OKRs, or Objectives and Key Results, are an objective management methodology that allows companies to define and measure their objectives more effectively. They were created by Intel in the 70s, but became popular thanks to Google, which adopted them in 1999. Since then, many companies have used this methodology to set and achieve their goals.
The OKR methodology is based on the idea that goals should be ambitious, but achievable. To do this, quantifiable and specific objectives are established along with the Key Results that are needed to achieve them. Key Results are the indicators that help measure progress towards achieving goals. These indicators are established according to the objectives to be achieved and must be measurable and verifiable.
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Origin of OKRs
OKRs emerged in the 70s at Intel, as a way to improve goal management within the company. However, it was not until their adoption by Google in 1999 that they became popular and became an essential tool for many businesses.
Initially, OKRs were used only in Intel’s top management, to set long-term goals that would help the company grow sustainably. Over time, they began to be applied at other organizational levels and adapted to the specific needs of each team.
Since its adoption by Google, OKRs have become common practice among many tech companies and have proven effective in other industries, such as education, commerce, and government.
Benefits of the OKR system
Among the benefits of using the OKR methodology we can mention the following:
- Clear and specific definition of objectives: OKRs allow a clear and specific definition of the company’s objectives, which facilitates its monitoring and measurement of its progress.
- Fostering accountability and collaboration: By setting quantifiable and specific goals, OKRs encourage individual and collective responsibility in achieving goals, as well as collaboration between teams to achieve them.
- Improves decision making: OKRs help companies make more informed and insightful decisions, as they allow the monitoring and analysis of progress and results of established objectives.
- Focus on key results: OKRs focus on the Key Results needed to achieve goals, helping companies prioritize and focus their efforts and resources on the areas most important to achieving their goals.
- Flexibility and adaptation: OKRs are a flexible methodology that adapts to the specific needs of each company and team, allowing its application in different areas and organizational levels.
- Motivation and commitment: OKRs help motivate and engage employees by involving them in the process of setting and tracking company goals, increasing their sense of belonging and commitment to the success of the organization.
Here are some examples of how companies use OKR to set and measure progress toward their goals.
As pioneers in the adoption of OKRs, Google uses this methodology to set goals at the company, team, and individual employee level. One of the company’s goals for 2021 is to improve the accessibility and performance of its products and services to make them more useful to people with disabilities.
To achieve this goal, Google has established different Key Results, such as reducing the loading time of its pages by 20% and improving the usability of its accessibility tools by 30%. Individual teams and employees develop their own OKRs that contribute to achieving this goal.
LinkedIn uses OKRs to set goals at the company, team, and individual level. One of their objectives is to improve customer satisfaction, for which they have established different Key Results, such as reducing the response time to customers by 50% and increasing the renewal rate of their premium subscriptions by 20%.
Each team develops its own OKRs to contribute to achieving this goal. For example, the customer support team can set the OKR to reduce the average customer response time by 30%, while the marketing team can set the OKR to increase the number of referrals from satisfied customers by 50%.
Netflix uses OKRs to set goals at the company, team, and individual employee level. One of their objectives is to increase the number of subscribers of their streaming service by 20%, for which they have established different Key Results, such as increasing by 50% the number of users who watch Netflix original content and reducing by 10% the number of users who leave the service in the first month.
Each team develops its own OKRs to contribute to achieving this goal. For example, the production team can set the OKR to launch 10 new original series during the year and the customer retention team can set the OKR to improve by 20% the renewal rate of existing subscribers.