New Economy: what is an OKR?

Do you know what OKR is? Discover how this methodology, popular in the New Economy, is helping companies achieve their most ambitious goals.

Discover the method that makes even a company's boldest goals become reality

Dreaming big is cool, but how do you get there? At New Economy, a ubiquitous acronym points the way to turning ideas into achievements: OKR (Objectives and Key Results, or “objectives and key results”), a method in which the company sets feasible goals and tracks its results at each milestone.

Even if the organization's objective seems too ambitious (Google, for example, wants to index all the information in the world) and almost impossible to achieve, the trick of OKR is to articulate a path to achieve it, showing which metrics and milestones are necessary to demonstrate that the company is progressing towards this objective.

The logic of OKR is as follows: first the company defines clear and measurable objectives collaboratively (and not top-down, as the idea is for everyone to focus their efforts in the same direction).

“The goal is what I want to accomplish. The key results are how I'm going to do this. The goals are long-lasting, bold and aspirational. The main results are aggressive, but always measurable, deadline-oriented and limited in number”, summarizes investor John Doerr, who named and popularized OKR, in a interview with Harvard Business Review.

The father of the OKR method is the American Andy Grove, who created a simple goal-setting system when he was CEO of Intel in the 1970s, but which broke with the tradition of hierarchical processes, with an annual cycle and linked to compensation. Doerr worked with Grove at the time, so he had the opportunity to learn the methodology in detail, improve it and rename it. He would later invest in companies like Amazon, Google, and Twitter (and apply this theory to some of them).

Since the 1970s, OKRs have been used by different companies and organizations; from Intel, in the creation of microprocessors, to the NGO One, founded by singer Bono Vox to combat poverty.

How does OKR work?

After defining the objective, you need to articulate how it will be achieved. To do this, you can, for example, think of some key results that indicate the path towards the main goal — and a deadline to achieve them.

An example: if the company's goal was to become the most downloaded app in Latin America, the key results could be to increase the number of downloads on 30% in three months and translate marketing material into Spanish.

After defining the key results, the methodology is used to monitor progress, aligning teams with what must be achieved and communicating with maximum transparency. In OKR, cycles are fast, so teams can evaluate performance and correct course quickly if results are not satisfactory or expected.

The OKR could therefore be summarized in two questions. The first is “what”: what is the objective (or the “O” of the acronym) that the team or company wants to achieve and within what time frame. And the second is how these main results (the “KR” of the acronym, key results) will be achieved, clarifying what the benchmarks and the measurable milestones that will show that the company is progressing towards the big goal.

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