The Silicon Valley way of setting goals: an introduction to OKR
By Felipe Castro, Partner at Lean Performance
Interested in OKR? Check out my OKR Guide and download free OKR resources
What is OKR?
OKR (Objectives and Key Results) is a goal setting framework created by Intel and adopted by several Silicon Valley companies. Google is the most famous case, having adopted OKR in it’s first year. Twitter, LinkedIn, Dropbox and Oracle are among other adopters.
All star venture capitalist John Doerr, who introduced Google to OKR, has a great tip for setting goals (from Betterworks’ Goals Guides):
John Doerr believes that there are three words that make or break goals: “as measured by.” So a simple rubric for good goals is as follows:
I will ________ as measured by ____________.
So an OKR can be thought of a commitment stated as:
I will (Objective) as measured by (this set of Key Results).
So one OKR has two components, the Objective (What we want to achieve) and a set of Key Results (How do we know if we are getting there):
Objective
- What we want to achieve.
- Qualitative.
- Aspirational (recommended).
Key Results (a small set per Objective)
- How do we know if we are getting to our Objective.
- Quantitative.
- Success Criteria that show if we are progressing.
- Metrics (recommended) or Milestones.
As an example, let's imagine a technology company that wants to increase customer engagement and satisfaction:
Objective: Delight our customers
Key Results:
- Recurring visits: average of 3,3 visits per week per active user.
- Reach a Net Promoter Score of 90%.
- Non paid (organic) traffic of 80%.
- Engagement: 75% of users complete a full profile.
What's unique about OKR?
- Simplicity: In order to enable frequent goal setting cycles (Intel used to set OKRs monthly), the process is extremely simple. The OKRs themselves are supposed to be simple and easily understood.
- Shorter cadence: Instead of using an annual static planning process, OKR uses shorter goal setting cycles (usually every quarter), enabling agile goal setting and faster adaptation to change.
- Many Flavors: OKR is an open source framework so companies adapt it to each culture and context, creating different versions of it. This is a great benefit since OKR is easily adaptable, but may mislead those looking for a step-by-step recipe.
- Stretch Goals: Goals that take the team out of the comfort zone and make them rethink the way they work to reach maximum performance (read more).
- Separation from compensation and evaluation: Decoupling goals from salary and promotions is key so that the team may go for hard and aspirational goals (read more).
Core Concepts
- Alignment and Transparency: The main objective of OKR is to create alignment in the organization. In order to do so, OKRs are public to all company levels — everyone has access to everyone else's OKRs. The CEO OKRs usually are available on the Intranet.
- Defined Top Down and Bottom Up simultaneously: From the company OKRs the teams are able to get a clear direction and understand how they can contribute to reach those goals. About 60% of the OKRs are defined by the team and validated by the managers in a bubble-up approach.
- Focus and Discipline: OKRs exist to set clear priorities and to focus the organization. In order to to that, you should have few OKRs. Each person should have 4–6 objectives and up to 5 Key Results per objective.
Ben Lamorte has a great post on the number of OKRs you should have.
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