What Are OKRs?

Objectives and Key Results (OKRs) are becoming an increasingly popular management methodology for business teams. It’s been popularised by Google but is now being used by organisations outside of the search giant. OKRs have been shown to increase employee motivation and productivity, among other benefits.

The ‘Objectives’ component describes what an organisation intends to accomplish and acts as a starting point for team and goal management: what can you do today to get closer to that goal?
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And ‘Key Results’ are key deliverables that will help determine the progress of the established objectives.

So how do OKRs differ from KPIs? Do we need both to track business progress? Are there alternatives to use? To break it down further, it helps to look at how OKR methodologies developed over the years and how they contribute to goal management.

The Evolution of Goal Management

The history of OKRs can be traced back to the term MBOs, otherwise known as ‘Management by Objectives’, which was introduced by Peter Drucker in his book, ‘The practice of management’ in 1954.

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According to Drucker, MBOs used a set of standards for objectives to measure the performance of a company and its employees. It was used to identify problem areas within the organisation by comparing productivity levels against the set of predetermined standards, which are made aware to both managers and employees from the onset. Setting clear standards was influential in helping employees become aware of their role in the company and the ‘big picture’. It streamlined the processes to follow in order to reach set targets or objectives.

If the objectives are not met successfully, the standards of measures were utilised to identify the exact problem areas. Once identified, they would be used to determine the areas that require prioritisation and the steps necessary for improving efficiency within the organisation.

Since 1954, MBOs have evolved through many stages to become what we refer to today as OKRs.

Timeline of goal management framework evolution:

What’s the Difference between OKRs & KPIs?

Objectives and Key Results (OKRs) and Key Performance Indicators (KPI) are metrics used together to help achieve business or team performance goals. Often you will hear the terms ‘Objectives’ and ‘Key Results’ synonymously; however, while related, they play different roles in the process.

In essence, OKRs are goal-setting methods that use ‘Objectives’ and ‘Key Results’ that align with business goals that are measured to determine the business progress and trajectory.

With the ‘Objective’ setting the direction for the entire goal and the ‘Key Results’ breaking down specific deliverables for each objective, the concept can present multiple key results to measure the progress of each objective.

On the other hand, Key Performance Indicators can be used as a measure of performance and contribute to decision-making and resource allocation. They focus on specific aspects at varying levels of the organisation. They are used for managing performance by creating a network of measures to gauge the critical outputs of an organisation.

A successful system that manages performance and creates a network of measures enables performers at all levels to determine their impact on critical organisational outputs.

Here are some of the key similarities and differences between OKRs and KPIs:

• OKRs are explicitly linked to the strategic outcome of the objective, while KPIs link to the process or the system, which may or may not be strategically relevant.
• OKRs can use multiple key results within an objective to describe the cross-functional nature of work. At the same time, KPIs only have a single focus and do not reflect on the overall organisational goal.
• OKRs are designed to focus all activities of the organisation and its employees towards one common goal. In contrast, KPIs are designed to cover specific organisation metrics, regardless of their importance to its primary purpose.
• It is important to note that KPIs are not stand-alone features but are used within the OKR framework to set precise goals that are more aligned and better executed.

Now, let’s find out how you can put these concepts to work with a comprehensive, cloud-based solution.

How Can Camms.Strategy Benefit Your Organisation?

Overlooking contemporary business concepts associated with strategy can be a recipe for inevitable failure. With the watchwords for today’s volatile and uncertain environment being agility and nimbleness, its crucial to consider if your organisation is taking the right steps to bring strategic management aspects together to secure its short and long-term success.

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Already a Camms customer? If you’re curious to learn more about how Camms.Strategy can be leveraged to create strategic alignment in your organisation, get in touch with a Camms Consultant today. Our Subject Matter Experts have an in-depth knowledge of strategic business planning to help turn your strategy into reality!