A simple methodology to define objectives and indicators that directly contributes to the company’s evolution. This is the proposal of the OKR methodology, disseminated by Google, which, from 1999, adopted the tool for growth — which happened very successfully, as we can see.
Whether to increase clarity, focus, team cooperation, productivity, among other benefits, OKR adoption is very simple, as is its practical application. For this, it is essential to know how it can help companies on a daily basis.
Therefore, if you want to know how to apply the OKR methodology, in addition to knowing its definition and, above all, which mistakes you need to avoid, be sure to read this article to the end. Good reading!
What are OKRs?
Although it seems complex, at first, the OKR concept is quite simple. Basically, this tool is a set of Objectives and Key Results (Objectives and Key Results).
Goals (O) tell you where you need to go. On the other hand, the Key Results (KR) are the indicators that indicate whether the path is being followed as initially planned.
In this sense, an interesting feature of the methodology is that the Objective (O) is represented by a very descriptive and didactic sentence, which shows the macro scenario where the company wants to be.
For example, we might think of a software company’s objective as “Delivering high-quality, customer-satisfying software.” Simple, no? These descriptive phrases show what the company wants in the future.
On the other hand, Key Results are measurable items with a more micro view. So they could be something like:
• Increase customer satisfaction to at least a 9 in the NPR survey;
• Reduce to less than 50 complaints made for bugs or system failures;
• Increase the range of tests to 100% of the delivered software;
• Reduce subscription cancellations to less than 2% per month.
In this way, as we can see, when we achieve the Key Results, either in their majority or in their entirety, we are directly contributing to the main objective, which is to deliver high quality software that satisfies the customer.
With that, we have actions that will be responsible for making the KRs reach. But this point is the responsibility of the company’s leadership/management.
How to set up an OKR in practice?
It is extremely simple to implement the OKR methodology. Assuming you understand how it works from the previous topic, it’s time to grab your notebook and do some exercises to get used to the mechanics.
First, it is important to define where you need to go. For this, we can have a company OKR, but we can also define Objectives and Key Results by areas, as long as the indicators communicate with each other.
That said, it is important to establish a “Top Down” vision, where we will start with the company objective, which will be the main goal, and move towards the objective of each area, responsible for directly contributing to the main OKR.
Let’s leave an example to make the practice more didactic:
• Company OKR: Increase recurring revenue;
• Marketing OKR: Increase the generation of new leads;
• Sales OKR: Increase the customer base;
• Technology OKR: Increase the quality of the delivered software;
• Service OKR: Increase customer satisfaction.
Note that despite being individual goals, each area OKR talks directly to the company’s OKR. That is, if they are reached, the chance of recurring revenues to increase is very high.
With the objectives defined, it’s time to define the Key Results. At this time, it is necessary to quantify the result to show how it will contribute to the goal. For example:
• Company KR:
• Reduce churn by 5%;
• Increase the average ticket by 10%.
• Marketing KR:
• Increase the reach of paid campaigns by 35%;
• Organize or participate in 10 events per year.
• Sales KR:
• Increase decisive meetings with leads by 50%;
• Increase conversion rate by 7%.
• Technology KR:
• Reduce the average customer complaint volume by 50%;
• Automate tests to cover 100% of the system.
• Service KR:
• Reduce the average service time from 5 minutes to 1 minute;
• Increase the number of support channels from 1 to 5.
So, as we can see, the Key Results are clear and direct indicators of what needs to be done so that the area’s OKR is achieved. And once each area OKR is covered, the business objective, therefore, will also be.
4 mistakes when setting up a company’s OKR
But not everything is rosy in the application of the OKR methodology for companies. There are some mistakes that should be avoided at all costs, as listed below:
1. Use the OKR methodology as a to-do list: remember that OKR talks about results that need to be achieved, not things that need to be done. Leave the to-do list for a next step;
2. Create multiple OKRs: having too many goals will take the team’s focus and make it difficult to achieve results, so work with just one goal, even if there are several business interests;
3. Not communicating OKRs to the teams: it is useless to define objectives and indicators if no employee knows about them. Transparency and good communication is essential in applying the OKR methodology;
4. Not measuring the results: not following the Key Results and, consequently, forgetting the main objective will also not help the established plan, so it is important to have a routine of constant monitoring of the numbers.
Despite being a simple concept, OKR is extremely powerful in managing results. So, introduce the methodology in your company — in the right way —, follow our recommendations and see the results take off.
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