If you are an entrepreneur or a business executive, then you know how very  important it is to have clear long-term strategy and clear short-term goals.

As far as long-term strategy is concerned, it is tightly connected to the vision and mission as well as to the values of your company. 

As far as short-term goals are concerned it is to know what to do in the next weeks and months

How can you set achievable and clear goals that connect both, long- and short-term objectives at all times?
One of the greatest and clearest methods to set goals is the OKR Method (Objectives and Key Results). It was originally introduced to Google in 1999 by John Doerr. Since then, a lot of successful companies have introduced OKRs as a method of goal setting, such as Twitter, LinkedIn, Spotify, GoPro, Zynga, Flipboard, Box, Yahoo!, Eventbrite and many others.
One of the biggest advantages of this method is that you can break down every objective as you move down the levels of the company. It means that the Company Objective serves as the guiding, big-picture objective, followed by the departments', teams' or employees' objectives. In this way, you can track every objective up through different levels and see how a concrete objective can lead to the common company goal.

These objectives are defined usually every quarter in absolute transparency. Every employee can see and track the objectives of the whole organization and their own to see how she contributes to the common objective and find the answer to the frequent question as to "Why?" that a lot of employees ask themselves. The employees can see their goal and think about various ingenious ways on how to achieve it.

The system is set in the form of a pyramid. at the top are the main objectives set for the executive level and team goals are set to serve as a list of priorities they are to focus on in a certain time frame. 

This method limits the number of the objectives to the maximum of 5 (3-5 ideally) and each objective has 4 key results to measure the achievement with. By limiting the number of the objectives, we are forced to focus on the most important ones.

The main rules of the OKR method:

  • The objectives are ambitious and make us feel a tiny bit uncomfortable
  • The Key Results are measurable and their level of achievement is easily rated by a percentage.
  • The model is throughout transparent. Every employee can see everybody else's OKRs.
  • The objectives should aim very high. The 75% achievement level should be considered the sweet spot. If the achievement level consistently reaches 100%, then we can consider it not to be ambitious enough. If the level of achievement stays too low, we can use the OKRs as the basis for the next quarter goal setting.

It is crucial for the objectives to be defined clearly and to be as concrete as possible. They also have to be defined accordingly to the level. The objectives are not a todo list! 

It is not always easy to set clear objectives. Therefore we have the key results that help us quantify the success in different phases or steps. If the success or the achievement level cannot be clearly defined (success - 100% achievement, no success - 0%), then you set the key results in such a way that is is possible to measure the success. This way only is it possible to evaluate the level of success and does not leave much room for interpretation. 

So, who sets the objectives? Ideally, most objectives come from the bottom level, the teams themselves. The process, however, usually starts from two directions, from the bottom and the top level. The ideal ratio is 60% (bottom) 40% (top). Why? because, nobody knows the processes and the products better than the employees themselves. And then the negotiations begin. The management negotiates with the teams to set commonly agreed objectives.

At the end of each quarter starts the OKR evaluation process. In this retrospective process, the evaluation of the achievement level for each of teams is carried out. As we said before, the objectives should be very ambitious and therefore we evaluate only the level of OKR achievement and not the individual performance. 

If the level of the achievement is not satisfactory, we should think if the OKRs should be altered, changed or carried over to the next quarter. We should only carry over the objectives that are absolutely necessary for achieving the company's global common objectives. If it is not crucial, we should definitely forget about it. If a project did not receive proper attention during a quarter we should ask why not and if it is worthwhile to keep wasting resources to a project that is not bringing results. 

The process of setting and evaluating a quarter's OKRs repeats at the beginning of every quarter. 

In our next posts we will go into the detail of every important aspect regarding OKRs as well as some real life examples. Stay tuned!