OKR (objectives and key results)
Updated at: 24 January 2025
OKR (Objectives and Key Results)
**OKR (Objectives and Key Results)** is a goal setting and achievement methodology that helps companies, teams and individuals focus on important tasks and measure their progress.
## What is OKR?
The essence of OKR is the formulation of two key elements: Objectives and Key Results. John Dorr, one of the popularizers of OKR, proposed a simple formula for formulating objectives:
#### "I will achieve [goal], which can be measured with [outcome]"
OKR is not just a list of tasks, but goals that challenge the team, stimulate innovative thinking and help focus on the really important areas of business development.
### History of the methodology
OKRs emerged as a result of the evolution of approaches to goal setting in business. The development of the methodology began in 1954, when American scientist Peter Drucker presented the concept of MBO (Management by Objectives) in the book "The Practice of Management".
A significant contribution to the development of the theory of goal setting was made by Edwin Locke in 1968. The University of Maryland professor proposed two key principles:
1. The more complex the goal, the higher the motivation and effort of employees.
2. Specific goals increase productivity more effectively than abstract goals.
Andy Grove, co-founder of Intel, developed these ideas. In 1971, he created iMBO (Intel MBO), refining Drucker's methodology. With iMBO, Intel achieved impressive results: the Intel 8086 microprocessor took 85% of the market.
John Doerr, a former Intel employee, took these principles to Google, where they evolved into the modern OKR methodology. This is how a tool that combines ambitious goals with concrete, measurable results came into being.
### OKR components
**1\. Objectives**
Objectives in OKR are what you are trying to achieve. Objectives should be short and memorable, generate enthusiasm among the team, stimulate development and be in line with the overall company strategy
Examples of goals:
- Create the best customer experience in our industry;
- enter a new geographic market;
- become the most attractive employer in the region.
**2\. Key Results**
Key Results are measurable indicators that help to assess progress towards a goal. They should be specific and measurable, time-bound, ambitious but achievable, and linked directly to the objective.
It is common to identify 2 to 5 key results for each goal.
Examples of key results:
- Increase customer loyalty index from 65 to 85 points;
- launch sales in three new countries;
- reduce employee turnover by 25%.
**3\. Additional component: Initiatives**
Although initiatives are not a mandatory part of the classic OKR framework, many companies include them as a third component. Initiatives are specific actions or projects that help achieve key results.
## Examples of OKRs
### For the company
### For a department or team
### For the employee
Goal: To become a leading sales professional in the region
Key results: - ● Increase personal sales by 30% compared to last quarter; - attract 5 new major clients; - Develop and conduct 3 sales trainings for colleagues. Goal: Develop public speaking skills
Key Results: - Deliver presentations at three industry conferences; - Conduct 10 internal training seminars for colleagues. ## Why use OKRs? Implementing OKRs is particularly useful for companies seeking rapid growth, innovation or significant change. This method allows you to focus your entire organization on achieving ambitious goals while remaining flexible and adaptable. The OKR methodology helps to address a number of important challenges in organizational management: 1\. **Synchronization of goals** \- OKRs allow to build a clear link between the company's strategy and the daily work of employees, which helps everyone to move in the same direction.
2\. **Change management** \- in a rapidly changing business environment, OKRs help to make quick course corrections.
3\. **Quality Decision Making** \- a clear understanding of priorities helps managers and employees make better decisions based on what really matters to the company.
4\. **Overcoming the "silo mentality** " - in large organizations, OKRs can help overcome departmental silos through fostering cross-functional collaboration. ## Benefits of OKRs OKRs help focus on the most important tasks - instead of spreading resources across multiple areas, the company selects a few key goals, which increases the chances of achieving them. The methodology also ensures a common understanding of goals by all employees: when every team member knows what the organization is striving for, it is easier to coordinate efforts and move in the same direction. Other benefits of OKR include: - **transparency - **OKR provides understanding of global goals and key results at all levels of the company, team interaction becomes more productive, the quality of teamwork increases; - **adaptability, flexibility** \- OKRs are periodically updated, which allows to adjust to the requirements of the modern market, changing situation; - **Involvement, motivation growth** \- goals act as motivation tools for employees, participation in setting OKRs promotes involvement in work and results; - **tracking of progress** \- OKR allows to control the process of task fulfillment, quickly react to changes, successfully adjust plans in accordance with the situation; - **opportunity for individual growth - **each employee of the company has the right to define personal goals and key results that can help in realizing potential and developing skills. ## Differences of OKR from other goal setting models The OKR system, because of its iterative and flexible nature, is particularly well suited for dynamic companies seeking innovation and rapid growth. Unlike traditional annual plans, OKRs are typically set quarterly, allowing a company to adapt to change more quickly. Also, many models, such as KPIs, are directly linked to bonuses and salaries. OKRs are intentionally separated from financial motivation, allowing for riskier goals to be set without fear of being penalized for failure. OKR methodology involves active employee participation in goal formulation, unlike the cascading model where goals come down from the top down. Many systems, such as SMART, emphasize quantitative measures, while OKR combines qualitative goals with quantitative results. Another important difference is the extreme clarity of wording, OKR does not require lengthy descriptions. Goals are stated succinctly, allowing teams to quickly understand them and get to work. ## How to implement OKRs **Implementing OKR** is an iterative process that requires constant adaptation and improvement. To get started with the methodology: 1. **Determine the scope of the pilot project** Start with a pilot project in an individual department or team - this will help assess whether OKR is a good fit for the company. Remember that even in small organizations, it is recommended to start OKR implementation at the management level to build the habit of goal tracking among top management. 2. **Train your employees** Tell the team about the transition to the new goal setting methodology and familiarize employees with OKR principles. 3. **Set goals** Formulate strategic goals for the long term and tactical goals for shorter periods. For the first OKR launch, it is optimal to define 2-3 strategic goals for the year and break them down into quarterly tactical goals. Each goal should correspond to 2-3 key deliverables to track progress. 4. **Discuss and approve the OKR list** Agree the OKR list with departments and individual performers. After adjustments are made, revisit the list at the management level. Present the final OKRs to all employees. 5. **Track progress** Ensure transparency in the work process by giving all employees access to the company's OKRs. 6. **Summarize the results of the pilot project** At the end of the test period, analyze the results and decide on further OKR implementation. Even if the starting goals were not fully achieved, continue the phased implementation by adjusting the process. ## Implementation mistakes When implementing OKRs, companies can make mistakes that prevent them from using the technique effectively. Knowing the typical problems and how to solve them will help avoid many difficulties. Let's look at the most common mistakes when working with OKR and how to fix them. **No management support** When top management is not involved in the OKR implementation process, employees lose motivation and perceive the methodology as a formality. To remedy the situation, you can conduct training sessions for management, demonstrate the benefits of OKR with case studies, and engage managers in regular discussions about goals and results. **Employees are not being trained** Without an understanding of OKR principles, teams will not be able to use the tool effectively - a problem that can arise from a desire to save time and resources on training. This is where regular training, manuals and OKR ambassadors in each department can help. **OKRs are tied to the reward system** When OKRs are used as a tool to evaluate employee performance, there is a risk of setting targets that are too easy to achieve. There needs to be a clear distinction between OKRs and the KPI system and use the methodology for growth and innovation rather than determining the size of a bonus. **OKRs are not being updated** If goals are not adjusted according to changes in the business environment, they will lose relevance. It is recommended to review OKRs on a regular basis, e.g. quarterly. **No transparency** When OKRs are not available to all employees, synergies and a shared vision are lost. Often management hides OKRs out of fear of strategic information disclosure. However, OKRs should be open to all employees to foster a culture of communication and innovation in the company. **Quantitative goals are more important than qualitative goals** Focusing only on quantitative targets and easily measurable results can miss important aspects of the company's development. OKRs should also include qualitative goals related to innovation, culture and process improvement. ## How to track the effectiveness of OKRs To monitor OKR performance in a company, it is worth regularly assessing the achievement of key results - in OKR system 70% is considered a good result. Visualizing progress with special software will help participants to quickly assess the situation: make graphs, dashboards and tables. Analyze the relationship of OKR achievement to key business indicators such as revenue growth, customer satisfaction and market share. Let's look at an example of using OKRs in a software company. Suppose the owner sets a goal to expand the target audience for his product. The key outcome for this goal might sound like this: increase the number of active users by 30% over the next three months. To track progress, the company can use several metrics. First, it's worth paying attention to the time of product usage - an increase in this metric will indicate an increase in user engagement. Second, it is important to track the expansion of target audience segments, which will show how attractive the product is becoming to new groups of users. These clear and measurable indicators will help determine how effective OKR is. ## Conclusion OKR methodology is a popular and sought-after tool for setting and achieving goals. It can be used to develop a clear strategy, increase employee motivation and productivity, improve the quality of interaction in the workplace, and adapt to a changing environment. Successful implementation of the methodology requires training and maximum involvement of employees and top management, as well as transparency.
| Objective | Key Results |
|---|---|
| Become a market leader in the industry | ● Increase market share from 15% to 25%; ● attract 1000 new customers; ● Increase customer loyalty index to 70 points. |
| Accelerate the digital transformation of the business | ● digitize 80% of internal processes; ● Implement an electronic document management system in all divisions. |
| Increase the company's environmental responsibility | ● switch to 50% renewable energy sources; ● implement a waste recycling program in all offices. |
| Team | Objective | Key Results |
|---|---|---|
| Marketing Department | Increase brand awareness | ● attract 300 thousand visitors to the website; ● Increase the number of subscribers in social networks by 3 times; ● get brand mentions in 5 leading industry publications. |
| Development team | Improve the quality of the software product | ● reduce the number of critical errors by 50%; ● Increase application loading speed by 30%; ● Achieve a user satisfaction score of 4.5 out of 5. |
| Customer service department | Improve the quality of customer service | Reduce the average response time to requests from 24 to 4 hours; ● increase the problem resolution rate from the first contact to 85%. |
Key results: - ● Increase personal sales by 30% compared to last quarter; - attract 5 new major clients; - Develop and conduct 3 sales trainings for colleagues. Goal: Develop public speaking skills
Key Results: - Deliver presentations at three industry conferences; - Conduct 10 internal training seminars for colleagues. ## Why use OKRs? Implementing OKRs is particularly useful for companies seeking rapid growth, innovation or significant change. This method allows you to focus your entire organization on achieving ambitious goals while remaining flexible and adaptable. The OKR methodology helps to address a number of important challenges in organizational management: 1\. **Synchronization of goals** \- OKRs allow to build a clear link between the company's strategy and the daily work of employees, which helps everyone to move in the same direction.
2\. **Change management** \- in a rapidly changing business environment, OKRs help to make quick course corrections.
3\. **Quality Decision Making** \- a clear understanding of priorities helps managers and employees make better decisions based on what really matters to the company.
4\. **Overcoming the "silo mentality** " - in large organizations, OKRs can help overcome departmental silos through fostering cross-functional collaboration. ## Benefits of OKRs OKRs help focus on the most important tasks - instead of spreading resources across multiple areas, the company selects a few key goals, which increases the chances of achieving them. The methodology also ensures a common understanding of goals by all employees: when every team member knows what the organization is striving for, it is easier to coordinate efforts and move in the same direction. Other benefits of OKR include: - **transparency - **OKR provides understanding of global goals and key results at all levels of the company, team interaction becomes more productive, the quality of teamwork increases; - **adaptability, flexibility** \- OKRs are periodically updated, which allows to adjust to the requirements of the modern market, changing situation; - **Involvement, motivation growth** \- goals act as motivation tools for employees, participation in setting OKRs promotes involvement in work and results; - **tracking of progress** \- OKR allows to control the process of task fulfillment, quickly react to changes, successfully adjust plans in accordance with the situation; - **opportunity for individual growth - **each employee of the company has the right to define personal goals and key results that can help in realizing potential and developing skills. ## Differences of OKR from other goal setting models The OKR system, because of its iterative and flexible nature, is particularly well suited for dynamic companies seeking innovation and rapid growth. Unlike traditional annual plans, OKRs are typically set quarterly, allowing a company to adapt to change more quickly. Also, many models, such as KPIs, are directly linked to bonuses and salaries. OKRs are intentionally separated from financial motivation, allowing for riskier goals to be set without fear of being penalized for failure. OKR methodology involves active employee participation in goal formulation, unlike the cascading model where goals come down from the top down. Many systems, such as SMART, emphasize quantitative measures, while OKR combines qualitative goals with quantitative results. Another important difference is the extreme clarity of wording, OKR does not require lengthy descriptions. Goals are stated succinctly, allowing teams to quickly understand them and get to work. ## How to implement OKRs **Implementing OKR** is an iterative process that requires constant adaptation and improvement. To get started with the methodology: 1. **Determine the scope of the pilot project** Start with a pilot project in an individual department or team - this will help assess whether OKR is a good fit for the company. Remember that even in small organizations, it is recommended to start OKR implementation at the management level to build the habit of goal tracking among top management. 2. **Train your employees** Tell the team about the transition to the new goal setting methodology and familiarize employees with OKR principles. 3. **Set goals** Formulate strategic goals for the long term and tactical goals for shorter periods. For the first OKR launch, it is optimal to define 2-3 strategic goals for the year and break them down into quarterly tactical goals. Each goal should correspond to 2-3 key deliverables to track progress. 4. **Discuss and approve the OKR list** Agree the OKR list with departments and individual performers. After adjustments are made, revisit the list at the management level. Present the final OKRs to all employees. 5. **Track progress** Ensure transparency in the work process by giving all employees access to the company's OKRs. 6. **Summarize the results of the pilot project** At the end of the test period, analyze the results and decide on further OKR implementation. Even if the starting goals were not fully achieved, continue the phased implementation by adjusting the process. ## Implementation mistakes When implementing OKRs, companies can make mistakes that prevent them from using the technique effectively. Knowing the typical problems and how to solve them will help avoid many difficulties. Let's look at the most common mistakes when working with OKR and how to fix them. **No management support** When top management is not involved in the OKR implementation process, employees lose motivation and perceive the methodology as a formality. To remedy the situation, you can conduct training sessions for management, demonstrate the benefits of OKR with case studies, and engage managers in regular discussions about goals and results. **Employees are not being trained** Without an understanding of OKR principles, teams will not be able to use the tool effectively - a problem that can arise from a desire to save time and resources on training. This is where regular training, manuals and OKR ambassadors in each department can help. **OKRs are tied to the reward system** When OKRs are used as a tool to evaluate employee performance, there is a risk of setting targets that are too easy to achieve. There needs to be a clear distinction between OKRs and the KPI system and use the methodology for growth and innovation rather than determining the size of a bonus. **OKRs are not being updated** If goals are not adjusted according to changes in the business environment, they will lose relevance. It is recommended to review OKRs on a regular basis, e.g. quarterly. **No transparency** When OKRs are not available to all employees, synergies and a shared vision are lost. Often management hides OKRs out of fear of strategic information disclosure. However, OKRs should be open to all employees to foster a culture of communication and innovation in the company. **Quantitative goals are more important than qualitative goals** Focusing only on quantitative targets and easily measurable results can miss important aspects of the company's development. OKRs should also include qualitative goals related to innovation, culture and process improvement. ## How to track the effectiveness of OKRs To monitor OKR performance in a company, it is worth regularly assessing the achievement of key results - in OKR system 70% is considered a good result. Visualizing progress with special software will help participants to quickly assess the situation: make graphs, dashboards and tables. Analyze the relationship of OKR achievement to key business indicators such as revenue growth, customer satisfaction and market share. Let's look at an example of using OKRs in a software company. Suppose the owner sets a goal to expand the target audience for his product. The key outcome for this goal might sound like this: increase the number of active users by 30% over the next three months. To track progress, the company can use several metrics. First, it's worth paying attention to the time of product usage - an increase in this metric will indicate an increase in user engagement. Second, it is important to track the expansion of target audience segments, which will show how attractive the product is becoming to new groups of users. These clear and measurable indicators will help determine how effective OKR is. ## Conclusion OKR methodology is a popular and sought-after tool for setting and achieving goals. It can be used to develop a clear strategy, increase employee motivation and productivity, improve the quality of interaction in the workplace, and adapt to a changing environment. Successful implementation of the methodology requires training and maximum involvement of employees and top management, as well as transparency.