Written by Ludovic Veys
Our ever-changing world
Companies have a toolbox at their disposal to help them with their strategic goalsetting: KPI’s, SMART goals, benchmarking, etc. Each of these tools have helped big and small companies to develop strategies for the upcoming year, three years or even the upcoming decade. They help to predict a company’s growth and thus the growth of whole markets.
Our economy depends on long-term planning and prediction. In a sense, that means our economy is dependent on long-term stability. The problem is that our world is no longer stable, and we have known this for years. Back in 2006, the deputy managing director of the IMF already voiced her concerns. She spoke of a remarkable economic expansion around the globe, but also warned us for the persistent and rising global imbalances such as rising oil prices, geopolitical instability and the avian flu outbreak.[2] Only two years later we went through the Financial Crisis of 2008.
The conclusion of research performed at the university of Surrey is therefore not that surprising: our economies have been unstable for decades. With the weight of the Covid-19 crisis added to the scale, we will now experience one of the weakest and most unstable economic recoveries in our history.[3]
OKRs as a key to short-term, ambitious goals
How do you keep looking forward without being able to predict what the next year will look like? The answer lies within short-term, yet ambitious goals. Companies need to approach the unreliable future one step at the time. However, this does not mean that they no longer have to reach for the stars.
Objectives and key results, OKRs, allow companies to establish these type of goals. OKRs are not a new tool, they have been used by numerous powerhouses like Google, Amazon, Siemens, and Walmart. The process is simple and can be performed both on a company level as well as on a team level. For the upcoming quarter, the company/team sets a limited set of objectives that are ambitious yet achievable. Objectives need to be inspiring, qualitative and time bound. For each of these objectives, up to 5 key results are defined. The key results are measurable, time bound and quantitative. Progress made on key results needs be expressed in a score between 0-100%. The scores translate into a total score per objective.
The most important aspect of these objectives is that they need to be ambitious and actionable at the same time. This means they allow the company to start working towards the end goal immediately, while keeping in mind that reaching 60-70% of that goal is already a big win. For example: if you set out to reach Mars and only reach the moon, you have already reached the moon. Without the goal to reach Mars, you would never have left Earth in the first place.[4]
Studies by Sears Holdings showed that consistently working with OKRs drove up revenues per salesperson by 8.5% and upped their performance by 11.5%. OKRs do more than that, though. Not only will they push your business forward, they will push your company culture too. OKRs create focus, transparency, and alignment within an organization. In companies testing OKRs with only part of the team, the other part soon starts asking to work with the methodology as well.[5]
Are you eager to set OKRs for your own company? BrightWolves recently helped a Belgian SME to face their challenges in the upcoming year by using OKRs. Reach out to us if you are interested in setting achievable yet ambitious goals.
[1] https://jell.com/blog/2020-goal-setting/ [2] https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp060706 [3] https://www.sciencedaily.com/releases/2020/06/200626114759.htm [4] https://weekdone.com/resources/objectives-key-results/ [5] https://okrs.com/2015/03/sears-holding-company-study-concludes-okrs-impact-the-bottom-line/