What is OKR and where does it come from?
OKR (Objectives and Key Results) is a method for setting and measuring organizational goals.
The management selects 3-5 objectives, namely: annual overarching goals and strategies, which serve to focus all annual organizational activities. These goals are ambitious, focused, and actionable.
Why has OKR become such a buzz in recent years? The ‘classic’ measurement methods are simply no longer sufficient. Employees and managers of today need added value, beyond the dry numbers that take the fun out of work. Moreover, each company requires a slightly different process, tailored to its needs. A ‘by the book’ approach is no longer viable in generating a competitive advantage.
Let’s start with the bottom line – why did you choose OKR?
Gil: “Have you ever hiked in Norway? In Norway, if you wish to see the fjords you have to walk extremely narrow paths, on the edges of cliffs, being careful not to plummet down; and they call them ‘beginner trails’. My wife and I found ourselves virtually hanging off of a cliff.
During my flight to Norway, I read the book by John Doerr, the father of OKR, and had a revelation.
When we were six people at the company, we sat around one table and each of us could see what the others were doing at any given moment. But the company started to grow and we faced an ongoing dilemma – how to manage the next step? What is the right organizational structure? What methods to use?
When I read Doerr’s book we had 30 employees and it was clear to me that this was the right approach for us. Why? The premise of OKR is absolute openness and trust within the organization, which we already had. Our corporate culture provides complete transparency from day one. Each and every employee knows the company’s situation as far as sales and cash flow. The foundation of OKR is similar and relies on this kind of openness; everything is out there. I immediately felt a connection and said to myself “This is a new method for me, but it sounds amazing and seems like it would work really well with our current approach”.
Shani: “In addition to transparency, there’s the issue of daring which definitely runs in our company’s DNA. For us, adopting a goal-setting method that always drives you ‘just a little beyond what you know you can’, serves to push us to do things differently and seems natural”.
How did you approach the implementation process in your organization?
Shani: “In the first phase we ran a pilot with the management, to understand how this method works with its pros and cons”.
Gil: “We started by taking software, it’s not a necessity but it helps. After that, everyone read the book and we had two offsite days with members of the management. During these two days, we formulated our work plan for 2019, using the OKR method.
The method starts with organizational goals. We started with each member of management presenting his or her five goals, and we then prioritized and selected the top five. Our executives are required to look beyond their department so that everyone is up to date with the company’s numbers. This may sound easy but it’s quite hard.
In the first stage, we were required to define our five primary goals for the employees. We then struggled some more to formulate it as OKR which wasn’t easy. We’ve been working with this method for two years and it’s still not easy.
We also had to formulate five Key Results for each goal. Did we do well? Not necessarily. We later discovered many mistakes”.
Shani: “Once we have, as management, formulated the objectives and had them aligned with our values of transparency and partnership, we presented them to the employees, and then each team chose the ones they wish to focus on. This way the employees were an integral part of formulating the goals for the coming year”.
Gil: “What Shani is describing is an ongoing managerial dilemma: do we set the goals or do we let the employees set the goals? Goals that are too difficult tend to be discouraging and if they are too easy they’re usually relinquished. The OKR method makes it possible to let the employees decide.
This must be done in an honest manner. if employees make suggestions and feel that they are ignored, they will never take it seriously. Let them know they matter. But keep in mind – the goals must be such that they are realized at 70%, which is considered a success. Achieving 100% of a goal means it was too easy, and meeting just half of it means we could have done better. This is the reason goals are quite aggressive which has some people hesitating in approving them, but eventually, they are decided by everyone together.
Next, each department determines its own five goals and shares how they will contribute to the overall effort. It’s a highly dynamic process that produces mutual dependencies between the departments – the marketing department depends on development, and development depends on the product; an entire array of dependencies. This may intimidate some people at first. It’s a very complicated phase that requires good coordination capabilities, and it teaches people that they are dependent on each other. They truly internalized it at this stage. If I don’t meet my goals, then my colleague won’t meet theirs, and the organization won’t be able to meet its goals either”.
Shani: “I think this is one of the things that really helped us as management. Because one of our values concerns looking at the organization as a group, and there is this dependency as part of the process, and the understanding that in order for the organization to meet its goals we must work together. Now we must stop, think, organize our thoughts and formulate a substantial plan that is measured weekly, to make sure we meet the same goals; which also makes for a personal challenge”.
Did you face any objections from employees? After all, you brought something new to the organization…
Shani: “Whenever you introduce a new way of working, it causes challenges and fears together with questions about the implementation. With the executives – I wouldn’t call it objections; more like questions. And the employees? Absolutely not. On the contrary, I think they were happy. Employees always seek to know the company’s situation and goals. With this method they are part of the process and they constantly know what the situation is.
My job in this aspect was to keep them calm, to try and find benchmarks to learn from, and assist with personal aspects of implementing the process”.
What are the benefits of such a process in the organization?
Shani: “We talk about employee engagement all the time, and how to generate it, which isn’t an easy task. It’s one thing to talk about it, and another to actually make it happen. The OKR is a significant factor in this respect since everyone, down to the last employee, is involved in it. It starts with organizational goals and moves on to departmental goals, and eventually permeates the employees’ work plans, regardless of their part in the OKR”.
Gil: “It really proved itself in our numbers and performance. Our entire organization worked together and marched in the same direction…”
In conclusion, here are some tips for the effective implementation of OKR in your organization:
- Agility – things are constantly changing and require you to rethink your steps.
- Constant supervision – you must always keep your finger on the pulse, precisely because the goals are aggressive. Hire experts, it speeds up the process and prevents mistakes.
In addition, Gil explained to us that “Startups have an image of being a complete mess! There is a feeling that CEOs don’t really know what they’re doing. We’ve introduced this tool early on when we had 30 employees. Apparently, we could have done without it, but that really shot us forward. This method is excellent for startups that wish to employ an effective form of management, in addition to the idea upon which their company is based“.