This article will cover a brief overview of the OKR (Objective and Key Result). All companies, including nonprofit organizations, are goal-oriented, purpose-driven, and yearning for accomplishments. Regardless of size and industry, however, they all operate with a limited amount of resources.

It doesn’t matter whether you run a startup or a company worth billions of dollars; you always need an effective goal-setting and measurement process. This is where OKR comes in.

What is OKR?

In simple words, OKR (Objective Key Result) is a framework used for setting strategies and defining goals to be achieved within a specified amount of time. At the end of the specified period, OKR provides a reference on how well the individual or company has performed in executing strategies and achieving the goals. As the name suggests, there are only two significant points:

Objectives: these are the goals you hope to accomplish within a specified time. At Google, for example, the results (goal plus where you are in completing the process) are on a dashboard for the entire company to see. OKRs help the whole company stay on schedule and give the company time to adapt if they are not on the schedule.

Key Results: think of key results as indicators of or pathways to achievement. Commonly the indicators are written in numbers, for example, percentage, time, reference, or monetary value. Numerically-based objectives or expectations are often easier to measure, as well. For example, the Objective is to (specific goal)  by (date).

Not every key result is quantitative or indicated in numbers. Instead of using numbers to track progress, you can use a qualitative (milestone) method. Every milestone represents a specific challenge or a portion of the larger initiative. Each milestone met means a step closer to the objective. For example, step one (25% of tasks required) completed (date) as scheduled and currently on track to achieve the overall goal as expected.

The maximum a person should have is four to five significant objectives. Four meaningful goals and four tasks to each means focusing on sixteen tasks.

Why use OKR?

To make sure that every individual and team in a company is on the same page, OKR must be widely distributed and easily understood. OKR is crucial because it acts as a management and communications framework.

Key results, ether quantitative or milestone-based, are measurable values used as the foundation to determine overall performance. Key results are indicators that mark both the easiest and hardest parts of an initiative. This way, the company can define the right strategy to focus on and the most immediate challenges by diverting or allocating more resources accordingly without compromising workflow in progress.

Main benefits of OKR

In addition to measuring success, OKR opens the door to better utilization of resources. As simple as it may sound, this is a complicated process; yet when done correctly,  it promises a wide range of benefits including but not limited to:

Effective employees: well-communicated objectives and key results allow the companies to focus on the most important task at any given time. The sense of achievement with every milestone met is also a strong motivation to keep on moving forward as employees realize that they are closer toward project completion.

Better planning: based on current achievements and remaining resources available, a company can craft strategies and execute all elements in more efficient ways. OKR gives a good understanding of the company’s situation and performance.

Manageable execution of strategies: the key idea here is prioritization. OKR helps a company to recognize any weak points in the planning or performance that will hinder progress and the completion of the objective itself. The company can then prioritize resources to address the identified shortcomings.

The idea behind OKR is to manage and measure success. Because some objectives can be too difficult to achieve, given a limited amount of time and resources, a generalized statement of success or failure is not good enough. OKR gives a clear overview of how far or close you are to achieving goals and foretells possible difficulties to come.

Here is an example of how to use OKR. T.J.Rogers, CEO of Cypress Semiconductor, who, through a dashboard, reviewed each person’s status daily. If an employee were behind in reaching his goals, he would call the person and ask,” how can I help.” He assumed they would have completed the task unless there was an obstacle holding him/her up. That’s a positive management tool and a positive approach to team members.