How to overcome organizational chaos with OKRs: ambitious goals and collective ownership

“Is my business moving in the right direction? Am I setting the right goals? — these are the questions entrepreneurs ask at different stages of developing their own business. One of the tools that will help make the company’s progress systemic can be OKR (Objectives and Key Results, “Goals and Key Results”) - a goal setting system developed by Intel.

Its key difference from others is flexibility. Many companies plan their work a year in advance, and this, as a rule, ends with the plan being hopelessly outdated. OKR follows an agile ideology in which goals and results are regularly reviewed. This usually happens once a quarter, but many companies adapt the system to their own needs and additionally implement weekly and annual OKRs.

The system owes its popularity to former Intel employee and venture investor John Doerr. Today this method is used in many well-known IT companies, including Google How Google sets goals: OKRs, LinkedIn The Management Framework that Propelled LinkedIn to a $20 Billion Company, Twitter What Twitter's CEO Learned from Google and others.

To start working on OKRs, you need:

1. Start preparing employees 3–4 months before the transition to a new planning system to make it easier. Hold meetings, webinars, recommend suitable literature and try to implement OKR at the level of corporate culture.
2. Formulate goals.
3. Define results.
4. Monitor implementation and adjust goals.

How to formulate goals

Goals in an OKR system are a memorable and concise description of what you want to achieve. Their main purpose is to challenge a team or company.

Another distinctive feature of the OCD system is who forms the goals and results. Unlike KPIs, which are usually set by management, OKRs can be created by the performers themselves. This encourages more initiative and involvement in the company's affairs among ordinary employees.

In addition, goals must meet some important criteria.

Ambition

It is important to maintain a balance here: the goal should be achievable, but not too simple. Imagine what you could do at your best. This will be a great goal.

Finishness and clarity

It's simple: the end point that needs to be achieved must be defined. Try to make the target a fighting unit in its own right, a slogan that doesn't need explanation.

Ambiguous language can lead to conflicts with other employees' goals. For example, team A wants to update the UX of the site: remove outdated elements, change colors and buttons. Team B wants to optimize the site and improve loading speed. At the same time, both used the vague wording “Improve the site,” although by this they mean completely different actions. To avoid inconsistency, Team A should have set the goal “Improve the UX of the site,” and Team B should have set the goal “Speed ​​up the loading of the site.”

Brevity

There shouldn't be many goals. If it is a small startup of five people, one will be enough. For example, “Create an AI calculator app and get to the top best sellers on Google Play” is not a good goal. The best choice would be to focus on the launch of the product (“Create a calculator app with AI”), and only after that, in the following quarters, focus on promoting it.

And even in the case of a large company with a complex structure, try not to create an additional goal once again. If there are too many of them, then it will take a lot of time to synchronize between departments and find out who is doing what.

Goals have been set, let's get to work, comrades!?

Big, hairy goals provide companies with a path to success. But success itself is not easy to create. It is impossible to give unambiguous recommendations on how to find this path and how to go through it to the end. If this were possible, if there were some “secret” methods of success, then everyone who became familiar with this method could become successful. However, alas, miracles do not happen.

At the same time, this does not mean that success is only a consequence of a successful combination of circumstances, the ability to be “in the right place at the right time,” and, finally, just luck. You can and should move towards success purposefully, including with the help of big “hairy” goals.

Entrepreneurs and leaders began the path to success, first of all, by being able to face harsh reality. Reality is “reality” because it is always harsh, regardless of time, regardless of crises, recessions or upswings. And you need to be able to honestly understand the situation in which the business and the company find themselves. Without this, it is impossible to make the right decisions, set the right goals, including big goals, BHAGs.

To develop big “hairy” goals, the efforts of only the owner of the company (group of owners) or only the “first” managers of the company are not enough. One must be able to create an atmosphere in which the truth can be heard. Of course, what is important here is dialogue and argument, not conflict, discussion of mistakes, or accusations.

summarized as follows: it is a way of leading a company through questions rather than answers.

It seems simple, but not everyone can do this, create such an atmosphere, even if they have a great desire.

Big “hairy” goals capture the imagination and fascinate employees. But big goals can be both good and bad. Bad, in the sense that they won’t actually lead the company anywhere. Such bad goals are a kind of bravado. Like, tomorrow we will show everyone who we really are, we will become the first and the best, we will lure all the clients to ourselves, we will invent something unheard of, etc.

Good goals, whether they are big or small, do not matter - they are derived from a realistic understanding of the situation in which the company and business find themselves. Understanding that any problems inside or outside are at the same time new, hitherto unknown opportunities. Understanding your so-called competencies, which is better to say in Russian, understanding what the company can be the best at, and even better, if it can be the best in the world.

When setting up BHAGs, it is important to understand what entrepreneurs and company managers really care about. The key point here is that they really care about the interests of the company and the business, that the interests of the company come above personal interests.

This is difficult to do and, at times, even impossible to imagine, because the main driving force of entrepreneurship is making a profit, including to satisfy personal interests. All this is true.

But “correct” big “hairy” goals appear only where all the above factors are combined at the same time: understanding of opportunities, understanding of the situation, understanding of competencies and the primacy of business interests.

How to formulate results

Once you have decided on your goals, you can start working on the results. If goals motivate and indicate the general direction of work, then the results should be as specific and measurable as possible. These are working tools and metrics.

It is also important to maintain moderation with them: each goal can have up to five results. Otherwise, you will be wasting your efforts. For example, you have an online store and you want to improve your email newsletter with offers for users. You set an ambitious goal: “To create the most profitable newsletter on the RuNet.” In this case the results will be as follows:

1. Increase email open rates to 70%.
2. Increase sales from each mailing to 20,000 rubles.
3. Increase the number of purchases in each newsletter to 50.
4. Win the competition “The most profitable mailing list on the Runet.”

Key results also have several important criteria to consider.

Measurability

No numbers - no results! If abstract constructions are still possible when drawing up goals, then this is unacceptable when forming results.

Confirmability

The result must first of all be achievable. If you cannot confidently say that at one moment you achieved what you wanted, then there is no point in setting such a result.

Compactness

One result - one metric. If you try to put everything in the world into the formulation, it will not lead to anything good.

This approach provides a number of advantages

Focus on the main thing. Everyone knows where the company is heading, what is important at the moment. The clearer the focus, the easier it is to decide which tasks are priority at each stage. A simple check works: what will the solution to the problem achieve in terms of achieving the goals of the team and the company.

Openness and open-mindedness. Each employee understands the goals of the organization and department. Awareness of common goals gives meaning to every action, even the most routine. Transparency ensures mutual understanding and consistency at all stages.

Engagement. People set goals themselves and do it openly, which entails a completely different level of responsibility.

Flexibility and willingness to change. OKRs don't specify how you'll achieve your goals or set your goals, so you can choose and change approaches and tools as you move forward.

How to Track OKR Completion

Results are monitored at short meetings - check-in. They are held weekly or monthly and last approximately 30 minutes, depending on the tasks assigned and the specifics of the business.

There are many different formats for holding such meetings. You can meet with employees in person if everyone is in the same city, or organize a video conference via Skype or Google Hangouts. Nevertheless, any check-in follows approximately the same formula:

1. Progress report. How OKR indicators have changed since the start or last check-in.
2. Confidence in achievement. Employees give an approximate forecast of whether they will be able to achieve the stated results.
3. Obstacles. External and internal factors that slow down or may slow down the implementation of OKRs.
4. Initiatives. What actions can the team take to speed up or make it easier to achieve results?

At the end of the quarter, a final check-in meeting is held: each team reports on the results and evaluates successes and failures. OKR philosophy implies ambition, so achieving 70% of goals is considered successful. If an employee or department completed the assigned tasks 100%, then most likely they were too simple. Therefore, when planning for a new quarter, the bar should be raised significantly.

In addition, if one of the key results is not met, the goal is not considered achieved.

What is the OKR method?

OKR is an acronym for Objectives and Key Results - a method that allows you to plan effectively while involving the entire team in the process.

Already from the name it is clear that the essence of the method contains goals and key indicators. For each given goal, we set our own measurable results (or metrics), which reflect how much the goal has been achieved.

This method is mainly used to set goals for an organization for a quarter or six months, but it can also be set for a year.

We use the OKR method when conducting quarterly strategic sessions, setting goals for the year broken down into quarters.

Ask yourself:

1. Where do I want to go? - the answer to this question will be your goal.
2. What results will show that I have achieved it? - the answer will be the key metrics by which you will evaluate that you have achieved your goal.

Dorr's Goal Formula

John Doerr, when introducing OKRs at Google, proposed a formula for setting goals:

I will achieve ___________, which can be assessed by ___________.

Without a measurable metric, you have no goal, only desire. A good goal describes what you want to achieve and how you are going to measure the result.

Let's take a closer look at goals and metrics.

Goals and key results of KRs

There is no need to set many goals: three are enough, the limit is 5. Needless to say, goals should be set according to SMART:

S - Specific - the goal must be specific. For example, increase sales of flat jet nozzles.

M - Measurable - the goal must be measurable. For example, increase sales of flat jet nozzles by 25% compared to the previous year.

A - Attainable - the goal must be achievable. For example, increase sales of flat jet nozzles by 25% compared to the previous year by reducing production costs, automation and increasing the marketing budget by 80% of the current figure.

R - Relevant - and the goal must be relevant. Will increasing injector sales by 25% really give you a noticeable increase in profits? How much money will you earn? How much will you lose? Maybe it’s better not to increase the marketing budget, but to automate production and reduce staff?

T - Time-bound - the goal must be limited in time. For example, “by the end of the third quarter of this year, increase sales of flat jet nozzles by 25% compared to the previous period by reducing production costs, automation and increasing the marketing budget by 80% of the current figure.”

Or it may be the other way around: it is important for you that the marketing budget remains at the same level and then you need to prescribe a different solution.

But for OKRs, it’s not enough to just set the right goals, they must be ambitious. Ambitious, but not impossible. And finding this line is perhaps the most difficult thing.

Ideally, you take the highest possible realistic figure and raise it by another 30-40%. Those. In a normal situation, working as hard as you can, your company will only be able to achieve 60-70% of the ambitious goal. And this is considered an excellent result.

For ourselves, we understand the ambitiousness of a goal a little differently. We set a 100% goal subject to successful external factors, i.e. if a crisis does not happen, demand does not change, something unpredictable does not happen, then all our efforts will lead to achieving the goal 100%, but if something goes wrong, then we must complete it by 60-70%, no less . Unfortunately, there are external factors and it is often difficult to rely on them.

Let’s say that every year sales of injectors grow by an average of 7-10% without making drastic decisions, if you try hard, it seems realistic to make 15-20%, then the goal of growing by 25% will be very ambitious, but in principle real.

We sorted out the goals and what about the metrics. Each goal should have no more than 3-4 metrics. Metric = An indicator by which you will understand that the goal has been achieved.

Essentially, metrics are steps towards achieving a goal.

To put it in simple terms, let’s assume that your goal is “to eat 5 pies in 8 minutes,” then your steps could be like this:

1. Eating nothing for 4 hours
2. Pour 250 ml of tea, you can choke in the dry drink
3. Eat 3 pies in 5 minutes
4. Eat 2 pies in 3 minutes

Key milestones are not just numbers to be achieved, but rather steps or measurable milestones that will contribute to achieving the goal.

If with pies everything is extremely simple, then in organization everything is not so obvious.

An example of goal setting using the OKR method

Let's return to our injectors. Goal: by the 3rd quarter of this year, increase sales of flat jet nozzles by 25% compared to the previous year.

Key indicators:

1. In the first quarter, reduce production costs by 15% by changing suppliers and reducing the cost of materials.
2. Hire 15 new sales representatives, increase sales by 10%. By the end of the 1st quarter, we must sell at least X injectors per month.
3. In the second quarter, reduce production costs by another 20% due to production automation.
4. Increase your marketing budget by 80% compared to the previous period. By the end of Q2 we should be selling at least X number of injectors per month.

If we announce that our goal is to increase injector sales by 25%, then most likely even the management team will fall into a stupor. How about 25%? We have never grown so much, it is impossible. But when people see concrete steps to achieve these goals, then implementation no longer seems so incredible.

Let me immediately clarify what the difference is between the concept of KR (key results) in OKR and the traditional KPI (key performance indicators). KPI is, as it were, included in the concept of KR.

If one of the steps to achieving a goal is to achieve some kind of metric, then KR in this case will be equal to the KPI metric, but KR can also simply be a progress indicator. For example, let’s take the key result “application launch” - it can either be launched or not, and it makes no sense to put a metric here on how many percent it is launched (kpi in % does not make sense here, the application is either launched or not). Launching an application is simply KR - a key result to achieving the goal.

North star metric

It’s also worth mentioning the North Star metric, sometimes called the metric of omnipotence. =)

The most important indicator for a company is the polar star metric, then simply NSM. That metric that reflects the core value of the company in the eyes of customers. For VKontakte, this is daily user activity; the more people are active on the social network, the better. For search engines - satisfaction of the user's request. For Airbnb, the number of accommodations booked.

This metric shows customer satisfaction and it is from this metric that we must proceed when building a company strategy and setting internal goals.

However, the long-term value of the product cannot be discounted. Let me explain with an example. Suppose some kind of universal flash mob was launched on a social network and the activity simply went off scale. Yes, user activity will explode like never before, but everyone still understands that this is a short-term effect that will not lead to high-quality growth for the company.

Therefore, the NSM metric must be coupled with long-term value for the end user.

It is NSM that sets the focus for further development and should be taken into account when planning using the OKR method, so that your company does not end up being pulled in different directions, and you grab onto everything that comes to hand.

NSM must be measurable, reflect value, and directly correlate to company profitability.

For example, for the ivi online cinema, the NSM metric is the time spent by users watching movies. Although initially it may seem that you need to focus on MRR (Monthly Recurring Revenue) - regular monthly revenue or the number of users who have subscribed, because this figure reflects profitability. Profitability may reflect it, but there is no value for the client in the indicator, and for NSM this is precisely what is key.

Knowing your NSM, it’s easy to focus on the main goal of the company and choose the right development strategy, so even before the OKR, define the company’s mission, value for customers and your NSM.

If we talk about us, our mission is to help small businesses. Anyone can promote a website with the capabilities of Sberbank, but not everyone can do this with the capabilities of a small business. Accordingly, the NSM metric is the amount of time that small businesses trust us.

And since we are talking about OKRs and the synchronization of all the company’s tasks and goals, it is logical to assume that the metrics, following the goals, will be built into a kind of pyramid. There are ready-made sets of metrics, for example AARRR, and at first you can rely on them. But it’s better to build yours based on your goals.

If we talk about us, our NSM is closely related to the metrics Cls (the number of “successful” clients) and Ltv (customer lifetime value). Cls in turn is related to the number of CL clients and ChR churn, etc. At one time we went into deep analytics and operated with more than 100 metrics at once (it was incredibly difficult and clumsy), don’t get carried away, go from the goals, and the metrics will line up by themselves.

How can we now convey this information to the average employee?

Engaging the team in OKRs

The goal is to connect the goals of each team member with the overall goal of the organization. We set goals for the company with the general management team, then each manager and his team think through how the team can influence the achievement of this goal, then a decomposition is carried out for each employee.

We set high-level strategic annual goals with long-term OKRs for the company. Based on them, we determine tactical OKRs with shorter OKRs for teams. And we monitor operational indicators for each employee on a monthly basis.

All key indicators are set in a two-way manner - both from the bottom up (set by the employees themselves based on the stated goal for the company and tactical tasks), and from the top down (corrected by the manager).

Thus, the effectiveness of each employee will determine whether the company can achieve its goals. And since the indicators are not imposed, but are set by employees independently, then each employee feels responsible for achieving them. Plus the fact that I won’t get hit with a hat for not achieving this goal really frees up my hands and allows me to get out of my comfort zone as painlessly as possible. And to achieve ambitious goals, leaving your comfort zone is necessary.

Everyone wants to work in cool companies, give employees the opportunity to build such an organization themselves.

Therefore, it is important that every employee has access to the posted OKRs. And he could clearly see how successfully the goals were being realized, and also understand what he should focus on now.

Another important point is that employees should not be punished for failing to achieve a goal. Remember that we set ambitious goals that have not been achieved before? That is why you cannot be fined for failing to achieve them. OKR is not a personal assessment of an employee, it is a reflection of his contribution to the development of the company.

Problems with employee engagement

It was difficult not even to convey, but to understand for ourselves what role, for example, a designer of client landing pages plays, how he can help in achieving the company’s global goal. In fact, people are usually themselves able to understand how they can help achieve a common goal. Therefore, involve employees in the overall process. They are interested in this and are impressed that you are interested in everyone’s opinion. For example, we learned a lot of new things.

Even during implementation, we were faced with the fact that not all departments could support a particular goal. For example, it is difficult for marketing to participate in the goals of reducing the cost of production processes, just as it is difficult for production to influence the growth of demand. Therefore, for ourselves we set a common goal for the company, for example, 5 years ago one of our goals was to become a company that provides the best customer support. And only then it gave rise to marketing tasks to shape the company’s positioning in the eyes of our clients, indicators of the number of positive and negative reviews on third-party sites, etc. were calculated. And for the production departments, the task was to collect maximum feedback from clients, and they began collecting NPS metrics for evaluation. Those. As part of the overall goal, we set tasks separately for production and separately for marketing and sales. And sometimes they are even supplemented with local tasks that only indirectly affect the overall goal of the company.

Before the OKR method, we used the MBO (management by objectives) method - if you are interested, you can read the details in the book “The Practice of Management” by Peter Drucker. This is a method of performance management, where goals must be achieved 100% and are predominantly descended from top to bottom, i.e. are appointed leaders. And then the employee is either fined for failure to achieve, or given a bonus if he was great.

Comparing both methods, I can say that OKR is much more effective because people themselves share their goals and strive to achieve them. This is not a belief imposed from above, it is independently invented, the value of such tasks is many times higher. Teams agree among themselves and synchronize their actions.

Every month we make a summary for the company and for each employee specifically, where we are on the path to achieving the goal. This allows everyone to keep their finger on the pulse.

The only problem is the demotivation of the team. When you regularly fail to achieve an ambitious goal, it can be very demotivating. You see unrealistic numbers and often want to give up and give up on such a goal in advance. To prevent this from happening, at the end of the quarter/year/other reporting period, it is necessary to show how much the company has grown and how well it has done. But when the goal is achieved 100%, it is perceived as a colossal success, and euphoria captures even the cleaning lady.

To be completely honest, we usually set 3 goals, extremely rarely 5, and most often only one can achieve 100%. At first we were very upset, but then we realized that we had stepped on the rake that most newcomers who implement OKRs step on - we simply do not have enough capabilities and resources to achieve several ambitious goals. Now we are putting up 3, but we are concentrating on one, the most important one.

Conclusion

OKR is an excellent tool that will help a business systematize and synchronize processes. Despite the fact that it was popularized by IT giants like Intel and Google, no one prohibits the use of the method in non-tech companies.

But you shouldn’t treat OKRs as a magic wand, with a wave of which everything will work out on its own. It is, rather, a professional drill or an expensive electric screwdriver, which only works as it should in skillful hands. Success in using the system depends on how you communicate it to employees and implement it throughout the organization.

To make working on OKRs more convenient, you can also use:

• special template for Google Sheets;
• the Coda service, which we recently wrote about;
• project management application Trello.

Also, if you are interested in this topic, you can read John Doerr’s book “Measure What Matters,” and also watch the Google webinar.

Why should you implement OKRs?

What OKR does for a company is an individual question, because... It is impossible to accurately calculate the effect of using this technique. But there are 3 reasons why it is worth introducing OKRs into a company:

1. Common goal . All employees will have a common goal, and this is the best motivator for effective work. Employees who perform joint tasks will become closer to each other and create a positive working atmosphere in the team.
2. Labor productivity will increase . OKR involves achieving ambitious goals, so your company will have to find a non-standard solution to the assigned tasks. Of course, in order to sustain the “sprint for the dream,” the company will have to increase the workload on employees, which will certainly lead to an increase in labor productivity.
3. Professional growth of employees. OKR is somewhat similar to the usual way of achieving goals: company management sets goals, and employees fulfill them. But that's where the similarities end. The beauty of the OKR method is that employees must independently come up with tasks for themselves, and then implement them. This approach will reveal the hidden potential of employees and accelerate their professional growth.

For more information about the question of why it is worth implementing OKRs in a company, read the article Why you should implement OKRs in a startup: 5 reasons with explanations.

Features of setting personal goals according to SMART

If you are doing well with self-organization and you don’t need a supervisor, you can safely skip this section and move on to the auxiliary criteria. If not, continue.

It is quite easy to assign a task to subordinates and monitor its implementation. It’s a little more difficult to set such a task for yourself.

When you do this, be sure to include personal gain in the goal.

Below we will look at techniques that will help you do this.

As for control, here you can use the help of a loved one. And ask to clarify at a certain time whether the task was completed. Responsibility to someone is motivating and failures are unlikely.

Over time, you will get used to self-control, and the need for external factors will simply disappear. Independence and responsibility can be developed - we will briefly tell you how to do this.

Personal responsibility

Responsibility is what allows us to stay on track and get what we want. The most important thing to remember is don't let your circumstances define who you are and what you do. You create your own world, and your goals will be fulfilled if you put enough effort and responsibility into their implementation.

In psychology there is a term locus of control - this is what they say about those who blame other people or some circumstances for their own failures. Such a person does not admit his guilt.

We will not be like that - we are ready to take responsibility and implement our plans. Let us briefly explain how to handle responsibility:

1. Reconsider the concept itself. Don't let it scare you. It is responsibility that will allow you to get what you want.
2. Imagine that your life depends on completing a task. The advice may seem harsh, but often in stressful situations our brain invents the most effective solutions.
3. Control your circumstances. Not the other way around. Yes, there are force majeure events, but they happen infrequently. Anticipate them (power outages, internet, etc.) and prepare in advance.
4. Desire exceeds fear. You want a promotion, but don't want to take on the responsibility. The moment your desire exceeds your fear, you will begin to move towards completing the task.
5. Be brave. Here I will tell you about the story of actor Jim Carrey. The family was poor, it even happened that they were forced to sleep in a tent in the yard of relatives. Young Jim arrived in the famous Hollywood hills, took out his checkbook and wrote himself a check for 10 million dollars. Of course, he had no trace of that kind of money. But in just 5 years he arrived at such fees. Because he was brave and clearly saw the goal in front of him. So go for it - there are no unattainable goals.
6. Be prepared for failure. Let me give you a simple analogy: in order to extract a few grams of alluvial gold, you need to wash through tons of dirt. So don’t be afraid to get dirty, and don’t let minor troubles hide the peak from you - your goal.

With any method of setting tasks, some tools work successfully; we will consider them below.