch targets.
OKRs versus KPIs
KPI stands for Key Performance Indicator. The term is very popular (you’ll even find a For Dummies book on the topic), but unfortunately, it is not used in a consistent manner across all organizations, which can lead to confusion. Generally, however, most organizations use KPIs to monitor operational performance: elements that must be measured quickly and frequently. For example, it’s very common for an organization to monitor the “uptime” of its core systems. KPIs such as uptime tend to last forever and don’t change. You always want to monitor how available your core systems are to your users. OKRs, on the other hand, focus on demonstrating business value and strategic impact. OKRs will change in recognition of your strategy and core challenges.
You can — and most organizations will — use both KPIs and OKRs. Anything tactical requiring frequent monitoring will be the basis of a KPI, whereas more strategic endeavors will require OKRs. Table 1-1 outlines some of the other differences between the two systems.
OKRs versus 4DX
4DX stands for “The 4 Disciplines of Execution.” As with SMART goals, OKRs and 4DX share a number of elements. Both demand a focus on what truly matters for organizational success — the Wildly Important Goal, or WIG, in 4DX, and the Objective and Key Results in OKRs. Both systems suggest the use of both lag and lead measures (key results, in OKRs parlance). A method of easily grasping progress is also a shared characteristic. Finally, both frameworks posit that regular reviews are crucial to progress, momentum, and execution.
TABLE 1-1 Comparing and Contrasting OKRs and KPIs
Distinguishing Factor
OKRs
KPIs
Purpose
Strategic – focus, alignment, engagement, visionary thinking
Tactical – evaluation of business activities
Duration
Typically quarterly or by trimesters
Annual with frequent updates
Defined in the context of an objective
Yes, by definition
No
Focused on maintenance, health metrics
Rarely
Often
Intended to increase alignment among teams
Often
Rarely
Linked to incentive compensation
Rarely
Often
Originates “bottoms up” from teams and individuals
Often
Rarely
Change frequently
Yes (by selected cadence)
No
The biggest difference between the two systems is cadence. When you set a WIG, you do so for the entire year; for example, a WIG may be “Increase revenue from $20 million to $40 million by December 31st.” For that WIG, you create lag and lead measures that you monitor throughout the year. OKRs may also be set annually, but they are also (commonly) set quarterly or by trimester. Although the annual OKRs will not change during the year, the quarterly OKRs are adjusted to reflect the strategic context faced by the organization. I believe that these strategic adjustments are an advantage of the OKRs method. Most pundits would agree (and statistics confirm) that competition in virtually all industries is rapidly increasing, which has the tendency to reduce the usable life of a strategy. Things can change so quickly nowadays that what seemed like yesterday’s urgent priorities are no longer on our radar today. OKRs, with their focus on a shorter cadence, allow organizations to rapidly respond to changes in their environment, making strategy execution (and strategy itself) more dynamic, agile, and emergent.
OKRs versus BSC
The Balanced Scorecard (BSC) is a performance management and strategy execution framework developed by Robert Kaplan and David Norton in the early 1990s. I have extensive experience with the system; a company I worked with at the time was an early adopter of the BSC and used it to great success.
The BSC challenges organizations to create objectives and measures in four distinct, yet related, perspectives of performance:
Financial:
This realm typically encompasses growth, profitability, asset utilization, and shareholder value.
Customer:
The focus here is on acquiring, satisfying, and retaining targeted customers with a unique value proposition.
Internal processes:
These are the activities and processes that drive value for customers and may include operations, innovation, manufacturing, branding, and more.
Employee learning and growth:
This area includes intangibles such as employee knowledge and culture that drive results.
As with the other systems discussed previously, OKRs and the BSC share some common DNA. Both include objectives accompanied by measurements, called key results in the OKRs framework. There are two significant differences between the systems.
The first difference is cadence. As with 4DX, most BSC practitioners will set annual objectives and measures. This is a potential shortcoming with BSC because it introduces the possibility of an insidious enemy of good measurement: the set-it-and-forget-it mentality. Objectives and measures that seemed inspiring and exciting in January have lost their luster and are disregarded by October. In contrast to BSC objectives and measurements, OKRs are created more frequently throughout the year, providing agility and allowing for flexibility based on your strategic circumstances.
Another possible pitfall of the BSC is the necessity of employing the four-perspective model throughout the organization. For lower-level teams in a company, those perspectives can become more difficult to populate with meaningful objectives and measures because such teams often focus on a small and discrete set of outcomes. For these groups, creating objectives and measures in all four perspectives can sometimes degrade to a tick-the-box exercise in which they put forward items with very little actual value in terms of moving the business forward.
Conversely, you create OKRs by determining what’s most strategically important right now. It could be a customer challenge, a supply-chain opportunity, or a recruiting drive. You have no need to create excess objectives and measures. Rather, the focus is on what’s important right now, allowing teams to isolate and execute effectively.
Chapter 2
The Benefits of OKRs
IN THIS CHAPTER
Overcoming business challenges with OKRs
Seeing how your company will benefit from OKRs
Discovering how your people will benefit from OKRs
In Chapter 1, I joke that this book may have been given to you by your boss with the strict “suggestion” that you read it right away, even though you’re not a believer in the power of goals. But required reading from the boss is without a doubt a real thing, as I’ve heard from countless clients over the years. Here’s a typical exchange:
Me: How did you hear about OKRs?
Prospective client: Our CEO made us … (awkward pause) … we all read a book about OKRs …
If you’ve read the first chapter, I hope you now recognize the value OKRs can bring to your organization, but you’re probably still a bit concerned about the costs of implementing the program. After all, you and your team are swamped already with fires to fight, pressing issues to deal with, figuring out who left the week-old tuna sandwich in the fridge, and a million other problems. Why take on something else now? The answer is simple: because OKRs offer a number of significant and proven benefits to both you and your organization.
In this chapter, I pull back the curtain on some of those many benefits, both for your company overall and for your associates. You discover how OKRs can help you crack the code of executing strategy, why OKRs drive passion and commitment from your teams, and how the system provides what may be the most important attribute of success for any modern organization: unrelenting focus.
OKRs can be considered a change initiative, and selling the need for any change program is critical to its eventual success. Use the benefits in this chapter to help craft your change story.
Overcoming Common Organizational Challenges with OKRs
A mountain of evidence supports the idea that we all think we’re different, and in most cases better, than the average person. One of my favorite illustrations of this is the fact that three-quarters of people say they’re better than average drivers. Men in particular hold this view, with a full eight of ten noting their superiority. Spending five minutes on any road in the world will disprove that statistic. And, of course, mathematically we can’t all be better than average, but that doesn’t stop us from thinking that we, the royal we, are different. So it goes with organizations. I’ve lost count of how many times I’ve been told by a company executive, within the first five minutes of meeting them, how different they are.
It's partially true that, when it comes to the organizational world, plenty of differences exist — in industry types, locations, cultures, and the list goes on and on. But after 25-plus years in the trenches of consulting, I’ve learned there is more that unites us as organizations than divides us. In the following sections, I outline three challenges that all organizations face (yes, even your different, above-average company):
Executing your strategy
Sustaining growth
Dealing with disruption
Read on for details on these challenges and how OKRs can help overcome each one.
Acknowledging the difficulty of executing strategy
Would you like some proof that executing strategy is a problem most organizations struggle with and need help in overcoming? How’s this: The book Execution, by Ram Charan and Larry Bossidy, spent 150 weeks on the New York Times bestseller list in the early 2010s. Execution has always been an enormous challenge for organizations. If Bossidy and Charan had been around in 1450 and were able to convince Gutenberg to have their ideas be the first thing churning out of his printing press, they probably would have had a hit on their hands even way back then.
The problem of putting your strategy into play continues today. In one recent survey, more than 400 global executives chose execution as the biggest challenge facing leaders around the world — and they had more than 80 potential challenges to choose from!
Before I talk about why execution is so difficult, I want to back up and consider a more fundamental question: What do the numbers say? In other words, what percentage of organizations actually do effectively execute their strategy? What’s your guess? Whatever you said, it was probably too high. Estimates of execution vary, but on the high end, just 25 to 35 percent seem able to turn their strategy into reality. At the low end of estimates, the figure is a dismal ten percent. Given the practically incalculable number of hours organizations spend crafting strategy, that’s a lot of value being left on the table.
The two main causes of execution failure
Execution is one of those hard-to-get-your-arms-around problems because in reality, any number of things can derail it, from a poorly crafted strategy itself to organizational inertia to executive politics and game playing, all of which can lead to misaligned people and projects. There are, however, two fundamental issues that appear to consistently disrupt execution efforts: 1) lack of strategic understanding, and 2) an inability or unwillingness to measure the execution of the strategy. Fortunately, OKRs can help with both.
A frequent cause of execution unraveling is the simple fact that many people in the organization don’t understand the company’s strategy, and I think you’d agree that it’s pretty difficult to execute something you don’t understand. Here are some statistics to back up these assertions:
Just 55 percent of middle managers can name even one of their company’s top five priorities (see “Why Strategy Execution Unravels — and What to Do About it,” by Donald Sull et al., Harvard Business Review, March 2015).
Sixty-seven percent of employees don’t understand their role when new initiatives are launched (see “The 5 Pillars of Strategy Execution” at
https://www.gartner.com/smarterwithgartner/the-five-pillars-of-strategy-execution
).
Eighty percent of senior executives say their strategy isn’t well understood (see
Strategy That Works,
by Paul Leinwand and Cesare R. Mainardi, 2016).
Seventy-four percent of managers say that the rotting tuna sandwich left in the fridge is the biggest strategic problem they face.
Okay, I made that last one up, but if we really did conduct a poll, who knows?
Effective OKRs should align with your company’s strategy and, therefore, a prerequisite of the process is ensuring that you’ve clearly and consistently communicated your strategy from top to bottom. Only then can you expect teams to create aligned OKRs that signal their unique contribution. For many companies, the creation of strategy is a “black box” type of activity, shrouded in mystery, conducted by a privileged few, and rarely communicated beyond the C-Suite.
OKRs demand that the strategy be explained and made as explicit as possible so that companies can use their strategy as the raw material to create OKRs. This effort goes beyond producing a few glitzy PowerPoint slides to flash across a giant screen for ten seconds at your next Town Hall. It means having real conversations, helping people understand the company’s overall strategy, and allowing them to determine their role in its execution.
Your organization will be rewarded with focused OKRs that help you overcome the feeble execution numbers I presented earlier if it does the following:
Takes the time and effort to share their strategy
Stays open to the tough questions it may engender
Provides the guiding rationale for its existence
Don’t just have executives read bullets on a PowerPoint slide to share your strategy with employees. Whether in person or virtually, break your teams into small groups and challenge them to poke holes in the strategy you’ve created, contemplate competitors’ responses, and outline how they can contribute.
Measurement is crucial
A second culprit in the battle of execution is the inability or unwillingness of most organizations to effectively measure the distinct elements of their strategy. A robust strategic plan frequently outlines the products and services you intend to sell, the value proposition you’re putting forth to your target markets, unique competencies your people possess, and more. All these encompass a hypothesis — your best guess based on available information of what it will take to succeed in your competitive arena.
Next you have to test those assumptions through measurement, and many companies fail to do so. Rather than track customer engagement, innovation, the effectiveness of new selling channels, and a host of other attributes of their strategy they fall back on the same tired metrics that tend to be almost exclusively financial in nature.
“You can’t manage what you can’t measure” is a wise adage I heard early in my career. If you don’t measure the elements of your strategy, you’re unable to make course corrections, adjust on the fly, and shift directions based on what’s happening in the world. Instead, you’re stuck reading out the same boring financial statement every month, quarter, or year. As noted previously, effective OKRs, which are basically measures of success, are always derived from the strategy of the organization. Thus, by embarking on an OKRs program, you’re instantly combating one of the deadliest forms of execution failure.
