OKR – The Silicon Valley management framework

Do you know what your employees, colleagues, and superiors in the company want to achieve? And successfully do? How are the goals communicated in your company? To simplify target management and employee leadership, we introduce the OKR method to you in this blog post.

Many Silicon Valley companies, including Google, Uber and LinkedIn, use this method to manage their team. The OKR method is a key factor in the success of these companies.

Visible progress for everybody

The method was developed and introduced at Intel by Andrew Grove. Today it is used by the most successful companies around the world. It is used to focus on goals and create clarity on how to achieve them. In addition, progress will be made visible to all stakeholders.

Achieving ambitious goals with milestones

However, the OKR principle is so simple that it can be applied to any company. OKR stands for Objectives & Key Results. The Objectives are superior to the Key Results and describe the main goal for the next months. The Key Results are milestones that have to be reached to achieve this goal. They are measurable, specific and reflect the progress made in achieving this goal. The OMCs are designed for a period between 3 and 4 months, in the meantime, there are reports in which the current status is reported.

The objectives are not only oriented towards the economic interests of the companies but should also harmonize with the vision of the companies. This should make it clear to the employees why you perform your task and motivate them.

Transparency promotes cooperation

Another feature of OKR is its transparency. The objectives and key results should be communicated transparently in the reports. This will facilitate communication and cooperation within the company, as everyone is up to speed and the risk of accidental duplication of work is reduced.

Who sets the goals?

Who is responsible for the formulation of the OKR? This varies, some companies specify the OKR, in others the departments and employees themselves decide which OKR they want to achieve. The different company levels define different OKRs and fulfill them, according to the company’s vision. John Doerr, an investor at Google who established the OKR method there, described the OKR method as bottom-up or horizontal in his book “OKR: Objectives & Key Results: How you set goals that really matter”.

OKR vs. MBO

OKR is just one of the many methods used to manage employees. Another frequently used method is Management by Objectives (MBO). Here the goals of the company are to be realized by setting goals for each organizational unit and employee. These should be SMART (acronym for specific, measurable, accepted, realistic and time-related) and represent the goals of the company in sum. If each employee fulfills his individual goals in the sense of the corporate strategy, this leads in theory to the achievement of the corporate goals.

In comparison with MBO the OKR method offers various advantages: On the one hand, the objectives are set for a short period. The MBO method sets goals for one year. This long period can lead to the fact that the goals lose relevance with the months. The MBOs are associated with compensation or incentives, which can offer employees false incentives. The OKR’s agility allows them to react to market developments and adjust their objectives or key results accordingly.

Target management with qmBase

The documentation of the objectives is not only relevant for the development of the company. ISO 9001:2015 formulates the definition and monitoring of objectives as a clear requirement. The central documentation, assignment, and evaluation of these goals are carried out with our Goal management. Besides, it is possible to use this module to communicate the set goals transparently within the company to increase employee motivation. To achieve the goals, measures can be linked and their effectiveness documented.

If you would like to find out more or request a trial version, feel free to contact us.

Sources:

Doerr, John
Measure What Matters: OKRs: The Simple Idea that Drives 10x Growth

Doerr, John
“Why the secret to success is setting the right goals”; Ted Talk April 2018

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