During the past few months, more and more companies started to ask me some burning questions about OKR. I have summarized the ten most popular questions asked by them below. If you have any other questions about OKR, and it has not been addressed here, feel free to ask me as well.
Q1: What is OKR? What's the value?
OKR stands for Objectives and Key Results. Objectives tell us where we are going, and Key Results suggest how we should get there. It is a critical thinking framework that helps organizations achieve strategic goals.
It was created by Andy Grove, the founder of Intel. In the 1970s, Andy Grove used it to involve all Intel employees to win a business war with Motorola. Since then, the application of OKR continued to facilitate the innovation and rapid development of Intel and helped Intel achieve more significant success in the market.
During that time, John Doer, who was mainly responsible for product development, marketing, and sales at Intel, witnessed the miracles OKR could create. After he became an investor in Google, he introduced OKR to Google. OKR started to be known by industries as it was successfully implemented in Google. As time goes by, more and more companies, such as LinkedIn, Bytedance, Huawei, and Twitter, started to apply OKR in their organizations.
The greatest value of OKR for enterprises is to help enterprises boost the wisdom and efforts of all employees to achieve organizational goals. It ensures employees work together and make measurable efforts to reach organizational goals quickly.
Any organization can be considered as a team. This team is composed of many people from different backgrounds and with different experiences. Because of that, it is natural that every team member has an individual goal. The problem is: if everyone does the job in various ways and pursues their own goal, what would happen to the organization’s goal?
Imagine there are two teams in a basketball contest. In the 1st team, every team member collaborates, and all of them have one common goal: to win the tournament. In the 2nd team, every team member is fighting for their own purposes. Which team will win? The answer is obvious.
Like the basketball contest, within a team, if what every team member does is aligned with others and the common goal, the power is not 1+1=2 any more. It can be 1+1=10 or 20.
Q2: Will OKR be useful for my company?
If your company is living in a VUCA (Volatility, uncertainty, complexity, and ambiguity) environment, you want to make sure you have a team that takes the initiative, work towards your organizational goal, and makes a measurable contribution to achieve it, then OKR will add value to you.
Q3: What is the difference between OKR and KPI?
There are many differences. The first significant difference is:
KPI is a performance evaluation tool, and OKR is a critical thinking framework that can help organizations achieve their strategic goals. Therefore, KPI's primary user is in HR, but many initiators and advocates of OKR are CEOs or company decision-makers. The value of OKR to an organization is far beyond performance management
In reality, most of the time, those great visions and missions and good ideas are only in the top management's minds. However, who can help them realize those visions and missions? Organizations need to have a framework to support the top management to turn their ideas into reality. This framework can also provide a warning if the whole team is not on the right track.
The second big difference is: KPI focuses on evaluation and results. OKR focuses on improving the thinking and management process.
For example, if one of the CEO’s KPIs for 2020 is a 25% increase in sales, what does it look like in an OKR format? It will be something like this:
Objective: to grow the business innovatively in 2020
· KR1: The revenue of value-added service reaches 3 million
· KR2: Create three innovative products with a profit margin of more than 50%
· KR3: Develop three new sales funnels that we have never tried before
KPI is like a dashboard in a car. It can let you know how hot your car is and how much petrol you have left, but it does not guide you to reach your destination. OKR is something similar to a GPS. It may change its route from time to time, but it will guide you to where you want to go.
Q4: What are the requirements of OKR implementation for organizations?
Like any change, OKR needs the full support of the company's top management, such as the CEO. Full support does not mean that the CEO verbally promises that he would like to use OKR in the company. Instead, when communicating with other management team members and even employees of the company, the CEO reviews and reminds everyone of the progress of OKR to ensure that OKR is really being used within the organization.
In addition, this communication needs to be repeated again and again, such as why OKR is essential to us. If an organization wants to achieve its objective, it must keep everyone on the same page. In other words, let all employees take organizational goals as their own goals.
Apart from that, the team using OKR must identify the team's most critical objectives, rather than unrealistically trying to accomplish everything. If the goal is improperly set initially, then the whole team’s time and energy will be wasted.
Finally, we must have a mechanism to implement and review the progress of OKR strictly. The goal in OKR is very challenging because when there is a challenge, there will be a breakthrough. When we set new objectives, we should be daring to set objectives higher than our current competency. An objective that seems impossible now will be achieved sometime in the future. To make this happen, we should consider how to improve our competency to achieve the goal.
However, we cannot achieve challenging objectives all the time. That’s why it is essential for us to record our experience and lessons. For example, reflect and review: why didn’t we achieve this objective? How can we improve this problem in the next cycle? What resources can help us achieve this objective? Is there anything we have to do less or not do in the next cycle?
If we do not strictly review the status of OKR, and do not transfer lessons into competency, the next time we fail, it will affect the team’s morale.
Q5: What does an organization look like if they can successfully implement OKR?
I have seen many leaders who have enough employees and the right products. One of the reasons they are stressed is that they are the only people in the company who are always concerned about the company’s goal. For example, once a leader told me that at 4 a.m., he suddenly jumped out of bed and said to himself, "Gosh, I still have an important thing that has not been completed."
In an organization that successfully implements OKR, the team will make united efforts to work for the company’s objective because they understand its significance. They have a sense of achievement, so that’s why the efforts can be sustainable. This has changed the traditional mindset that thinks the boss is the only responsible person for the company’s goal.
Q6: What are the reasons for the failure of OKR implementation?
There are many reasons for the failure of OKR implementation. However, the most common reason is: the OKR check-in meeting was not held in time.
In the corporate world, each of us may read hundreds of emails daily, answer dozens of phone calls, and attend a few meetings. Our energy and time are limited. For those who need to have business travel regularly, it isn't easy to have a regular OKR check-in meeting with everyone at a fixed time to review the status of OKR.
As a result, after setting objectives, the team forgets the objectives, not to mention converting lessons and experiences into competency. Failing to set up regular check-in meetings is the most common reason for OKR failure.
Q7: How fast can we complete OKR?
If OKR is considered as a project, when the implementation is successful, the project is completed. This is another reason OKR results are not sustainable within some organizations. In fact, OKR should not be considered as a project. It should be a long-term effort within the organization because your business will be continuous.
However, if it is the first time you implement OKR, we will hand-hold you for 2 OKR cycles. Before the 1st cycle, we will understand and evaluate your company's current situation, and then we will help you walk through 2 processes. Each process is about three months.
If it is your first time implementing OKR, you will find problems and questions along the journey. It’s good to discover those as we can avoid that from happening in our next cycle.
Q8: The management and leadership in my company are not mature. Can we do OKR?
This is also a question many leaders have asked me. In fact, if there is no strong leadership or good management in an organization, we cannot achieve anything extraordinary. Leadership and management are the foundation for everything great we want to achieve.
One of the values that OKR brings to the organization is to get employees involved in the business and activate their wisdom and initiative to achieve the state of "all staff working together to achieve the organizational goal."
In the past, the employee’s working goal is always determined by their boss. That’s why, deep inside, employees feel that it is the goal the boss wants to achieve, not me. When the goal is not very relevant to employees, they do not go the extra mile to complete it.
How does OKR change that situation? Objective setting in OKR is a combination of effort from the top-down and bottom-up. In other words, goal setting is not a simple assignment from the superior to the subordinate but a discussion between the superior and the subordinate, considering what both organizations and employees want to achieve.
During the discussion, the subordinate will tell the boss what he wants to achieve and what resources he wants to obtain. The superior also takes this opportunity to understand what subordinates really want, so as to know how to help them. Suppose the relationship between your managers and subordinates in your company is not very harmonious, then after this process, their relationship will certainly have a leap forward or even have a breakthrough. If your managers and subordinates are already in a good relationship, this process will help you translate the trust and bonding into results.
Therefore, the process of implementing OKR is also a process to improve leadership and management.
Q9: Most of the employees in our company are still mainly motivated by salary. Does OKR work for them?
This issue is also a concern for many Malaysian organizations. First of all, we have to accept the fact that the goal of enterprise existence is to make profits. So when an employee joins us, compensation and benefit are the most basic expectations he has to a company.
If the company cannot provide a very competitive package, there should not be a big gap between your company’s package and other competitors' packages. For example, in the same industry, other companies give employees RM6k a month, and you give your employees RM 4k a month, your employees will not be motivated to work for you anyway.
Having said that, does that mean compensation package is the only thing that your employees expect from you? Generally speaking, when an employee joins you, they have two expectations. One is monetary expectation. The other is spiritual expectation. Monetary expectation refers to the compensation package they receive. Spiritual expectation refers to his needs of growing, sense of achievement, and recognition from others.
Think about those outstanding performers who left your team before? Did you satisfy both expectations they have? OKR can activate employees' wisdom and initiative because one-on-one coaching meets employees' growth and recognition expectations.
One-on-one coaching is crucial in the OKR journey. Think about how frequent you will have one-on-one coaching with your subordinates? According to my clients' feedback, many supervisors are too busy to hold a department meeting in half a year's time, not to mention spending time on one-on-one coaching for subordinates.
Some bosses told me, yes, I do one-on-one coaching for my subordinates every week. But after I had a word with their employees, their employees do not like to have meetings with bosses because, from the employee’s perspective, that meeting is not about one-on-one coaching, but about the blaming of results.
No one likes to be blamed by others. When subordinates come to one-on-one coaching, they expect to obtain resources and help to complete something amazing. Growth is equal to happiness. That’s the reason why OKR can be used as a communication strategy and enhance the understanding, bonding, and trust between managers and employees.
Q10: I believe OKR can benefit the company, but how can I make my team accept this method from the bottom of their heart?
Great leaders are far-sighted, and they will get support from their team. When leaders firmly believe OKR will bring breakthroughs to their company, they will use the simplest and direct way to tell the team: Why?
Simon Senek has a famous speech about “Start with Why”. He used a model called The Golden Circle to explain all the most outstanding leaders like Steve Jobs or Martin Luther King to inspire their followers by telling them Why-How-What.
When we want to implement OKR in our organization, how can we explain to our team why we do OKR? I heard one prospect told me: because my CEO will do OKR, we need to find an OKR coach and consultant for him. From this answer, you can see this employee does not buy in OKR. To him, OKR is just another task his CEO assigns to him. So when he received this instruction, his goal is to finish shortlisting OKR consultants. To him, OKR does not sound excited at all, and OKR is not related to him at all.
Once I heard another CEO explains to her team why the company needs to do OKR. “Since we are in the technology industry,” she said: “We should learn the best practice in this industry. We benchmark ourselves against Google and Huawei.” This reason sounds logical, but it may not make sense to employees. The burning questions that employees want to hear from the CEO are: why do we need OKR? How does that help our company at this moment? What’s in it in for me?
OKR will eventually become an item in employees' to-do-list if the CEO cannot answer those questions.
Have more questions about OKR? Please feel free to ask us. Let’s make progress together.