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The Objectives and Results (OKR) methodology consists of defining and communicating goals and results within organizations. Its main objective is to connect the company, the team and their personal objectives in order to achieve measurable results, getting people moving together in the right direction. One of the great advantages of this method is that it gives each employee clarity about what is expected of them at work.
This technique was first applied in the 1970s by Intel president Andy Grove and later spread to many technology companies, including Google, Linkedin, Oracle and Twitter.
Applying the methodology is very simple, just follow the steps:
- The company can start by defining three to five fundamental objectives. These objectives should be ambitious, qualitative but not unachievable.
- For each objective defined in the previous step, define three or four measurable (quantitative) results. These results can be based on company growth, performance, profit, commitment, customer satisfaction, among others.
- Every quarter the objectives should be redefined and a review should be carried out annually. These moments of analysis are called "checkpoints".
- For each indicator, a grade must be defined, i.e. a number from 0 to 1. Thus, a good indicator should reach 0.7 or 0.8. Those that reach 100% indicate that they are too easy and should be revised.
Once the objectives and results have been defined, they should be communicated to all stakeholders and it should be checked that everyone is clear about them. On a day-to-day basis, people update their results indicators on a weekly basis. The main benefit of the methodology is to keep the vision, goals and objectives in front of employees at all times.
Advantages of OKRs
#1 Collectivity and productivity
OKRs, as defined above, are interrelated objectives which, achieved collectively or individually, contribute to the achievement of global goals. That's why each professional must understand how important their work is to the whole, and how they should direct their efforts to achieve the final goal. This enables employees to focus their energy better, increasing productivity, improving the organizational climate and creating a culture in which everyone works together as a team.
#2 Transparency
One of the advantages of the model is that the objectives set for areas and employees are public knowledge. Everyone can access the information and the company must also create the conditions for this by investing in internal communication.
#3 Adaptability of the methodology
Any company can apply the OKR method, regardless of its size. Google itself applied the methodology in its first year as a company, when it was still just a small group of professionals. All it takes is for the organization to be interested in establishing a culture of achieving goals to apply the methodology.
Disadvantages of OKRs
Despite being the darling of companies in Silicon Valley, OKRs have some flaws.
Disadvantage #1 - Unification
OKR unifies multidisciplinary teams, and this means that dreamy designers, idealistic engineers and dynamic customer service professionals will all have the same end goal to achieve.
Disadvantage #2 - Confusing concepts
Another common mistake in methodology is the conflict of concepts. A key result is not something you do, it's something that happened because of what you did. Many companies set objectives as tasks. Leave the tasks to your checklist and define inspirational objectives.
Disadvantage #3 - Cheating the system
Due to the culture that a good objective should not be achieved 100%, it was observed that in some companies managers created two easy objectives and one extremely difficult one in the set of OKRs. That's not the point. OKRs are designed to encourage the company to reach for the stars! They are designed to show what your company is capable of achieving.
The OKR methodology can be used in conjunction with the BSC - Balanced Scoredcard. The software Strategic Management Stratec's software is compatible with OKRs, executes them in a systematized way and goes further, as the software executes any methodology and even allows a mixture of models to be made to cover the OKR's shortcomings. In other words, the software GE provides a basis for using other complementary methodologies in an automated way, so that one management model covers the shortcomings of the other, and so the strategy can be surrounded and implemented efficiently and effectively, increasing the organization's results.
