Learning about OKR — Part 1
The following was based on a real WhatsApp conversation with my good friend who’s learning more about Objectives Key Results (OKR), with an intention to implement it in his 2,000-people tech/retail company in Indonesia. I thought it’d be useful to share this with others who might have similar questions.
Q: OKR is no different than standard KPI drafting, right?
One Key Result (KR) essentially encompasses one KPI.
One of the fundamental differences between KR and KPI is that KPIs are identified or set as important metrics, whereas KRs are derived from an Objective. That is, when you completed all your KRs, this should give you confidence that your Objective is achieved.
Also, given the convention that Key Results are bound by a specific Objective — and the fact that OKR is (or, should be made) publicly available, it’d be easier for you to have a conversation about why we’re aiming for those KRs. With KPI, the conversation about the ‘why’ is usually harder to initiate. I am not saying that it won’t, but given that KPIs are not tied to a specific Objective (i.e. the inspiring ‘what’) a deeper discussion won’t happen as naturally as with OKR. This is especially true when KPIs are purely set by someone in a higher position.
Q: Can or should a KR be shared across departments?
Some KRs should, but not all. The purpose of a shared KR is to bridge respective teams to work together towards the same goal. At the most fundamental level, a shared KR should encourage conversations among them: a useful strategy when you start noticing different departments in your organization operate in a silo.
One common good example is to have a shared KR between Sales and Engineering.
Q: Anything you’d edit from this OKR (image)?
When you’re getting into more subtleties of fine-tuning OKR, it’s recommended to avoid the word “at least” in your KR. This is because it doesn’t necessarily encourage us to stretch ourselves.
In this example, I’d change the second KR to “International sales of $3M by Mar 2019” and have the team understood that a 0.7 score* for this KR is acceptable. 0.7 score for this KR means that $2.1M is achieved (=0.7 x $3M).
Reframing this would encourage the people in your company to talk about in a $3M term instead of $2M. This is a healthy stretch.
*Scoring is an important OKR activity that your team must practice. In general, the scoring either uses a 0–1 scale (with 0.1 increment e.g. 0.6) or ii) 0–10 (with 1 increment e.g. 6). Both works just fine. Google, for example, uses the former scale.
Q: OKR is KPI 2.0 then?
In terms of timeline, yes: OKR was invented after KPI.
Here’s a useful chronology from Betterworks. Peter Drucker introduced Management by Objectives (MBOs), a process
during which management and employees define and agree upon objectives and what they need to do to achieve them. In the early 1980s, S.M.A.R.T. goals and Key Performance Indicators (KPIs) became popular methods for organizations to set objectives. Then in 1999, John Doerr introduced Objectives Key Results (OKRs) to Google, a model he first learned about at Intel, and revolutionized goal setting.
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