The OKRs myth: Why so many organizations get it wrong and how to fix it
OKRs were originally designed as a system to align vision, strategy, and execution in perfect harmony. Using the OKRs framework, teams and individuals can work as one and move the business forward in giant leaps.
However, my experience didn’t always live up to the hype. I’ve seen many problems lead to an increasing frustration with OKRs and through blood, sweat and tears, I’ve learned a few lessons.
What are OKRs?
“Objectives and Key Results” is a goal-setting system developed in the 1970s by Andy Grove, the former CEO of Intel. Many Silicon Valley companies embraced it and all kinds of organizations have tried some version of OKRs since then.
Grove was inspired by the management techniques of Japanese companies that emphasized clear, measurable goals and periodic progress reviews.
Here’s a quick recipe for implementing OKRs:
Set clear and measurable objectives: Identify the most critical goals that the organization wants to achieve and define them in specific, measurable terms.
Identify key results: For each objective, identify the specific metrics that will track progress toward the objective and set targets.
Review and adjust: Review progress towards the objectives and key results, and make adjustments as needed to ensure that goals are being met.
At their best, OKRs bring many benefits:
- create a clear vision for the organization
- help the business achieve their most important goals
- drive continuous improvement
- foster a culture of transparency and accountability
Why OKRs fail
Despite all the information available, the teams I have worked with have faced many challenges to deploy OKRs successfully.
These are the most common pitfalls I have observed:
- Lack of clarity: OKRs may not be well-defined, making it difficult for teams to understand what to do and how to measure progress.
- Misalignment: OKRs may not align with the organization’s overall goals, resulting in confusion and lack of focus.
- Complexity: The process may be overly complex, making it difficult for teams to set and track OKRs effectively and on time.
- Lack of buy-in: Employees may not understand the value of OKRs or fully commit to achieving them.
I’ll dive into each issue and propose ways to avoid falling into their traps.
1. Lack of clarity
Defining the wrong objectives or key results is a surefire way to hinder clarity throughout the process. There are clear guidelines for setting OKRs, but teams often stray or take shortcuts. You can avoid a lack of clarity by adhering strictly to some rules.
How to define objectives
One of the fundamental principles of the OKRs framework is that objectives should be specific, measurable, attainable, relevant, and time-bound (SMART).
Go through the list for each objective.
Specific: Is it subject to multiple interpretations?
Measurable: Do we have the means to measure it?
Attainable: Is it realistic with our available resources?
Relevant: Is it crucial for our success?
Time-bound: Is it aligned with the cadency of the OKRs?
Start with the organization’s overall vision and strategic plan. Then cascade down into teams and departments, with each group setting OKRs that align with the organization’s overall goals.
How to define key results
Each objective typically requires 3 to 5 key results to define success and track progress. Define a set of metrics and targets so that hitting all the targets means you achieved the parent objective. This exercise requires a deep understanding of the goals and KPIs. This is your strategy, don’t rush it.
You should be able to articulate it like this:
We want to achieve [objective] as measured by [key results].
Committed objectives and moonshots
You can set two types of objectives: committed and moonshots. The differences between committed objectives and moonshots are the levels of ambition and risk involved.
Committed objectives are goals an organization is determined to achieving in full. These should remain realistic and aligned with the business goals. They are often used to drive incremental progress and continuous improvement.
On the other hand, moonshots drive significant change or innovation. They are typically more challenging and involve a higher level of risk. Use them to drive disruption and explore new areas of opportunity.
You should aim for 100% achievement on committed objectives, while 70% is the definition of success on a moonshot. You never want to land too far on a committed goal, but it’s acceptable to miss some moonshots. Always specify the type of goal to avoid confusion.
Less is more
Not everything your team does needs to be an OKR. Start with just a few ambitious and aspirational objectives at the company level. For example, three big goals will be memorable and clearly depict what is vital for the business in the upcoming year.
This focus is even more critical in early-stage startups. When the resources are scarce and the runway is short, choosing what to work on is critical.
2. Misalignment
Alignment issues happen when different teams set objectives that are not pushing the company in the same direction, when they don’t take dependencies into account, or when they don’t share resources properly.
These issues can arise right at the start of the process, during the OKRs definition, or later when circumstances change and the OKRs don’t adapt.
Some specific moments are critical to achieving and maintaining alignment.
Top-down, then bottom-up
Alignment starts at the top. The management team defines the strategy that will take the business to the next level and ultimately achieve its mission. That includes creating high-level OKRs that align everyone in the same direction before the teams build their OKRs.
That said, the team should define how to get there. There should be plenty of room for each department to define its strategy and corresponding OKRs, according to what they know is best. It’s even healthy to add some out-of-the-box ideas that come from individual contributors at the team level and have those projects make their way back up to leadership.
Many teams announce their completed OKRs at this point, but there’s one more important step.
The alignment phase
The alignment phase is when different teams work together to ensure that their OKRs align with each other horizontally, not just with the organization’s top goals.
They may identify any overlap or duplication in the OKRs and make modifications to ensure that teams work towards complementary goals. It's helpful to use tools such as a cross-functional OKR matrix or an OKR dashboard to visualize the relationships between different teams’ OKRs.
Adjusting OKRs
Can we change OKRs in the middle of the execution period? Yes, you can and should adjust OKRs as needed. The framework is a continuous process of setting, tracking, and adjusting goals.
If progress towards an OKR is not on track or circumstances change, making the OKR useless, it may be necessary to change it. Of course, no one likes to change the goal in the middle of the game, but it’s better to correct the issue than to have a misalignment between the OKR framework and the reality of the business.
3. Complexity
A complex process is more prone to errors and more time-consuming. Spending too much time creating and maintaining a complicated strategic framework leaves less time to implement the strategy and drive results.
Finding the right balance is essential; in my experience, this is one of the biggest challenges. Make it too simple, and you risk a lack of clarity and alignment. Make it too complex, and you get less time to do the actual work. Both can demotivate the team.
If you need to remove complexity, don’t skip critical steps. Try these suggestions instead.
The right cadency
How often should we set and review OKRs? The frequency of setting and reviewing OKRs will depend on the needs and goals of the organization. For example, some organizations set OKRs quarterly, while others put them in place annually or biennially.
Assuming your company has some stability, I recommend setting the top OKRs yearly. This allows you to aim for longer-term results, signal to the team that you have a clear and solid strategy, and as a bonus, free you from going through the whole process every quarter. If you do this, I suggest a quick review in the middle of the year to confirm the OKRs are still valid and the flexibility to make changes, if that’s not the case.
For the team and individual OKRs, I still advise a quarterly cadence. Think of a yearly strategy and more agile quarterly tactics to get there.
Tracking OKRs
Tracking key results is an integral part of the process, as it helps ensure progress toward the goals.
Begin by setting up a system for tracking progress toward key results. This could be as simple as a spreadsheet or as complex as a specialized OKR software platform. An excellent report will allow you to understand how far you are from each target in that moment and also how fast you are moving in its direction.
Equipped with the right report, you can always review progress easily. I like to check weekly and do deep dives monthly. This analysis should give you the information to keep or change your planned tactics and activities.
Ownership and governance
You have already realized that OKRs have many nuances, can be a heavy framework to implement, and need constant maintenance. Therefore, it’s best to assign an owner and even build a task force to bring OKRs to the organization and maintain governance over the entire process.
A group of people dedicated to making OKRs work should be able to tackle the most common issues and deliver a better experience. Look for people with solid knowledge of the OKRs framework, sound project management skills, and excellent communication across departments.
4. Lack of buy-in
Any combination of the issues I just described can lead to a lack of buy-in from the team regarding OKRs. I have some extra advice to achieve full buy-in across the organization.
Keep the communication flowing
Efficient communication is critical in any process, and OKRs are no exception. So dedicate some time to a communication plan that keeps the company aligned and informed throughout the process.
Define pivotal moments, like a quarterly all-hands meeting, when the leadership presents the company OKRs and sets the stage for the next steps. Then keep including quick OKR checkpoints in the company updates at regular intervals.
Define the company objectives in a way that connects to its vision and mission. The key results may be just numbers, but the objectives should tell an inspiring story about the future and rally the team around bringing it to life.
Training and development
Some people are well-versed in the OKR methodology, while others may need a little guidance. Create documentation that outlines the process, a timeline, and some guidelines. Make it easily accessible to everyone.
Go even further and run a few training sessions. Record them for later use as well. If you provide adequate training to the team, they will feel empowered to embrace and use the system correctly.
Celebrate good times
When you achieve an important milestone, it’s time to celebrate and recognize the team’s hard work. Achieving 100% of a company-level objective should be a reason to throw a big party and have fun!
Conclusion
I still believe that OKRs can live up to the promise of an aligned organisation where everyone knows how their work contributes to the company’s strategy, but it’s not as simple as it may appear on the surface.
To implement OKRs successfully, check all the points on this list:
- Assign ownership of the OKRs system to a person or task force
- Define objectives and key results correctly (SMART goals)
- Specify the type of objective (committed vs. moonshot)
- Focus on 3 to 4 big objectives at a time
- Start top-down, then do the reverse
- Align the OKRs between departments
- Adjust the OKRs anytime circumstances change significantly
- Set the right cadency for your organization
- Create a tracking and reporting system from the start
- Communicate it widely and frequently
- Give training to the team
- Celebrate successes
Learn more
If you’re interested in learning more about OKRs, I highly recommend reading “Measure What Matters” and “High Output Management.” These books are excellent resources that provide valuable insights and strategies for using the OKRs framework.
“Measure What Matters” is a book by John Doerr that explores the principles of the OKRs framework and how it can stimulate innovation and achieve breakthrough results. Doerr is a venture capitalist and author. He is a partner at Kleiner Perkins, a Silicon Valley-based venture capital firm, and has invested in many successful companies, including Google, Amazon, and Twitter. The book includes case studies from companies successfully implementing the OKRs framework and practical tips and strategies for setting and tracking OKRs.
“High Output Management” is a book by Andy Grove that explores the principles of high output management and how it can drive organizational success. The book includes case studies from Intel, where Grove served as CEO, and provides practical advice on creating and maintaining a high-output organization. The book also covers topics such as strategy, leadership, innovation, and team building, and offers tools and techniques for managing and leading teams effectively.