If you’re going to explain an acronym, you’d best start by spelling out the initial letters. In this case, we’re talking about “Objectives and Key Results,” commonly abbreviated as OKRs. They’ve become a popular form of setting performance goals and measuring progress towards those goals, notes Red Hat technology evangelist Gordon Haff .
“They’re generally attributed to Andy Grove when he was CEO of Intel in the 1980s, but later spread to a variety of other companies, primarily through the venture capitalist community,” Haff says. Today, they’re common in most IT groups and many line-of-business groups - putting the emphasis on individual and team performance outcomes, versus output.
What is an OKR?
“As the term suggests, an OKR has an objective which is a clearly defined goal that will help you get where you want to go as an organization,” Haff says. “For example, perhaps you want to increase outside contributor engagement with an open source project. You then want to come up with less than five key results. These are specific measures used to track the achievement of that goal over a particular window of time. In general, they should be “stretch” measures. In our example, we might pick the number of accepted outside commits or a number of interactive sessions with current and potential contributors.”
This fundamental aspect of OKRs is worth repeating right out of the gate: They’re not only concerned with setting goals, but also, as in Haff’s example above, defining what “goal achieved” specifically looks like.
“Connecting the goals with the outcomes is what sets OKRs apart from traditional goal-setting,” says Jon Knisley, principal, automation and process excellence at FortressIQ. “Too often we hear a company say, for example, they want to double revenue in three years. This sounds good, but is often pulled out of thin air.”
While the objective in an OKR sounds good (and achieving it will be a win for the organization or individual), it’s the key results that make the path to that goal tangible.
“Objectives are inspirational and address what the organization wants to achieve,” Knisley says. “Key results are measurable and answer how the objective will be achieved.”
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OKRs are usually favored by leaders and managers who are more interested in outcomes rather than a play-by-play accounting of everything a person or team does. OKRs usually tend toward quality over quantity, too. This means OKRs aren’t a great match for micromanagers or command-and-control types, since the team or individual needs space to be able to execute on the OKR.
“OKRs are a tool that many successful companies, especially those in the tech world, have utilized to help them focus on outcomes, as opposed to output,” says Mike Rozensher senior product manager of connectRN. Perhaps most importantly, OKRs empower teams to achieve those outcomes without their leaders prescribing the path to get there.”
While OKRs were born at Intel, and later popularized at Google, their usage is by no means limited to tech firms or IT departments. In fact, one of the reasons that OKRs remain relevant is that they’re seen as applicable across an organization – as a way of unifying different business units toward common strategic priorities. OKRs can be defined at the business unit, team, and/ or individual level, typically in relationship to those overarching company goals.
As a result, IT leaders may find themselves in conversation with peer executives and others about organizational OKRs – where it’s helpful to be able to talk about them in plain terms. Let’s arm ourselves with some other definitions you can use, including some that wrap the potential benefits of the OKR framework in the definition. Then, we’ll share some overarching examples of what an OKR might look like in an IT organization.
5 OKR definitions
- “Objectives are inspirational and address what the organization wants to achieve. Key results are measurable and answer how the objective will be achieved.” –Jon Knisley, principal, automation and process excellence at FortressIQ
- “OKRs are created as hypotheses made by separate teams or departments aligned to the company’s goals. Given the public, transparent objectives, each team member becomes a part of the global mission and can better align their commitments and efforts toward the company’s needs and values. Within the cross-department objectives, OKRs improve collaboration between departments and reduce the number of competitive initiatives.” –Olena Kovalova, senior delivery manager at Exadel
- “You work towards stated objectives or goals, and then you measure your progress towards those objectives with key results. Sounds simple, yet OKRs are so much more. OKRs are really an alignment between strategy and execution. They are conveyed throughout an entire organization by flowing from top to bottom. Enterprise objectives feed and inform every level all the way down to the team level, and even further down to the individual level.” –Saahil Panikar, principal consultant at Project & Team
- “Essentially, OKRs are a system that helps individuals to separate what matters from what doesn’t. You have your big vision - the objective, and you also have measurable actions to achieve it – your key results. This way, you always know what you need to achieve and how you should achieve it. It helps to create sustainable performance, set priorities, and be more efficient as an individual and a company.” –Marcin Stoll, head of product at Tidio Chatbots
- “OKRs help our teams gain visibility, inject creativity, drive, and meaning into the work we do, and align everyone on a unified set of goals. OKRs form a clear framework for defining and tracking our most important organizational objectives and their results. –Erika Flora, president at Beyond20
What are good OKRs for IT?
Definitions and benefits in hand, the best way to illustrate the OKR approach is with examples. You’ll encounter different opinions on quantity here, both in terms of total OKRs and the number of key results per objective. A couple of rules of thumb that can be adapted to your org or team:
- The total number of objectives needs to be attainable in a given timeframe. (At the company-wide level, OKRs are often a yearlong affair, though that’s adaptable, too.) If you have 75 OKRs, you’re almost certainly overdoing it. Somewhere in the three-to-seven range seems to be a sweet spot.
- Each “O” usually gets a few specific “KRs” – at least one, and often two-to-five results per objective.
The numbers don’t matter as much as the quality. Panikar notes that poorly designed OKRs will impede organizational priorities, which is essentially the opposite of their intended impact. Panikar adds that OKRs are usually concise; overly broad, shoot-the-moon OKRs need to be narrowed down. OKRs should also be written in a way that makes it simple to determine whether they’ve been achieved at the end of your timeline.
“Key results tend to be quantitative and are easily assigned a pass or fail. Either this target [or] metric was hit or it wasn’t,” Panikar says. “If all your key results are passed then you have accomplished your Objective. The more specific the Key Results, the better, but it’s also important that they are realistic and grounded. Therefore, KRs can be qualitative as long as they still meet the pass/fail criteria described above.”
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OKRs vs. KPIs: What's the difference?
What about that other popular acronym in management circles, the KPI, shorthand for “Key Performance Indicator?”
Like the OKR, the KPI has been around a while. It’s a common method of measuring corporate performance – and like OKRs, KPIs can be defined at organizational, team, and individual levels. So how do the terms relate? Are they interchangeable? If not, why?
Most folks agree that the two concepts and their usage are distinct. (As with many business and technology principles, not everyone agrees on how the terms should be defined or applied, particularly when it comes to KPIs.)
“While there are similarities, OKRs and KPIs are not interchangeable,” says FortessIQ's Knisley. “KPIs provide a measurable assessment of performance. They are descriptive and tend to look backward. OKRs are also measurable and timeboxed, but since they tend to be more aspirational, OKRs provide a more strategic view of what’s ahead.”
This speaks to one of the fundamental differences between KPIs and OKRs: KPIs are usually concerned with the way things are or were (or both.) OKRs define how you want things to be at some point in the future. They can both be useful in organizational strategy and measurement, but they’re not one and the same.
Now, let's look at five real-world OKR examples: