OKR – yet another business acronym you have to learn, extrapolate, and incorporate into your business. Is it even worth the effort?
Objectives and key results (OKRs) are the secret sauce behind why companies like Amazon, SpaceX, and Google sustain their growth over time. This article dives into the definition of an OKR and how it helps organizations implement and execute organizational strategy.
Definition of OKR
OKRs are a goal-setting methodology that can help your team set and track measurable goals. The benefit of this framework is that it’s easy for your employees to laser focus on the results they obtain from their efforts. Essentially, OKRs bridge the gap between the long-term vision and the day-to-day activities of your staff.
Managing workload and timelines has evolved towards aligning project scope, people, and resources in the project management arena while producing successful results. It is easy to have project goals. But how do you create measurable objectives every week to ensure you hit these goals?
The answer is objectives and key results.
Objectives are where you want to go with the project, i.e., increase brand awareness, and create more followers. Objectives are qualitative and time-bound goals, either weekly, monthly or quarterly. A set of key results supports each objective.
Key results are how you plan to achieve your goals. Each key result is a metric that points to specific tasks or initiatives to measure your progress towards your objective.
All Hands on Deck
It is critical to implement goal initiatives that are transparent and clear to all those involved, which is why everyone in your organization needs to be engaged with OKR. All employees need to have input on what is achievable over the next quarter and 12 months.
After leadership sets the OKRs, teams, and individuals can determine where they will achieve the most significant impact. Empowering employees can facilitate purpose and ownership to their everyday tasks.
OKR vs KPI
KPI stands for key performance indicator, and at first glance, OKRs appear synonymous with KPIs; however, there are distinct differences. The main difference is that KPIs tend to look at what has happened or how things were. Whereas OKRs define where you visualize something in the future.
Similar to how a balance sheet is a snapshot of the company’s financial position at a single point in time. A KPI is a snapshot of how your project operates toward your goals without focusing on the result.
KPIs are quantifiable ways to measure your initiative against results, and OKR goals are broader and focus more on the company’s future. However, both can be useful in organizational strategy and measurement.
To create a development process of OKRs, start with your objective, then single out a shortlist of 3-5 key results that are definitive of the success of your goal. The key results are milestones to guide your process and align your team.
Here are a few examples of this process in action:
Objective: Increase sandal purchases by 25% for Q2
- Add 500 sandals to the online store
- Create 50% more digital ads on social media
- Run a 2-week promotional campaign
Objective: Launch a new mobile app in 12 months
- Complete wireframe and design
- Connect prototype with existing APIs
- Test and optimize mobile app before launch
Objective: Improve customer experience
- Send out a feedback survey to customers and non-customers
- Reduce cart abandonment by 30%
- Increase customer retention by 50%
Initiatives are an optional step that offers more granular checkpoints to help move the needle for your key results. Examples would be individual tasks, projects, and anything else that helps define the work needed to maintain progress.
Now that the rules are set, and each team member understands their role, weekly initiatives contribute to the overall plan. Therefore, it is important to develop a system in which each employee can track and check off the components daily or weekly.
Each initiative on your checklist should be measurable, specific, and within your control. In addition, these tasks must be flexible and incorporate new developments quickly.
Knowing where you want to go is of little value unless you understand how you will get there, making the OKR a valuable tool for any organization that wants to meet its goals consistently.
The OKR framework differs from other goal-setting techniques because it pushes team members past their comfort zone and enables them to accomplish more than they thought possible.
The result is an empowered team with a holistic goal-setting framework that they help construct. Connecting the work to your company’s big-picture goals drives employee motivation, delivers better outcomes, and increases your company’s success.
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