Effective Goal Setting Method: OKR
“If you don’t know where you’re going, you will not get there.” — Andrew S. Grove
Within an organisation we need to work towards a common goal. This is not always the case, with different teams chasing their own agenda. In order to ensure continuous growth, we must focus on the right goal and work towards that goal collectively. OKR (Objectives and Key Results) will help us to do just that.
What is OKR?
OKR is an effective goal setting method of Silicon Valley origin.
We can think of OKR as what needs to be done in order for the period to be considered successful. These periods can be quarter, half year or annual.
So it is a Definition of Success for us.
The list of things to be achieved within the specified period are Objectives.
The list of how to achieve these objectives are Key Results.
OKR is determined at all levels of the organization, in each period. Objectives can be set at the organization level, department level, tribe level, team level and individually complementing each other.
IMPORTANT: All OKRs identified are expected to be transparent within the organization. It should be visible to the whole organization and the whole organization should be able to reach how successful they were in the past.
History of OKR
In the 1970s, a method called MBO (Management by Objective) appeared in Intel. Andrew S. Grove, former CEO of Intel, summarizes MBO in his book High Output Management as follows: “The idea behind MBO is extremely simple: If you don’t know where you’re going, you will not get there.”
OKR was formed based on this method. Intel’s John Doerr offered the OKR to Google, in the first year of Google. Google leaders recognised the benefits of the method and implemented it immediately. OKR gained its main popularity after the presentation of How Google sets goals: OKRs in 2003 by Google Ventures partner Rick Klau. The presentation now has over a million views and many companies adopted and applied the method.
How to set the right Objectives
For the OKR method to work effectively, we must first set the right objectives. However, it’s not always easy to set objectives and write OKRs.
IMPORTANT: Objectives should be aggressive and not easily achievable. The objectives should feel uncomfortable.
First of all, we must find the answer to this question;
“What should we achieve within this OKR period?”
The answer to this will give us our objectives, but this answer should be clear.
Here’s an example of an unclear objective:
“Making the application perfect” ❌
This example is more specific:
“Increasing the average time our customers spend in our app by 10%” ✅
What about this one?:
“Publishing three new retrospective techniques in medium” ❓
This objective may be right or wrong. In multi-level organizations, the Key Result of the next level can be the objective of the lower level, or the Key Result of the team can be the objective of an individual on the team. Therefore, it is very important that the objective is not only clear, but also its relationship with the upper and lower goals.
“Increasing the agile mindset of our organization” ✅
This could be the team objective of the upper objective. We will clarify this when we discuss Key Results.
How to determine Key Results
We can think of Key Results as the acceptance criteria of the objectives. These are our roadmap to the objective and are critical to being successful at OKRs. That’s why we have to take the time to identify the correct Key Results.
IMPORTANT: Key Results must be measurable and gradable.
Measurable: Whether a Key Result is successful or not can be determined by using metrics or a similar method.
Gradable: Key Results can be unsuccessful(0), successful(1) or they can be gradable like 0.6 etc.
There were two objectives set in the previous section. Let’s continue by taking these objectives and determining our Key Results to reach them.
Objective 1: Increasing the average time our customers spend in our app by 10%
We should consider what we need to do to increase the average time customers spend in our app by 10%. For this, api response time can be reduced or async responses can be used in places where user interaction is high. These and other criteria can be set to achieve the objective.
For now, let’s continue with these two criteria:
KEY RESULT 1: Reducing the average product listing response time from 1000ms to 600ms.
We can reach the average of the product listing response time between the specified hours with the help of metrics. That’s why the Key Result we wrote supports the measurable criterion.
We know the current average value of the product listing response time and the value we want to reach. So as a result we can go beyond just success or failure and talk about a percentage success. For example, if we can reduce the average to 600ms, we will say 100% success, but if we can reduce it to 700ms, we can say 75% success.
KEY RESULT 2: Passing five api calls (add product to basket, remove product from basket, change quantity, add address, delete address) including user interaction to async response structure.
We know where to check to see if Key Result is successful.
We can determine how many of the five criteria we have achieved.
Objective 2: Increasing the agile mindset of our organization
According to whom or according to what? Increasing the organisational agile mindset is not a clear objective. However, we can look at the goal from the following point of view: Each action to be taken about agility within the organisation will contribute to the increase of an agile mindset, directly or indirectly. For this reason, the Key Results that will be placed specific to the agility will have a positive effect on this path.
Like with the objectives, you can also evaluate the following Key Results by their measurability and gradability.
Our Key Results could be as follows:
- Three new retrospective techniques will be added to the pool.
- We will perform an agile health check on 10 teams and create an action plan for any shortcomings.
- We will create a “Scrum Framework for Non-Tech” training for non-technical teams.
Some Key Results can be graded from 0–1 while some can be directly 0 or 1. The third Key Result is an example of this. We will examine how to use these gradings in the ‘Evaluation of OKRs’ section.
As with Sprints, OKRs also have a cycle. These cycles are usually three months, six months or a year long. The frequency of the OKR cycles can vary depending on the organisation.
Commitments of OKRs
At the beginning of the OKR cycle, top-down and bottom-up OKR commitments are made. What does this mean?
The person who will determine the top-level strategy of the organisation determines the main goal of the relevant OKR cycle. After that, OKRs are determined at department level, alliance level, tribe level, team level, individual level by going down one level in turn, and after these determined OKRs, hands are shaken from bottom to top. Although the main logic remains the same, intermediate levels can of course differ from organisation to organisation.
When the OKR determination and commitment phase is completed, all levels of the organisation are united in a common goal, and each individual becomes a piece of a big puzzle.
Evaluation of OKRs
Throughout the OKR period, we should check whether we are on the right track by constantly monitoring Key Results. If there are problems on the way, we should detect them during follow-up and intervene early.
At the end of the OKR period, we grade all of our Key Results between 0 and 1 according to their success rate, and get a final score. This constitutes our corresponding OKR period score.
IMPORTANT: An OKR score of 0.6 (60%) — 0.7 (70%) should be considered successful. If 1 (100%) is taken continuously, then this suggests that OKRs are not aggressive enough. Low scores may also indicate that the OKRs are at a very high level, rather than poor performance.
OKR scores should be evaluated as data and should contribute to the feedback loop. In the next OKR period, we should aim to achieve success by determining new OKRs using these data.
A Turkish version of the article is available in the link below:
Etkili Hedef Koyma Yöntemi: OKR | Nasıl doğru hedef belirlenir?
Çalıştığımız organizasyon içinde, bambaşka hedeflere koşan takımlar olmasını istemeyiz. Organizasyon çapında senkron…