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What is OKR?
Objectives and Key Results (OKR) is a methodology designed for formulating goals within a company. Unlike traditional planning systems, OKR offers a more adaptive and creative approach to management. The essence of this methodology lies in the clear definition of objectives (Objectives) and the corresponding measurable indicators of their achievement (Key Results). It is important to note that the main focus of the OKR system is not on the process of achieving goals, but on the ability to confirm their achievement.
John Doerr, one of the authors of the methodology, proposed a simple OKR formula: “I will achieve..., and I will know this because...”. Goals can vary in scale: from corporate to individual, and they must all be aligned with the overall development strategy of the company. The process of setting and discussing goals involves not only the management team but also the entire staff, creating a unified understanding of priorities and contributing to more cohesive work.
Components of OKR
Objectives
One of the key aspects of the OKR methodology is collaborative work on formulating and discussing objectives. The process begins with proposals from top management, which provides a vision of strategic priorities. Subsequently, departments and employees contribute their ideas and suggestions, creating a collective list of objectives approved by the entire company.
Interestingly, one good idea from an employee can become the basis for the OKR of an entire department or the company as a whole. For example, this is how Gmail was created at Google. Objectives should be bold yet realistic and clear to avoid misunderstandings. It is optimal to set three to five objectives for the review period to avoid distraction.
Key Results
Key Results are a set of measurable indicators that allow for assessing progress towards achieving the set objectives. It is important that these results are quantitative, as OKR does not allow for subjective interpretations. It is recommended to establish two to five Key Results for each objective to avoid confusion and simplify the evaluation process.
Key Results can be based on both actions and metrics. It is necessary to clearly specify how these results will be achieved and set deadlines for completion. Additionally, it is important for performers to choose their own ways of achieving results, which maximizes their engagement and accountability.
Advantages of OKR
The OKR methodology has several significant advantages that make it more attractive for business compared to traditional planning methods. The main advantages include:
- Flexibility: Companies can adapt their goals and priorities depending on market conditions, allowing them to remain competitive.
- Transparency: Access to goals and Key Results enables synchronization of employees' work at all levels.
- Simplicity: Well-formulated OKRs are easily understood, reducing the need for constant discussions and meetings.
- Collaboration: Objectives are formulated in two directions, leading to greater employee engagement and interest in achieving common goals.
- No linkage to monetary rewards: This allows for setting more ambitious goals without the fear of losing financial stability due to failures.
- Ambition: OKR motivates employees to think outside the box and show creativity.
How to implement OKR in work
Implementing the OKR system is a gradual process that requires time and effort. According to research, more than 40% of companies start with a pilot project that can last from two to six months. The main steps in implementing OKR include:
- Decide on the scope of the project: Choose at what level the system will be implemented.
- Prepare the staff: Train employees and explain the benefits of the new system.
- Set objectives: Define the strategic and tactical goals of the company.
- Discuss and approve the list of OKRs: Coordinate objectives with departments and individual performers.
- Track progress: Ensure that all employees have access to information about current OKRs.
- Summarize the pilot project: Evaluate the results and decide whether to continue the implementation.