Companies that were successful with OKRs
Andy Glove founded the OKR methodology in his early days at Intel. The OKR is a hybrid of MBOs (management by objectives) founded by Peter Drucker, who Andy Glove admitted influenced his ideology and creation of the OKR It was developed to set realistic goals and smaller milestones to achieve them. Leading global brands have since used the OKR methodology to set and achieve company goals.
What is an OKR?
OKR is a short form for Objectives and Key Results. It is a goal-setting system comprising the main goal and step-by-step ways of achieving it. For example, your main goal is to lose 10lbs in 2 months; this is your main objective. Key results will be; to enroll in a gym and exercise three days a week, run 5 miles on rest days, and practice intermittent fasting. OKRs are available for individuals or companies. The methodology serves as a way to monitor progress in a team or teams in a company. Objectives are ambitious and challenging yet realistic and achievable.
The OKR formula
As previously stated, the OKR consists of two main parts, objectives and key results.
An objective is a definite goal to be achieved at the end of the cycle. It is not ambiguous. Objectives help to eradicate rashness, uncertainty, and ineffective execution. For example, I will design an e-commerce website that can list 50 products in 2 days.
Key results are step-by-step guides on how you or your team get to the objective. Key results must be time-conscious, measurable, and verifiable. You either meet the key results or you don’t; there’s no gray area. You can have multiple key results depending on how many vital steps it takes to achieve your objective. Key results are usually measured quarterly for large companies. After each quarter, each key result is ticked ‘done’ or ‘not done.’ An example of a key result is, “I will pay for a domain name and web hosting.”
Types of OKRs
There are three types of OKRs, depending on the desired objective. They are committed OKRs, Aspirational OKRs, and Learning OKRs.
A Commitment OKR is a list of commitments to be achieved at the end of a cycle. They are graded and usually given a passing grade at the end of the cycle.
These are OKRs with objectives that have never been achieved by anyone else. They are challenging and must be created based on collaborative brainstorming sessions to develop key results. For example, “I will build a car that will drive on water.”
These are used when an individual or a team has a skill or added profession to learn within a period and is confused about how to achieve this goal.
Benefits of O.K.R.s
John Doerr, a friend of Andy Glove and fellow propagator of the OKR methodology, describes the benefits of the OKR system through FACTS (Focus, Alignment, Commitment, Tracking, and Stretching)
An OKR helps teams to pay unwavering attention to a set number of priorities.
Having an ultimate purpose allows every department within the organization to align their activities towards a common goal, ensuring each team member is in sync.
OKRs are highly demanding and require all members to commit to a significant objective. Members can commit easily, knowing they have a set number of priorities to follow.
OKR methodology helps teams to easily track their progress to know when their strategy is failing and when to change or modify tactics.
OKRs enable teams to stretch their focus beyond ‘business as usual’ to attain a significant change in a company.
Top 7 successful companies using the OKR methodology
The tech giant that needs no introduction; we all use it. Google is one of the early adopters of the OKR formula. Andy Glove introduced his philosophy to the founders of Google in 1999, and it’s been a common practice across the organization to date. Google sets its objectives using the OKR methodology, and every employee has a personal OKR aside from team OKRs that are transparent and available to the public. Google uses the Aspirational OKR to encourage overachieving to continue to be the leading search engine.
Allbirds is a renowned clothing brand for its sustainable and environmentally friendly footwear. Their mission was to produce carbon-neutral shoes. Here’s their OKR model
Objective: Create the lowest carbon footprint in the clothing and footwear industry.
Key result 1: To reduce supply chain and shipping infrastructure zero waste.
Key result 2: To pay 100% carbon offset fees for carbon dioxide emissions.
Key result 3: One-quarter of the material is compostable.
Key result 4: Three-quarter of the materials used is biodegradable.
The number one platform for networking and recruiting job seekers has over 774 million users across the globe. C.E.O. Jeff Weiner has openly spoken about how he ensures his employees have personal OKRs to keep them focused and motivated. Jeff believes that OKRs should be challenging and impactful. They believe in time-specific stretch OKRs that are checked quarterly. Weekly group meetings are held regularly to ensure everyone is on track.
Of course, we can’t talk about companies that apply the OKR methodology without talking about where it all began, Intel. Andy Grove, Intel’s CEO and founder of the OKR methodology saw his company grow from a storage space manufacturing company to the biggest producer of semiconductor chips worldwide. As the company grew, he saw the need to set OKRs, which he initially called “Intel management by objectives,” to boost productivity. Over the years, his model has not only led to the success of Intel; it has also grown to other tech giants.
Zynga is a game developer with a mission to connect the world through games. In 2011, they established an OKR intending to become the number one iOS poker game. This vision became a reality in six months. They achieved this by prioritizing individual OKRs over team OKRs and having a manager oversee each individual ensure accountability.
It is no surprise that the world’s most valuable brand is an adopter of the OKR formula. Amazon uses an Aspirational OKR that doesn’t change, helping them maintain a common goal. Each individual has their OKR, which is linked to the team OKRs that Amazon sets for different periods, weekly, quarterly, or annually.
The multi-billion-dollar streaming company has been described by many as ruthless when it comes to setting and achieving company goals. This has seen the streaming company stock rise in recent years. Over 90% of employees attest to Netflix having clear and strict goals.
The OKR methodology is a proven simple tool that can be used by renowned companies all over the globe. It is an excellent way to maintain focus and encourage overachievement, which every startup needs.