OKR is an acronym that stands for “Objectives and Key Results.”
Business leaders set up OKRs in order to stay organized when establishing goals for their organization or for teams. These metrics are often used in combination with KPIs in order to create and measure a business strategy. Properly implementing OKRs help make businesses more results-oriented, making scaling a business easier.
What is an OKR?
Think of OKRs as a tool for growth. It makes it easier if you think of them as keys to growth. They layout where you want to be while also allowing you to see how far you’ve progressed towards the future you want. Leaders set Objectives and Key Results as they have a top-down view of the company.
*Take note that the following examples aren’t listed in the usual format: 1 objective followed by 3 key results*
Examples of objectives for businesses:
- Establish a stronger global presence
- Increase customer satisfaction
- Improve corporate culture
Examples of key results in business:
- Reducing attrition by 5% annually
- Reaching a sales target of $1 million
- Successfully launch and maintain an all-hands Town Hall every month
OKRs vs. KPIs
At first glance, OKRs and Key Performance Indicators (KPIs) sound the same. The biggest and most important distinction would be the scope of each of the tools. KPIs, while also able to cater to long-term goals, are all about the nitty-gritty details. Similar to the difference between strategy and tactics, where strategy (representing OKRs) is the plan to get you to a goal, while tactics (representing KPIs) are the steps you take to achieve the goal in your strategy.
Putting it simply:
- KPIs – determine what processes are important and they measure how well a business is currently performing
- OKRs – determine what progress needs to be made and measures how much progress has been made on these goals
Impact on Business Growth
In order to understand how OKRs impact growth, you need to understand activity-driven versus results-driven businesses. Activity-driven businesses are all about finishing activities or tasks, with that being the end goal. On the other hand, results-driven businesses look at their tasks as a way to reach their end goal, taking the time to analyze the results their tasks actually bring. In addition, results-driven businesses always take the time to look into their long-term goal, which allows them to reevaluate what tasks they should be doing and recalibrate when necessary.
- Tasks are a means to an end
- Tasks are measured on their results and are reassessed based on the end goal
Having a clear end goal allows businesses to accurately know the path they need to take. The ability to compare your current trajectory versus where you want to be, allows businesses to make the necessary adjustments while there is still time.
This can be the difference between having your company grow and stay successful in a short amount of time or having to wait years before any real change or growth is made. Ultimately, results-driven businesses will be more successful because they have a path to success instead of flying blindly.
The Wrap Up
OKRs help businesses grow by allowing teams to assess their progress against the organization’s main goal. Processes can be adjusted to make sure the company stays on the right track and, if used in combination with KPIs, you get a more detailed look at the things your company needs to improve upon.
This style of organization is critical for businesses trying to achieve certain goals. Without an organized plan of action where decisions are based on statistics, decisions will be made blindly and may impede progress towards your goal. Try implementing OKRs in your business and make sure to keep realigning the company and you’re sure to see results.