Where OKRs work best and where OKRs don't work

Objectives and Key Results (OKRs) is an effective goal management methodology. It's important to understand why use OKRs and how do OKRs work before implementing them in your organization. However, OKRs are not a silver bullet and are not always an answer to any organizational problem. As with any method, OKRs have their limits of applicability in the organizations. Here are some examples where OKRs work best and where they don't work and how to OKR properly. I

Wondering "are OKRs a waste of time? We'll explore the benefits and limitations of OKRs and provide insights into when and how to use them effectively.

Strategy

OKR help to align the team around common Objectives and execute the company strategy. Whether it is the exponential company growth, an increase of customers, team size explosion, rapid increase in the number of products or services, or increase of customer satisfaction and NPS rates.

Implementing the strategy, you need to think out the box, set a bold vision, and take risky steps, learn fast and iterate fast based on the feedback from your customers.

OKRs make the company goals transparent, enabling every team member to contribute and relate to those goals. The bottom-up approach allows for a high level of accountability and engagement from every team member. Strategy execution becomes more comfortable with OKRs.

R&D

OKRs encourage the ambitious moonshot goals, beyond what they think is possible. OKRs drive learning and experimentation culture. Moreover, OKRs disrupt the organizational culture and foster the environment of psychological safety and fail-friendliness.

OKRs encourage visionary thinking, leaving the day-to-day comfort zone behind. Team who uses OKRs prefer rapid iterations and moving forward over being right and taking the safe steps. It is an ideal fundament for innovation and the creation of the new products.

However, working in such a mode is exhausting, and no-one can sustain it forever. Be careful in order not to burn your team and allow them time to relax and recharge regularly.

Organizational change

Most of the organizational changes fail. The study from Robert Half Management Resources shows that half of the time, the failure is due to the lack of communication during the execution.

Using OKRs during your organizational change helps support the understanding and the buy-in of the whole team. Transparent goals remove ambiguity, provide the broader buy-in, and make sure the company is moving towards the same direction. You can also use OKRs to restructure your organization.

Team productivity

One of the most common reasons why companies implement OKRs - is to increase alignment and team productivity. In my previous company, before we introduced OKRs, a particular thing happened regularly. Even though we were working hard, the output did not seem significant. In retrospect, we saw that we were making many activities but rarely led them to the conclusion, starting something new in the middle of the way. The lack of focus and a single direction didn't allow our team to achieve the highest productivity. After adopting OKRs, we became focused and disciplined about our activities. As a result - team performance increased significantly.

OKRs help the team maintain focus and discipline. Also, OKRs let everyone see the bigger picture and connect personal work to the overall company output. It drives motivation and accountability. As a result, team productiveness increases. That is an AHA-moment for many teams after adopting OKRs.

Where OKRs don't work

I want to emphasize that OKRs are not a silver bullet and do not solve every organizational problem. Moreover, when misapplied, you might even harm your organization, let alone bring any benefits of OKRs. Here are some of the most common ways organizations misuse OKRs for:

1. Day-to-day tasks and activities. OKRs are NOT about everything you do and are not your daily To-Do lists. They are also not for task management or tracking. Furthermore, individual OKRs usually do not work. OKRs are about the most crucial goal of the team.
   
2. Operational activities. For different teams, OKRs can take a different portion of their working time. It can be from 100% for the R&D teams to 20% for the operational/support teams. Do not try to track all operational activities (like the number of written emails) in the OKRs. Better set fewer Objectives or Key Results.
   
3. Performance reviews. It's tempting to use OKRs for the performance evaluation to determine the salary or bonus. However, it's not what the OKRs were designed for, and such an approach deteriorates the whole OKR process. Read this article to learn why you should separate OKRs and performance reviews.
4. OKRs as KPIs. KPIs are indicators of your team performance. They are metrics that show how well you're doing. OKRs are what your team aims to improve/achieve in the current period. KPIs and OKRs usually should be used together, not instead of one another.

Summary

Objectives and Key Results is a robust goal management methodology that can skyrocket your team results and effectiveness, as well as increase team engagement and happiness. However, they are not a silver bullet. Understand the context where OKRs apply to gain all the benefits of OKRs and achieve your goals. Additionally, we recommend checking an article about common OKR mistakes to avoid and ensure you achieve your goals with this methodology.

Check out an OKR tool Peoplelogic that allows you to set and manage your engineering Objectives effectively.