Back in my early analogue days as a Unilever trainee nothing had prepared me for the world of work more than the technique of using acronyms to help memorise the facts and figures need to pass exams in those days. Seems ridiculous now but the business school terms of EBITDA, SWOT analyses, R&D and even PR all needed an explanation and felt like new territory to a fresh-faced lad with just a BA in an unrelated subject to guide him. But just like my own made up versions these acronyms represented new worlds of subject matter and a methodology, none more so than the favourite of senior management methodology at the time, the MBO(and by MBO I mean Management by Objectives and not the much later but now familiar Management Buy-Out).
As in most Unilever subsidiaries at the time MBO became our company’s modus operandi.
Based on Peter Drucker’s 1954 work which itself had its echoes of military planning MBOs tied the company’s goals to the individual’s and even went as far as rolling appraisal time into the process. SMART goals became the way forward and many of the world’s largest corporations growing through the 1960 and 1970s used derivatives of the tool.
From my own perspective, the biggest weakness of MBOs and conversely the biggest strength of OKRs (Objectives and Key Results) was the golden thread or line of sight clearly linking all the individual and group activities with the corporate long-term objective, so the business and employee were clear about what was important and what was not. Couple OKR methodology with the benefits of the simple to use communication and measurement software now available and MBOs have been supplanted by a much more powerful and accessible tool for CEOs, boards, division, teams and individuals to tie their own plans into the company’s and at the same time have clear sight of the performance of others in the organisation.
OKRs are set to be the natural successor to the MBO and so well suited to today’s fast-changing businesses, perhaps why they have found such favour with Intel and Google being a key component of their respective success stories. At Auxin we now use it in all our client assignments and of course to help us plan, set and achieve our own business goals.
So no, OKRs are not just another business acronym but a valuable management tool for all ambitious high growth businesses who want to combine strategic business plans with state-of-the-art IT to help them reach their stated goals.
If OKRs are relevant to your business, give us a call and we’ll share our insight into how best to use this powerful new management tool.