Having an effective way to measure business performance and growth is essential to manage the business. What you measure matters to the growth of the business. Objectives and key results (OKRs) are a method to structure goal setting and quantify achievements within an organization. OKRs help businesses measure what matters to the growth and improvement of the business.
Measuring Business Performance
Many businesses want to achieve exponential growth and improve their performance significantly. But do they have a system to manage the focus, alignment, and accountability of the business goals and performance? This is where OKRs can be of immense help.
The concept of OKRs was introduced by Intel and become a raging trend in the year 2014 when Google revealed its internal work processes to the world. From start-ups to established businesses, OKRs can be used as a collaborative goal-setting protocol for individuals, teams, and companies. The objectives and key results approach promote focus, accountability, alignment, and ambition throughout the organization.
A business objective defines “what is to be achieved”, while key results benchmark and track how the objectives are achieved. Setting clear objectives avoids fuzzy thinking and improves the clarity of purpose. KRs are time-bound, aggressive, specific, measurable, and verifiable. Each objective will usually include 3-4 KRs. Achieving all of the KRs will mean that the objective has been achieved.
OKRs do not require daily tracking, but weekly check-ins and monthly meetings are required to monitor and track their progress. During these meetings, the progress is reported, challenges are identified, and key areas are refined (as needed). OKRs help businesses measure what matters for business improvement and growth.
Measure What Matters – A Brief Review
John Doerr, a legendary Venture Capitalist at Silicon Valley, in his book “Measure What Matters” has explained how the OKR goal-setting system has helped tech giants like Intel and Google achieve exponential growth. The book also gives valuable suggestions on how businesses can use OKRs to thrive.
An “OBJECTIVE” According to John Doerr is simply “what” is to be achieved no more and no less. By definition, objectives are significantly concrete and action-oriented and are mostly aspirational.
KEY RESULTS on the other hand monitor the progress and measure how we reach the objectives. Effective key results are specific, time-bound and aggressive, and yet realistic. According to Marissa Mayer, “it is not a key result unless it has a number”
In this book, John Doerr speaks about how it started with MBOs and how Andy Grove, Father of OKRs compares it with OKRs. By the 1960s Management by Objective process has been adopted by most forward-thinking companies and also MBOs brought an increase in productivity and level of commitment. But they also had limitations as they constantly measured the output and got caught in the activity trap. Andy Grove in Intel brought in a simple system which he called iMBO and was very different from MBOs.