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  • Writer's pictureJosh Peterson

OKR’s - A no-nonsense approach for organisations to measure what matters.

Updated: Sep 3, 2018

As someone who has spent the majority of their career in large corporate environments, I was well and truly indoctrinated into the traditional way of measuring success - Key Performance Indicators (KPI’s). Under this framework, an individual's performance is measured against their respective annual employee plan (scorecards) which also happens to form the basis for their Short Term Incentive (aka bonus).

This model sounds good in principle, however the reality goes something like this-

  1. At the start of the new financial year, you sit down with your respective manager to discuss the organisation and teams objectives across a range of categories, from financial through to risk management.

  2. Create a list of individual goals that are in line with said objectives.

  3. Create a metric (out of thin air) to measure said objective.

  4. Spend next 6 months putting out fires and forget about plan.

  5. Review plan and realise a fraction of what you did (all of which was critical at the time) lined up with said plan.

  6. Put out more fires for another 6 months.

  7. Get paid a bonus based on some ridiculous bell curve and who knows what else.

  8. Rinse and Repeat.

I consider myself a fairly pragmatic person, so it didn’t take me long to call BS on the whole process. Actually, everyone I had ever spoken to on the topic had the same opinion - and I mean everyone. I realised that for many organisations, performance plans were treated in the same vein as corporate values - you’ve got to have them but no one really pays much attention to it. For me, this exercise felt more like ticking a box than achieving quality outcomes. This traditional approach is not optimal for a number of reasons:

  1. Plans generally lack a clear and specific vision of what the organisation is trying to achieve. A recent survey from Reward Gateway suggested only 16 per cent of Australian employees feel “completely informed” about their employer’s corporate mission, and only 22 per cent feel the same about their organisation’s values. Sound familiar?

  2. They don’t connect the employee to each team members goals.

  3. Measurements of success are often vague and lack key metrics.

  4. They provide remuneration driven incentives which just don't create the passion and drive that organisations think they do.

As I moved out of the corporate space and into a rapidly expanding startup, our business quickly realised that we needed a practical way to articulate goals and measure success - without the fluff. It was at this juncture that we made friends with the management framework - OKR’s.

Now don’t get me wrong, OKR”s have been around for decades, and are being used by some of the largest and most successful organisations around the world - think Google, Intel, Amazon, LinkedIn, Microsoft, Netflix and Yahoo - just to name a few.

The principle is pretty simple.

  1. Define your objective - Where do you need to go.

  2. Key results - Tells me if I’m getting closer to my objective.

  3. Initiatives - The steps you need to take to reach your objectives.

Once we made the decision to commit wholeheartedly to the principles of OKR’s things really started to take off. Here's why:

  • Every employee was singing off the same song sheet.

  • OKR’s aren’t tied into remuneration. Don’t get me wrong, money matters - but when it comes to slogging it out day in and day out, money just won’t get you there. It needs to be something bigger than a paycheck.

  • Every employee knew exactly what the business was trying to achieve and the role they played in delivering that vision.

  • There were key metrics assigned to every deliverable (zero fluff)

  • They were public. Everyone was accountable for their part from the top down - not in the micromanagement way you might be thinking - it’s more about keeping everyone honest, reviewing what works and what doesn’t and recalibrating quickly.

  • It keeps everyone laser focused and becomes quickly evident when you’re getting sidetracked or derailed by tasks that aren’t in line with the broader objective.

  • Regular check-ins - Understanding each individuals objectives made it easy to understand how we could help each other to achieve our individual goals-and therefore the organization's goals.

I have had to privilege to partner with some fantastic organizations, big and small, in realising their digital transformation strategies. In the early stages of these journey’s it becomes clear pretty quickly who’s using OKR’s and who’s stuck in a traditional framework. When I hear things like ‘we would like to go digital sometime this year, but there’s a lot of red tape to get through’, alarm bells start to ring and I cry a proverbial tear. Alternatively, when I hear organizations say things like ‘we want to have a full digital onboarding solution delivered in the next 30 days and have 50% of applications submitted electronically 60 days post implementation’ I know the organization has very clearly articulated objectives.

OKR’s aren’t a magic pill - it’s bloody hard work, but at least you know under this framework you are positively contributing to an organisation by doing work that really matters and not just keeping busy.

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