Everything you need to know about how to make Objectives and Key Results (OKRs) work at your company. It includes examples, best practices, and mistakes to avoid. Learn how to manage by objectives like top execs from Salesforce and LinkedIn, the history of the practice, and how to align OKRs with your company vision and values.
15Five's Ultimate Guide For Making OKRs Work At Your Company (Part One)
For Making OKRs Work
AT YOUR COMPANY
2 | 15Five’s Ultimate Guide for Making OKRs Work at Your Company
What do today’s most successful, fastest growing companies have in common?
Companies like Yammer, which was sold to Microsoft for $1.2 Billion, or Salesforce
which grew to $1 Billion in revenue in 10 years, all practice management by objectives
(MBOs) for goal-focused, company alignment.
Inc. 500 companies (and even some Fortune 100 companies) all use a variety
of slightly different models; OKRs, V2MOMs, Rocks, etc. The common themes
are creating objectives every quarter, implementing metrics to measure them,
when the clock runs out.
In his best-selling book, Mastering the Rockefeller Habits, Verne Harnish provides an
overview of three habits that are crucial for successfully managing a business. Harnish,
who has been described as “the guru of fast growth companies”, observed that
businesses need to do the following:
1) Create 5 overarching priorities for the year and the quarter, as well as priorities for
individual employees that align with those of the organization. One of the company
priorities should include a theme for the quarter or year.
2) The business must have sufficient data to provide daily or weekly insights, along with
key performance metrics for each employee.
3) To maintain company-wide alignment and drive accountability, the company must
have an effective communication rhythm of effective daily, weekly, monthly, and
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Create an overall theme for the
quarterly goal, and implement a
rhythm of feedback and meetings
that maintain alignment and
Every employee has measurable
results that are tracked and
updated each week. Employees
statistics so that management
can see the performance of
individuals, teams, and the entire
organization at a glance.
The company establishes 3-5 top
priorities every quarter. Each team
and individual employee creates
objectives that are in-line with the
When applied to OKRs, these three elements make for a powerful business practice…
4 | 15Five’s Ultimate Guide for Making OKRs Work at Your Company
The communication rhythm is the most vital element for creating growth.
Communication provides context to the data so that when employees and teams
fall off target, managers have a method for discovering why.
Analyzing employee performance and team dynamics involves listening to
employees to hear a story more subtle and complex than the numbers alone
can convey. This qualitative analysis provides a complete picture of the health of
organizations who know that their people are the main determining factor between
success and failure.
When managers view and analyze performance metrics, they often need more
context to determine the causes of success or failure, and how to take action. Rather
than looking at performance ﬁgures in a vacuum, managers can take a step back
to see what employee behaviors inﬂuenced the numbers. For example, a company
can look at sales ﬁgures as a KPI, without looking into the quality of the demos that
were done or the number of customer phone calls made.
Holistic management practices like soliciting regular employee feedback coupled
with management by objectives, allows managers to delve into the drivers of
employee performance. Was productivity low for a certain time period? Why? Asking
questions can provide valuable information to replicate what’s working and to turn
failures into wins.
“Themes create the focus & the fun, but what makes a
quarterly goal achievable is daily and weekly rhythm aimed
at keeping everyone informed, aligned, and accountable.”
-Verne Harnish, Mastering the Rockefeller Habits
6 | 15Five’s Ultimate Guide for Making OKRs Work at Your Company
THE HISTORY OF MANAGEMENT
Objective and Key Results, or OKRs, are certainly nothing new. The practice was
invented at Intel in the 1970s as the company pivoted to create computer processors
instead of memory chips. Managers across the various teams used OKRs to prioritize
quarterly objectives for employees that were aligned with greater company goals. By
the time the personal computer revolution began, Intel was using OKRs to become
one of the world’s largest manufacturers of microprocessors.
Rocks are used by many Inc 500 companies and most of the Entrepreneurs’
Organization and the Young Presidents’ Organization. Steven Covey developed
the term, which was later popularized by Verne Harnish in his book, Mastering
The Rockefeller Habits.
In The Seven Habits of Highly Effective People, Covey provided the analogy
of placing rocks into a jar. Just like the workday, the jar has limited space. When
people begin by adding sand and then add pebbles (the small tasks), they will
not have room for the large rocks (the more important, time-consuming tasks).
To make everything ﬁt, Covey suggests putting the rocks in ﬁrst, then the
pebbles, sand and water. Starting the day with the most important tasks ﬁrst
allows for plenty of time for all the smaller, less important things.
The same logic is applied to each quarter of the year. The path to success lies
in simplicity and ﬁnding the leverage. Focus only on 3-5 major objectives that
are aligned with the company goals.
Today, Google, Zynga, Yammer and many Silicon Valley companies use the OKR
model as a way to quantify what they are working on and measure their ability to
achieve those goals. The main idea is to prioritize important things ﬁrst, then focus on
the ﬁner details.
Various other systems have evolved based on this original OKR model. All are built
around the same basic premise with nuances that ﬁt into the ethos and values of each
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There are many different ways to move employees along the path, from formulating
objectives to producing effective results. No matter the acronym, these simple and
highly focused systems have been proven to work time and time again, and are
easier to put in place than one would think.
V2MOMs are a variant being used by Salesforce, another company that
needs no introduction. The acronym that stands for vision, values, methods,
obstacles, and measures was invented by CEO Marc Benioff. Benioff believes
that “while a company is growing fast, there is nothing more important than
constant communication and complete alignment.”
V2MOMs helped make Salesforce successful because of the simple path that
was laid out from goal visualization to accomplishing results. Benioff has seen
the process work with every stage of company growth: “We’ve used it as a
business plan for our startup, and we ﬁnd the same construct to be effective
for outlining the annual goals of a public company.”
MORPHs (or mission, objectives, results, people, and how) have been used
at Yammer for years. CEO David Sacks offers that the mission gets people
thinking about their individual contributions at the company. Guided by that,
they come up with their top 3 to 5 objectives for each quarter. Results are the
metrics used to measure performance of those objectives and the how looks
at how each person did that quarter. The big picture is that MORPHS are a
symbol for change and progress within the company.
What separates this practice from the others is the “P”, or people. Yammer
considers how employees ﬁt into the completion of objectives. Do they need to
hire new people or reconﬁgure the teams? Everyone’s role within the company
is deﬁned in such a way that they have ownership over a certain sphere and
the ability to achieve the desired results. MORPHs are what Sacks calls an
“exercise in alignment”.
INTO YOUR COMPANY
VISION AND VALUES
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FITTING OBJECTIVES INTO YOUR VISION,
MISSION AND VALUES
companies away from thinking ﬁrst about what they do, and instead ﬁgure out WHY
they’re doing it. This not only impacts the services and products, but also the people
who build out and fulﬁll the company vision.
No matter how great the vision, the world will always be pulling companies away
from fulﬁlling their higher purpose. Management has to consciously and intentionally
move toward it with everything they do. The worst thing one can do in having a
corporate philosophy is to write it on the wall and never talk about it again.
Drifting away from purpose will set the company on a course toward rampant
cynicism. Employees will point to the wall of values and say, “Be the Change? Ha!
We’re not that, that’s a joke.” In cases like this, companies are better off not having
values at all, rather than a lack of organizational integrity and trust.
Your company vision must be supported by your core
values, and business leaders want those values to be more
than meaningless words. They want all employees to live
them in their daily work with joy, commitment and creativity.
At 15Five we drive home the values by asking this
question every week, “Which company value are
you most aligned with this week and why?”
By answering this question every week, employees can embody
each value as a way to achieve their goals and do their best work.
10 | 15Five’s Ultimate Guide for Making OKRs Work at Your Company
Questions are so powerful that they inﬂuenced the creation of objective based
management. Andy Grove developed OKRs at Intel in response to two questions:
Where do I want to go? How will I know I’m getting there? These questions are really
asking people how they focus their time at work. With OKRs, yearly and quarterly
objectives are broken down by team and again by employee. Each objective ﬁts
into the company mission, vision, and values.
At the 2013 First Round Capital CEO Summit, LinkedIn CEO, Jeff Weiner, discussed
how the company grew to a $20 Billion valuation by developing a strategy to
achieve objectives in a ﬁercely competitive market. OKRs are how companies fulﬁll
their mission while staying aligned with their vision and values.
The CEO is responsible for setting the direction of his or her company. Not only to
develop yearly and quarterly objectives but to be the chief advocate of the company
mission, vision, and values. Every company leader must connect each action and
initiative to the deeper purpose, and check in regularly to make sure the team is
inspired and the company philosophy is alive and well.
“Missions can be deﬁned in terms of concrete objectives, and
a company can be measured by how well it achieves them.”
-Jeff Weiner, CEO LinkedIn
The OKR process basically works like this:
• The company sets 3-5 objectives for
the year and for each quarter.
• Each team sets 3-5 objectives that are aligned with
the ones leadership sets for the company.
• Employees work with managers to set 3-5
objectives and corresponding key results that are
aligned with team and company objectives.
• Employees and managers gain mutual agreement on
setting OKRs as stretch goals that are not easily achievable
and are not tied to performance evaluations.
• Make OKRs transparent throughout the company so that everyone
sees the bigger picture and can hold each other accountable.
• Employees evaluate their key results (score them)
at the end of each quarter -- target set by company
is typically between 60-70% success.
Objectives & Key Results
For Each Department
OKRs For Each