What can you Learn from Top Companies that Adopted OKRs?
OKRs are goals and objectives that help you focus on what matters. The acronym stands for objectives and key results, which is a goal-setting framework that Google popularized. OKRs are designed to help enterprises achieve their goals by focusing on the most important things at any given time. Google attributes its success to adopting this methodology, which took them from a small start-up to today’s tech giants. The methodology as we know it now was first created by John Doerr, who was working with Intel in 1999, and has since been adopted by some of the world’s leading companies, including Amazon, Netflix, Google, and Uber. This article examines how these enterprises used OKR management methodology to overcome challenges and pain points.
How Does OKR Management Methodology Work?
An effective OKR framework consists of the following.
- Every year, you set three to five bold goals known as objectives. These are measurable, substantial accomplishments that will significantly impact your enterprise’s future success.
- Next comes the key results. These are specific metrics that help you measure your progress towards meeting your objectives. For example, if your objective is to increase sales revenue by 20%, one key result could be to increase sales team productivity by 10%.
- Each month during the quarter, you should review your OKRs with your management team to determine if they’re still relevant or need adjustments based on new developments in the market or your business model.
How does Google use OKRs to build Motivation and Prevent burnout?
Motivation and burnout are big problems within an enterprise. That’s why Google sets OKRs, so their team doesn’t burn out when experiencing incredible growth. Even companies you think are doing well, like Facebook, Amazon, Netflix, and Airbnb, have had failures! And even companies that look like they have it made, like Apple, have had setbacks.
Google is now famous for hitting its OKRs. In 2008, Sundar Pichai was in charge of a brand new Google program, Chrome. The OKR was 20 million users by the end of the year. Even for Google, this was massive growth and might have been difficult for other leaders. This goal was ambitious for Google but not for Sundar. He wasn’t used to failing and had only one message for his team, “Anything can happen if you set an objective.”
When Sundar and his group set off in 2008, the program was delivered to Windows, yet the Mac adaptation was late. Sundar’s group couldn’t hit their 20 million users objective. It could have been an issue for other people, but not for Sundar and his group because they had an OKR mentality. In 2009 they set another OKR, 50 million clients. They finished the year at 37 million—another disappointment. The following year they put forth another objective of 111 million clients. Despite past disappointments, they kept going forward with increasingly ambitious objectives. In the final quarter of 2010, they finally hit their target of 111 million clients.
Today, Sundar is the CEO of Google. His past failures didn’t prevent him from succeeding. They didn’t dial him back or stop him. A superior goal-setting framework was able to add coals to the fire and keep building momentum. The lesson Google teaches is not to be discouraged by failure but to leverage the OKR hierarchy to build motivation and prevent burnout.
How does Amazon use OKRs for Brand Improvement?
Focus on what will not Change
Jeff Bezos, the founder of Amazon, says that while setting OKRs, you should focus on what will not change. As an industry leader, he says he often gets asked what will change in the next ten years, which is an interesting but common question. He says he rarely gets asked what will not change, and in his opinion, this is a more relevant question that he could build a business strategy around. As a retail business owner, he knows that customers want affordable prices and fast delivery, which are two factors that are unlikely to change over the next decade. He explains that having established long-term truths allows you to expend energy on goals that are both clear and stepping stones for your enterprise’s success. In Amazon’s case, successful projects like the Kindle and drone delivery were initially experiments to meet Jeff Bezos’ affordable pricing and fast delivery goals.
Set OKRs at Both Individual and Team Levels
At Amazon, both individual and team goals are established using OKRs. Team OKRs enable employees to work together by aligning their objectives with the company vision. Individual OKRs help employees analyze their performance and personal development needs. Managers also use OKRs to assess employee upskilling, performance enhancement, and business growth at the end of each quarter.
How does Netflix use OKRs to enhance customer and Employee Experience?
Netflix has been a leading name in the streaming service industry for years. But in recent months, the company has been under fire for its poor customer service, which led to an exodus of customers and a decline in stock value. Netflix’s CEO Reed Hastings said he believes adopting OKRs will help his company get back on track with its customers. The company will also introduce quarterly surveys to collect feedback from subscribers about their experiences with Netflix. This initiative aims to determine what aspects of their subscription service need improvement and work towards fixing those problems in future releases of new products or services offered by Netflix.
Netflix implemented OKRs tracking software to help them make decisions about new projects, prioritize projects that need to be done, and evaluate the success of previous projects. Netflix set goals for its brand by focusing on three key areas: customer experience, growth, and culture. They used data from surveys and interviews with customers to identify what they wanted to change about the customer experience. They then created OKRs based on these findings by focusing on improving how they interacted with customers through email or phone calls and ensuring all employees were trained on how to properly handle customer complaints, such as making sure they were resolved within 48 hours.
Netflix also used data from surveys and interviews with employees who left the company after working there for more than two years. They found that many employees quit because they didn’t feel supported or appreciated by their managers or didn’t feel like there was room for growth within the company’s structure.
In Conclusion
OKRs are an effective goal-setting methodology contributing to the tremendous success of industry-leading companies today. Today’s companies that are at the top weren’t always pioneers in their respective fields. What sets them apart from their competitors is the OKR mentality that allows them to set clear goals and take appropriate measures to achieve them. These enterprises succeed in executing their ideas due to the OKR framework that streamlines their process. Adopting a similar approach in your enterprise can take you just as far.
