Creating a sustainable and successful business model all comes down to the amount of planning and structure that goes into an organisation’s strategy.
While many of the business tycoons of the world run their ventures on whimsical decisions and capricious behaviours, it is the businesses that use proven planning methods and structured frameworks to develop their organisational goals that create genuinely long standing and successful ventures.
An example of a proven planning method and structured framework is the Objective and Key Results framework – more commonly referred to as OKR.
The OKR framework originates from the concept of Management by Objectives (MBO for short), which refers to a management style in which managers come up with specific objectives within their organisation that are communicated to their employees and associates and implemented accordingly.
MBO was first popularised by an Austrian-born American author and educator Peter Druker in 1954. Some 14 years later, the concept was further developed by Andy Grove, the co-founder of Intel, who turned it into the OKR framework and implemented it within the entire Intel corporation.
Then, in the year 1999, another co-founder of Intel by the name of John Doerr became an advisor and investor to Google and brought the OKR framework over to the then early stage tech venture – where it is still practiced today.
Now that you’ve got some insight into where the framework comes from, let’s take a look at how the framework is actually structured.
OKRs are made up of three elements that form a pathway to reaching pre-set organisational goals.
Within the OKR framework, an Objective is a goal or substantive result that the company wants to achieve.
The Objectives that are set are there to give managers and employees a reason to come to work and do their jobs, and it’s what keeps them from becoming lost and feeling aimless in their respective roles within the organisation.
For example, if a company has been experiencing a high level of employee turnover and want to improve their employee retention levels, they might decide that one of their Objectives is to “become a more desirable workplace for employees”.
These are used to measure the progress that has been made towards achieving the organisation’s Objective. A Key Result is a metric that shows how far the organisation has come, and how much further it has to go until it reaches its Objective.
Each objective should have several key results, but not too many. The idea is that each Key Result should require a significant amount of effort in order to be met, all the while remaining achievable and within reach.
Continuing along from the example of becoming a desirable workplace, the Key Results for that objective might be:
Key results are achieved through what the OKR framework calls Initiatives. Initiatives are the small steps that are taken along the journey of reaching the Objective and help the organisation progress from one Key Result to the next.
So, if increasing the amount of benefits that employees receive is one of the Key Results, then the Initiatives would be things like:
And if you’re looking for help in achieving each of those initiatives, Perkbox will be able to help you every step of the way.
Before deciding what the organisation’s Objectives, Key Results and Initiatives are, managers need to place a significant amount of time and effort into brainstorming and understanding what the business’ overall mission actually is.
Coming up with a vision and overall company objective isn’t something that happens overnight. Depending on the business, it can take many months of strategizing and exploring to identify the mission – so don’t rush the process.
Only once that overall objective is clear can the organisation implement the OKR framework effectively.
Implementing the OKR framework is something that can (and should) be done by both the company as a whole, and the smaller groups within the organisation. However, there are some differences in dealing with company-wide OKRs, versus group-based OKRs.
Company-wide OKRs need to be fundamental and broad in order to be effective, and they should be set up on a yearly cycle. To maximise the benefit of using this framework, 3 to 5 company-wide Objectives should be set each year.
Given that smaller groups need to see progress more often, group-based OKRs should be set on a quarterly cycle and should be structured in a way that they align with the company-wide OKRs.
The OKR framework can play a really integral role in organising a business’ strategy and helping it achieve its goals, but it doesn’t guarantee that those goals or objectives will be met.
In the event that your company or group doesn’t manage to reach the Objective that it set as part of using the OKR framework, it’s important to remember that not achieving your intended results is an important and inevitable part of business (and life!).
The key is to understand what went wrong along the way and ensure to learn from those mistakes the next time round.