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A few years ago, not many people had heard of OKR (Objectives & Key Results). Today, thousands of organizations across the world have successfully adopted the framework, supported by hundreds of articles that explain how to get the most out of your own OKR program. The most important question, however, remains largely unanswered: what is OKR for?
What is OKR?
To find out what OKR is for, let’s first have a look at what OKR really is. OKR is 2 different things: (i) it’s a way to structure goals; and (ii) it’s a goal management methodology. Some of the information that you’ll find online is confusing because people tend to not differentiate between the two.
(i) OKR as a way to structure goals
You can pretty much structure any goal as an OKR. In an organization or team, when you often collaborate with dozens or hundreds of others, clarity is really important. Structuring goals as OKRs takes a bit more time and effort, but the upside is that you’ll have a lot more clarity about what your intentions. If you want to learn more about how OKRs help you gain more clarity of intent, I recommend you to read this post on why OKRs outclass regular goals.
(ii) OKR as a goal management methodology
OKR is also a methodology, or framework, that helps you run a successful goal-management program in your team or organization. The OKR framework is a set of best practices that prescribe all elements of a successful goal-management program, such as how often to set goals, on what levels (e.g. company, team) to set them, and whether or not to make all your goals transparent. When you read on the internet that Key Results need to be ambitious, for instance, you’re reading about the OKR methodology.
Do I have to use both?
No. You could decide to structure goals in your organization as OKRs but to not adopt the OKR methodology. You could also decide to adopt the OKR methodology but to not structure your goals as OKRs. At Perdoo, we strongly believe in the value of structuring goals as OKRs, which is why we’ve made that a requirement of being able to work with our software.
What is the OKR methodology for?
We know now that OKR is a way to structure goals and that the benefit of structuring goals as OKRs is clarity of intent. We also know that OKR is a goal management methodology. It is still unclear, however, what the purpose of OKR as a methodology is.
Roughly said, the OKR methodology can be used for 2 different purposes: (i) to manage performance of individuals, or (ii) to manage performance of your business.
(i) Using OKR to manage performance of individuals
This is more of an HR use case. It takes your employees as the starting point for your OKR program and answers the question: now that we have all these employees, what should their goals (OKRs) be?
In this case your OKRs are often very output-focused, and the vast majority of your OKRs will be Individual OKRs or Personal Development OKRs. In this use case, OKR becomes an employee performance management tool, where individuals are the focus and often results in OKR as a tool to ensure employees are doing the things that managers want them to do.
(ii) Using OKR to manage performance of your business
This use case focuses on using OKR to lead your organization and teams towards a desired future. This is the use case that we’ve built Perdoo for. We don’t take your employees as the starting point, but we take your organization as the starting point. Organizations have ambitions, and their ultimate ambition is typically reflected in their mission and vision. OKRs bridges the gap between today’s reality and that desired future.
In order for your organization to get where it wants to be, it needs resources, such as people. To allocate resources wisely, direction and leadership is required. This direction and leadership come from Company and Team OKRs. These OKRs communicate where everyone needs to go, what the priorities are and how everyone is progressing. These are the OKRs that help you align your employees behind the goals of the organization.
While there is still room for Individual Goals, such Individual Goals then define what someone needs to do in order to help the company or team achieve its OKRs. Such Individual Goals, that describe what you’ll be doing, is what we call Initiatives at Perdoo. OKRs measure your desired outcomes, and only measuring them is not going to help you achieve them. Just buying a scale is also not going to make you lose weight. It is therefore crucial that your OKRs are supported by such Initiatives.
To help people reach their full potential, and to get the most out of your resources, you need to create an environment in which people can perform well. That means, amongst other things, that you need to lead them to success, you need to give them direction and show them what is most important right now for their team and for the company. That’s exactly what this use case is for.
We’ve seen that it is important to differentiate between OKR as a way to structure goals and OKR as a goal management framework. Structuring goals as OKRs gives you increased clarity of what your real intentions are. The goal management framework OKR can be used for 2 different purposes. Before you get started with the OKR methodology, it’s important to first decide what you are planning to use it for. At Perdoo, we believe that the OKR methodology is a great way to help you lead your organization towards that desired future. That is what we’ve built our software and services for.