I have personal and professional goals. Sometimes, I state them as objectives: complete this book, learn that thing. Those are personal objectives. My personal objectives look like MBOs, Management By Objectives. These personal objectives contribute to my company, but they are not a corporate objective.
Some of my goals are corporate objectives: release that book, build that workshop in service of a greater goal. Those goals look like OKR s, Objectives and Key Results. I can measure my progress towards those goals on a regular basis, and see my results as I accomplish them.
MBOs (Management by Objective) don't have to be personal. MBOs should arise from corporate objectives. Too often, MBOs are personal—they don't correlate with a corporate objective. Many people have yearly MBOs that look something like this:
- Finish Project A (underway)
- Start and finish Projects B and C
- Coach some other employee(s) in my expertise
- Learn something-or-other
That's fine if the corporate objectives don't change throughout the year. And, it's fine if you don't need everyone pulling in the same direction.
When I created MBOs with my manager, my projects changed. Sometimes, all the projects changed within a week of my goal-setting. I had other goals for the rest of the year. At the end of the year, when we reviewed my MBOs, we often shook our heads—our corporate objectives had changed, even though my MBOs hadn't.
Notice how my MBOs optimized for my deliverables, a form of resource efficiency. When Drucker developed Management By Objectives, the idea was to flow the objective down to each person and gauge their results against that corporate objective.
That's not what happened. We had personal objectives, which might or might not have been congruent with the corporate objective.
Enter OKR s, Objectives and Key Results. Instead of yearly objectives, the people in the organization collaborate to create quarterly Objectives and Key Results the organization wanted.
Objectives have measures: a specific increase in customer retention, increase in customer acquisition, increase in revenue, etc. The objectives are supposed to be SMART goals (Specific, Measurable, Attainable, Relevant, Time-Bound). Then, the Key Results can also be measurable.
OKRs are supposed to encourage flow efficiency, so everyone works to the same objective. If the objective is sufficiently audacious, people will not achieve well-defined OKRs a significant portion of the time.
OKRs provide us a way to create feedback loops on corporate objectives and how well we meet those objectives. If we don't meet our OKRs, we learn from these feedback loops. We can decide what to do the next time.
What About Accountability for Objectives?
In MBOs, each person was accountable for their own work. Too often, failure was not an option. Fail enough and even if you learned, you got fired. You're supposed to hit the target on every MBO.
With OKRs, each team is accountable for their work, first to tie the key results to the objective. Second, to deliver something and learn. You don't have to hit the objective target, as long as you can show progress and learn.
So, can you ever have an objective be “release this product”? You can, for an MBO.
For OKRs, think a level higher: what is the value of releasing this product? That's the objective. What is the corporate objective you realize by releasing the product?
If you have a small organization, you might have several OKRs for the entire organization. If you have a large organization, consider product-line OKRs. When in doubt, optimize up.
When we collaborate on the OKRs, we can make organization-wide goals. That helps with flow efficiency. We can all work to achieve a result greater than what we can do alone.
The organization becomes accountable, not the person.
Confusing OKRs with MBOs
One organization thinks they have OKRs. Each team has an objective to release their own products. Except, each product is part of a program. Releasing the products on their own does not provide as much value as releasing the entire program. They are using the term of OKR, but they're treating it as an MBO. They optimize for each team, not the program.
Worse, another organization thinks an objective is to increase a team's velocity. That notion misunderstands velocity, ignores flow efficiency, and is not an organization-wide objective. This is the worst kind of MBO: a way to punish people if they aren't “accountable” for a surrogate goal.
A Possible OKR Checklist
Here's a check on your OKRs, to see if they really are OKRs:
- Does the objective tie to the corporate strategy?
- Do people collaborate on defining objectives?
- Do teams collaborate to define their key results?
- Can you publicly share your key results and have people agree that they tie to the objective?
- If you don't achieve the results, will people celebrate what you learned?
- Does the organization set the OKRs quarterly or even more frequently?
- Does the OKR have SMART goals so you can measure how well you achieved it?
If you can answer yes to these questions, you probably have OKRs. If not, you probably have MBOs.
In part 2, I'll discuss accountability and what that might mean in an agile environment.