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This article is a summary of the components of the OKR framework.
Objectives and Key Results (OKR) is a very popular framework for strategy deployment which has become famous because it has been used in many successful companies such as Intel, Google or Twitter.
OKR methodology consists basically of two processes: alignment and review. Every organizational unit from the top executive team all the way down to the product teams defines their OKRs in agreement with their upper level. And, progress towards goals is reviewed periodically in a cadence.
So, as you can see, this is the basic PDCA (Plan-Do-Check-Act) applied to the process of strategy deployment. You define your plan for the next period, you implement it, then check progress and learnings and act upon it for the next cycle.
In this article we discuss the basic structure of OKR framework. You can read some of our previous articles if you want to learn more about OKR best practices, get some OKR examples or get some OKR FAQs answered.
Before moving ahead it is important to note that OKR is not a new name for your old Management by Objectives (MBO) with results linked to individual compensation. If that’s what you want to do, just keep the old method.
OKR methodology is a collaborative approach to goal setting that aligns the whole organization and increases focus and engagement. The purpose of OKR is to improve overall performance of the company and enable continuous learning.
Benefits of OKR
Overall the OKR process is a platform by which organizations can achieve alignment, focus, buy-in and continuous improvement in their effort to achieve their vision and mission aligned with the company’s purpose. When properly implemented OKR will engage everyone in the organization and provide a sense of purpose for each member of the company.
OKR planning requires a practical review process that ensures progress and ensures continuous organizational learning. Properly implemented, the process will allow for dynamic, fast and flexible adjustment of priorities to align with the realities of the business.
Although the OKR process has many levels, cycles, and tools, overall, in the end, everything boils down to four simple questions:
What do we need to do?
How should we do it?
How are we doing?
How do we know?
OKR Framework Blueprint
In the picture below you can see the basic components of the OKR framework.
Purpose and vision don’t change too often, and certainly not due to outcomes of the OKR process but rather due to changes in the environment or the executive team.
- PURPOSE – is the reason the company exists.
VISION – Long-term (5-10 years), futuristic and motivational statement. What would the ideal state look like? How is the world going to be different as we fulfil our purpose?
MISSION – articulate what needs to be done. Addresses what is to be accomplished. In general, the mission statement describes what the OKR plan needs to accomplish. This is the highest level OKR and it is company wise and will be probably reviewed on an annual basis.
Every organizational unit goes through the same OKR cycle continuously in a cadence that depends on their level, but it is usually a quarterly cycle.
OKR PLANNING – Objectives and key results are defined for the entire cycle and at all levels. This is done both top-down and bottom-up in a collaborative process sometimes called catchball.
OKR WEEKLY FOLLOWUP – This is a tactical meeting that can happen on a weekly or bi-weekly basis where progress of initiatives and indicators are reviewed
OKR REVIEW – Review meetings are used to determine the degree of achievement at the end of an OKR cycle. Based on the outcomes new goals are defined, or goals are completed or Key Results for other goals updated.
OKR RETROSPECTIVE – This retrospective serves as a way to improve the OKR process itself. What did the team learn? What should be improved in the next cycle?
Successfully rolling out OKR framework usually takes one year. A complete OKR cycle.
It is not a complicated framework per se, but it requires people to learn to define goals, to measure progress and work based on outcomes rather than outputs or projects. And, for many companies adopting this new way of operating takes time.
You can make the most of it but getting support from expert OKR coaches and attending some of our OKR workshops.