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What is OKR? A Complete Guide

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The term OKR is being increasingly thrown around in the business world these days, but what is OKR exactly? OKR stands for “objectives and key results”, but it goes far beyond just setting objectives or defining desired results.

OKR is one of the new methodologies that are becoming increasingly popular in the business world. It is important for any executive, aspiring executive, or entrepreneur to be aware of these methodologies if they want to be successful in the modern business landscape. 

More and more companies are seeing the benefits of transparent and participative strategies like OKR that allow employees to be more effective, perform better, and deliver better results.

OKR

What are OKRs?

OKRs, as the name suggests, involve setting objectives and key results. However, the methodology defines each of these two key elements in a specific way:

  • Objectives should be uncomfortable. That is, they should be “stretch goals” that the individual or team needs to work hard for in order to achieve.
  • Key results must be measurable. This makes it possible to assess your progress towards these results, see if you’re on track, and easily mark them off once achieved.

Another key part of OKRs is that they should be transparent. OKRs should be public within the organisation, with all team members and management being fully aware of the objectives and key results that have been set.

Additionally, OKRs are defined from above. Teams should look to the company’s broader OKRs and use these to set their own OKRs. This way, each team’s activities will work toward achieving the organisation’s overall goals and help the company to achieve its bigger OKRs.

How do OKRs help businesses to be successful?

Organisations are increasingly adopting OKRs as part of their strategic planning, and they’re finding that this is improving employee productivity and performance, as well as helping the business to reach its overall goals. OKRs also have immense cultural value within companies, as they encourage teams to be focused on outcomes rather than output.

OKRs are so useful because they can help teams and organisations to achieve:

  • Clarity: Because everyone has access to the company’s OKRs, they understand what the company wants to achieve and where the company is headed. This facilitates big-picture thinking at all levels of the organisation, not just at the senior management level.
  • Alignment: OKRs help all parts of a company work together towards overall organisational goals. All teams are aligned with company strategy because team OKRs follow from the company’s bigger-picture OKRs.
  • Value: Staff members have more awareness of how their individual contribution fits into global strategy. This helps them to feel motivated and inspired because they know how their work is part of the bigger picture.
  • Vision: OKRs encourage all team members to work to achieve the company’s overall vision, increasing productivity and creating more opportunities for innovation.
  • Motivation: Teams are aligned and have clear, ambitious goals that they have set together, which greatly increases motivation.

Things to keep in mind when implementing OKRs

We’ve already seen how effective OKRs can be. However, in order to get the full advantages of this innovative methodology, it is important to implement them properly.

Firstly, it is important to remember that an OKR score is not to be used as an individual performance score. OKRs are designed to help teams set objectives that are in line with the company’s broader goals, and allow them to achieve them. They are not intended as a way of assessing the individual performance of team members.

It is also critical to keep in mind that these are stretch goals. This means that they are achievable, but push the team to move forward. They should not be too easy to achieve, as this will not challenge the team or push them as far as they can go. Equally, if objectives are unrealistic and unachievable, this will be discouraging and demotivate the team.

The OKR score you achieve is a good indication of whether you are setting the right kind of goals. Teams should aim for an OKR score per quarter of around 60-70%. If OKRs scores are consistently around 100%, this means that the goals are not ambitious enough. A consistently lower score indicates they are too ambitious and unrealistic.

How EDHEC Can Help You to Conquer OKRs

As part of EDHEC’s online programmes, you can learn about OKRs and other goal-setting, management, and performance methods. This will give you the critical knowledge you need to be successful in today’s modern business world, not to mention possess the most important skills that employers look for.

See our online programme catalogue to learn more about the courses we offer.