OKR To Rock The World - Avoid The Pitfall of OKR

What is OKR?

OKR stands for "Objectives" and "Key Results”. It is a performance management methodology, and has become widely known as some leading IT companies such as Google and Facebook adopted it. In Japan, since Kao Corporation announced in December 2020 that they would roll out OKR as one of the major pillars of their mid-term strategic plan, it suddenly became a topic among companies as they realized that OKR is adoptable even by "traditional” Japanese manufacturing companies.

Some of the advantages of introducing OKR are as follows:

• It promotes innovation by pursuing more challenging goals
• It enhances agility by rotating through the PDCA cycle at high speed
• By linking goals company-wide, consistency and collaboration throughout the organization can be achieved. In addition, employee engagement increases because employees can see the connection between their goals and company goals.

How is OKR different?

It is often the case, not just with OKR, that companies try to imitate what advanced companies are doing without the full understanding of the intentions and essence of the approach, leading to superficial deployment to find themselves trapped in a pitfall. I am not worried about Kao as they seem to be fully aware of the essence of OKR. However, I am worried that there may be a great many companies set for a failure as they follow the superficial explanations of OKR that are currently flooding the internet.

At a glance, OKR seems to be not all that different from a conventional performance management system, but one clear difference is as follows.

"In a conventional performance management system, goals are set on the assumption that goals will be achieved 100%, but for Key Results (which is equivalent of “goals” in the conventional performance management system) of OKR, it is expected that only 60-70% will be achieved." 

This description is not in itself a mistake. However, those who look at this description would no doubt think “Okay, so I just need to change my goal of 100 to Key Results of 166 or so, and what I am expected to achieve is the same 100”. If that happens, what is the point in introducing OKR?

Both SDGs and Carbon Neutral are OKR-like.

I think SDGs would be a good example of OKR, although the concept of OKR may not have been in the minds of those involved in creating SDGs. SDGs consist of 17 goals which could be considered as “O” of OKR. Beneath each 17 goals are the corresponding targets which could be considered as “KR” of OKR. I believe that the essence of OKR is in the "O" rather than “KR”. "O” (objective) is defined as the big goal, but it might serve the purpose better when defined as "ambition".  The question is whether organizations and individuals can wholeheartedly feel that this “O” is incredibly challenging but also meaningful and worth the effort.

For example, Goal #1 of the SDGs is "end poverty in all its forms everywhere". It is quite audacious. Its targets, or “KR”, are more specific such as "by 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day" and "by 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions”. (Unfortunately, it seems that the covid-19 pandemic has decreased the possibility of achieving these targets to less than 60-70%.) People around the globe are working to achieve these targets because they share the ambition to end poverty everywhere, which is “O” of OKR. 

Carbon-neutral strategy, which is a hot topic in business today, is also OKR-like. The Japanese government, as well as considerable number of companies, have declared to become carbon neutral by 2050. Most do not know how that can be feasible, nonetheless made the declaration for they all realize that their ambition and commitment to this “O” is critical to maintaining the foundation of business and even our life. At this moment companies are striving to create a roadmap and means to achieve carbon-neutral strategy which will turn into “Key Results”.

"How much impact are you delivering to society?"

Kao Corporation described their intentions to introduce OKR as follows:

"By introducing this OKR at Kao, I hope to encourage each and every employee to pursue their dreams and not shy away from them. I would like to ask them what they aspire to do through their work or at Kao to improve the world."¹

It is clear that Kao's OKR focuses on “O” to encourage dreams and ambitions to make a difference in society.

Moreover, a friend of mine who works at Google, a pioneer of OKR, told me this:

"My manager often asks me, 'How much good impact did you deliver to society? How can you deliver even more impact?'"

For details on how to design and implement OKR system, a book entitled "Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs" written by John Doerr is useful. I like the phrase “Rock the World” as it is inspiring and aspirational. However, the Japanese translation of the book title is somewhat disappointing. If I re-translate it into English, it is: "Measure What Matters; a guide to success taught by a legendary venture investor to Google, OKR" It sounds as though it is a guide to quickly make a fortune. Those who look at this Japanese title and deploy OKR with such intentions are doomed to fail.

OKR is considered applicable and effective to companies if conversations about how to change the world are rampant at workplace. I hope that OKR will spread not only to Kao but also to many companies to join the force to “rock the world”.

¹Source: Kao fully adopts OKR-to bring out what employees want to do | Human Capital Online (nikkeibp.co.jp) (Japanese)