OKR Meaning: Why Google & Co Use It

What do Google, Intel, and Netflix have in common? They all use the OKR method. But what do these three letters mean, what's the method for, and which advantages does it offer?

Below, we'll answer all of these questions and more, sharing everything that you need to know about the OKR method, including how you can integrate it into your business's everyday routine.

OKR is an agile management method that helps businesses to more effectively define and achieve their goals. It stands for objectives and key results. Let's take a brief look at its history and development:

Intel co-founder Andrew S. Grove developed the OKR method in the 1970s, but it wasn't until 1999 that it became popular. This happened after John Doerr, an investor, brought it to Google:

While still at Google, one of its co-founders, Larry Page, had the following to say about the approach:

From there, it didn't take long for the OKR method to spread throughout Silicon Valley. Nowadays, it's used by a seemingly endless number of businesses and organizations of all sizes and branches in their day-to-day operations.

Unlike Scrum, there's no institutionally agreed-upon OKR framework. This means that its implementation varies from business to business and depends on the consulting firm or expert. Some work with fixed pillars and principles that are meant to help with its application in practice. John Doerr summarized the basic underlying concept of the OKR method as:

"Objectives" answer the question of what the OKR should accomplish, while the "key results" offer the how. Don't think of these as to-dos or specific activities, but rather, as descriptions of certain goal-setting aspects that need to be coordinated with one another.

These are the goals and targets to be achieved or reached and have the following characteristics:

Key results provide waypoints for how a goal can be reached and have the following characteristics:

Does the last goal sound familiar? If so, that's because it is: The OKR method aligns in some aspects with the SMART goal-setting formula, however, it also takes things a step further.

Daniel Montgomery, the managing director of Agile Strategies, summarized the differences between the two. According to him, SMART provides a structure for goals and targets, whereas an organization's OKRs align and reinforce each other. As such, OKRs aid in goal management.

In addition to the well-known structural features from SMART, the OKR method also provides a complete, cyclical framework.

Businesses with long-term visions can only achieve their goals by following well-developed strategies. OKRs help to translate strategies into a series of objectives that can be measured in a step-by-step process.

In our fast-paced world, conditions and requirements constantly change. So, what should you do if the goal your business comprehensively defined and set last year isn't applicable to the environment's requirements when you reach it this year? The OKR method provides built-in flexibility, since its objectives are regularly evaluated and, if needed, adjusted:

The cycle's length can be optimized to your business's needs, however, most organizations benefit from cycles that last 2-4 months. This means that a cycle is performed approximately every quarter, adding up to four per calendar year.

An OKR cycle has four components. If you have some Scrum experience, these steps should sound familiar to you. We'll briefly introduce and summarize them below:

During the planning phase, you'll specify the upcoming cycle's objectives and key results. Make sure that objectives are clearly communicated so that all teams and departments can internalize them. Should multiple teams be assigned to work on the same objectives, organize regular meetings. This helps to better coordinate goals with one another as well as align them to your corporate strategy.

The OKR method is rarely limited to a single team and instead impacts an entire business or organization. As such, every level, from management to individual employees, should formulate OKRs.

Broadly speaking, about 40% of the objectives should be put forth by management (top-down), while the remaining 60% should be bottom-up, from employees. At the same time, keep your business's needs in mind and be flexible: If employee-level OKRs don't make sense in your organization, focus on other levels.

The result? All of the objectives that the business formulates impact its strategy and vision.

After the planning phase, teams begin working on reaching the objectives defined in the previous stage. This makes the OKR's weekly similar to a Scrum daily. The main difference is that progress is not checked every day but in pre-defined intervals.

It is recommended to evaluate OKRs on a weekly basis, at the minimum.

At the end of the cycle, during the review, teams present their results and grades. Just like in school, a grade reflects the extent to which a specific key result was achieved. Percentages (0-100) have become the preferred method of calculating this, and every team chooses a value for their key results.

A grade also shows whether the objectives set in the first stage were ambitious enough. Although a perfect grade might seem ideal, 100% actually indicates that the targets weren't challenging enough. According to experts and Google, the "sweet spot" is from 60-80%.

Sometimes, a traffic light system is used to visualize the extent to which objectives have been achieved:

During the retrospective, insight from all of the preceding phases is summarized and discussed. As its name implies, this last step of the cycle is about evaluating what occurred earlier: The team reviews its efforts, how the OKRs were approached, as well as the methods that were used.

Some commonly asked questions during this phase include: 

Once again, this phase demonstrates some similarities to a Scrum retrospective, and several aspects are applicable to both approaches.

Based on the retrospective's findings, the team can prepare for the next OKR. With that, the first cycle is finished, and the process can start over again. Results from the previous OKR cycle will flow into the upcoming cycle's planning stage and the team can adjust or modify its objectives accordingly.

The OKR method can benefit businesses and organizations in a number of ways. At the same time, it's not without disadvantages.

If you'd like to bring the OKR method to your business or organization, start by scheduling a workshop. Gather your top management and department heads, so that you can jointly develop a strategy and an initial understanding of what lies ahead.

After this, employees need to be introduced to the method and how to properly formulate OKRs. Only correctly formulated OKRs can help to achieve goals and targets.

Below, we've provided an example of a well-formulated OKR:

Would you like a few more examples, or to find out what separates good OKRs from bad ones? Be sure to check out our list of OKR examples.

Does your organization already have an OKR expert? If so, you can embark upon your first OKR cycle. However, in the event that you don't have an OKR pro close by, it's a good idea to get in touch with a consultant or agency, especially if you're planning to examine multiple departments or sections. Even though the method sounds straightforward, implementing it can prove tricky.

The OKR method can be adapted to any type of business. With that said, the factors below are almost always important:

Every business or organization has a goal. Even then, it's rarely easy to set objectives or targets and effectively pursue them. The OKR method offers an agile framework for businesses to focus on their goals and measure progress towards them.

For this to be effective, it's important that the conditions are right: Transparency, open channels of communication, and flexibility are just a few of the most essential success factors. Anyone who wants to follow Google's recipe for success can start planning their first OKR cycle, or get in touch with external consultants and experts.