How To Effectively Roll Out OKRs In Your Organisation
Arnold Ho
At Neu21 we’ve been using a goal-setting tool popularised by Google called Objectives & Key Results (OKRs).
Why do we use it?
To drive organisational alignment to help achieve our goals and vision. OKRs are so ingrained in our culture and ways of working that we have been implementing it with our clients, and have even started using them as part of our own people development program.
OKRs have become increasingly implemented in organisations in recent times, coinciding with an emerging need for a different way to set goals within teams and organisations.
In this blog, we share what OKRs are, how we do it at Neu21, and we provide advice on what not to do when doing so, which might help you if you decide to surf this growing wave of driving goals in your organisation.
What are OKRs?
Objectives & Key Results (OKRs) are a methodology created by Intel Founder, Andy Grove to replace the traditional methods of organisational objective setting. The rules are simple: quarterly, the executive team would decide on 3-4 objectives for the organisation and 3-4 key results to specifically measure each objective, making this the executive team’s OKRs for the quarter. Importantly, the key results would have to be ambitious rather than realistic. The rest of the organisation would then follow the same approach, forming OKRs that contribute to achieving the executive team’s OKRs. A review at the end of the quarter would follow with new OKRs being set. Rinse and repeat.
It’s important to note that like other methodologies of its kind, OKRs are in effect just a tool. And whilst it has been successful at companies like Google and Intel, its implementation may require refining for your organisation due to differences in your industry, people and even cultural context.
How do we do it
We don't follow the rule book when working with clients. What we do is understand the concept and intention behind OKRs and then slightly adjust for each organisation. So, let's say this is Neu21’s to take on the OKR model.
Start with the executive team’s vision
The vision is the ‘where’. Where do you want your organisation to be? Your OKRs should flow from a clearly defined vision statement. An example of this could be a travel insurance company that has the following vision: To make travel insurance accessible to all people globally.
Choose your strategic drivers
Next are the strategic drivers, which can be thought of as the areas of work in the organisation or team that will help you achieve your vision. We find having 4-5 strategic drivers a good number, but also keeping it simple enough to understand. Back to the travel insurance company, the strategic drivers might be:
Sales and Growth
Marketing and Brand
Product
Customer Experience
People and Culture
Decide on an Objective for Each of the Strategic Drivers
Within each strategic driver, we then collaboratively define the objective for the quarter for each strategic driver. These objectives should be qualitative and aspirational in nature. An example of an objective within Sales and Growth could be: Grow the market in South-East Asia.
Decide on the Key Results for each of your Objectives
The key to key results is making them specific so you know definitively whether you have achieved it or not. They can be a result or even an initiative. If you feel that the initiative is greater than 90 days, make the key result what you want to achieve in 90 days. The important principle here is that they should be ambitious enough that you feel like they are a true stretch target. Limit your key results to 4 or 5 per objective so that you are prioritising your work.
Using the example objective of Grow the market in South-East Asia, the key results for the quarter could be:
Complete market analysis of South-East Asia
Launch new South-East Asia product
Identify three corporate partnership opportunities
Generate $2 million in revenue
Use Visual Management with an Operating Rhythm
Visualise these somewhere in the organisation so everyone has access to them and they are transparent. Then decide on the frequency at which the visual work is talked about. For executive teams that might be once a fortnight or once weekly to discuss the status for the work.
After establishing OKRs with one of our clients' executive team, we agreed to open up their OKR stand-ups to the entire business. Anyone could attend their weekly stand up and ask questions about the key results in progress. This was a big step for the business as leadership meetings were seen by employees as a 'black box' with no communication coming out of sessions. We believe that by combining leadership OKRs with visual management and making them transparent to anyone in the organisation is a powerful way to drive engagement, ownership and a culture of trust.
Below is an example of a visual management wall where the executive team would have a fortnightly meeting to discuss their OKRs:
6. Correlation across the Organisation
Once you have the executive team’s OKRs, the cascading of OKRs to the organisation may vary based on your context. This could be done by-product streams, functions or cross-functional teams. The cascading of Key Results for the executive team would happen by making one of the executive key results an objective for one of the teams, and this team would then create key results for this objective.
Here’s an example if it was correlating by function:
Key Result for the executive team: Complete market analysis of South-East Asia.
Objective for the Sales Data Analytics team: Complete market analysis of South-East Asia.
Key Results: Identify key markets for growth in South-East Asia -- Engage external vendor to validate research -- Complete South-East Asia Customer segmentation report -- Set up CRM platform for South-east Asia expansion.
What to Consider
Now that you know what OKRs are and why to use them, these are the 5 things to consider to get you started:
Don’t substitute KPIs for OKRs
Key Performance Indicators (KPIs) are the traditional way of objective setting and performance measuring in organisations. In essence, KPIs are objectives tied to individuals' pay and/or bonus.
To make things clear: OKRs are not KPIs. They don’t fulfil the same role and don’t work to achieve the same outcome. By using OKRs as KPIs, you run the risk of rewarding mediocrity for those who set too easily achievable objectives. Or on the flip-side, you might end up punishing employees who were too ambitious (and brave) in their goal setting.
When partnering with People & Culture leaders, we often discuss that in most organisations KPIs can lead to toxic employee behaviours such as gaming KPIs to get a pay rise or friction between departments due to conflicting KPIs. So, if you're planning on using OKRs in the traditional way organisations use KPIs, you will be replacing one tool for another with no real change. This defies the purpose of OKRs as they are based on setting stretch goals and helping departments and teams find alignment.
Don’t be tempted to link OKRs to reward and recognition
Similar to KPIs, using OKRs as reward and recognition can again shift behaviour in the wrong way. OKRs are about being ambitious with your objectives and learning from coming short of your goals. If they are connected to someone’s pay, then objectives that are set will never be ambitious enough to achieve the level of learning that the organisation desires.
The OKR model should not be followed rigidly
Like other tools and frameworks, they are founded on principles and this is how you should approach the OKR model. The danger of shoe-horning rules without a proper understanding of your context may lead to disengagement in the process, going against what you’re ultimately trying to achieve - organisational alignment and learning.
Remember that OKRs should be aspirational
It may seem daunting at first as OKRs can seem lofty or quite high-reaching. But remember that they are intentionally written in this way to propel an organisation forward. Google uses the rule that 70% is what is realistically achievable. If you are getting 100% of your OKRs done then you’re aiming too low, and if you’re getting under 70% then you may be aiming too high.
We usually say to new starters at Neu21 that if they don't finish 100% of their OKRs, no one will be penalised. This is not to say that we don't care if things are not getting done; our intention is to recruit people whom we trust from day one and to continuously prioritise our key results as a team in any given quarter.
Use OKRs as a way of driving team achievement and collaboration
We're frequently asked to help teams and departments to collaborate more. But as we always say: driving collaboration without changing the organisation's system of work is only impacting the tip of the iceberg! What we found is that OKRs shift the focus from the individual to the team and to the entire organisation.
For OKRs to really succeed, we must shift our mindset from 'my targets and my division' to a collaborative mindset of 'my objectives impact and correlate with the organisation's objectives and key results'. We've all witnessed a conversation between work colleagues trying to push their agendas on each other without any appreciation of what the other team or individual is trying to achieve. OKRs are a great way for leaders and People & Culture teams to impact culture through improved ways of working, without losing sight of the organisational strategy and direction.
Conclusion
After successfully implementing OKRs over the years within Neu21 and with clients, we believe that OKRs are an effective way for leaders to foster organisational alignment, promote cross-team collaboration and increase transparency across the organisation. However, as exciting as it can be to try out a new tool, focus on the principles and the intention behind the tool to effectively implement them. As you do it, continue refining the process as you reflect and learn. You could end up being the same organisation with new names for how you do things or you can achieve real transformational change.
