OKRJourney in practice: Joining practices and experiences to enhance results

By Antonio Muniz, Carla Krieger, Victor Patané and 2 more

Learn concepts and practices in OKR with the experiences of 42 people leading the adoption of OKRs in various sectors of the Brazilian and international market.

Learn about the challenges and best practices in a journey of OKR implementation.

"In this work, another goal of this fantastic initiative called Jornada Colaborativa, we have a deepening of the concepts, context-based applications and, mainly, real market cases, which will surely help you in this VUCA/BANI world where short-term objectives are increasingly necessary." - Vitor Massari, preface


A Jornada Colaborativa

Together we are smarter and more lives are transformed!

Once upon a time there was a university professor who dreamed of releasing a book when he finished his master's degree in 2007.

After some ideas for publication on topics such as Microsoft certification, project management and service management, the dream began to be fulfilled in 2017 with the book "Jornada DevOps" (DevOps Journey), but some obstacles stopped its evolution after the definition of the final structure for the official EXIN certification and the writing of three chapters.

In September 2018, during a lecture at PUC Minas, a click emerged: "would other people passionate about DevOps help with collaborative writing?" Dozens of people accepted the invitation and the book was released to 350 people on June 6, 2019 at the SulAmérica Convention Center in Rio de Janeiro, after intense coordinated work with people from several cities who had never worked together before.

After this successful experience with many learning experiences, the team's escalation created great friendships, new initiatives and a donation of R$ 251,500.00 to institutions, with 11 books launched.

We dream of transforming more lives with collective intelligence and the support of friendly companies...

Antonio Muniz
Founder of Jornada Colaborativa, organization and curation of 20 books.

Carla Krieger
Organizing team leader for the book, curating and technical review.


Co-authors
Adriana Brandão
Alessandro Seixas
Antonio Muniz
Bruna Milare
Bruno Tadeu França
Bruno Tarsis
Bruno Urakawa
Carla Krieger
Carlos Eduardo R. Cruz
Dani Dias
Daniel Moro
Eriveldo Madureira
Fabio Cruz
Fernando Fernandes
Flavia Silva
Francisco Medeiros
Gabriel Francisco Pistillo Fernandes
Hermann Rego
Jamile Marques
Júnior Rodrigues
Leandro Mattoso
Leonardo Santos
Luciana Moreira
Luiz Eduardo Labriola
Márcia Maximiano
Marcos Afonso Dias
Maria Angélica Castellani
Maria Heloiza Rodrigues Magrin
Marília Maragno
Marlon Bastida
Pedro Signorelli
Queli Silva
Rafael Vilela
Renata de Podestá Gaspar
Roberta Altermann
Rodrigo do Vale
Ronaldo Menezes
Victor Patané
Walther Krause
Werther Krause
Yuri Bilinski Escarião
Yussif Barcelos Dutra

• Language: English
• Publisher: BRASPORT
• Release date: Sep 20, 2022
• ISBN: 9786588431764

Antonio Muniz

https://www.linkedin.com/in/muniz-antonio1/

Book preview

PART I.

ORIGIN AND PURPOSE OF OKR

1. The history of OKR

Marlon Bastida

Hermann Rego

Márcia Maximiano

Where it all began...

Taylor and Fayol, considered to be the fathers of management, began the treatment of business management as a science. William LaFollette and Richard J. Fleming, in their article The Historical Antecedents of Management by Objectives (1977), mention that in 1916, Henri Fayol identified five functions of management: planning, organization, command, coordination and control. Fayol considered that the planning function consisted of visualizing the desired end (that is, the objective or goal), the action plan to be followed and the methods to be used.

Cecil Mace, around 1935, performed the first experiments involving goals, proving that goals could improve the performance of workers. At that time, Mace ended up discovering some of the basic principles that are still valid, propagated and taught on this topic, such as:

1. Performance is dependent on the existence of goals.

2. Goals can be assigned to individuals and unless they are very hard to reach (unrealistic), will be accepted as yours by those individuals.

3. Goals can be assigned to a variety of results: for any performance criterion that can be measured, a goal can be defined.

4. A strict and specific goal will lead to greater increments in performance than a loosely specified, do your best instruction.

5. Goals increase performance less through intensifying effort and more through prolonging effort.

6. In the absence of intrinsic motivation on the part of the employee, performance will be worse if there are no goals.

In addition, Mace found that individuals needed feedback on their performance against goals, that is, in addition to being set, goals also needed to be closely monitored to be effective.

After Mace, Locke et al (1981) ended up writing the bible on the subject of performance goals.

In 1950, Peter Drucker created the MBO (Management by Objectives and Self-Control) methodology, which focused on project management using goals. Drucker understood that managers should set goals — around productivity improvements and other measurable results — and follow them at a certain cadence, in order to increase productivity and improve results, facing this scenario in a process of continuous improvement. This concept was described in the book The Practice of Management (1954) and was adopted and used by companies such as HP, DuPont, General Mills and General Electric.

Drucker understood MBO as a management philosophy that is capable of establishing teamwork, aligning individual goals with the collective result, considering the common vision, responsibility and strength of each individual. At that time, Drucker advocated that goals should be set by each manager and not by top management, giving them co-participation and responsibility for the result. It is up to the top management to evaluate and approve (or not) the defined objectives.

Thereafter, in the mid-1960s, Deming and Japanese industrialists worked together to improve the quality of products developed in the post-war period by the Japanese economy, which was undergoing reconstruction. TQC (Total Quality Control) and the Toyota Method are the fruits of that time and these actions. Hoshin Kanri, or Policy Deployment, has the same proposal. In this methodology, which belonged to the total quality management scenario, the corporate goals had consequences for each area of the company. The adoption of business management by goals comes from that time.

During the 1960s, psychologist Edwin Locke developed the theory of goal setting with the aim of explaining the need to work towards a goal as a source of motivation at work. Key studies used Locke’s study as a basis to develop theories and concepts related to the establishment of goals and objectives to increase performance. A study by Locke et al (1981), known as the Goal Setting Theory, concluded that specific or more difficult goals result in higher levels of effort and better performance.

Andy Grove started the idea of OKRs — Objectives and Key Results — in the 1970s, applying it at Intel. The concept was shared in the book High Performance Management (2020), where Grove describes the functioning of Intel’s goal and employee management, giving an overview of the embryonic OKR. This management by goals was actually called iMBO or Intel Management by Objectives, using Drucker’s MBO as a reference and using periodic SMART¹ goals (quarterly and annually). iMBO incorporated action plans (composed of individual actions called Key Results) to targets. This innovation of treating action plans and goals together was already practiced at Hoshin Kanri.

In Grove’s opinion, Key Results (KRs) were milestones that would make it possible for someone to identify the achievement of goals, and should be measurable and belong to an action plan. It is also believed that Grove came from the definition that OKRs (goals and actions) should be defined bidirectionally, also involving employees in the definitions and adding engagement and commitment in the process. Thus, Intel employees should define their goals considering the alignment with the company’s goals, which are in fact the reference, adjusting and adapting them with the participation of their managers. Finally, it is understood that Grove also came up with the need to have ambitious/difficult to achieve OKRs, creating the concept of stretch goals.

Because it is a collaborative contribution from several sources, and in view of all this history, it can even be said that the OKR system does not have a single creator. In this scenario, and considering everything that has happened in the last 20 years, each company customizes its version and contributes to the evolution of the model as a whole. A great example was the best-known milestone in the market, when, near the turn of the 20th century to the 21st, John Doerr — at that time a partner at Kleiner Perkins Caufield Byers, one of the most renowned venture capital companies in the world — showed the methodology (which he used at Intel like any other employee) to some Kleiner Perkings companies, including the start-up Google. Larry Page and Sergey Brin, Google founders, decided to adopt OKRs as a management methodology. Google’s success and the importance of OKR to that success, propagated in the market by the company’s own founders, made OKR grow more and more in the technology market and also in the market in general.

Considering its beginnings as an internal management tool, to the present day, in which it is considered one of the most efficient management models, OKR has developed and grown in the same proportion as its use has supported the growth of several companies. John Doerr brings in the book Measure What Matters (2018) the history of OKRs and how they can sustain the growth of companies.

Figure 1.1. Chronology of target systems.

Source: Hermann Rego (author).

It is worth mentioning the enthusiasm of Larry Page, one of Google founders, when Doerr introduces him to the idea of OKR. Page says he wished he had had this vision at the beginning of Google, at its founding, 19 years ago. He wasn’t used to processes, so when Doerr comes up with an idea from a company that had already shown results, OKR definitely goes to Google.

According to Larry, Doerr decisively helped the company to grow tenfold, helping to fulfill an extremely daring mission of organizing all kinds of desired information and getting close to the achievable, keeping Google on the right path when they needed it most.

How to set an OKR?

OKR is basically the combination of two components: Objectives and Key Results. Objectives are definitions of what you want to achieve. It should be qualitative, short, inspiring and engaging. It must motivate, challenge and give a sense of purpose to the organization, as well as to the team and people.

On the other hand, Key Results can be defined as a small set of metrics that regulate progress towards the Objective. Each key result must be quantitative and measurable, that is, if there is no number, it cannot be considered a key result.

At first, it is necessary to define what the Objective is. That is, what you want to achieve.

Objective example: To be a collaborative community of amazing technology and innovation by 2022.

Then, break down the Objective into key results. Examples of key results:

tick [OKR 1] Write 20 books

tick [OKR 2] Record 15 podcasts

tick [OKR 3] Agility for 100% of volunteer teams

tick [OKR 4] Two hundred new subscribers to Jornada Club

Key results are quantitative, measurable and help us to know if we are moving towards our objective. They must define balanced results that lead the team to the expected results. It is important that each objective has two to five key results. With less than two it is difficult to know if, in fact, we are heading towards the objective and more than five is complex to manage.

The big difference between OKR and other goal setting models is that OKR is extremely simple, agile, flexible and decentralized. It can be used for goal setting at any organizational level (operational, tactical and strategic). Because it’s so effective, companies like Spotify, LinkedIn, Twitter, Nubank and, of course, Google don’t give up using it.

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1SMART means S — specific; M — measurable; A — achievable; R — relevant; T — timely.

2. Why use OKRs?

Walther Krause

The goal setting theory was proposed by Locke et al (1981), as we saw in the previous chapter. For Locke et al, difficult, challenging goals, when accepted by employees, result in even higher performance than easy goals. People are motivated by established goals: well-defined and clear goals are stimulating. As long as there is capacity and acceptance, the more ambitious the goal, the greater the yield. Objectives can stimulate people’s behavior, demonstrating value for what is aimed.

The definition of goals and objectives, as advocated by Locke et al (1981), reflects on motivation, as it allows people to assimilate more quickly what results should be obtained.

The MBO (Management by Objectives and Self-Control) methodology, devised by Peter Drucker (1954), put into practice the concepts of the theory of goal setting by Locke et al. MBO became popular in leading companies, which leveraged good results through this model. The larger the organization, the greater the benefits gained from MBO.

If MBO was so good, why adopt OKR?

The changes that have taken place in society and in organizations, demanding ever shorter cycles in strategic planning and greater agility/adaptability in the development of actions to carry out the strategy, required a goal management model that was more adhering to the new scenario. The emergence of OKR took up the space, as the MBO was in decline.

OKRs are often defined, measured and evaluated in short cycles. OKR is a simple, paced and participative process.

Like MBO, the OKR exists to create alignment and to set the cadence for the organization. The objective is to ensure that everyone is moving in the same direction, with clear priorities, at a pace adjusted to the conditions of the moment.

What are the OKR differentiators?

The OKR model is not a one-size-fits-all recipe. Each organization and team can and should adjust the model to its reality and scenario.

The main benefits of using OKRs are:

tick Agility/Adaptability : one of the main benefits; short goal cycles bring better adaptation to change, reducing risk.

tick Focus and discipline : the goals, few in number, ensure the focus on obtaining results and greater discipline in the organization.

tick Engagement : everyone’s participation in setting goals connects employees to the company’s objectives, increasing engagement and commitment to results.

tick Alignment and cooperation : shared goals encourage collaboration between teams, resolving interdependencies and creating synergies between different initiatives.

tick Communication : transparency and simplicity make communication clearer, facilitating the understanding of the organization’s goals and priorities.

tick Autonomy and responsibility : when applied with self-management, teams receive clear direction and are free to choose how to achieve OKRs. Autonomy increases agility in decision-making and the search for the best ways to achieve the objectives.

tick Ambitious goals : decoupling OKRs from compensation makes it possible for the team to set ambitious and challenging goals, avoiding the temptation of unethical attitudes to obtain results.

The OKR structure

An OKR consists of an Objective and a set of Key Results (KRs). The objective represents where you want to go, what you want to improve. It is described by a short, clear, qualitative and aspirational sentence. It could be a problem to be solved or an opportunity.

Each objective can have two to five key results. Key results represent how you will measure progress towards the defined objective. Key results must always contain a relevant metric to achieve the objective.

Examples of an OKR

Objective: Delight consumers of our products

Key results:

tick KR 1: Increase NPS from 6.5 to 8

tick KR 2: Increase the number of hits to the site from 5,000 to 8,000.

tick KR 3: Increase the repurchase rate from 15% to 25%.

Key results define what success is through quantitative metrics.

Objective: Improve my fitness this year

Key results:

tick KR 1: Reduce cholesterol from 170 to 90

tick KR 2: Reduce the weight from 110 kg to 80 kg

Initiatives (to achieve key results):

tick Go to the gym three times a week

tick Perform aerobic activity twice a week

tick Eat up to 1,800 calories a day

tick Reduce salt and sugar in juices and foods

OKRs are aspirational and seek engagement

OKR is a model to support business growth and customer value creation. As the objectives are challenging, achieving them is not always the most important thing, at the individual level. The wish is that teams do their best, learn fast and the organization grows. The risk of making mistakes is part of the process and is positive, as long as it generates learning and evolution.

Why companies prefer OKR

OKR is a model that is simple to understand, but complex to implement in order to be effective. With the support and sponsorship of senior management, the process is gradually absorbed by the organization. It takes persistence and discipline. As a result, companies of all sizes are adopting the OKR model to accelerate their transformation and growth processes. Intel, Google, Twitter, Amazon, among others, are no longer alone in this