OKR stands for Objectives and Keys Results. OKR is a methodology whose purpose is to define the objectives of a company with the aim of establishing clear goals that can be measured.
This methodology was the brainchild of Andrew Grove, an employee of one of the most cutting-edge technology companies of the time, under the premise that there were too many people working to achieve too little. Although companies had already been focusing on optimising the performance of their employees to achieve their objectives since the 1950s, it was not until the 1990s when, thanks to OKR, this idea began to materialise and become institutionalised.
The basis of the OKR methodology is communication between teams. According to this model, the key to achieving objectives is to communicate them with the whole team, not just with those who design them or those who have invested the most capital. It consists of making all employees aware of the purpose of the work they do so that they can focus on it. The results, in fact, show that a team achieves its objectives to a greater extent when it is aware of them.
Therefore, the three main elements of OKR are:
- Objective: Objectives are the aim of the company, the goal, what you want to achieve. It does not have to be economic, although most of the time it is. An objective can also be to improve internal cohesion, increase the number of employees or improve product quality. Defining the objective thoroughly is the first step to achieve it, if it is diffuse or not quantifiable, you will never get a good result.
- Measurement: In order to be able to determine the objective well, and of course to fulfil it, it is necessary to know how to measure and quantify it. It is necessary to specify exactly what the objective is in order to fulfil it. But measurement also covers the process, i.e. not only the degree of achievement of the objectives is measured, but also the balance of each day, each moment and each phase. A key element when measuring the objectives are the so-called KPIs, which allow the performance of the project and the team to be evaluated. The OKRs work with both quantitative and qualitative measurements.
- Outcome: The pursuit of an objective implies an outcome, either positive or negative; however, failure to achieve an objective does not necessarily mean a negative outcome.
The triangulation of these three elements makes up the OKR methodology, which also differs from other methodologies for achieving objectives in terms of its structure. Usually, the objectives are centred on those who propose them and those who profit from the result, focusing on the top of any company. This vertical and hierarchical structure has nothing to do with the horizontal vision of OKR. Sharing the goal, the information, with the employees has proved to be a good way of involvement in the process and, in some way, although an ordinary worker will not be directly affected by a rise or fall in the number of sales as much as an investor, being aware that the company has a specific objective motivates and focuses the worker to fulfil it.
In order to be able to evaluate, of course, OKRs must be measurable. Usually an objective is related to a result and a measure, which centralises the process and allows specialisation in each objective.
As we said, OKRs generate multiple benefits for the company. Among them:
- Commitment: Taking on an object you know is easier than working blindly, which is the key to OKRs. When a team is committed to a cause, its success is more likely.
- Belonging: knowing the ultimate goal of the company creates a sense of belonging among employees, they take on the company's goal as their own because they know it and therefore work to achieve it.
- Improved communication: communicating the company's objectives with the entire team opens the door to a conversation that previously did not exist.
- Concentration of effort: Focusing work and directing it towards an objective is one of the most beneficial consequences of OKR.
- Improved productivity: for the same reason, having a clear goal focuses the effort and this translates into better results, not always economic as we said.