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You’ve probably heard of the power of OKRs and how they help organizations focus on their most important goals and outcomes. Countless companies have used OKRs to achieve success, including Google, Intel, Microsoft, and even the musician Bono.

OKRs are now the standard goal-setting and measurement tool for creating transparency on strategy and purpose within the organization. They also help to establish alignment for business goals with organizational strategy.

OKRs stand for Objectives and Key Results and are a goal-setting methodology to set objectives and measure progress through measurable results. OKRs can help track progress, create alignment, and foster engagement toward quantifiable goals. What company doesn’t want to streamline strategic focus, align daily work with overall vision and mission, and simplify strategic planning?

Three Reasons OKRs Are Business-Critical

Since their inception in the 1970s by Andy Grove, the CEO at Intel, OKRs have helped countless organizations succeed. One of the most widely recognized adopters of OKRs is Google, which attributes its success over the years to OKRs. Google uses OKRs to set ambitious goals, even if it never achieves all of them. Yet OKRs help Google’s teams think big and execute.

“At the heart of successful projects, especially in multifaceted environments like Google, lies the art of balancing ambitious aspirations with concrete commitments while ensuring seamless coordination across various teams,” according to Google’s OKR playbook.

You don’t have to be a major technology company to reap the benefits of OKRs. Nonprofits, start-ups, small offices, municipalities, and even individuals can benefit from OKRs. Even Bono, the frontman of U2, used OKRs to organize the goals of the nonprofit One campaign. The following are three reasons OKRs help with success in whatever endeavor.

1. Measures What Matters

In his book Measure What Matters, John Doerr, a pioneer of OKRs, wrote that objectives are the “What,” and key results are the “How.” Measuring progress toward the objective is essential, which provides necessary feedback to adjust work, manage a team, and understand how tasks ladder up to the larger goal. In many large companies, data, and numbers fly around freely — but do you know what’s business-critical and what’s just measuring busyness? Or, put another way, how do you decide which data will power the decision-making of the C-suite and which will cloud their judgment? If you can’t answer this question, you may measure the wrong things for your team, product, or division.

OKRs allow you to manage the right things, deliver the correct data to senior management, and ultimately deliver the right product. A clear, laser-focused effort toward the top objective is much easier to ladder up to than a general sense that your team is doing good work and making good products. With strong strategic focus and direction from the C-suite, your team and division can more easily decide how you will best support that goal — and what measures of success you need to report back to leadership.

Better Alignment Between Strategy and Execution

Churn costs money. In many organizations, the customer focus of the product team is derailed by ‘wish lists’ from senior stakeholders that don’t add critical business value. They may be inspired by what competitors are doing and want to create a new product. However, suppose the product team adds to their work because of requests from stakeholders rather than strategic planning from product management. In that case, the result is churn — releases get delayed, customers get frustrated, and the product’s value is muddied. This makes it harder for your marketing and sales teams to communicate the value and purpose of your product, leading to a further loss of market share.

OFFSET: If your organization needs the skills to turn strategy into execution, power your portfolio management function with Lean Portfolio Management training.

If this scenario sounds familiar, it’s time to take control of the day-to-day work your team delivers and focus on driving the company goals forward in a measurable way. OKRs empower teams to deliver on the strategic vision set by the company’s leadership. Still, there’s a flip side to using OKRs that’s just as powerful for Agile organizations — they allow team management like Scrum Masters and Product Owners to say no when asked to sidetrack the release of new products with features that don’t align with the company’s stated strategic intentions.

2. Your KPIs Aren’t Understood

Finally, OKRs are more aligned with the structure of Agile organizations than other goal-setting methods like Key Performance Indicators (KPIs). OKRs push teams to work ambitiously toward big goals, while KPIs help with existing, realistic, and achievable goals. OKRs keep the “why” central to each key result. KPIs can also measure churn, while OKRs (when used correctly!) only focus on what’s most impactful for the organization.

This doesn’t mean you must completely abandon your company’s KPIs. You can look at the differences as OKRs being a tool and framework for achieving goals and KPIs being data that matters. OKRs make strategy explicit, and this is where KPIs are weak. Suppose your company struggles with alignment, communication from the top down, and – most importantly – motivation to achieve company objectives. In that case, OKRs are a fresh approach that can create the conditions to power engaged, high-performing teams.

3. OKRs Build Better Businesses

Whatever business you’re in and whatever you do, you should measure and review your performance. This allows you to track your growth, identify areas for improvement, and adjust as necessary, which can significantly impact your business. Even if you’re already using KPIs, OKRs provide a different value because KPIs are a measurement, and an OKR is an outcome.

However, doing OKRs right can be challenging. Understanding what objective to establish and which key results measure progress is essential. HyperDrive has extensive experience helping small and large organizations find success using OKRs. To learn more, contact our team to set up a free consultation.

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