5 Reasons OKRs Fail and How to Avoid the Pitfalls
Perhaps you’ve considered the idea of deploying OKRs as a development tool for your organization, or maybe you’ve written off OKRs as the latest flavor-of-the-month business buzzword. Either way, understanding more about the process, and the handful of reasons OKRs fail, will help you to decide whether this framework makes sense for your company.
First, while OKRs may be fashionable now, they’re not new. John Doerr, a former Intel salesperson, came up with the term in 1975. It was almost a quarter-century, though, before OKRs really had their coming-out party. Doerr was then working for a venture capital firm, and introduced the OKR concept to a start-up company named Google. The rest, as they say, is history, and OKRs have since been immortalized in Doerr’s book, Measure What Matters.
These days Google continues to embrace the OKR process, as do Netflix, Bono and the Gates Foundation, so it’s fair to say that the idea has been widely accepted. Should your business join the crowd?
What OKRs are and What They are Not
Let’s start by defining what OKRs are … and what they’re not. OKR stands for “Objectives and Key Results,” or put another way, a clearly-defined goal and the measures used to track and achieve it. If that sounds a lot like Key Performance Indicators, you’re not completely wrong: there are similarities and differences. While similar to Key Performance Indicators, OKRs tend to be more aspirational. A KPI is the output of a process already in place, but OKRs are more ambitious and ‘stretch goal’ oriented. In fact, one guide to OKRs says they “may feel somewhat uncomfortable.”
An effective OKR clearly defines the goal and delineates the actions to get there, and those actions should be specific, concrete and measurable. Each key result – typically there are about three of these for each objective – should in fact have a number in it: a percentage, dollar amount, quantity, something to tell you definitively whether the finish line has been crossed.
The original OKR evaluation process evoked the famous quote from Yoda: “Do or do not. There is no try.” Each key result either was or was not achieved, period. Since then, some organizations including Google have taken to grading results on a scale (0 to 1.0 in Google’s case). As you’ll see below, one argument for the latter is that checking every Key Result box means the Objective was probably not ambitious enough.
Avoid These Five Missteps
Given the transformative potential of ambitious OKRs and that so many companies have successfully used the process for so long, many others have jumped on board. Some have had great success, and some have not. For those that have struggled with OKRs, the problem often is one of these five missteps:
If both the objective and the key results aren’t clearly defined and readily understandable, you’ll have a hard time achieving progress. It’s fine if the objective isn’t terribly specific (for example, “Achieve fiscal sustainability”), but it must be clear and concise. And the key results must be specific (“reduce budget variances from 10% to 5%”) and again, measurable with some form of a number.
A company that put a single manager in charge of setting OKRs, or a leader who came up with them on his or her own? As the auto mechanic would say, “There’s your trouble.” Good organizational aspirations require input from various voices, and specifically the people in the best positions to accomplish each key result. And this is no place for your organizational silos: OKRs are visible to the entire enterprise so everyone can see what others are working on.
Even if the OKRs are set by a team, an effort has to be made to bring the entire organization on board. That often comes down to explaining the “why” behind the goals. If team members understand what success means for the company, they’re much more likely to all row in the same direction. That’s why it’s so important that OKRs are public so everyone can see the bigger picture.
You as a leader need to make it known that you support the mission, and that you and everyone else involved are accountable for its success. While individual team members might be accountable for only a single Key Result, you’re responsible for the overall success of the effort. Note, however, that “accountable” doesn’t mean that anything short of 100% is a failure. OKRs are an iterative process, and unachieved goals should be used to help refine the next set of OKRs. One authoritative source on OKRs maintains that the “sweet spot” is actually 60-70% of goal. Put another way, if someone is consistently nailing their Key Results, they aren’t thinking big enough.
Mismanagement of the Process
Navigating OKRs successfully can be a real challenge for a manager. The very nature of these stretch goals can be intimidating for employees, and they might be tempted to set low but achievable goals for fear of falling short. It’s highly recommended to put a firewall between your company OKRs and individual performance reviews and compensation. Encourage your team to reach, and make it clear that no one will be punished for setting the bar high.
It all adds up to a delicate balancing act for a manager: ambitious goals, complete transparency and the need to separate goal achievement from individual job performance. Used properly, though, OKRs can transform an organization by motivating the entire team to reach higher. Just ask Google.