You’ve heard people talk about goals and OKRs but what’s the difference between the two? We set out to answer this question and demonstrate the subtle difference that makes OKR such a powerful framework for managing success.
OKR is a popular goal management framework that drove organizations like Intel, Oracle, and Google to great success. Objectives & Key Results (OKR) help focus work and make success measurable by using two simple but powerful concepts:
An Objective sets out a direction for your team or company. It answers the question: Where do you need to go?
These are simply KPIs or metrics with targets that help you measure progress toward your Objective, and tell you if you’re on track. They answer the question: How will you know you’re getting closer to your Objective?
When someone refers to “an OKR”, they refer to an Objective with one or more Key Results. When someone refers to “OKR”, they’re usually referring to the framework.
An OKR is almost the same as a goal, with a few small differences.
For example, a natural way for people to come up with goals is to say: “Grow revenue to $1 million”. Here we can spot 2 main components: a direction (Grow revenue) and a target ($1 million).
The OKR framework prescribes that you split a goal like this example into two parts, an Objective and a Key Result. The Objective always answers the question Where do I want to go?, and the Key Results answer the question How will I know I’m getting there? Hence, the goal Grow revenue to $1 million can be split into the Objective Grow revenue and the Key Result $1 million in revenues. It really is that simple.
Surely, you could improve the quality of the Objective Grow revenue (read our eBook ‘How to write great OKRs’ to learn how), but you’ve just successfully converted a goal into an OKR. This really is the only hard requirement for working with OKRs: splitting your goals into Objectives and Key Results.
Converting goals into OKRs is recommended for a few reasons. First of all, it helps to increase company-wide transparency as everyone should be able to understand the Objective. Key Results are often more technical and don’t appeal to, or aren’t understood by, everyone.
For example, if your Engineering team has all sorts of complicated metrics they use to measure your app’s performance (such as API response times or API error rates), most people outside of the Engineering team probably have no clue what that means. But if these are Key Results for an Objective to Have an enterprise-grade app performance, everybody should understand what the team is working on.
Another benefit when comparing goals vs OKRs is the ability to add multiple Key Results. Making your app performance enterprise-grade probably requires you to influence more than just one metric. With an OKR, your Key Results can reflect a number of important metrics that you’ll be setting targets for in order to achieve your Objective.
Objectives also represent key focus points for an organization or team. They should, therefore, be inspiring and easy to remember, so your team are clear on what to focus on. Not everybody is moved by numbers or targets, and remembering Objectives is much simpler if they don’t contain any difficult metrics or targets.
As a framework for goal management, OKR means a lot more than Objectives & Key Results. At Perdoo, we look at OKR as a set of best practices — collected ever since goal management came up in the corporate world with the introduction of Management by Objectives (MBO) in the 1950s.
If you’d like to learn more about these best practices and where they come from, I recommend reading Goals gone wild from Harvard Business School. The authors realized that — according to most academic research — goals and goal management have a clear advantage for businesses. They, therefore, researched the pitfalls and risks. You’ll find that most of the rules that belong to the OKR framework (such as transparency, alignment, frequency) are safeguards against these risks.