Andy Grove, helped Intel become among the most valuable companies by 1997. In his years at Intel, he conceived a management and goal-setting system, called OKR, standing for “objectives and key results.” Venture capitalist and early investor in Google, John Doerr, systematized in the book “Measure What Matters.”
Table of Contents
A glance at the OKR system
Back in the 1970s, Intel was among the most respected and admired companies in Silicon Valley.
During that time, Intel’s CEO, Andy Grove, was the man who managed to drive organizational change.
Andy Grove did that via a goal-setting process called OKRs, or objectives and key results.
Where the objective is the direction toward which the organization needs to be in the medium term.
And the key results are milestones that allow the company to get there.
Those key results must be easily trackable, understandable, and shared across the company.
This is critical as the whole ability of the OKR to become actionable is expressed in how well a company can address its key results.
In its purest form, OKRs consist primarily of four superpowers:
Focus and Commit to priorities
This superpower focuses on making clear what matters and what doesn’t.
More precisely, it allows whole teams and departments to decide where the focus is and dispel any confusion.
Align and connect for teamwork
One essential ingredient of the OKRs is its transparency and the fact that it needs to be openly shared across the organization, from the CEO down to each team and member of the organization.
OKRs is not a siloed process but rather a transparent goal-setting tool.
This is another core tenet of the OKR framework.
Indeed, this is one of the aspects which differentiates OKR from any other goal-setting tools.
OKR uses an open approach to goal-setting, where these goals are shared across the organization and made visible to anyone.
In addition to that, OKR enables teams to work together on shared – ambitious – goals while keeping them measurable and achievable.
Track for accountability
OKRs are data-driven.
It doesn’t stress, though, on countless metrics that help to increase the noise level.
OKRs instead focus on a few critical metrics to measure the impact on the business.
This sort of North Star Metric, or set of metrics, is the one that will inform the whole plan as it moves forward.
A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hackingstrategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the businessgrowth.
Stretch for amazing
Objectives set in OKRs aren’t conservative; those are aggressive, hard yet possible, and attainable.
From this balance, OKRs bring the organization forward.
For those that know Management by Objectives or MBO, it might be easy to confuse it with OKRs. However, there are a few key differences.
At its core, the MBOs focused on what while it was primarily top-down and risk-averse.
By converse, OKRs focus on the “what” (direction) and “how” (key results).
Rather than an annual review process which might make it too complicated and formal OKRs follow a quarterly or monthly schedule that is public and transparent, and usually bottom-up.
Where MBOs’ goals are risk-averse, OKRs goals are aggressive and aspirational.
OKRs objectives have a few key elements, such as:
Ambitious.
Qualitative.
Time-bound.
Actionable by the team.
While OKRs key results are primarily:
Measurable and quantifiable.
Make the objective achievable.
Lead to objective grading.
Difficult but not impossible.
The OKR cycle
Brainstorm
In this phase, the top senior leaders set the company-wide OKRs.
Communicate
The OKRs can be communicated to everyone.
At the same time, teams develop their OKRs to be shared
Share
Contributors share their OKRs but also negotiate them with their managers.
Track
Employees track and share their objectives with managers.
Reflect
At the end of the cycle, employees perform a self-assessment and what they have accomplished
OKR scoring system
How do you score the success of the OKRs?
There are two ways to score OKRs:
The simple way
Andy Grove would use a very simple “Yes/No” approach to understand whether the key results would be achieved and whether the primary objective also got accomplished.
OKR example
Objective: Reach $100K in revenue this year:
KR: build a newsletter with a thousand subscribers to sell $33K worth of products
KR: attend three events where to find 10 clients worth $33K in contact value
KR: publish 10 articles to share to sell $33K worth of products
Track the results with the simple method:
Build a newsletter with a thousand subscribers to sell $33K worth of products? Yes
Attend three events where to find 10 clients worth $33K in contact value? No
Publish 10 articles to share to sell $33K worth of products? Yes
The advanced approach
Each key result can be scored on a scale. “0” means failure, and “1.0” means achieving the objective.
Therefore, you can score each result against its outcome and evaluate whether you failed, made progress, or achieved them.
It’s essential, in this phase, to be honest about the self-assessment as the OKR itself requires self-reflection.
OKR vs. KPI
It is also important not to confuse OKR with KPIs (Key Performance Indicators) are performance metrics for a specific activity.
OKRs are aggressive and aspirational.
They drive the key objectives underlying the plan.
Where KPIs are a set of more objective standards to measure activity and operating plans.
OKRs are set to achieve extraordinary goals.
Therefore, KPIs and OKRs might be connected, yet OKR, it’s a specific methodology where the company needs, through aggressive yet achievable, shared goals, to work through them.
Often, KPIs can be made more useful and focused by picking up a so-called North Star metric, which can help the company be more focused.
A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hackingstrategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the businessgrowth.
Most organizations use KPIs to address their short and long-term goals. While OKR is quite popular among startups.
OKR vs. SMART Goals
A SMART goal is any goal with a carefully planned, concise, and trackable objective. To be such a goal needs to be specific, measurable, achievable, relevant, and time-based. Bringing structure and trackability to goal setting increases the chances goals will be achieved, and it helps align the organization around those goals.
SMART goals are very similar to how objectives are defined within the OKR framework.
The critical difference is that OKR is a company-wide exercise whose target is to align an entire, potentially large company to achieve goals and move fast, nonetheless size.
SMART goals, instead, might be more suited for individuals.
Another core difference is that OKR’s objectives, even if achievable, they are very ambitious, often connected with 10x targets.
Where SMART goals might and might not be as ambitious.
OKR vs. Balanced Scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A balanced scorecard’s main aim is to track, control, and improve the execution of activities that can be monitored by executives and managers within an organization.
The balanced scorecard differs in scope and aims from the OKR, which is set to achieve an ambitious growth plan.
OKR and 10x: Moonshot thinking as a way to renew your business model
Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.
In 2010, Google founded its research and development lab, called X, or Google X.
As pointed out by Google:
“While almost every corporate research lab tries to improve the core product of the mother ship, X was conceived as a sort of anti–corporate research lab; its job was to solve big challenges anywhere except in Google’s core business.“
This connects with Google’s founders’ 10x mindset, which we can apply back to the business world as it makes us switch from an incremental growth mindset to a 10x mindset.
What are some of the key elements?
As I highlighted in the moonshot thinking guide, the fundamental principles are:
When you apply this sort of mindset, it might seem way more difficult to implement in the short-term.
In reality, once the proper context has been developed, it becomes cheaper and more effective.
It’s essential to align part of the team around 10x goals, enabling the company to look for opportunities outside the core business model.
Like in Google, where most of the organization is focused on maintaining and incrementally growing the core business model, Google is also invested in other bets, a strategic set of initiatives that could change its whole business model.
Of Google’s (Alphabet) over $257 billion revenues for 2021, Google also generated $753 million from a group of startup bets, which Google considers potential moonshots (companies that might open up new industries). Those Google’s bets also generated a loss for the company of over $5.2 billion. In short, Google is using the money generated by search and betting it on other innovative industries.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
OKR examples
Here are three hypothetical OKR examples from which a business can draw inspiration.
Marketing department
Objective: Increase brand awareness and reach outside of the United States.
KR 1 – Publish one thought leadership article each week.
KR 2 – Increase web traffic from the Canadian market by 15%.
KR 3 – Add at least 300 new weekly subscribers to the newsletter.
Objective: Create a customer community
KR 1 – Devise a customer community strategy based on best practices.
KR 2 – Achieve a 25% community participation rate via discount incentives.
KR 3 – Publish at least 15 articles in the first quarter that outline and draw attention to customer success.
Objective: Improve the efficiency and consistency of social media marketing
KR 1 – Increase posting frequency from two times per week to three times per week with a core focus on video content in TikTok and Instagram Reels.
KR 2 – Boost user engagement to 30% by hosting live chat events and increasing the quality of the content posted.
KR 3 – Add at least 1,000 TikTok followers every month for the first half of the year.
Customer success
Objective: To demonstrate to our customers that their input drives/influences company outcomes.
KR 1 – Interview at least 50 customers monthly and collate suggestions for product and service improvements.
KR 2 – Hire three additional customer success managers.
KR 3 – Reduce product-related complaints from 65 to 30 before the end of the year.
Objective: Train customer success staff to enhance their capabilities.
KR 1 – Ensure that every member of the team has a personal development plan in place.
KR 2 – Increase task success rate from 75% to 90%.
KR 3 – Come up with 4-6 coaching and training opportunities each year.
Objective: Ensure the team has the necessary support to achieve company objectives.
KR 1 – Solicit training firm to run three personal development sessions per quarter.
KR 2 – Onboard 15 new customers per month.
KR 3 – Maintain a customer response time that never exceeds 18 hours.
People expertise
Objective: Create a team of employees that is motivated, happy, and engaged.
KR 1 – Offer regular opportunities for personal and professional development.
KR 2 – Employees who meet stated objectives and performance standards shall be offered at least one raise of 5% per annum.
KR 3 – Schedule at least two meetings with department heads per quarter and ensure that quarterly check-ins are maintained.
Objective: Acquire more talent to increase the collective strength and capabilities of the organization.
KR 1 – Launch hiring campaigns in three regional markets.
KR 2 – Devise and implement an employee referral program.
KR 3 – Decrease the average time to hire from 25 days to 18 days.
Objective: Become an industry leader in talent retention.
KR 1 – Implement a program to provide continuous educational assistance to employees.
KR 2 – Review current remuneration policies and adjust where appropriate according to peers.
KR 3 – Distribute a questionnaire to employees to assess the current corporate culture and where it could be improved.
Key Highlights
Introduction to OKRs: The OKR (Objectives and Key Results) system was developed by Intel’s CEO, Andy Grove, in the 1970s as a goal-setting process for driving organizational change.
Objective and Key Results: OKRs consist of objectives, which are the direction a company aims to move in, and key results, which are measurable milestones that help achieve the objective.
Superpowers of OKRs:
Focus and Commit to Priorities: OKRs clarify what matters, helping teams and departments make informed decisions about where to focus.
Align and Connect for Teamwork: OKRs are transparent and shared across the organization, fostering collaboration and alignment from top management to every team member.
Track for Accountability: OKRs are data-driven, focusing on a few critical metrics that measure the impact on the business.
Stretch for Amazing: OKRs are ambitious and challenging, driving the organization forward.
Comparison with MBOs (Management by Objectives): MBOs are more top-down, while OKRs involve both the “what” (direction) and “how” (key results). OKRs are transparent, frequently updated, and more aggressive in setting goals.
OKR Cycle:
Brainstorm: Senior leaders set company-wide OKRs.
Communicate: OKRs are shared and communicated across the organization.
Share: Teams develop their OKRs and share them.
Track: Employees track and share their progress with managers.
Reflect: At the end of the cycle, employees self-assess their accomplishments.
OKR Scoring System:
Simple Method: Uses a “Yes/No” approach to determine if key results and objectives were achieved.
Advanced Approach: Scores each key result on a scale from 0 (failure) to 1 (achievement).
OKR vs. KPIs (Key Performance Indicators): OKRs are aggressive, aspirational goals that drive growth and are shared transparently, while KPIs are performance metrics that measure specific activities.
OKR vs. SMART Goals: Both OKRs and SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals focus on specific objectives, but OKRs are more ambitious and often aim for 10x growth.
OKR vs. Balanced Scorecard: The balanced scorecard focuses on tracking and improving activities, while OKRs aim for ambitious growth and align the organization to achieve extraordinary goals.
OKR and 10x Thinking: OKRs can be aligned with moonshot thinking, aiming for at least 10x goals to drive innovation and renewal of the business model.
OKR Examples:
Marketing Department: Increase brand awareness, create a customer community, improve social media marketing efficiency.
Customer Success: Demonstrate customer input drives outcomes, enhance customer success staff capabilities, provide necessary support for team objectives.
People Expertise: Create motivated team, acquire more talent, become industry leader in talent retention.
Other Goal-Setting Frameworks And Theories of Motivation
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
Businesses use backcasting to plan for a desired future by determining the steps required to achieve that future. Backcasting is the opposite of forecasting, where a business sets future goals and works toward them by maintaining the status quo.
Maslow’s Hierarchy of Needs was developed by American psychologist Abraham Maslow. His hierarchy, often depicted in the shape of a pyramid, helped explain his research on basic human needs and desires. In marketing, the hierarchy (and its basis in psychology) can be used to market to specific groups of people based on their similarly specific needs, desires, and resultant actions.
Herzberg’s two-factor theory argues that certain workplace factors cause job satisfaction while others cause job dissatisfaction. The theory was developed by American psychologist and business management analyst Frederick Herzberg. Until his death in 2000, Herzberg was widely regarded as a pioneering thinker in motivational theory.
The theory was developed by psychologist Edwin Locke who also has a background in motivation and leadership research. Locke’s goal-setting theory of motivation provides a framework for setting effective and motivating goals. Locke was able to demonstrate that goal setting was linked to performance.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
The SWOT analysis is commonly used as a strategic planning tool in business. However, it is also well suited for personal use in addressing a specific goal or problem. A personal SWOT analysis helps individuals identify their strengths, weaknesses, opportunities, and threats.
The OGSM framework is a means of creating a well-structured and actionable marketingstrategy. Fundamentally, the OGSM framework allows businesses to first define what they want to achieve and then determine how they will get there. To provide direction for marketing teams, the acronym of OGSM (objectives, goals, strategies, measures) should be followed in sequential order. Here is a look at each in more detail.
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
A personal mission statement clarifies what is important in life to an individual. A personal mission statement is a written statement of purpose that allows individuals to define their calling in life. It helps clarify goals, values, beliefs, or passions, communicate them, and better execute a personal growthstrategy.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
