What is OKR?
OKR is a method for flexibly aligning an organisation to changing market conditions and thus for agile management. OKR is the abbreviation for Objectives and Key Results. Objectives define “Where do I want to go?” and Key Results determine “How do I measure whether I have reached my goal?
How does OKR work?
In OKR, goals are defined for the coming quarter based on the long-term orientation of a company. They are then checked for progress in weekly reviews and redefined again at the end of the quarter. The heart is thus a short-cycle planning with consistent review of the results.
The formulation of an OKR starts with answering the question “Why? Then the objective is defined. This shows the direction for the coming quarter. After that, several key results determine what the key outcomes are and how progress towards achieving the quarterly target can be measured.
The difference between OKR and KPI lies in the influence on the control of targets. Key Performance Indicators (KPIs) are key figures of a company that have a long-term consistency. OKRs, on the other hand, are focused on one quarter in order to achieve a concrete improvement in this period through targeted influence.
OKR fails when top management and leaders do not demand the consistent discipline to implement the OKR method. OKR can only be kept alive if it becomes part of the DNA of every employee. Only when OKR is no longer questioned in an organisation does it have a chance.
OKR is referred to as an agile method in its current application and is strongly associated with the principles of the Agile Manifesto (2001). The origins of OKR go back to the 1970s. Even back then, the idea of OKR was based on quarterly planning with short-cycle goal review.
OKRs make sense when a company wants to position itself successfully on the market in the long term. Especially when rigid structures prevent corporate success, the OKR method helps with flexible and agile orientation. In addition, OKR is often introduced when previous activities to achieve goals have not led to any significant success.
In principle, the introduction of OKR is suitable and makes sense for any size of company. Regardless of whether it is a start-up, a medium-sized company or a corporate group. Likewise, the implementation of OKR is independent of the industry. In general, however, it is recommended to inform oneself sufficiently about the different implementation strategies before the introduction.
Different roles can be distinguished in OKR. Top management has the role of showing the highest level of commitment to OKR. The managers are responsible for exemplifying the OKR process and demanding discipline. The OKR manager is responsible for training and coaching the OKR methodology and maintaining the OKR standard.
In simple terms, OKR is a method to achieve set goals. For this purpose, improvement activities are defined to get processes and procedures to a better performance level. Thus, OKRs should be part of the daily work of every employee, which is an additional component to the classic daily business.
In general, there are a number of tools for implementing OKR. All tools have their advantages and disadvantages. Therefore, it is advisable to use a manual method (e.g. Excel) for the first one to two years and to learn from the company-specific OKR process. With this, the requirements for an IT solution can then be set in concrete terms.
One of the advantages of OKR is that targets are set for only one quarter. This increases the impact in terms of implementation. In addition, OKR conducts weekly reviews to assess the current status of implementation in a timely manner. Finally, a high level of transparency is created as OKRs are visible to everyone in the company.
Classic project management is based on the so-called waterfall method, in which a project is planned through in detail from start to finish. OKR, on the other hand, follows the principle of agile planning. Here, the actions are planned on a short-cycle basis. This means that the next actions are only planned until the next weekly review.
The disadvantages of OKR are that it is more difficult to implement OKR in traditionally grown corporate structures. Similarly, company-wide quarterly planning can overburden an organisation. Especially in larger companies, the change of planning cycles means a high degree of coordination and effort.
