Google success is not achieved resources to reach the Outcome Objectives And Key (OKR) highest point as the world’s largest search engine. This inseparable from implementation of objectives and key results short which has been used to develop better business performance.
So, along with the development of the times, many companies and startups are implementing the use of the OKR method for their business needs. However, there are still many companies that commonly use the KPI method or key performance indicator. So what’s the difference between these two terms?
Well, in our article this time will discuss the OKR system and how it is implemented in real terms, as well as the difference between it and KPI. However, before discussing this topic, it’s a good idea to know what OKR is.
Table of Contents
What Is OKR
The definition of OKR or objectives and key results is a way that individuals or teams can make by setting ambitious and objective targets.
Make OKR then the target that you will achieve must be based on data, facts, and can be measured with numbers. The objectives you will take can be seen clearly performance of each progress parameter in a flexible manner.
The main purpose why Outcome Objectives And Key (OKR) is used as a method is to measure the work activities of the company, as the goal of the company must have big ambitions. However, it is still within the realistic and measurable limits of the implementation process.
The OKR method has two elements, namely objectives and key results. The objective is the main target or goal of a competition to be achieved by a company, individual, or organization. Thus, the objectives must be ambitious, realistic, and tend to be more qualitative.
Then, the key result is a measurable action and the data produced is quantitative. Therefore, after the objective has been determined, the leadership and team need to determine the key result of the main goal.
What also needs to be considered is that the key result has a certain time span (time bound) while still taking into account joint decisions within the company or team.
MBO VS OKR VS KPI
After knowing the explanation regarding the brief understanding of OKR the discussion which has become a topic of discussion in several business circles. What’s that? Usually most people already know the terms of KPI and MBO. So, what is the difference between the three terms?
First, KPI or Key Performance Indicator is a measuring tool to measure achievement at a certain level in the field of activity for which the work indicators will be evaluated.
Second, OKR is a measuring tool used to measure the main goals of a project or company goals.
Third, MBO or Management By Objectives is a model of management strategy that aims to improve the performance of an organization by setting clear goals or objectives to all stakeholders.
The History Of The Creation Of OKR
The history of OKR’s birth is quite long, where it was first born and developed by Peter Drucker in 1954. Initially, the method was known as MBO (Management By Objectives).
Then, in 1968, Andy Grove founded a technology company called Intel which is currently using the MBO method. And in the end, the method was just adopted and modified into an OKR system.
Officially, in 1974 John Doerr entered the Intel company and studied the OKR method comprehensively, as well as implemented it in its entirety. Not stopping there, John Doerr also worked as a venture capitalist who invested in Google in 1999.
As consultant he also took advantage of this opportunity to promote to the founders of Google namely Sergey Brin and Larry Page regarding Outcome Objectives And Key (OKR). Since then until Google has been successful in developing its business using this method and has been applied to various startups around the world.
How To Arrange OKR
After knowing a brief history of the objective and key result method, then we will discuss how to prepare the right OKR and suit your business.
1. Determining The Tools To Be Used
First, you need to determine in advance the tools or technology that will be used to create an OKR. You can start trying to create by using the help of web-based applications, mobile, or spreadsheets that are easier.
2. Designing The OKR
The second stage, you can begin to design OKR while keeping in mind the main goals of the company or organization. Most importantly, make sure the objectives that you are targeting seem ambitious and realistic.
3. Drafting OKR Plans For The Company
The next step, you need to design the OKR method for the needs of the company. So, those who have the right to determine and make are the company’s leaders (directors) because they are the ones who best know the ins and outs and the company’s goals going forward.
4. Create OKR Structure For Team
After making the objectives for the company, the next step is to expand the objectives into sub-objects for each division. Which, later on, each team will have a different key result that is adjusted to their duties and responsibilities.
5. Creating OKR Structures for Individuals
The last step is to arrange objectives and key results for individuals while still adjusting to the goals of each team. Therefore, OKR must run in harmony starting from the highest level or layer to the lowest system.
Benefits Of Objectives And Key Results
There are several benefits of using OKR for your business, including the following.
1. Capable Of Uniting Companies
The first benefit, OKR can unify every department from the highest to the lowest level with the main focus on the company’s goals that have been determined. Thus, communication between each team becomes more harmonious, effective, and efficient.
2. Every Employee Can Work More Focused
The next advantage is that OKR is able to increase productivity for every employee to stay focused on achieving the company’s main goals. Where, tasks and responsibilities will be carried out optimally by using various technologies and flexible resources.
3. Transparency Is Created
The next advantage, transparency is an important point why companies take advantage of this method. Why is that? Because by implementing OKR into the business, work transparency will be guaranteed and the entire team can be monitored properly.
Thus, the performance of each individual can also be seen very clearly, as well as being able to know the performance of each employee.
4. Speeding Up Results With The Right Objectives
The last benefit after the transparency of OKR has been guaranteed support the creation of business transformation to be able to answer objectives quickly and use the right method. The business goals can be achieved and can generate significant profits for the company’s finances.
Example Of Making OKR
After knowing a number of things related to what things need to be prepared in building the right Outcome Objectives And Key (OKR), then we will see an example of a case study for making objectives and key results in a digital marketing agency.
First you need to create OKR for the company first.
- The company’s objective: improve the company’s business reputation at the national level
- Key result:
- Get the company’s revenue of 1 billion
- Get partnership with 500 new clients in a year
- Opening 3 new branches in 3 different provinces in Indonesia
- Reduces errors in product releases by 35%
- Release the company’s 20 products in a year
Second, from the points above, it can be passed down to each division with the following scheme. We will provide examples for only two divisions, for the next you can add your own according to your business requirements.
- The objective of the business development division: get 200 new clients in a year
- Key result:
- Calling 50 potential clients every week
- Carry out pitching with 10 potential clients every week
- Product developer division goal: release 10 products in a year
- Key result:
- Added 3 division teams for mobile and web developer.
- Releasing 2 new products every 3 months.