December 5, 2019 – TRG Talk: Project Management with the topic of “OKR for Project Management Functions” aimed at shedding light on the new rising star in goal-setting, OKRs, and how applicable is this method in project management.
Businesses have been using Key Performance Indicators (KPIs) as the primary tool for setting and monitoring targets for years. Nonetheless, KPIs do have their own limitations, and some organisations find this goal tracking system somewhat lacking.
TRG Talk: Project Management December was arranged to present another approach to goal setting – OKRs (Objectives and Key Results) – which is more agile and employee-oriented.
Don’t miss out: Check out TRG upcoming events
What is OKR?
Objectives and Key Results (OKRs) is a management framework initially invented in the 1970s by Intel and Oracle’s leaders. The framework combined two of the most popular goal-setting approaches: Management by Objectives (MBOs) and SMART Objectives. John Doerr then applied the concept of OKRs to Google, and the method continues to be used at Google until today.
An OKR comprises two essential components: an objective and a few key results.
But according to Carsten, an OKR, when applied in the context of Project Management, is still missing the third component, an “A” for Action. Carsten believes that Action is more important than other elements.
OKRs can be applied on either large or small scale, i.e. at the organisation level or a team level, or even at a personal level.
Benefits of OKRs
OKRs ensure that every employee well understands the company’s goals and objectives. Managers and employees are able to align their goals with the company’s objectives.
OKRs can improve collaboration and endorse transparency among team members and different teams, thereby, unifying everyone to work towards the common goals.
Key Results and Actions are proposed by the employees which hold the employees accountable. Therefore, they will be more obligated to reach predefined goals.
OKRs enables businesses to be more focus as it requires them to pick out on only a few critical issues to solve within a time frame (which tends to be short-term) and defers the less urgent ones.
Businesses need to track the progress regularly to avoid any lagging and adapt their actions accordingly. The limited number of goals, time, and frequent monitoring allows companies to see the real, immediate impact.
As a result, OKRs pushes companies to achieve higher transparency, to strive for more ambitious goals outside of their comfort zones, goals that are otherwise thought to be impossible.
KPIs and OKRs, which method to choose?
Above is a query raised by one of our participants this morning. According to Carsten, each goal-setting method has its own benefits. Both approaches aim at establishing and planning quarterly and/or annual goals.
The short answer to the above question is: it depends on your organisation. It is up to you and what you are looking to measure. In fact, OKRs can be used in conjunction with KPIs.
For example, your company wants to test out OKRs to see how applicable it is to your current situation. You can select one team play around with it first, while the rest of the company continue using KPIs.
After the testing period and OKRs are proven to be a good fit with your company culture and values, then you can start rolling it out on a large scale.
KPIs and OKRs are indeed two different approaches to goal setting. One noticeable difference that sets the two apart is:
- KPIs are given from the top down.
- OKRs are driven from the bottom up.
Moreover, KPIs are often set around a project that is already in place, while OKRs are often bold, ambitious stretch goals to push team members forward.
Setting up an OKR framework
The objective is a description that defines the outcomes companies want to achieve within a set time, usually quarterly. Carsten believes that companies only need 3 to 5 objectives, as having too many goals at once can be confusing and challenging to keep people focus.
Ask yourself: “What are the most important priorities right now? And when do you want to have these priorities satisfied?” Be bold, be brave, but don’t be irrational.
Each objective needs to have 3-4 Key Results that enable you to measure the team’s progress. Key Results denote what companies want to do to have these objectives met. Key Results must be numerically-based because they define whether a project is a failure or a success.
Finally, Actions are steps taken to satisfy the Key Results and Objectives. There must be one person responsible for the actions taken. Actions also must be time-bound.
When set out to define Objectives for each team, bear in mind that they must be aligned with the company values and objectives. Carsten also emphasizes that it is critical to have an open organisational culture to be able to implement the OKR framework.