In this article we answer the most typical OKR questions people ask us.
What are OKRs?
Objectives and Key Results (OKR) is a framework that addresses both the long-term strategic direction for the company and the short-term daily management activities.
OKR methodology is fundamentally a goal setting process based on defining and tracking objectives and their results across the organization, from strategic goals, to product and operational goals.
Who created OKRs?
OKRs invention is attributed to Andy Grove, who introduced the approach in Intel and wrote the first OKR book on 1983, called “High Output Management”.
However, if you ask Andy Grove where did he get this idea from, he will probably tell you about Hoshin Kanri, the strategy deployment process used by many Lean organizations, which was first implemented by Japanese corporation Bridgestone in 1967. OKR System is an adaptation of Hoshin Kanri, but essentially it is the same. It is PDCA cycle applied to strategy deployment and organizational learning.
In 1975, John Doerr attended a course within Intel taught by Andy Grove where he was introduced to OKR methodology.
In 1999, John Doerr introduced the idea of OKRs to a start-up called Google. The idea had so much impact that OKRs quickly became a cornerstone to Google’s management.
Quoting Larry Page’s foreword to John Doerr’s book: “OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
Since becoming popular by being used at Google, OKRs have spread virally and have become a de-facto standard for strategy deployment in modern organizations.
What do OKR stand for?
OKR meaning is pretty straightforward, what is really difficult is its successful implementation in organizations with a traditional command-and-control or bureaucratic mindset.
A successful OKR implementation allows companies to achieve high degrees of decentralization, focus and alignment which will lead to higher business success.
OKRs implementation requires defining objectives — clearly defined goals — and several key results for each objective — specific measures used to evaluate achievement of the goal.
What companies use Objectives and Key Results for?
Many companies nowadays use OKRs, specially in the digital arena, thanks to the influence of important players like Google, LinkedIn or Uber which have been using OKR framework for several years.
What is the difference between OKR and KPI?
This is quite a usual OKR question: KPI vs OKR or OKR vs KPI?
The answer is simple: KPIs are Key Results in OKR system. For each goal, you define your Key Results (KR) or KPI (Key Performance Indicators) if you want. Specific measures that allow you to know if you are getting closer to the goal and whether you achieved the goal within the expected timeframe.
As an example I will use SpaceX. One of the key milestones or impediments SpaceX identified to be able to fulfil their vision of humans becoming a multi-planetary species is the cost of emigration to Mars. So, they set a goal of “Drive the cost of emigration to Mars to the equivalent of a house in the US”.
For these goal, SpaceX has three key results or KPIs:
- The overall market cost is <= $200K
- Reusability of rocket transportation is >= 90%
- Tons of propellant can be produced in Mars
As you can see, and you will learn if you attend our OKR workshops and OKR certification programs, sometimes a KR is a goal for another level or unit in the organization. In the previous example, “Tons of propellant can be produced in Mars” is a condition to be able to minimize the cost of emigration to Mars, but it is a goal on itself for the team responsible for producing propellant in Mars.
Hoshin Kanri vs OKR
Another one of the key OKR questions is the difference between OKR and Hoshin Kanri.
OKRs and Hoshin Kanri seek the same end, but there are several differences. We are firm followers of Hoshin Kanri as a methodology of strategic alignment and continuous improvement, since it is based on established principles and practices of Lean and has been widely validated.
OKR also works, but due to the generated hype and the diversity of sources, we have seen how many times the incorrect indications are given.
We leave you here our definitive guide on Hoshin Kanri so you can understand what it really consists of and how to implement it in your organization.
You can also access here the series of articles on OKRs that will allow you to implement it successfully avoiding the usual problems and pitfalls.