OKR’s stands for Objectives and Key Results and constitute one of the organizational methodologies used to identify a shared goal for the company and the activities that the team will have to carry out to achieve the objectives. More precisely, the Objectives have a qualitative nature and indicate the destination where you want to go while the Key Results, which have a quantitative nature, indicate the activities that the team will carry out.
Many of the largest companies use OKR’s (such as Google, Facebook, Amazon, Spotify, Linkedin) because they help to:
OKR’s allow you to answer questions:
To plan the OKR’s, some essential rules must be followed:
Small but relevant numbers. In the elaboration of the objectives and the results, it is necessary to keep in mind that for each objective you have to elaborate 3 or at least 5 key results that will have to be monitored through the metrics. This is a not very large number which, however, allows you not to spend between the different activities and circumscribes the number of things to pay attention to.
Transparency of the OKR’s. OKR’s must be visible to all members of the company so all members can see what other members are working on. In this way, each employee feels involved in the general functioning of the company and can monitor the progress of the objectives in the other departments.
Achievement of objectives and results. The key results have the function of making explicit how to reach a goal in quantitative terms so that the results are measurable. Therefore the Key Results must always be measurable (e.g. increase the Net Promoter Score by 10%; decrease the CAC by 3%, etc.). The objectives must not be achieved 100% because, as we have said, they must be ambitious. When the objectives are defined, the perception that you must have is that of unease because you know that it will be a lot to achieve that which requires perfect execution. In case the goals are to be achieved 100% then it could mean that you haven’t set ambitious goals enough. When the objectives aren’t fully achieved, the team tries to understand why the objectives have not been achieved and in this way a virtuous circle is activated which generates greater creativity in strategic processes and increases the ambition rate. Not reaching the goal actually means having an opportunity for growth.
Monitoring. The results are checked in periods of three or six months. At the end of this period, an overall assessment must be made. The means of carrying out the check are the metrics which, in fact, constitute the parameters through which to verify the impact of corporate activities.
Order in decisions. When defining OKR’s, a strategy definition order must be respected. First, you have to define the objectives; once the latter have been defined, the Key Results can be identified and the tasks to be performed must subsequently be defined.
Growth accelerator. When the team manages to monitor the change, as the objectives are achieved, it becomes faster in the execution of its tasks and this is because the effort made by each employee is measurable and everyone realizes its indispensability and the possibility of achieving more ambitious goals.
Change of OKR’s. The OKR’s are not unchangeable parameters, indeed they can be changed within the quarter. However, they must not be changed frequently or easily: the change must be an exception. The continuous change of the OKR’s could mean that you cannot define your priorities or that you have not been able to apply the rules for their definition well.
Procedure for the definition of the OKR’s. Each year the CEO must define the annual OKRs together with the heads of the different departments (CFO, CPO, CMM, COO, etc.) and must, therefore, identify the numbers towards which the business must strive. Normally this activity must be carried out 30-60 days before the start of the year of activity. Once the annual objectives have been defined, it is necessary to move on to defining the objectives of the Quarter (also in this case it would be preferable to start 20/30 days before the beginning of the Quarter).
Control procedure. The results achieved must be checked every Quarter during the so-called Quarterly Meeting. In this context, all department managers must report on the results obtained. This meeting isn’t a time to talk about how good or skilled the company and its employees have been in achieving the objectives but it serves to address three issues: 1) what have we been good at? This question serves to replicate positive actions; 2) what did we do wrong? This question is to avoid repeating the mistakes made; 3) how can we do better? This question serves to go beyond the limits we set every time we reach a goal.
The OKR’s are compasses that can guide individual and collective work. For this reason, OKR’s are normally established for the company, for the teams that make up the company and for the people who make up the team. They, therefore, allow you to connect the objectives set at each level by linking them together. In this way, the common matrix of the individual and collective organization follows a common goal and this means that all teams simultaneously compete to achieve the same goal.
In addition to measuring individual and collective performance by tracking the general performance of the company and its ability to achieve its objectives, the OKR’s are an excellent lever for generating conversations on productivity. At the end of each semester, in fact, everyone will have to discuss their performance and clarify the reasons why a certain percentage has been reached in achieving a goal. This activity is very useful because it allows you to identify what the company is doing very well and what it needs to change.
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