Guide: OKR method – agile planning and management
What do you do when innovation gets lost during long-winded planning processes? The OKR method is guaranteed to turn things around quickly. Our guide reveals how to use objectives and key results to manage your business.
OKR method: A full orchestra instead of “grapevine”
If you take a closer look at traditional planning and target agreement processes in companies, you’ll spot surprising parallels with the children’s game “grapevine”. From top-down communication through many different levels, a lack of transparency, or a lack of agreement and coordination across teams and hierarchies to an opaque focus on results, the end result is frequently personal target agreements that – at best – are indirectly linked to the overarching company goals and vision. That is, if the latter can actually be meaningfully related to individual working areas.
In contrast, you could think of the OKR method as an agile planning, leadership, and management approach, rather like a full orchestra. Although each section of the orchestra has its own sheet music, all the musicians play at the same time under the leadership of the conductor, so that the different melodies come together to create harmony. Just as a symphony is intended to get the sound of the entire orchestra to blend together, the aim of the OKR method is to ensure that all goals work together. It is a structural management system where the company goals are closely linked to the team and individual employee goals in a way that is specific and measurable.
OKR: The model for success from Silicon Valley is not short of copycats
OKR was developed as a management method and leadership tool for teamwork back in the 1970s by Andy Grove, one of the co-founders of semiconductor manufacturer Intel. Managing with “objectives and key results” became more visible when it was introduced and further developed at Google in 1999 by the well-known US-based manager John Doerr from Kleiner Perkins Caufield & Byers.
The company’s presentation “How Google sets goals: OKR” was responsible for a further rapid spread of the OKR method, which quickly became increasingly popular, especially in the agile digital economy. From Apple, Twitter, and LinkedIn to Oracle, Dropbox, and Amazon – nowadays, the OKR model is an essential part of many successful brands. It is also increasingly well-received in Germany, where it has been adopted by companies including Zalando, Outfittery, Trivago, and Flixbus.
Using OKR for agile working in manageable time frames
Traditional target and performance management systems such as Balanced Scorecard are based on planning over a year or even longer. With the OKR method, the only thing that the company vision or the longer-term goals and plans define is the overall framework. You can use the objectives and key results to set specific, measurable goals within significantly shorter periods. In many cases, the full OKR cycle is run on a quarterly basis, which facilitates agile management that you can use to adjust the company strategy in the short term in response to the current circumstances.
The key to successfully implementing the management method is to set qualitative goals (objectives) and measurable key figures (key results), and to share all OKRs across the company. Organizing workshops, regular updates, and status meetings ensures that everyone is familiar with the goals and progress of other team members and departments, so they can actively provide support.
- In general, objectives for individual levels are developed and defined by both the management and jointly by the teams. This is a strategic decision, as the objectives are ambitious, emotional, and motivating, so they give people the incentive to move up a gear to achieve their vision. They also define what needs to be accomplished within the chosen time frame.
- In order to measure success, the simple and clearly formulated objectives are linked with a number of key results. The key results that are developed within the team use clearly measurable metrics and act as objective assessment criteria for determining whether goals are achieved.
Important note: In order to maintain the focus within each OKR cycle, the corresponding sets should comprise no more than five objectives, each measured by three to five key results.
Our free guide “Agile planning and management with objectives and key results method” will give you a deeper insight into the operating principles and definition of OKR.
What are the advantages of the OKR method?
The OKR method allows you to create an efficient structure for defining, setting, and measuring goals, so that you can use resources effectively and avoid projects that do not support your company’s goals. Other good reasons for using OKR as a flexible framework include:
- Defining clear priorities by focusing on a few important goals
- Strengthening employee buy-in and encouraging them to take personal responsibility
- Improving employees’ understanding of the company strategy and setting clear objectives and benchmarks for their work
- Improving communication between the management, departments, and employees
- Creating greater transparency within teams and preventing silo thinking by encouraging people to consult each other and work together
- OKR allow success to be measured efficiently and act as an early warning system so that course corrections can be made quickly
Practical guide for implementing the OKR method in your business
Working with objectives and key results will help your company become more transparent and focused. The OKR method is an agile process that makes your company’s approach more holistic, is accessible to everyone, and identifies clear preferences in daily work. Our free guide to introducing the OKR model therefore not only contains plenty of information on the OKR cycle and practical tips for implementation, but also valuable hints on pitfalls to be avoided when integrating OKR into your day-to-day business.