OKR

OKR stands for “Objectives and Key Results.” It is a method companies use to define what they will work on over the coming months. A goal is formulated in a single sentence: for example, “Our app should be much easier for new users to use.” On its own, though, this sentence is just an intention without proof. That’s why two to five figures are added, which later show whether it worked. For instance: “80 percent of new users complete sign-up without help” or “The number of support requests drops by half.” Goal plus figures together make up an OKR.

What OKR does against wishful thinking

In large organizations, many people work on many things at the same time. Without a shared direction, projects arise that get in each other’s way or duplicate the same work. OKR forces a selection: only a few goals per quarter, i.e., per three-month period. Everything else is deliberately left undone. This self-restriction is the actual core of the method.

The second point is measurability. Phrases like “We’re improving quality” can be interpreted as a success at the end of the year however one likes. A figure cannot be interpreted that way. At the end of the quarter, it is either reached or not. This makes conversations about progress more objective and less dependent on who presents most convincingly.

A common misconception: OKR is not a performance evaluation system for employees. If goal achievement determines salary or promotion, everyone will deliberately set easy goals. The method then turns into its opposite. That’s why companies deliberately separate OKR from performance reviews.

The quarterly rhythm

OKR runs in cycles, usually over three months. At the start, leadership sets a few goals for the entire company. The individual teams then derive their own OKRs from these. A team asks itself: What can we concretely do to bring the company goal closer? This creates a chain from the top of the company down to the individual working group.

During the quarter, there are short, regular meetings. These only look at where the figures stand and where things are stuck. At the end comes a review. Each key result is rated on a scale from 0 to 1. A value around 0.7 is considered good in many places.

That sounds odd, but there’s a reason for it. Goals are meant to be deliberately ambitious, meaning set high enough that you can’t be certain of reaching them. Anyone who consistently achieves 1.0 has set the bar too low. Such goals are called “stretch goals.” It’s important to draw a distinction: figures that merely monitor ongoing operations do not belong in OKR. For those, there are ordinary metrics, known in jargon as KPIs.

OKR at tech giants and in quarterly reports

The method originated in the 1970s at chipmaker Intel. It became well known through Google, which introduced OKR shortly after its founding and has used it ever since. From there, it spread throughout the entire tech industry and later into traditional corporations, government agencies, and associations. Today there is dedicated software solely for managing OKRs.

In business news, the term is usually encountered indirectly. When a company announces that it will focus on AI products over the coming months and discontinue three other projects, such goal planning is often behind it. Sentences in quarterly reports about “focus areas” also point to it.

For students, the transfer is straightforward. Instead of “I’ll study more math,” an OKR would be: goal “I will definitely pass the next exam,” plus the figures “three practice sheets per week” and “all exercises from chapter 4 completed.” The difference from a simple to-do list is that the result is fixed first, and the tasks come afterward.