Why OKRs – And Why Now?

Why OKRs – And Why Now_V2-01

Power comes not from knowledge kept but from knowledge shared.

Bill Gates

Every large enterprise firm we work with is strategically working to adopt and exploit the cloud-native advantages enjoyed by today’s digital leaders, including Amazon, Netflix, and Google.

For all the amazing technical benefits of cloud tools, automation, and containers, one of the most powerful advantages these companies enjoy is the transparency and alignment of teams across their organizations. It turns out that this ability to align while maintaining the agility to pivot is the secret sauce of their extraordinary business success. This secret sauce has a name, and it’s OKR.

OKRs have become the preferred way to set yearly goals and track quarterly progress by digital natives and those practicing enterprise agility.

Management by Objective, ascendant in the 1950s, made way for SMART objectives in ’80s. Andy Grove and Intel turned these into Objectives and Key Results (OKRs) in the 1970s. The intent of Grove’s OKR process was to enable managers to convey knowledge to their employees and the groups they influenced so that others had the knowledge needed to make decisions themselves. Grove stated that OKRs and the process of communicating them provided managers with the ability to be successful, delegate decision-making to others, and participate in those decisions without actually being there. John Doerr learned the OKR process at Intel and applied it to the startups that he worked with, most notably Google.

OKRs provide companies an advantage in business climates that are volatile and disruptive, climates requiring innovation and fast responsiveness to customer feedback. They achieve this by emphasizing transparency, alignment, autonomy and high performance—traits that can help legacy enterprises match the cunning and dexterity of the digital titans.

One of the largest deployments of OKR across a traditional enterprise was at Sears Holding Company1. In 2013, Sears rolled OKRs out to its entire salaried population of roughly 20,000 associates. As part of the implementation, Chris Mason (a PhD in industrial-organizational psychology and senior director for Strategic Talent Solutions) researched the bottom-line impact of OKRs over an eighteen-month period.

For the group who used OKRs, we saw an increase in their average sales per hour from $14.44 per hour to $15.67, or an average increase of 8.5 percent. This increase is not only statistically significant, but practically significant.

Chris Mason

Mason also looked at improvement of employees across non-sales areas. In this case, they examined OKR’s impact using the company’s nine-box performance and potential tool2. Movement from medium to high performance is difficult, particularly over the course of one year, however, 11.5 percent of consistent OKR users were able to make this jump (3 percent of inconsistent users were more likely to move up and there was no change in performance level for those who didn’t use OKRs).

If you knew there was a tool out there that takes just a few hours each year to use which could increase your chances of high performance by 11.5 percent, wouldn’t you at least try it?

Chris Mason

The Sears Holding Company research provides the first outcome data on the impact of OKRs on personal and corporate performance.

  • Even minimal use in an enterprise setting (20,000 employees, or approximately 11 percent of the total Sears workforce) produces a significant impact to the bottom line and individual employee performance.
  • Employee improvement in these studies were analyzed based on their previous performance, supporting the benefits of giving people more autonomy in their goal-setting practices as a means of improving performance.
  • Consistent use, verses intermittent use, of OKRs should be the metric tracked by those companies who use or are implementing them.

Advance your executional performance and gain companywide agility with StriveTM, Gear Stream’s next-generation OKR tool for companies on the journey to cloud native. For more information on the use and implementation of StriveTM and OKRs in your company, email me (carol.mase@gearstream.com) and set up a free thirty-minute call.

  1. https://www.linkedin.com/pulse/sears-holding-company-study-shows-okrs-impact-bottom-line-ben-lamorte
  2. https://blogs.cfainstitute.org/investor/2016/02/08/where-do-you-fit-on-your-organizations-nine-box-grid/

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