What is the OKR method? Is it hype or a serious goal-setting method?
As recently as 2018, nobody outside the Silicon Valley was familiar with the OKR method. And now, less than two years later, everyone is talking about it.
But is this serious or are OKRs just a temporary flaw that will fade soon?
So let’s take a closer look at the OKR method.
OKR method: Silicon Valley swears by it
The OKR method dates back to the 1970s, when the then CEO Andy Grove had to make the chip manufacturer Intel more competitive. Motorola had caught up massively and made more and more competition with Intel in its bread and butter business.
But Intel had become sluggish, they were spoiled by successes and nowhere near as agile as the competition.
This gave rise to the idea of OKRs – although they weren’t called that at the time.
Andy Grove defined the following basic OKR rules:
- Absolute transparency of all goals, from the board of directors to the intern
- Absolute measurability of the intermediate steps (key results)
- Promotion of very ambitious goals (objectives)
With the last point in particular, the ambitious objectives, he contradicted the idea of the SMART method, according to which a goal must always be realistic and very specific.
But realistic goals are usually not very ambitious.
And, even worse, realistic goals are usually not really motivating!
When things are too easy to achieve, why bother putting in the effort required?
And they don’t help a company being successful if the competition sets the pace.
Intel achieved a remarkable turnaround and sometime later even a Motorola manager paid his respects by saying “What you get done at Intel within three days now takes weeks or months for us at Motorola“.
The prey became the hunter and in the process Grove and Intel invented the most practice-oriented targeting method of modern times. Now famously known as OKRs.
It has been used by Google (one of the first supporters of the method), LinkedIn, Zenga, and many other companies in the tech industry since 1999.
OKR method: The new secret weapon of modern digital leaders?
But is all the hustle and bustle about Objectives and Key Results really justified?
Are OKRs the new management miracle weapon of modern leaders?
Yes and no.
If OKRs are only used to put old wine in new bottles, then they won’t be more successful than the previous methods.
An organization that is already very goal-oriented and implementation-oriented will become even more efficient by using and thinking based on OKRs. They will have more alignment within the organization and they will become much more efficient.
An organization that has barely achieved its goals so far can become much more successful with OKRs if a clear rethinking begins, especially at the most important management levels. And that is the key point:
OKRs require the right mindset!
OKRs require that
- Few (maximum 5) objectives are defined
- All objectives for the entire company (or in the area in which OKRs are to be used) are transparent for all parties involved
- All OKRs are discussed at least once a month, the progress is honestly documented and also communicated transparently, and objectives or key results are adjusted in the event of serious deviations
This requires a mindset that is not about always looking as good as possible or waiting until others fall behind.
It’s about everyone knowing exactly what they want to achieve together, and what priorities both you and your colleagues around you have.
And because you know what priorities the others have, you don’t force them to do something else through power games.
OKR method establishes real collaboration
If this new mindset is established, planning sessions will turn from fights to discussions about collaboration, support, and joint effort to achieve the important goals.
Then you really care about the priorities of other teams or company areas and compare them with whether you can support them with your own OKRs.
Above all, you speak to other teams beforehand if you need their support for your own OKRs and clarify how and whether this is possible.
OKR method: a recipe for success?
Basically, the OKR method is a recipe for success for companies, organizations, authorities, etc.
Almost every institution can benefit from OKRs.
When used correctly!
There are also areas of the company in which OKRs make no sense at all. Then you shouldn’t force this either.
And one mustn’t make the egg-laying woolly milk pig out of the method, which it is not.
A performance management system is quickly tinkered with OKRs – and at the latest when the achievement of the target also entitles (or not) to pay a bonus, hardly anyone will define an ambitious target. It would be stupid to set yourself an ambitious goal! There are ways to bring OKRs and bonus systems together – but please speak to an OKR advisor who has experience with this (contact OKR advice).
Especially in the corporate divisions that set and have to achieve very ambitious OKRs in order to move the company forward, that would be the death of OKRs.
Used correctly, OKRs are a real recipe for success.
No wonder that it is now being used or at least tested in many companies all over the world. From IT service providers to automotive suppliers, from financial institutions to authorities – the industry coverage is considerable.
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