The simple mechanism that makes OKRs outclass regular goals

Establishing a successful OKR program in an organization is a challenge but the essence of OKR is simple and straightforward. A customer of ours once put it like this:

“OKR is a proven, simple and highly effective way of setting, managing and communicating goals and results across your organization.”

The OKR framework includes a set of rules, such as making your Objectives inspiring. These rules are nothing else as best practices. They summarize everything that the corporate world has learned ever since goals became an essential part of running a company with the introduction of Management by Objectives (MBO) in the early 1950s. You can choose which rules you’ll adopt and which you won’t: OKR is not an off-the-shelf solution but should be tailored to your organization and culture.

Unless you decide that goals don’t play a role within your organization, you should at least take a close look at OKR. Let’s see what happens if you don’t use OKR to manage goals using an easy-to-grasp private life example.

Managing goals the old way

Imagine you want to lose weight, say 10 kg. What do you do first? Perhaps you’ll set yourself goals to go to the gym twice a week and to run a 10K every week. You’ll probably also weigh yourself frequently to see if you are actually losing weight.

You now have 3 different goals: lose 10 kg, go the gym twice a week, and run a 10K every week. In classical goal management systems and habit trackers, your goals would look like this:

These goals, however, are not all the same. There is only one thing that really matters to you: losing weight. Going to the gym and going for a run are just a means to that end. Weighing yourself is your way of verifying that you are progressing toward your goal of losing 15 kg. You could go to the gym twice a week, but just sitting there sipping smoothies is not very likely to generate any results.

Would you be happy with the results below? If you were, then losing weight wasn’t your real intention.

As you see, it’s crucial to have clarity on what truly matters. How else will you get where you want to be? All too often we get lost in goals that are actually a means to an end. If they don’t generate the desired results, we should change these goals to get where we really want to be.

OKR ensures that all teams across the organizations achieve that clarity of intent. It does come at a cost: it takes effort to set up. You decide what’s more important, but I would say that’s time well spent.

The power of OKR

Any goal and its sub-goals can be converted into an Objective with Key Results. One of the criteria for a good Objective is to make it inspiring. This is a nice-to-have rather than a strict requirement, but for most people, it’s more motivating to work toward something positive and inspiring like Getting in shape again, instead of Losing weight.

Your Key Result will tell you whether you are getting closer to your Objective, e.g., lose 10 kg. It’s the Key Result that makes your Objective measurable, allowing you to get on the scale every week and track progress. The beauty of OKR is that you can add multiple Key Results. If your true Objective is to get in shape, maybe you also want to reduce your body fat percentage by 5% and be able to run a marathon. If you manage to achieve all 3, you’re pretty much in shape again.

Introducing a third element: Initiatives

You’ve also seen that you will be doing certain things to achieve your Objective to lose weight, like going to the gym and going for a run. This is why, at Perdoo, we have pioneered a third element: Initiatives. Initiatives are all the things you will do, the outputs you will be generating, to realize your Objective.

Your Initiatives are always hypothesis, and you’ll have to look at your Key Result(s) to see whether they are generating the desired outcome. While working on your Initiatives each day, you should check your OKRs, at least once every week, to see if you’re actually moving forward.

OKRs vs. Goals

If you compare OKRs to regular goals, the benefits of OKRs are clear. Regular goals are just things you want to do or accomplish in the future. There is no differentiation between intent, measurement, and action. With OKRs, on the other hand, you differentiate between where you want to be (Objective), how you will know if you’re getting there (Key Results), and what you will do to get there (Initiatives). This structure makes OKRs much more powerful than regular goals.