When John Doerr joined Kleiner Perkins in 1980, he brought with him a radical new management methodology that would revolutionize Silicon Valley.
He had spent the previous five years at Intel, where, while working under management guru Andy Grove, he learned about Grove’s revolutionary system for goal setting and accountability.
“Andy had created this system for goal setting that was deceptively simple, but also the polar opposite of the conventional management by objectives (MBO) systems, which tend to be top-down, hierarchical, annual, and linked to compensation,” Doerr told Harvard Business Review.
Grove’s new methodology worked on the revolutionary idea that teams perform better by focusing on outcomes—not procedure. Instead of telling Intel’s employees precisely what to do, Grove would set them a goal and let them work out how to achieve them.
He called it Intel Management by Objectives, although he later simplified that to Objectives and Key Results—better known today as OKRs.
In his book Measure What Matters, Doerr distilled Grove’s methodology down to one simple meaning:
The Objective is the goal you want to achieve—increase brand awareness, create the lowest carbon footprint in your industry, that sort of thing.
The Key Result is the metric by which you’ll measure your progress towards your objective—drive one million web visitors, ensure one-quarter of your product’s material is compostable, and so on.
It’s a simple but immensely flexible template that bends and bows to fit nearly every purpose.
KPIs, which stand for Key Performance Indicators, are a way for teams to track performance within projects and initiatives. OKRs, on the other hand, are a framework for setting and achieving goals. Because of the relationship between the objectives and key results, OKRs are a better way to holistically think about your goals and how they relate to your work.
That isn’t to say your team can’t use KPIs. In fact, some KPIs make great KRs. Here’s how they differ, and how your team can benefit from both:
If both of these acronyms are new to you, stick to OKRs. By empowering your team with a holistic goal-setting framework, you can connect your individual work to your company’s big-picture goals to drive employee motivation and deliver better outcomes.
Because of how flexible the OKR framework is, you can set and phrase OKRs in a variety of ways. Like any goal, OKRs should be falsifiable and measurable. You should think of OKRs as the pillar of your strategy for the next period of time. However, to set good OKRs, you also need to connect them to your day-to-day work.
Even though most companies set goals, research has shown that only 26% of employees have a clear understanding of how their individual work contributes towards company goals. That’s because most teams set goals at the beginning of a year or quarter, then never revisit them again. But, when employees have clarity on the relationship between their work and their company’s objectives, their motivation doubles. By connecting each individual’s work to your organization’s goals, your employees have the context for why their work matters.
There’s no set number for how many OKRs you should set, but in practice, aim to set no more than ten objectives. Each objective can have more than one supporting key result, depending on the team. Because your OKRs represent your big-picture goals, you want to set a number that you can reasonably complete in a set period of time, like a quarter or a year.
You should also practice setting OKRs at both the company and team level. For example, if your company’s objective is to be the best-in-class solution in your field, your marketing team’s OKR might be to create a best-in-class product demo and share it with a certain number of people.
OKRs are effective at guiding large, long-term goals. Check out a couple of company-wide OKR goals.
Objective: Create the lowest carbon footprint in our industry.
Objective: Delight customers. Ensure that our customers are so happy with our service and product that they have no choice but to order more pizza and to rave about the experience with their friends.
When you step down a level, from the C-suite to functional teams, OKRs are equally effective. Just as they can direct our strategic thinking, they can guide our functional work, too. Here are a few team OKR examples.
Objective: Increase brand awareness
Objective: Launch major product initiative by end of quarter
Objective: Drive employee impact and engagement
Objective: Increase recurring revenue
OKRs aren’t necessarily limited to the workplace, either. When asked about how he improved his personal life, John Doerr revealed he used his trusty system to maximize the time he spent with his family.
Objective: Have more quality family time as measured by:
Thomas Edison once quipped that “vision without execution is hallucination.” It’s an idea that deeply inspired Doerr and the OKR methodology: Good ideas with poor execution will forever remain just that, ideas.
Doerr says the biggest lever in execution is goal setting—and by extension OKRs. It focuses our attention, establishes accountability, and highlights the activities that really drive progress.
“When done right, goal setting is a very powerful tool,” Doerr told Betterworks. “Every team member in the company can link their goals to the corporate goals, knowing that their work is having a direct impact on the success of the company.”
How to set OKRs the right way
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