Year after year, researchers point to a worldwide crisis in employee engagement. People become less passionate about what they do; they’re alienating from their companies. This is a critical problem for businesses. After all, employee engagement directly impacts the overall organizational profit and also how soon people start leaving the company.

According to Deloitte research, employee engagement is one of the main problems of the 21st-century for many companies. How can it be solved? Studies have shown that no factor has a greater impact than the clear goals described and reported to humans. Such goals contribute to focus, clarity, and employee satisfaction.

Other studies have shown that complex goals contribute to productivity more than simple ones. Also, the more specific the goal is, the higher the productivity.

Let me introduce the OKR and its superpowers! Objectives and key results (OKR) — a popular goal management framework, which only consists of 2 blocs:

• objectives - WHAT should be done
• key results - HOW the objective going to be achieved

Despite its extreme simplicity, in practice, it often turns out that companies face difficulties while implementing it.

The creator

The OKR methodology was initially proposed by Andrew Grove — a Hungarian-American businessman, engineer, and CEO of Intel Corporation back in 1975. This methodology was later adopted by the top tech giants like Google, Oracle, LinkedIn, and Twitter.

John Doer researched the OKR in detail while working at Intel, where he worked closely with Andrew Grove. Andrew led the company for 11 years and during that time Intel brought its shareholders more than 40% per annum.

For Grove, Intel has become a laboratory for management innovation. In 1971, for example, he proposed a new model for goal-setting. It consisted of two main components: goals and key results.

A famous business guru — Peter Drucker was the author of this approach. Before Drucker, management was dominated by the authoritarian system of the industrial era, which was introduced by Henry Ford and Frederick Taylor. It was dominated by a clear hierarchy: there were those who gave orders and those who unconditionally executed them. Drucker destroyed this approach by introducing a more humanistic goal in management. He wrote that a corporation should be a community built on trust and respect for employees, not just a machine for profit.

Drucker encouraged managers to discuss goals with subordinates. He understood the essence of human nature: if employees are involved in the choice of direction, they are more likely to understand it. This means that they will have an inner motivation to perform. Studies have shown that this principle increases people’s productivity by 56%.

Andy Grove was a pioneer in the application of Drucker’s ideas in software development. Grove wanted to create an environment where people strive for results and achieve them, and do not just initiate activity for the sake of activity. The result and activity are very easy to distinguish on the conveyor belt and much more difficult during intellectual work.

In the Grove era, OKR became the core of Intel. They were the subject of weekly meetings, staff meetings, and monthly and quarterly reports. That’s how Intel managed tens of thousands of its employees.

John Doer has proved the effectiveness of OKR by example. He used this approach in the tech companies he invested in. OKR has long left the limits of Silicon Valley — it is widely used by companies such as BMW, Samsung, Disney, and others. Google reached the greatest heights in the use and development of this approach. For more than twenty years, OKR remains a part of the internet giant’s daily work.

OKR superpowers

Concentration

An effective system of goal-setting begins with the rational thinking of leaders who spend their time and energy to choose what really matters. They are looking for an answer to the following questions:

• What are our priorities for the near term?
• What should employees focus on?
• What is most important in the next three, six, twelve months?

Leaders must take personal responsibility for setting goals. Where to start? First of all, with the mission of the company — the goals should work to fulfill it. Google, for example, bases all its goals on its mission: “To streamline the world’s information and make it accessible and useful.”

To achieve high productivity, the goals must be understood by the entire organization. It is important to check whether the goal answers the questions “why?” and “what?” and broadcast goals over and over again. Otherwise the implementation of OKR will be ineffective. Goals and key results act as a connection between theory and practice, vision and execution. Goals are about a relatively far-off horizon. Key results are more mundane and measurable.

Put differently, the key results are the landmarks, passing which you reach the goal. And if the goal is formulated correctly, it is usually enough to achieve three or five key results. If you have more, there may not be enough focus.

Of course, the first introduction of OKR is a shock to the entire company. So don’t rush into switching to this model. Each company chooses its own implementation rhythm, depending on the context and maturity.

There is a potential danger related to the concentration superpower — some important criteria may be overlooked. For example, in 1971 Ford produced a thrifty and super-compact car called Pinto. To meet the strict economic requirements set by the company management (weight up to 1000 kilograms and price up to $2000), engineers did not pay enough attention to safety checks. For example, the fuel tank was placed only at a distance of fifteen centimeters from the rear bumper. Hundreds of people were killed in the rear impact. In 1978 Ford was forced to recall the entire consignment of cars. This is one the highest volume of recalls in automotive history.

Thus, the key results should take into account the effect and counter-effect, combining the quantity and quality indicators. Developing three new models is an example of quantitive goal. And quality objective can be formulated as “less than five errors during the tests.”

OKR must be concise, specific, and measurable. And hitting all the key results should lead to the goal achievement. If that doesn’t happen, it’s not OKR.

The art of management lies in the ability to choose from a huge number of options two or three that will provide the most powerful influence, and focus on them.

Focus and teamship

OKR assumes that all staff can see everyone’s objectives down to the CEO. Studies show that open objectives are more likely to be embodied. 92% percent of U.S. employees admitted they would be more motivated to achieve results if colleagues could see their progress. Transparency breeds cooperation and reduces suspicion, idleness, and intrigue. Therefore, the company minimizes unnecessary efforts, saves time and money, and achieves fantastic productivity.

Focus is an OKR superpower that links employees’ day-to-day goals to the overall organization vision. Unfortunately, the focus is quite rare. Research shows that only 7% of employees fully understand their company’s strategy and what is expected of them to achieve common goals. In the business world of the past, work was strictly managed from above. The employees’ goals were known solely to their managers. This approach is still a common practice in large companies and it generates fundamental disadvantages: lower speed, lack of flexibility, unmotivated people, and one-sided communication.

OKR introduces full transparency. For example, in Google, the goals are transparent. This creates a market-based approach to tracking progress: OKRs of the highest level are known to everyone, OKRs of colleagues are open. In this way, teams that are out of step stand out immediately.

OKRs create a flow of objectives not only from top to bottom but also from the bottom to top. Innovation proposals come not only from top management but also from the periphery. People on the front lines are the ones who notice impending changes before others. The two-way flow of OKR strikes a balance between focus and autonomy, shared goal and creativity.

Tracking and accountability

One of the greatest OKR benefits is that they can be tracked — and therefore revised and adapted. OKR is a living organism, unlike traditional business goals, which are usually frozen for a long period of time.

Research has shown that people who wrote down their goals and drew up weekly progress reports achieved them more often compared to those who just thought about goals and never shared them. Without constant status updates, goals cease to correspond to the current situation and the gap between the plan and reality widens daily.

At this time organizations are widely using cloud technologies to track OKR in real-time. Cloud solutions provide automatic updates, tools for reporting analysis, real-time alerts, and integration with corporate IT products. The real-time OKR dashboard quantifies progress and indicates what needs attention.

Additionally, cloud OKR platforms provide OKR dynamics:

• make everyone’s goals more accessible;
• fuel engagement;
• encourage internal networking;
• save time, money and prevent frustration.

OKRs must be constantly reviewed and monitored, otherwise the framework will not work. Take a look at your sports bracelet — you monitor your movements daily in clear numbers. Thankfully there is no need to monitor OKR on a daily basis. A weekly review is enough to prevent delays, procrastination, and slippage. To achieve high productivity, OKRs should be regularly checked at employee and manager meetings. The purpose of these meetings is to share progress, identify obstacles, and polish key results. Regular team meetings will help to assess progress towards common goals and develop a plan of salvation if required.

Ambitiousness

OKRs lead us to accomplishments that border on our capabilities and dreams. They push us far beyond our comfort zone but help to generate more creative solutions and open new forces up. This creates breakthrough innovations that are impossible with conservative goal-setting.

When ambitious goals are chosen wisely, victory justifies the risks. Here is why Jim Collins introduced the concept of BHAG — a strategic goal (Big Hairy Audacious Goal). Such goals encourage you to jump to the next level. They are close to entrepreneurs who do more than anyone thinks possible, and with fewer resources. OKRs are the only way to focus on crazy goals.

Ambitious goals identify those people who seek to test the extreme limits of their abilities and build the best version of themselves. Such employees are the dream of a professional leader.

An ambitious goal is not a road to nowhere. It cannot be imposed from above without considering the situation on the ground. The team may not be able to withstand it, and the manager should take this into account. The manager must convey two things to people: the importance of the result and the belief that it can be achieved.

Wrapping-up

Above is just a brief introduction to the OKR world. Of course, there are many difficulties arise while implementing this framework in practice. In the following articles, I will discuss the most common problems that companies and teams face during the implementation phase and share my personal experience.