One of the biggest challenges for today's leaders is to create engaging goals for everyone in the organization and at the same time manage the organization based on these goals with a clear focus that keeps everyone from running in different directions.
It is all too common for management in an organization to set performance targets that are not prioritized by departments and teams. Often the mistake is made of not communicating the strategic and management objectives from the top down to the bottom of the organization, nor of anchoring them at all levels. Furthermore, there is often a lack of concrete activities linked to the set objectives, i.e. how each individual can contribute to increase the likelihood of achieving the objectives.
So what can you do to create goals that are both forward-looking and engage everyone?
OKR
OKR stands for Objectives and Key Results and the approach is gaining momentum right now, with Google perhaps being its main proponent. But what is OKR and how can you start working with this framework?
OKR is a method for setting and monitoring objectives in a transparent and measurable way. By using OKR, organizations can link strategic objectives to concrete results and provide a clear direction for their employees.
To work effectively with OKR, it is important to first establish overall Objectives that clearly describe what the organization is trying to achieve. These objectives should be inspiring and challenging and should set the direction for the entire organization. Examples of Objectives could be increasing market share, improving customer satisfaction or increasing the pace of innovation.
For each Objective, you then create specific Key Results that measure progress and performance. Key Results should be concrete, measurable and achievable within a given timeframe. Linking the results directly to the overall objectives creates a clear line between the organization's strategy and individual efforts.
The recommendation is to set 3-4 Objectives and 3-5 Key Results per Objective.
In simple terms, the OKR can be described as follows:
- Objectives = Where we are going
- Key Results = How do we measure
- Initiatives = What we do
Two examples of OKRs
The first example is a technology company whose Objective is to increase its user base in the coming quarter. Key Results could then be that:
- Increase the number of active users by 20%.
- Increase the number of users who continue to use the product by at least 15%.
Once you have identified both Objectives and Key Results, it is time to start defining what each should do to achieve the objectives, which in OKR is called Initiatives. This means that you create concrete measures or activities that are planned and implemented to achieve the Key Results you have set. Examples of Initiatives in this case could be that:
- Launch a marketing campaign to attract new users.
- Improve the user experience by implementing feedback from existing users.
- Conduct a thorough analysis of competitors' success factors to identify opportunities for differentiation.
Crucial for Initiatives to bring the organization closer to goal achievement is that they are clearly Specified, Measurable, Acceptable, Realistic and Time-bound, i.e. according to the SMART model.
In the second example, which is within a sales organization, the Objective could be to increase sales volume. Examples of Key Results to:
- Increase sales by 30% over the next month.
- Increase customer satisfaction by reducing complaints by 20%.
Initiatives could then include
- train the sales team in new sales techniques.
- Implement a more effective CRM.
- Work with the marketing team to create campaigns that attract new customers.
Things to consider
An important aspect of OKR is that it is not essential to achieve 100% target achievement every time. It is rather a process of learning and improvement. If results do not reach the expected levels, it provides valuable insight and the organization can adjust its strategy to better focus on what works.
Finally, transparency is the key to successful OKRs. Making the OKRs set up available to everyone in the organization creates a sense of community and allows everyone to see how their work contributes to the overall goals. Using OKRs as performance management creates a culture of measurable success and constant improvement that promotes organizational efficiency and growth.
Do you want to learn more about OKR and maybe see how you could get started with creating forward-looking goals with concrete activities that can be distributed to everyone in your team? Do you also want to link this to individual development and reflection? Then feel free to contact us at Rolf.