A successful [OKR] system needs only to answer two questions:
1. Where do I want to go? (The answer provides the objective.)
2. How will I pace myself to see if I am getting there? (The answer gives us milestones, or key results.)
– Andy Grove in High Output Management
OKRs(objectives and key results) and other frameworks for setting goals and objectives are a common aspect of organizational life. But familiarity doesn't necessarily mean competence and can easily end up becoming an academic exercise devoid of any power behind it.
1. "Less is more"
“A few extremely well-chosen objectives,” Grove wrote, “impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.” A limit of three to five OKRs per cycle leads companies, teams, and individuals to choose what matters most. In general, each objective should be tied to five or fewer key results.
A common mistake both in organizations and in personal arenas is setting too many goals. If everything is a priority then nothing is. Focusing on the important few and marshaling all resources behind them is grossly underrated.
2. "Set goals from the bottom up"
To promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs, in consultation with managers. When all goals are set top-down, motivation is corroded.
Often when executive teams set organizational level goals, there is a disconnect between realities on the ground and what gets discussed in boardrooms. Meanwhile middle managers while knowing those realities can't really affect change at the organizational level. This is where a good balance between a top-down and bottom-up approach goes a long way.
3. "No dictating"
OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Even after company objectives are closed to debate, their key results continue to be negotiated. Collective agreement is essential to maximum goal achievement.
Peter Drucker once said that strategy eats culture for breakfast. A top down strategy hatched by executives but disconnected from reality will always struggle to find traction. Emotions and engagement are as important as logic in the success of any initiative. Managing by decree and edict might work in the short term but tends to be unsustainable in the long run.
4. "Stay flexible"
If the climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle.
Von Clausewitz once said, "No plan survives first contact with the enemy". OKRs are usually designed for a one-year cycle but there is no reason to stick to them when change is warranted.
Consistency for consistency's sake doesn't make sense. Realtime responsiveness and the willingness to make necessary revisions and changes is a key aspect of adaptive strategy.
5. "Dare to fail"
“Output will tend to be greater,” Grove wrote, “when everybody strives for a level of achievement beyond their immediate grasp. ... Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.”
While certain operational objectives must be met in full, aspirational OKRs should be uncomfortable and possibly unattainable. “Stretched goals,” as Grove called them, push organizations to new heights.
This is one aspect of goal setting research that has been proven time and again. A well designed stretch goal helps to push past our limits. There are other critical dimensions of goal-setting as well that determine their effectiveness.
6. "A tool, not a weapon"
The OKR system, Grove wrote, “is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review.” To encourage risk taking and prevent sandbagging, OKRs and bonuses are best kept separate.
As Doerr notes, goals being coupled with performance reviews can have all kinds of unintended consequences including people not pushing the limits. OKRs are but only one aspect of someone's performance and should not be used as weapons for punitive measures. Practical judgement is required on the manager's part to figure out the importance given to OKRs in the overall performance review.
Another stumbling block is that OKRs are a means to an end but often end up being ends in themselves. As Jeff Bezos puts it, "It's always worth asking, do we own the process or does the process own us?"
7. "Be patient; be resolute"
Every process requires trial and error. As Grove told his iOPEC students, Intel “stumbled a lot of times” after adopting OKRs: “We didn’t fully understand the principal purpose of it. And we are kind of doing better with it as time goes on.” An organization may need up to four or five quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.
How many organizations have the patience to stick with a process for longer than a year before they see results? As is often the case, strategy tends to be similar from one organization to another. But it's the commitment, alignment and consistency of the execution that ends up being the difference maker.
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Sources and Useful References
- Measure What Matters by John Doerr
- High Output Management by Andy Grove
- A guide to setting goals using OKRs: https://rework.withgoogle.com/guides/set-goals-with-okrs/steps/introduction/
- For more classic OKR writing traps, check out Google's OKR playbook : https://www.whatmatters.com/resources/google-okr-playbook
- OKR 101 course: https://www.whatmatters.com/get-started