Google, Zynga, Sears. Thanks in part to names like these, OKRs, or “objectives and key results,” have taken off in the past couple of years. Since 2013, more and more companies are integrating this system into their culture and operations.
The popularity is earned. Lightweight and adaptable, OKRs represent a powerful way to think about alignment and execution within a company.
At Khorus, our mission is to help align every employee’s work with the top corporate objectives, and that’s precisely what OKRs do. However, we’ve identified a simple practice that can take the system to the next level.
Before we get to that, let’s take a brief look at how OKRs work in the first place.
What Are OKRs? The Quick Version
OKRs, initially developed at Intel in the 1970s, operate from an uncomplicated premise: people do their best work when they know what to focus on, and when they can see how that work ties in to the bigger picture of the company.
If you’re new to OKRs, Rick Klau’s defining presentation—a factor in 2013’s resurgence—is a great place to start. In short, OKRs are a way for a company, its teams, and its inidividual employees to record a related set of "objectives" and supporting "key results" for each quarter.
The company sets a handful of objectives and key results, teams set their own OKRs to support company OKRs, and individuals then set OKRs to support team-level OKRs, resulting in an aligned cascade of priorities.
- Objectives are large, aspirational goals, such as “Recapture market share” or “Accelerate new-product development.”
- Key results are a set of measurements that define how the objective will be achieved; there are usually 3–5 for each objective. Unlike the objectives they support, key results must be quantitative: “Increase sales revenue by 20% in Q1” or “Complete survey of 500 customers by April 1.”
All OKRs, from the CEO to the frontline, are visible to everyone. At the end of the quarter, each key result gets a grade on a scale of 0.0 to 1.0.
The Practice That Takes OKRs Even Further
Even in its most basic form, the OKR approach can cut away organizational distraction and give a person, a department, and a whole company an invigorating sense of purpose and focus.
But there is one simple practice that plugs a huge potential hole in the system. This practice ensures that OKRs deliver better insight to higher levels of the organization, giving the CEO and other leaders an accurate picture of organizational reality and helping them make more informed decisions.
What is this practice? It’s a short, weekly conversation between an objective-holder and her manager, that begins with a single question:
How do you feel about the quality of work done so far on this objective?
Yes, this probably seems a nebulous thing to ask. (A simpler, real-world translation is “How’s this objective going?”) Read on to see why the “quality question,” as we’ll call it here on out, is actually a key supplement to OKRs.
You’re Meeting the Objective—But Are You Meeting It Well?
One of the prime features of OKRs is measurability. “It’s not a key result if it doesn’t have a number,” Marissa Mayer says in Steven Levy’s corporate history of Google, In the Plex. Without a hard, quantitative metric by which to determine whether you met the objective, the system loosens and falls apart.
In practice, though, some of the numbers attached to results don’t fully portray the state of the objective. That’s when the quality question, and the ensuing conversation, becomes imperative.
Let’s look at an example from the aforementioned OKRs presentation by Rick Klau. Toward the end of the talk, Klau generously talks through several of his own OKRs from a quarter when he worked for Blogger. He shows how during one quarter, he owned this objective: “Improve Blogger’s reputation.” Supporting that objective were five key results, including this one: “Reestablish Blogger’s leadership by speaking at 3 industry events.”
This key result passes the Marissa Mayer test: it’s got a number. At the end of the quarter, Klau had indeed spoken at three industry events, so he got a grade of 1.0.
What this grade doesn’t capture, though, is the quality of those industry events, or of the speeches Klau gave at them. Did he give visionary talks at highly visible events, or did he sit on panels at a few small events, where the positive effect on Blogger’s reputation would be minor? Did he leave the events feeling like he’d moved the proverbial needle for Blogger’s reputation, or did he sense that the reach of his talks wasn’t quite what he wanted?
Klau’s boss, of course, would want this information—not just a ticked box indicating that he spoke at three events. An employee’s general sense of the quality with which an objective was met (or not met) will inform the grade he gives himself, but valuable insight can nevertheless be left on the table.
Asking the quality question patches the problem. If a boss checks in regularly with her direct reports—for just a few minutes—to see how they feel about the quality of work done so far toward objectives, she can get a quick read on the situation as a whole and understand how the objective is really going, beneath the hard data. If the employee feels confident in the quality, great. If he doesn’t, what can she do to make him feel more confident? Does he need more resources? Is some circumstance preventing the expected outcome? Does he need clearer direction? Once this assessment is made, the leader can give the employee what he needs to keep the objective on track.
You don’t need to ask employees the quality question about every individual key result; just ask it once for each of the person's 3–5 top objectives. All it takes is five or ten minutes, especially if you keep the focus on situations where the employee feels that quality is declining. (And it's even faster if you use Khorus—more on that later.)
The Particular Danger of Binary Key Results
Binary key results—where the measurement is a simple yes or no—are particularly dangerous when it comes to losing critical insight in the OKR system. Say, for example, that a designer sets the key result of producing a new logo by April 1. For this kind of objective, it’s easiest to set a binary result: If the logo is done by the end of the time period, the designer gets a 1.0. If it’s not done, she gets a 0.0.
This type of zero-sum grading, however, isn’t particularly helpful to the designer’s boss, or anyone who needs to keep tabs on the health of the department. What if the design is completed ahead of schedule—a 1.0—but it looks amateurish and the sales team hates it? On paper, the objective has been achieved and everything looks great, but in reality, trouble is brewing.
Conversely, what if the designer, after doing extensive competitive research and giving herself a crash course in semiotics, is a week away from putting out a game-changing logo at the end of the quarter? Unfortunately, she’s going to get a 0.0. Though her direct boss may know the reality of the situation, when the CEO pulls up the OKR system to look at the grades for the quarter, the logo project misleadingly appears to be in crisis.
Clearly, the binary measurement keeps precious insight from reaching the next organizational level. The solution, again, is to cultivate regular conversations about how objective-holders feel about the quality of work done so far. It’s in these looser conversations that leaders capture the qualitative side of a goal.
Note that, for the logo example, the designer could add further key results with non-binary measurements, such as “Obtain 85 percent satisfaction with new logo based on company survey.” This type of metric helps, but it still won’t definitively say whether the logo is good or not, whether it will tangibly strengthen the brand and move the company forward, or whether the designer herself feels like she did her best work and thus feels motivated and engaged. Because it’s nearly impossible to judge the inherent and objective “goodness” of something like a logo (once it passes a certain threshold of quality), any number included in the key result is not going to capture the whole picture.
Focused communication, based around the quality question, is the answer. It adds crucial insight to the OKR mix, beefing the system up into something even more powerful.
Just as OKRs should cascade throughout the organization, so should the quality question—all the way up to the CEO, who should ideally check in with department heads in a weekly ops meeting to take a quick pulse on the quality of work being done, and what it reveals about the needs of various people and teams. How is the leader of each unit feeling about the overall work done on the objective? Is the objective filling him and his team with energy and ideas? Are they proud of the work? Or, on the other hand, are people frustrated by the work? Are they having to stretch themselves thin or make quality trade-offs to meet the objective?
This information, often invisible in the OKR system, is vital for leaders, particularly the CEO, to know. Without it, the company risks a system in which objectives are seemingly being met, but without the quality desired.
In addition to helping companies who use OKRs give structure to the system, the Khorus platform makes asking the quality question nearly effortless. Every employee takes a minute each week to rate the quality of work done so far for each objective, on a five-level color scale, and this data is rolled up in an intuitive interface. At any time, the CEO and managers (or anyone else) can log in to get a quick read on the softer side of objectives and their supporting measurements, whether for a person, a team, or the whole company. Vibrant greens mean the quality is high. But when the color starts moving toward the red side, it's time to talk about what steps will keep the objective on track—and the employee feeling good about his work.
Want to hear more about how Khorus can align objectives and facilitate valuable communication within your company? Talk to us today!