CEOs of young companies are under constant pressure to grow their businesses faster and faster. And these high-growth companies have been applying an increasingly popular goal setting system — OKR (Objectives and Key Results) — to reach desired growth. Used by companies like Google, Dropbox, Intel (the inventor of the methodology), LinkedIn, Twitter, Salesforce, Oracle and many others, OKRs help companies effectively set goals, align their teams and drive operational excellence while maximizing results across the organization and providing clear, data-driven insights into team progress.
You can get fully up to speed on how Google uses OKRs by watching this video (or if you don’t have 82 minutes, you can read through this transcript). But, for a distilled perspective, I’ve compiled 7 of the most critical and concrete insights from the video along with my own experience so you can learn the most effective ways to implement OKRs in your business.
1. OKRs are Not Just for Google, They’re for Every Company!
You might think OKRs are really only beneficial for large and complex organizations like Google, LinkedIn, Dropbox, etc. But, these big companies wouldn’t be where they are if it weren’t for OKRs. Google Ventures’ Rick Klau even comments that Google wasn’t Google before the company began using OKRs. They were a young and ambitious company looking to quickly grow and scale and the OKR methodology gave them the structure and transparency needed to achieve their goals.
2. OKRs Align Everyone at the Company to the CEO’s Top Goals
At many companies, employees can’t tell how their daily responsibilities are directly linked to the CEO’s top goals for the company. Since OKRs aim to fix cadence alignment, the methodology brings into line how everyone’s objectives line up with the overall company mission. OKRs both cascade down from the top and filter up from the bottom so that every individual contributes directly to his or her own set of OKRs.
3. Set No More Than 5 Objectives and 5 Key Results
While OKRs are helpful, setting too many can cause confusion and lead to misalignment. Leaders must impose a limit on OKRs so that employees stay laser-focused on priorities. By embracing an approach of “less is more” everyone stays driven to accomplish their tasks. It’s best to stick to no more than 5 objectives and 5 key results for any given quarter.
4. Check In Regularly (Weekly!)
The majority of companies that successfully use OKRs rely on regular check-ins between managers and their team members. These check-ins keep everyone on track and aligned with the company’s overall goals. They also keep team members accountable and on pace to achieve the key results they set out for the quarter. And when you consider that a quarter is only 13 weeks long, getting ramped up and remaining on track is crucial.
5. OKRs are for Data-Driven Companies
Rick Klau mentions that Google was so attracted to OKRs because OKRs provide data. In other words, measuring objectives and the key results of those objectives provides concrete information, which can be used by CEOs, executives, managers and teams to gauge progress and show how to hit their goals. OKRs also create discipline and transparency. When everyone in the company knows which goals others are working on, it promotes transparency and drives accountability, discipline and real results.
6. Allow for Bottom-Up Goals
To get buy-in and align your teams to your OKRs, ensure that at least 50% to 70% of the objectives come from the bottom up. While the CEO must set the top-level objectives, team leaders and individuals should be allowed to propose their own set of objectives that will help the company ultimately achieve the CEO’s goals. This bottom-up approach not only keeps everyone engaged, but helps employees understand how their responsibilities connect to company-wide goals. And, just as importantly, this method allows the CEO to tap into the collective wisdom of the entire company in order to produce the desired results. In the end, people will go much farther if they come up with the way to get there themselves, rather than always being told what to do.
7. OKRs Do Not Take a Ton of Time (They Save Time!)
It might sound like weekly check-ins and staying on top of OKRs would drain your time, but in reality, they wind up saving you a significant amount of time. Think of all of the meetings you hold to discuss priorities, come up with solutions to issues that have compounded and to allocate resources to solve those problems. OKRs do all of that for you — they outline priorities, prevent issues from compounding in the first place and show you exactly how to allocate your resources moving forward. Then think about all of the time you spend seeking out updates from your team — after all, there hasn’t been a succinct way to collect data about progress until now.
OKRs actually save you a great deal of time, leaving you to focus on strategic business decisions and plan for the future.