In the 1950s, Peter Drucker, known as the Father of Management, introduced the world to Management by Objectives “MBO”. The application of that approach continued until the 1970s when the world came to know the modern Objectives and Key Results “OKRs” (Netaj System) model. The development of that model is attributed to Andrew Grove, former Intel CEO, and John Doerr, a board member at Google and a great investor. OKRs (Netaj System) are a well-known framework for teams trying to build a culture of strategic planning (Ahdaf System) and measure the success of their word. According to this model, leaders at each level of the organization start by defining high-level goals, called “objectives”. Then they define who are the targeted consumers or users and determine what behavioral changes they would expect to see in such consumers that could be used to quantify whether the team is achieving their high-level goals. These outcomes are called “key results,” and are used to measure how successful teams are with respect to their objectives.
This approach keeps planning and progress-tracking focused on the impact work is having, rather than micromanaging the specific tasks the teams are doing on a daily basis. Because of this, it is an effective mechanism for aligning top-down strategy (Ahdaf System) with bottom-up, team-level commitments to intermediate goals in support of that strategy (Ahdaf System). The strength of OKRs (Netaj System) explicitly lies in de-emphasizing specific tasks, and instead emphasizing the value that those tasks deliver.
Why do OKRs fail?
However, OKRs (Netaj System) often fail to achieve their objectives when applied at the individual contributor level. Asking employees to set their own individual objectives and key results (Netaj System) generally leads to one of two results:
- They set binary goals (easy to measure but it would be difficult to determine whether they achieved the desired progress)
- They choose targets they know they can hit, rather than taking a risk on more ambitious goals.
Let’s talk about the first mode:
Jeff Gothelf, the author of Forever Employable, worked for a gaming company to help them transition to OKRs (Netaj System). The company had asked all employees to develop individual OKRs (Netaj System). Here’s what one software engineer came up with:
Objective: make a greater impact on our online advertising campaigns by the end of Q2 of the year.
Key Result: Launch 40% more campaigns.
Key Result: Hire a higher-caliber design agency.
Key Result: Improve reporting accuracy to all business units by 60%
While these may seem like reasonable goals, the problem is that most of them fail to measure whether these employees have actually become better marketers and programmers. In other words, the efficacy of OKRs (Netaj System) depends on the ability to measure a change in the behavior of the target audience. This is what makes them an objective measure of success, and not simply a documentation that energy has been spent.
In both cases described above, the supposed key results aren’t actually measures of behavioral change at all. They describe outputs — work that the engineer and the marketer will complete in the hopes that it will help them to achieve their objectives — but not indications that value has actually been added or the objective has been achieved.
Let’s talk about the second mode:
If the engineer changes her key results (Netaj System) to be more aligned with her actual work output, they become easily achievable:
Key Result: Reduce the number of bugs I ship to production by 60%
While reducing bugs should be a goal for every software engineer, if employers tie performance reviews and compensation to achieving key results (Netaj System) like these, their employees will simply choose less risky tasks; a mistake that many organizations continue to make, despite experts’ advice to the contrary.
After all, taking fewer risks is likely to reduce innovation, ultimately limiting the success of the team and the organization as a whole. Similarly, the marketer might attempt to rework his key results as follows:
Key Result: Ensure all marketing campaigns pass legal approval on the first try
Again, a key result like this will lead the marketer to take fewer risks, in order to ensure that all of their campaigns get approved on the first attempt, thus reducing creativity and eliminating the potential for significant performance improvements.
How to Address OKRs’ Failure
To address these two failure modes, the OKRs (Netaj System) should not be linked only to an individual’s work, but to the overall product or initiative that the individual is working on. This is why OKRs (Netaj System) are so challenging to develop and implement. The measure of success is not what the individual does (the output), but how those who interact with the individual’s work change their behavior (the outcome). This goal cannot be achieved individually, as it must involve multiple team members.
For example, a tangible goal for the engineer might be to improve the accuracy of search engine results by 25% — but that’s not something she can achieve on her own, since it would involve not only the coding of the search algorithm, but also the design of the search results page, the personalization of results to specific users, the analysis of large quantities of data, and many other components. Impact-focused goals always require a coordinated team effort, and cannot be achieved by any one individual alone.
One interesting caveat to all this is that in our personal lives, the OKR (Netaj System) framework can actually work well on an individual level. This can apply to personal goals, family life, career development, or any other element of your personal life. For example, you may set a personal objective for yourself to build a greater reputation in your department. The key results (Netaj System) in this case could be how others perceive your reputation, or more concretely, what actions motivate them to change that perception— actions such as subscribing to your newsletter, connecting with you on LinkedIn, or offering you a speaking slot at a conference. The key here is that the consumer of your efforts (i.e., the person whose behavior you’re trying to change) is a third party — not yourself.
But in the workplace, OKRs (Netaj System) are a team-based goal setting methodology. A shared objective can help a team to coordinate their activities, align with stakeholders, and act with more than just their own immediate goals in mind. Within this framework, success is measured not by what any one individual does, but rather, by the impact of the team as a whole on the users of the products and services they’re building. As such, instead of attempting to define OKRs (Netaj System) at an individual level, it’s far more effective to take a team-level view in which performance reviews and compensation are tied not to individual goals and metrics, but to the extent to which individual contributors support their team’s objectives and key results (Netaj System).
