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Objective Key Result (OKR) : The Definition and Function

Last updated: Aug 25, 2023

What is OKR?

OKR stands for objective and key result and  is a framework that determines the company's or individual's targets along with a number of important steps that can measure these achievements. It aims to make sure all employees know the company's goals and work together to achieve those goals.

Organic Key Result was first developed by Peter Drucker in 1954, initially referred to as management by objectives (MBO). Then in 1968, Andy Grove, owner of the intel company, started using MBO and modified it.

Then in 1974, John Doerr, originally an intelligence worker, began to study the Objective key result method. In 1999, John Doerr teamed up with Google and introduced this method to the two founders of Google, Larry Page, and Sergey Brin. 

 

OKR Benefits

Using Objective Key Result provides a number of advantages for businesses. Some of the benefits are as follows:

  • Improve teamwork - It connects every division within the company so that team communication can be more aligned and efficient.
  • Make teams more focused - a simple structure helps employees focus more on important targets that need to be achieved first. In this way, the productivity of the team will increase.
  • Work transparency - the goals and the performance of each team can be monitored clearly so that it is easier to know the performance of employees.
  • Employees engagement - It allows each employee to contribute to achieving business goals, so productivity will increase and company goals can be achieved quicker

 

The Difference between OKR and KPI

Some people think that key performance indicators (KPI) and OKR are the same things. However, there are a few things that differentiate the two.

KPI is a metric to measure the company's performance in achieving business goals. The KPI component consists of measured metrics, targets to be achieved, supporting data, and reporting frequency.

While OKR is a measuring tool used to determine the company's main goals and measure the progress of efforts to achieve these goals. Also, the main components are the objective and key results.

 

Example Objective Key Result

Objective Key Result is divided into two important elements, namely objective and key result. Objectives are specific goals that a company or individual wants to achieve. Meanwhile, key results are measurable metrics that include actions to achieve objectives.

The following is an example of a case study of making objectives and key results in a digital marketing company.

OKR on Company XX

Objective: increase the company's brand awareness in Indonesia

Key Results:

  • Publish 15 new articles every month for a year
  • Increase the number of backlinks by 5% in a year
  • Get 51,000 organic traffic before June 20
  • Cooperate with 200 new clients in a year

 

Furthermore, company or any stakeholders can share the key results according to the tasks of a particular division or team.

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