The abbreviation OKR stands for Objectives and Key Results. Loosely translated, OKR means "leading with objectives". It is a management method that combines corporate goals with those of employees and teams. Successful companies no longer rely on strict hierarchies and top-down instructions without giving employees the opportunity to contribute content and, if necessary, critically.
Managers who move with the times rely on transparency, clarity and feedback. OKR focuses on the clear communication of goals, progress and results. However, the focus is not only on the success of the company, but also on the assistance needed to achieve the company's goals. The introduction of the OKR method thus leads to a changed management model. Away from strict orders from the top down, towards more involvement of the employees and individual teams.
OKRs thus focus entirely on the output and the resulting results (outcome). The OKR method works with challenging and motivating goals, which, however, cannot be fully achieved in every case. Success drivers called key results focus on a concrete and measurable part on the way to achieve the formulated goals.
How does the OKR method work?
Already with the formulation of the objectives it is determined how the achievement of the objectives will be measured and the resulting results evaluated. However, the OKR method can only be successful if the defined goals are identified and clearly formulated. In order to be successful in the marketplace, companies need to adapt to changes immediately, but at the same time focus on the next steps necessary to keep up with this changing market situation. In order to achieve the formulated goals and the associated successful results for the company, so-called operational excellence is required during the implementation phase, which better connects employees and individual teams on the path to goal setting.
However, management systems are only successful if they are applied consistently and the entire management team and employees stand behind the decisions. In goal-setting meetings, you decide on the use of the tools required for the Objective necessary resources and the associated important issues. Operational excellence enables immediate implementation, increased commitment of the target system and significantly better measurable results. Sixty percent of the goals from the operational level and forty percent of the goals from the management level find their way into the OKR method and optimally harmonize the goals from these two corporate areas.
To get there, it is recommended to collect all pending goals, projects and tasks, analyze them and rank them according to importance. Important goals, projects and tasks are separated from the less important ones and priorities are set. OKR makes it possible to set the right focus every three months, to use scarce resources in the right place and to adapt the corporate strategy to changing market situations at short notice. This goal setting method with clear communication creates transparency for employees, the correct distribution of tasks, and improved communication and cooperation between management and employee levels.
The management culture has changed
The management culture in most companies has changed significantly in recent years, moving away from the top-bottom method towards communicative and flexible ways of working. These new approaches to corporate cultures involve employees at different levels of the company and dispense with hard hierarchies and top-down orders that employees merely have to carry out without criticism or questioning. The OKR method is one of these new management approaches. What is the origin of the OKR management method?
But this method is not so new. At least not in the USA. Because there it was already introduced in 1979 by the then Intel president Jimmy Grove. He was thinking about developing new methods of goal setting. Grove correctly recognized that employees in teams perform better than each employee on his own. However, only if they focus on goal setting from the beginning, not on how to achieve the set business goals. Jimmy Grove proved to be a visionary, as this new management concept brought Intel a significant increase in sales over the next few years. After 19 years, the computer company was able to increase its sales from 1.9 billion USD to 26 billion USD.
Which companies use OKR?
Intel employee John Doerr introduced the OKR method to Silicon Valley corporations, where this new approach also quickly became very popular. Doerr designed his OKR approach to be flexible and simple. His guideline was that the goal was what the company's workers wanted to achieve. He referred to the bowl result as a metric by which progress could be measured. The advantage of OKR is its great flexibility, as the template can be adapted to virtually any purpose. This innovative management approach is just as suitable for tech companies as it is for small and medium-sized enterprises or public authorities. No less a figure than Google founder Larry Page highlighted the positive influence of Grove's conceived OKR method on the success of his own company. Digital corporations such as Twitter, Netflix, Amazon and Microsoft are also convinced by this flexible management solution.
It's hard to believe: in Germany, the majority of employees are dissatisfied with the objectives set by management. Only a small number, on the other hand, are satisfied with the way in which corporate goals are implemented. Management and employees often go their separate ways when it comes to implementing the company's goals instead of working together to achieve the company's success. To put it bluntly, everyone cooks their own soup and contributes according to their abilities.
OKR: Involve employees in goal implementation
However, it is precisely at this point that the weak point lies, because there are employees who make full use of their abilities and make every effort to achieve the defined corporate goals. And then there are the more reserved and/or lethargic employees who do not contribute much to the company's success and do not make their Comfort zone hardly left.
In the rarest of cases, management is unaware of this discrepancy. As soon as the company goals have been formulated and communicated to the employees, the management expects a smooth implementation and is surprised when in the end only mediocre results emerge. OKR could also be called challenge and encourage, because every employee in the team is involved on the way to achieving the goals.
There is no retreat to comfort zones; all employees are part of the strategic planning. OKR prevents employees from withdrawing at the expense of colleagues and letting the others do the work. Goals and key results are extremely ambitious, a certain willingness to take risks is expected from all participants. Doubters don't stand a chance.
It is known from psychology that people like to set challenging goals once they are confronted with them. Even when it is known that it may not be possible to achieve 100 percent of the targets. Employees who are confronted with ambitious goals usually put more effort into achieving the targets and are therefore usually more successful than employees who retreat into their comfort zones. It is important to identify goals, communicate them clearly and align them. OKR ensures that nothing is forgotten and that teams focus exclusively on their important tasks. This approach allows for an approach that is tailored to the teams' ability.
OKR focuses on quality, not quantity
Therefore, it should be noted that a maximum of five Objectives with five Key Results each are set per quarter. Each employee works on five objectives with five key results each. It is important not to overburden team members so that individual objectives do not lose focus. Structured one-on-one meetings and team reviews encourage collaboration and engagement among all employees. The more experienced the team, the less goal setting is required by management. In this case, an 80:20 ratio is ideal, with 80 percent coming from operations and 20 percent from management. Often, the 60:40 ratio is used, where 60 percent of the formulated goals come from the operational level and 40 percent from management. In less experienced teams with new employees and trainees, on the other hand, 95 percent are set by supervisors and five percent by employees.
However, OKR not only promotes the employees, but also the executives in management. Because they learn how to communicate their objective clearly and transparently and when to intervene along the way. Regular updates make this efficient approach possible. These updates make it easy to follow individual processes on the way to optimal goal implementation.
OKR can be used everywhere
OKR can be used in all companies and public authorities, which has led to a great popularity of this management method. Transparent and clearly formulated goals lead to an equitable distribution of tasks, while the short measurement cycle of three months helps to set the right focus on the following quarter. Unwanted developments and projects moving in the wrong direction are prevented. Employees with a short time goal setting can set priorities and refuse additional tasks that get in the way of achieving a goal.
Every member of the team is fully involved and sees which teams and employees are following which OKR. Through these transparent and clearly communicated work specifications, time-consuming discussions and arguments among team members are avoided. For the evaluation of goals and successes, the associated expected value and measurement method must be defined.
Objectives, referred to as lenses, are not nebulous topics but concrete descriptions of a future state. The targets are not simply top-button given, but negotiated. The measurement of success in the company is understandable and easily comprehensible for all employees through comprehensible indicators. The focus is on vision, mission and strategy, which are to be linked to short-term, operational planning.
The management system of Objectives and Key Results is characterized by its flexibility and the possibility of fair employee management. This agile framework provides a guideline for companies to be successful in the working world and on the market in the long term. OKR is characterized by dynamism, team and project work, and competitive and innovative pressures. The top of the OKR pyramid is the so-called Big Picture, i.e. the vision of the company. The corporate strategy focuses on the vision - for example, becoming the best provider of a certain product in Germany.
OKR process with key results for the next quarter
There is no detailed step-by-step plan, but there are projects to achieve the objectives. For example, sales activities or product development measures. The interim goals are continuously reviewed and redefined. The question is always asked as to which interim goal is the most effective and suitable for achieving the company's objective. A company must ask itself which market is best for the product launch, which department will be entrusted with it and which product will be given preference over others. Executive meetings are held every three months. The Key Results are derived directly from the measurable Objectives. Taking into account available resources, concrete key results are defined by the next quarter.
For example, promotional activities, sales training or a change in product presentation are possible. OKRs are therefore not prescribed to the employees by their superiors from management, but the goals and tasks are negotiated, with a fair distribution of work taking place afterwards. Each employee asks himself how he can best contribute to the team with his strengths in order to achieve the overriding goals and thus guarantee the company's success.
The Team leader collect the messages from the employees, match them with the pending tasks, coordinate the teams and provide the required resources. As with the top button method, the OKRs are coordinated from the top down by the management level of the teams. The big difference, however, is that the messages, ideas, lessons learned, and results reports regularly feed back upward. The more transparent and clear the strategy communication, the more experienced the team, the less target setting by superiors is necessary.
In the following we would like to point out ten advantages of planning an OKR process into the current business.
The team is focused on pursuing only those goals that are important to the company.
Improved communication leads to more intrinsic motivation and satisfaction of the employees. They know exactly which tasks they have to perform and for what reason.
Internal coordination processes can be made more efficient due to shorter communication channels and resource planning can be optimized.
OKR is easy to implement without a complex infrastructure. With transparent, clear and easily understandable communication, every employee is picked up and optimally integrated into the team according to their performance.
Commitment and self-organisation are promoted, employees are taken out of their comfort zone and the Productivity increased.
Used correctly, OKR achieves an open corporate culture and employee desire for positive change.
Companies learn to focus on objectives, projects do not get out of hand. In addition, all tasks that stand in the way of realizing the company's goal are put on hold.
Due to the flexible design options, companies become more agile and competitive.
OKR is the optimal management system for cross-team collaboration. Provided that the objectives are clearly and transparently formulated, the distribution of tasks is done accordingly. Who is responsible for which goal, who exchanges information with which team member?
Employees identify strongly with the company's goals because they have helped to shape them themselves.
Transparency is not desired in all companies, and some managers in particular find it difficult.
Employees may feel controlled and monitored during well-intentioned teamwork and transparency.
Employees may feel pressured and have their personalities hurt because of the constant team comparison.
Ambitious OKRs are only possible with a correspondingly healthy Error culture successful.
With OKR, interesting things happen in the company, because the target agreements are no longer communicated according to the waterfall principle from top to bottom without consultation and exchange, but agile work structures are introduced and self-organized teams that regularly exchange ideas are established. Every three months, the company's goals are reviewed and reformulated.
The weak point of one year, which is far too long for the ever-changing world of work and the market, must give way in favor of the shorter periods of three months. Abstractly formulated and for the employees mostly incomprehensible targets of the company bosses are broken down into easily understandable targets on team and employee level.
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