The objectives and key results (or OKR) methodology involve setting business objectives and measurable outcomes. These goals are set, tracked, and re-evaluated periodically. The OKR methodology can be a powerful motivator for high performance and product excellence within teams and companies. Implementing a goal-setting framework that sets the bar high sounds like a no-brainer, right?
Additionally, OKRs take effort to create and maintain. They work well in an empowered organization. Moreover, this requires an intentional shift away from outputs and top-down decision-making. The focus then shifts towards outcomes and individual and team authority and ownership.
For some organizations, this can be a dealbreaker.
Let’s look at some of the core steps involved in creating an OKR-ready culture and evaluate if your organization is ready for the shift.
Benefits of Using an Objectives and Key Results (OKR) Methodology
The OKR methodology helps organizations measure success and stay on target with their strategy and vision. OKRs set qualitative objectives and establish key results metrics. Moreover, they boost employee engagement and nurture strong team collaboration. Similarly, OKRs have incredible power to motivate and unify members of the organization. The objectives and key results framework establish direction and creates an opportunity for growth. OKRs keep everyone informed at all times. They are concrete, which makes them challenging to be misinterpreted.
But before you jump in, you’re going to have to take a long, hard look at the state of trust within your organization.
Develop a Work Environment Built on Trust
However, experts correlate high trust in organizations with higher productivity and energy, better collaboration, excellent employee retention, and significantly lower stress.
According to Paul Niven, OKR coach and author of Objectives and Key Results, effective OKRs can play a role in creating an environment of high trust. Niven offers these three strategies to build trust:
- Create achievable goals that challenge people. For example, OKR projects must be both achievable and challenging. “The moderate stress of the assignment releases neurochemicals, including oxytocin, that intensify focus and power social connections,” writes Niven.
- Let employees drive projects. Therefore, when you make space for people to choose what they work on, you lay the foundation of trust. Niven cautions, “If objectives and key results are handed down from senior managers, with no input or negotiation, you can be certain that trust and commitment will suffer immediately, and poor results will be the natural longer-term consequence.”
- Lastly, you need to make sure everyone knows your company’s strategy. For example, you need to communicate your strategy and vision widely and cultivate an environment of transparency regarding business goals and direction. “Uncertainty about the company’s overall direction leads to chronic stress, undermines teamwork, and reduces trust. You cannot create an effective OKR methodology without knowledge of the company’s strategy,” warns Niven
Focus on Outcomes, Not Outputs
In the article “This Is Why Your Company Is Not Ready for Objectives and Key Results (OKRs),” Donatas Stirbys writes:
“Moving towards goals-based planning is a big organizational shift in terms of the mindset it requires to focus on outcomes and not on outputs. It also brings a change in how priorities are communicated between different business departments, how the engineering group operates, and it is a huge trust exercise for the leadership, but if used properly, this could unlock superpowers for the company.”
Roadmaps support these trust-building strategies by communicating strategy and vision across the organization. Moreover, theme-based roadmaps provide a timeline. They are always up to date and can pivot quickly.
Signs Your Organization Isn’t Quite Ready for OKRs.
Google attributes much of its success to the OKR model. Similarly, other giants like Amazon, Microsoft, Twitter, Netflix, LinkedIn, Airbnb, Target, and Walmart use OKRs. There must be something to the OKR model, right?
Therefore, take heed: OKRs only work if everyone knows what they are, understands their expectations, and grasps how the company is progressing towards achieving them.
Meanwhile, in the wise words of one seasoned product management pro:
“OKRs should not be a project list or a laundry list of ambitions, nor should they be summaries of the P&L. They should also not just be some lofty mission statement. OKRs also cannot be done once presented and forgotten. They need constant attention and to be integrated into the heart of all of the teams’ internal communications – from agile sprint backlog grooming sessions to all-hands meetings and presentations to expectation sessions with the CEO or board of directors.”
Understand the Critical Signs that Your Organization Needs More Time to Implement an OKR Model:
You don’t have a vision, a strategy, or a roadmap.
OKRs should align with your vision and strategy, so getting those pieces in place should be priority number one. Vision and strategy should also directly inform your objectives. Jumping ahead to OKRs is akin to putting the horse before the cart–in either case, you won’t go very far.
You focus on output, not outcome.
The beauty of OKRs is that they lead to measurable outcomes. But that requires shifting your focus from outputs (i.e., shipping a product) to results (i.e., delivering customer delight by solving customers’ problems). Being willing and able to iterate to provide a great product is a crucial aspect of OKR methodology.
Management wants to call all the shots.
An outcome-driven approach requires a profound mind shift for everyone. Executives need to feel comfortable with the idea of a feature-driven roadmap. It can be challenging to step out of that mindset to embrace a different approach that empowers individuals and teams to build and create features that will achieve a specific result.
Data, measurement, and insights are an afterthought.
Measurable results are at the heart of OKRs, so measuring progress and impact is crucial to making data-informed decisions and understanding whether or not you’ve hit a goal.
Making the Shift to an OKR-Ready Culture
You might not be ready to jump in right away to implementing an OKR framework, and that’s OK. But if you aspire to use OKRs down the road, it’s a good idea to lay the groundwork to shifting your output, feature-focused organization to an outcome-driven one.
Start by thoroughly exploring these questions:
- Do you know what your customers want? Having a deep understanding of user needs and problems will help you turn them into OKR objectives.
- Do you have a method of collecting and synthesizing data? Collecting and using data will enable you to measure progress and impact.
- Have you cultivated an inclusive, supportive environment where everyone feels comfortable sharing their ideas and input? Giving teams ownership and autonomy in creating solutions is the hallmark of an empowered organization.
- Does your team have suitable systems? Get clarity on what your team does now and what direction you need to go with project management software.
- Do you have a team culture that recognizes and rewards achievement and supports individual development? Celebrating innovative ideas and achievements creates a positive work environment where innovation and creative problem solving can thrive. Innovative ideas fail to take root when team members encounter stress within the workplace, leading to burnout. Intentionally create space and opportunities for them to develop their knowledge, skills, and expertise.
- Do team members have authority? Giving team members power leads to an empowered organization that can effectively support an OKR methodology. Authority provides a sense of trust. Product leaders build trust through communication and consensus. Individuals need authority and autonomy to develop and create solutions to achieve a specific result.
- Do you have buy-in for OKRs from management? Building a product roadmap that follows an OKR structure is one way to help your team focus on making things that matter most.
Once you can answer these questions, you can confidently leap to implement an OKR framework.
For further in-depth reading, check out these resources:
- Measure What Matters by John Doer
- Driving Focus, Alignment, and Engagement with OKRs by Ben Lamorte and Paul R. Niven
- Empowered Product Teams by Marty Cagan
An OKR Methodology Final Review
Before you jump into OKRs, you have to research what’s going on within your product strategy, company, and teams. It would help if you also did the work to create a high-trust, empowered environment.
Gerard Murphy, VP of Product & Design at Sesame, offers this advice:
“OKRs are a lot of work. The process takes time. If you aren’t willing to invest in them, they will not work effectively and may actually lead to increased burnout or skepticism within the team. I have seen lots of teams invest in them just enough to get frustrated. I have seen few teams invest enough to have them drive results.”
Finally, the benefits of a well-executed OKR methodology are many, but it takes serious effort and consistency across the company to achieve its full potential. And as you move through your evaluation of your OKR-readiness, you might uncover areas within your organization where a culture shift has a positive impact on other business areas.