"Gentlemen," Mr. Grove began with a firm voice, "Intel, the memory chip company, is dead. But there is another product we can bank on: the microprocessor." With these words, Andy Grove, CEO of Intel, in the mid-1980s, started one of the most remarkable transformation stories in U.S. business. At that time, Intel faced the enormous challenge of having to be successful in a new industry within a very short period. The DRAM market was flooded, and profit margins were collapsing. At the same time, the emerging importance of the microprocessor was recognized. To commit his company to the rapid transformation, Andy Grove had the brilliant idea to work with a so-called "North Star," meaning a very clear goal. What was really new was that his "North Star idea" was broken down for all employees. Thus, the entire company knew where the journey was headed. No room for interpretation – but full of motivation.
The way Andy Grove managed to transform Intel at breathtaking speed became the blueprint for today's management method "Objectives and Key Results," abbreviated as OKR.
In the following article, we want to shed light on what makes OKR so successful and why more and more companies are adopting this methodology and why it fits so well with interim management. We also highlight the challenges and why it might be sensible to hire an OKR-experienced interim manager for the successful implementation of the OKR framework in the company.
From the North Star at Intel to the DNA of Google
The development of the OKR approach was originally based on the so-called "Management by Objectives," abbreviated as MbO by economist Peter Drucker in 1954 – also called "management by setting goals." After Intel had successfully initiated the first significant further development of MbO, this completely new style of management caught attention again in 1999. Google investor John Doerr knew the OKR approach from his time at Intel and implemented it at Google. Successfully established, it became the DNA of the tech giant. With visible success. Since then, companies such as LinkedIn or Oracle, as well as renowned Swiss companies like Digitec Galaxus, SBB, or Zühlke, have successfully applied the OKR management method.
How does OKR work?
Essentially, Objectives & Key Results are about conceiving projects from a desired end state (Objectives). So, it starts from the result rather than, traditionally, through individual measures.
Similar to a small time travel, all OKR team members imagine the agreed end state in the smallest detail. In the case of Intel, the goal was: The establishment of the 8086 processor as the most popular 16-bit microcomputer solution on the market.
It's about a shared vision – how the future of the company will look once the Objective is achieved. From now on, it means: All full speed ahead for this goal.
The so-called Key Results are the vehicle that transports everyone there. They are the measurable milestones. Essentially, the success drivers of the Objectives. To stay with the example of Intel: A Key Result was that Intel wanted to win over 2,000 customers or partners within the next 18 months who would use the 8086 chip in their own products or applications.
Differences to classical management
OKR (Objectives and Key Results) and MBO (Management by Objectives) may both be based on the principle of setting goals, but their approaches and applications differ significantly.
Unlike MBO, OKR focuses more on aligning with overarching company goals, or, if you will, the North Star idea of Andy Grove at Intel. OKR promotes transparent and joint goal setting throughout the company. The guiding principle of company-wide transparency allows employees, for example, to view all OKR lists within the company. And: Since OKR is only a framework, the team has all the freedom to achieve the desired result.
The stated goals should always be challenging and above all motivating. Important: Key Results are not to-dos. They show measurable progress towards the desired end state. And here we come to one of the first challenges: OKR requires a different mindset.
OKR increases productivity and implementation speed but requires expertise
For everyone in the team to pull together and properly implement OKR principles, management experience is required. If a company wants to switch two areas, say digitalization and a sustainability program, to OKR, it needs a so-called "OKR supporter or coach" who methodically supports the teams in these two areas. So, a supporter for a maximum of two areas. An interim manager with the relevant expertise can not only bring additional capacity but also ensure that the framework is sustainably implemented in the OKR teams. Because now a structure is needed that helps all team members to always think and act from the agreed end state. What sounds easy at first is relatively complex in practice and requires real coaching.
Without an "OKR supporter," there's a risk of quickly falling back into old patterns in the day-to-day business and essentially continuing as before – just under another name.
An experienced interim manager in the area of OKR can support a company in the following aspects:
Taking on a steering role as an OKR coach. He is primarily responsible for a maximum of three initiatives that are managed with OKR.
Defining the areas of the company that should be switched to OKR. He can advise between an "All-In" approach, where all areas switch to OKR at the same time, and a "Sneak-in" approach, where only certain areas start, and recommend the appropriate strategy.
Evaluating the right time to switch to OKR by analyzing the current company conditions, goals, and challenges and making a strategic decision.
Supporting the design of the new OKR structure that fits the company perfectly. This also includes selecting suitable digital tools that enable efficient implementation and management of the OKR framework.
Developing a communication strategy to transparently and understandably communicate the introduction of OKRs and ensure that all employees develop an understanding and acceptance of the new framework.
Planning and conducting training measures to prepare employees for the introduction of OKRs and ensure they understand the concept and can work effectively with it.
Defining appropriate KPIs to evaluate the success of the OKR implementation and measure and analyze the impact on company performance. This allows for continuous improvement and adjustment of the OKR system.
Interim management and the implementation of Objectives and Key Results (OKRs) are like two puzzle pieces that together complete a picture of efficiency, clarity, and high implementation speed. Interim managers can further expand these highly sought-after requirements with the introduction of the OKR framework, allowing companies to remain successful in a dynamic market environment in the future.
There are more reasons why companies can benefit from implementing the OKR framework. In the following, we will highlight some additional advantages that OKRs offer and how they can enhance the performance and success of a company in the long term:
Higher motivation of employees
OKR emphasizes the collaboration of teams and departments to achieve joint results. While MBO often has a more hierarchical structure and is set "bottom-down" by managers for their employees, OKR is more "bottom-up" oriented. It encourages employees at all levels to actively participate in shaping the company's goals.
Questions like "Why are we doing this and that?" or "Do we really believe we can achieve the goal?" are expressly welcome; indeed, they are the fuel to reach the desired state as quickly as possible. Andy Grove's assertion that workers can be responsible for setting their own goals and that every member of a company counts, from the CEO to the intern, was not only preached by him but also practiced. Our experience also shows time and again: Companies only achieve ambitious goals with motivated employees. With employees who really want to participate.
OKR is very dynamic – and fast
Unlike lengthy goal-setting processes, OKR allows for continuous assessment of progress and, if necessary, rapid adjustment of strategy. By evaluating the Key Results on the way to the overarching goal, teams can clearly track their progress and, if necessary, reset priorities.
The desired state should be reached in three, at most six months. The 18-month example from Intel was a so-called Meta-OKR, i.e., a longer-term target state to be achieved. The Key Results, i.e., the measurable milestones, must continuously grow and show progress along the way.
Clarity brings freedom
By implementing OKR in a company, a clear focus is placed on defined goals and measurable results. This not only creates transparency about what is to be achieved but also promotes a culture of personal responsibility and freedom. By setting clear goals, teams and employees have the freedom to choose their own path to achieving them. This autonomy allows employees to develop creative solutions and organize their work independently. At the same time, they are encouraged to take responsibility for their actions and decisions, as progress is regularly measured and evaluated. In this way, OKR helps employees to be motivated to achieve their goals while having the freedom to shape their work in their own way.
Higher resilience of the company
The example of Intel is more relevant than ever. The last few years have shown that rapidly changing conditions will likely continue to be the rule in the future. Those who can adapt quickly are clearly at an advantage. By promoting an agile and adaptable way of working, OKR contributes significantly to developing a higher resilience of the company. By regularly setting and reviewing overarching goals, companies can quickly respond to changing market conditions, customer requirements, or internal challenges. The flexibility of the OKR framework allows teams to continuously adjust their priorities and strategies to adapt to unforeseen events without losing sight of achieving the overarching goals. In addition, OKR fosters a culture of openness and learning and the intrinsic motivation of employees.
In the end, Intel even exceeded its self-set goal and acquired 2,500 partners in
18 months. Intel became a leader in the microprocessor sector.
What was demonstrated for the first time back then is more valid than ever today: OKR-oriented companies can adapt more quickly to a constantly changing environment than companies that are managed in a traditional way.
In our community, we have interim managers with many years of expertise in "Managing with Objectives and Key Results." If you are interested in learning more about this exciting topic or have specific needs, it is best to arrange a consultation appointment today.