What is OKR? – how to avoid the magpie effect when scaling your business

We’ve all done it. Been sidetracked by a new, shiny thing taking our eye off our real business objective. You need Objectives and Key Results (OKRs) to stay focused, says Roger Longden

Focus – we all struggle with it from time to time, but day-in and day-out, when your time is consumed with business-as-usual tasks, it’s even harder to maintain focus and not get derailed by the new and the novel.

Many businesses begin life with a team that is a cohesive unit, working closely together with clear alignment between what the business has to achieve and how the team will achieve it.

But then comes the “drift” – the point at which the organisation starts to grow rapidly, and the team begins to lose some of its glue as more people join and organisational complexities increase.

Simply, things don’t work as well as they used to, and it becomes more difficult to see the path ahead.

How do you stay focused on the things that continue to drive growth, foster innovation and ultimately lead to success? And how do you bring everyone in the organisation along for the ride?

How to stay focused

The solution lies in the process of Objectives and Key Results (OKRs), which are changing how companies define and communicate their successes and make it easier to demonstrate that an organisation is heading in the right direction – helping to avoid things that may seem more exciting but may not bring the desired results.

Some of the fastest-growing businesses in the world are technology-based companies and so it’s no surprise that OKRs are used in Silicon Valley’s most well-known brands – Google, Twitter and LinkedIn being the most familiar advocates of OKRs.

What are OKRs?

Objectives and Key Results is a management framework that helps everyone in the organisation see progress towards common goals and the overall strategic objective of the company. Most organisations practise a top-down goal-setting framework that often gets snarled-up when working out what to aim for rather than actually achieving goals.

OKRs take a different, more “agile” approach where an organisation achieves its goals by building specific measurable actions and then communicating and monitoring progress towards achieving them. The ethos in setting and agreeing OKRs is not as you might expect from the top of the organisation, down – it’s around a 30 per cent down/70 per cent up split. The objectives are short, ambitious signals of where you want to go, whilst the key results are the actual deliverables for each objective which track progress towards success.

Fundamentally OKRs tackle a number of things that often go awry in rapidly scaling businesses, helping to keep them focused – they help alignment with the overall strategic objective, demonstrate clear progress, stop siloed working because they work across the organisation, promote internal creativity and ambition and allow for “smart failure”.

Keep aligned

Alignment is at the heart of OKR – the whole organisation must be working to achieve the strategic goals of the business set by management. As we’ve already pointed out, in the early days of a company’s evolution, alignment is easier, there are fewer employees and growth has been managed – things worked well. But with increasing size comes increasing complexity and alignment is often the first casualty of growth. OKR offers a way for each person responsible for growth to measure their own key results. Since OKRs are transparent, it helps ensure alignment throughout all levels and departments in achieving objectives moving everyone in the same direction.

Clear progress

OKRs must be clear, measurable and unambiguous and they must also demonstrate incremental change over time. However, we must be careful not to become busy fools – there is a clear difference between an output and an outcome – output is simply ticking off items in a to-do list, whereas an outcome is a result.

In terms of showing progress, the easiest trap that organisations fall into is to set a binary result where the outcome is either achieved or not. It’s difficult to demonstrate progress if you either have or haven’t achieved something – but demonstrating that you have reached milestones means that you are for example 25, 50 or 75 per cent of the way to success, which signals change and progress to management. Incremental change over time shows how close (or far) you are from ultimate goal.

Removing silos

OKRs are bi-directional, that is to say that they don’t cascade from the top of the organisation to the bottom, they are set in individual groups across the whole organisation, which means that working in isolated departments is a thing of the past. Colleagues can collaborate across the organisation coming together to meet common goals more easily, whilst working transparently means that everyone understands how they have a critical role to play in the overall bigger picture. Colleagues can see how working together to achieve common goals achieves the overall success.

Ambition and creativity

People are the most important part of the organisation and culture plays a pivotal role in OKR. Importantly, once leaders in the organisation have their objectives set, they will define the way they will achieve their own key results, they are not forced upon them. This means that ambition, innovation and creativity are required to get to the endgame, and those employees that set themselves ambitious targets to hit will ultimately be given the most resources internally with which to achieve them, promoting internal entrepreneurship, and helping with employee retention and job satisfaction.

Smart failure

OKRs demand that if you’re going to fail, it’s done in a rapid, smart way. Failure is a vital element of OKR practice and is what helps with an organisation’s evolution of OKR.

As part of an agile organisation OKRs promote “retrospectives” where teams look back at failure and work out what they could have done better or different. Failure should be contained so it doesn’t put the whole organisation at risk and drive adaption for next time around – but smart failure helps in the long run.

Those businesses that implement OKRs weave them into the daily rhythm of the organisation, so they become part and parcel of demonstrating and achieving success. Time is a rare commodity in a fast-growing organisation and stepping back to see the bigger picture is inevitably harder to do. OKRs help to keep the focus, while empowering employees to make decisions which deliver the required results.

Ultimately, the organisation is doing the tasks which bring clear results, not pursuing those that don’t.

Roger Longden is founder and managing director of There Be Giants, an Objectives & Key Results (OKR) consultancy