March 5, 2019
2 reasons why OKR goal setting is better than any other approach
There are many approaches to setting business goals, but few have the power of OKRs (objectives and key results). OKRs are built upon two incredibly effective goal setting methods, SMART goals and MBO, but they are tailored to meet the needs of today’s fast-growing businesses and fast-paced work environments. They also center goal setting, measuring, and tracking around the thing that matters most for your business: results.
What is it specifically that makes OKRs far more effective than any other approach to goal setting? There are two factors:
1. Cascading alignment
Consider your most important business priorities. Maybe your goals are to grow revenue or build your customer base. These are the most essential goals that you as an executive aim for, but when everyone in the organization has a list of priorities that don’t match yours, your goals can seem out of reach.
OKRs solve this problem through cascading goal alignment. Here’s how it works:
Review company goals. Prior to the start of the quarter. Executives will collaborate during a quarterly planning meeting to discuss the fundamental company objectives. A maximum of 3-5 quarterly objectives will be determined.
Cascade down. After the executives’ objectives have been determined, they will cascade down to department, team, and individual contributor levels. That way, each person or group of people will be doing work through the entire duration of the quarter that supports the company’s overarching goals.
Collaborate. Goals aren’t just established by managers and executives; rather, employees and their bosses collaborate to determine objectives together.
Encourage bottom-up objectives. To create buy-in and commitment among employees, encourage them to set some of their own objectives. While these should still be discussed with (and approved by) managers, it gives employees an opportunity to play an active role in the goal setting process (and the process of supporting company objectives). This drives engagement, performance, and ultimately, results.
2. Smaller steps
The key results portion of OKRs is what makes them so effective, because they break down objectives into smaller steps. They are also clearly defined, making it easier for employees and their managers to track progress.
To maximize effectiveness, each smaller step or KR should also be:
Specific. Always use specific language when structuring both your objectives and key results. For instance, to say that you want to “grow the business” isn’t specific enough. In order to know what must be accomplished and execute your OKRs with precision, you need clear, concise language.
Measurable. OKRs should always be “as measured by” something. For instance, if your objective is: Complete X of PR projects in Q2 to improve brand awareness, your key result might be: Complete X amount of PR projects by the end of April. From there, you can break key results down into tactics and tasks.
Aligned. OKRs naturally encourage cascading goals. Double check to make sure that all objectives are aligned with company-level goals, readjusting them as you.
Relevant. What’s most important to your company right now? Are the objectives you determined the most important priorities to be handled at this point in time? Is now the right time, or are there other action items that should be taking priority instead?
Time-Based. Always assign a deadline to every key result. Determine what can be done in six weeks, what can be done in a month, a week, and a day. This will help you achieve larger objectives–this breaking down action is what makes OKRs so powerful.