What Is OKR? The Goal-Setting System To Scale Up Your Business

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.”

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, things that allow the company to get there. Those key results need to be easily trackable, understandable and shared across the company.

In its purest form OKRs consists 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

Track for accountability

OKRs are data-driven. It doesn’t stress though on a countless number of metrics that help to increase the level of noise. OKRs instead focuses on a few critical metrics to measure the impact on the business

Stretch for amazing

Objectives set in OKRs aren’t conservative, those are aggressive, hard yet possible and attainable. From this balance, OKRs brings the organization forward

Those superpowers are kept together by continuous improvement and corporate culture.

How is OKRs different from MBOs?

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 focuses 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 which 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

OKR vs KPI

It is important also not to confuse OKR with KPIs. KPIs (Key Performance Indicators) 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.

OKR vs balanced scorecard

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 with the OKR which is set to achieve an ambitious growth plan.