The Hidden Pitfalls of OKRs: Why They Don’t Work for Every Team

This article explores the OKR (Objectives and Key Results) framework, highlighting its popular use in organizations like Google and Intel for setting and tracking ambitious goals. It outlines the basic structure of OKRs, where Objectives define what an organization aims to achieve, and Key Results measure progress towards these goals.

While acknowledging that OKRs have been instrumental in driving success for many companies since the 1970s, the article also suggests that a lack of emphasis on embedding the ‘why’ and ‘how’ into their strategy potentially poses limitations that can risk negatively impacting team performance. 

These ‘pitfalls’ include a lack of strategic depth, vagueness, over-reliance on stretch goals, difficulties in tracking cross-functional execution, a narrow focus on metrics rather than meaningful outcomes, insufficient flexibility in adapting to dynamic work environments, and inadequate guidance for execution. 

This article encourages leaders to carefully evaluate whether OKRs fit their strategic needs and consider alternative frameworks if necessary. 

‍

Introduction

One of the fundamental keys to success for any organization is setting clear goals for strategic growth and progress. When setting these goals, leaders must diligently select the optimal framework for their teams to be clear on the values behind the goals and how they will be executed and attained. 

OKRs are a popular goal-setting framework among many organizations, but are they necessarily the right fit for all? As with many strategic processes, input will determine the quality of output. Merely selecting a framework does not guarantee success, particularly if it struggles to cover the full scope of your communicative needs and how to execute them. 

This article will unpack the OKR framework by briefly covering its history and how it works. We will then shift focus toward its common pitfalls and how they can affect teams negatively to offer some perspective on whether or not it will be the right fit for your strategy.

‍

What are OKRs? 

Before we break down the components of OKRs in more detail, we’ll briefly examine their inception and popularisation to add context to our understanding. 

History of OKRs

‍

In 1954, Peter Drucker introduced the concept of Management by Objectives (MBO) in his book ‘The Practice of Management,’ wherein he explored defining an organization's specific objectives to empower managers to convey these objectives to the organization's members. 

Once formulated and communicated, they could decide how to achieve those objectives one step at a time. MBO was a method intended to align an organization's specific objectives with individual goals.  

In the 1970s, Andy Grove, the CEO of Intel at the time, built on this idea by adding the concept of ‘Key Results’ to provide measurable milestones that would indicate whether progress was being made on the ‘Objectives.’ Thus, Objectives and Key Results - OKRs -   were born as a goal-setting framework.  

‍

In 1999, John Doerr, who was in the management team of Intel under Andy Grove, introduced OKRs to Google founders Larry Page and Sergey Brin. In his book ‘Measure What Matters,’ he covers what OKRs are and how Google adopted the OKR framework into its culture and strategy. Throughout the book, OKRs are credited as being instrumental in helping Google scale and achieve its ambitious goals.

With Google’s success, OKRs became popular, and many major organizations have followed suit to adopt OKRs into their goal-setting strategies, such as Airbnb, Amazon, Linkedin, Microsoft, and Uber, to name a few. 

‍

How do OKRs Work? 

Now that we understand what OKRs are and how they developed, let's hone in on how they work. 

Objectives

Objectives must be formulated as a clear, concise statement of ‘what’ an organization wants to achieve. They should be well-chosen and no more than 3-5 at any one time.

The purpose is to provide:

• Direction: Objectives should help organizations and teams focus on a direction that matters. Clearly defining a goal highlights the organization’s priorities to ensure that efforts align with the broader mission.

• Motivation: A well-crafted Objective should inspire and engage. It should help to challenge teams and individuals to stretch their limits and drive their capabilities. 

• Alignment: Objectives align the efforts of individuals and teams with the organization’s overall strategy. They provide a shared understanding of success and how it fits into the larger picture. 

‍

Example: ​​Enhance customer satisfaction to drive repeat business

‍

Key Results

Key Results are specific, measurable milestones that should indicate ‘how’ an organization is to achieve the Objective. There should be five or fewer tied to each Objective.

Their purpose is to provide:

• Quantitative Targets: Key Results should be measurable, verifiable, and time-bound. They should provide the metric parameters to indicate whether the targets have been achieved or failed. There should be no room for doubt. 

• Measurable indicators: By breaking down an Objective into specific Key Results, teams and individuals can focus on measurable indicators of progress that determine alignment with the overall goal. 

• Accountability: Key Results should foster accountability by setting clear benchmarks for success. They should help to make performance evaluation objectively clear so that areas where additional effort is needed can be identified. 

‍

Example:

1. Improve customer service response time to under 2 hours.

2. Increase customer satisfaction scores by 20%

3. Implement a customer feedback loop to inform product development, resulting in at least two new feature launches.

‍

OKRs are Powerful, but “Why”?

OKRs can be a very powerful tool for goal management and alignment and have a proven track record for driving growth and success in some of the biggest global organizations. 

In his Ted Talk, John Doerr delivers a compelling keynote on the power of OKRs in goal-setting. 

‍

One of the interesting takeaways of this keynote, in contrast to the standard format of OKRs, is his inclusion of the “Why” behind the goal. This is a pivotal addition.

Not too long before John Doerr’s inspiring Ted Talk, the company Spotify decided to ‘ditch’ using OKRs for employees. 

While acknowledging their value, particularly on the corporate level, their ultimate criticism came from the focus of OKRs being too much on the “how” and not enough on the “why,” claiming that the latter was more valuable to them. 

This is one example of OKRs not being the right fit for an organization, among many a success story for others; the purpose here is not to dismiss OKRs but to highlight that in practice and execution, OKRs may not always provide the best framework for all teams, especially if not implemented effectively. 

Like most processes that work well under certain conditions, they are not without their pitfalls. Let’s take a look at them. 

‍

The Pitfalls of OKRs

Lack of strategic depth 

OKRs often fail to convey the deeper ‘why’ behind goals, making them feel more like checkboxes than an integral part of a broader vision and strategy.   

Vagueness

Leaders can often set vague objectives that are too broad or abstract key results that lack quantifiable metrics, for example, ‘get more leads than last quarter.’ This can create a sense of uncertainty as to how efforts contribute to larger goals. 

Over-reliance on stretch-goals 

Setting stretch goals can often cloud any sense of meaningful progress. Often, they are over-ambitiously set to push the boundary beyond what is realistically achievable. This can also potentially encourage a diminished return by creating a grey area that is too large to be certain of acceptable performance. 

Lack of action leading to meaningful strategy

Success or failure with OKRs isn't tied to whether or not strategic progress has been made. With the lack of a clear ‘why’ linked to a committed outcome, OKRs have the potential to become just another set of metrics to track rather than a guide to meaningful action that ladders up to meaningful strategy. 

Do not provide a roadmap for execution.

OKRs often lack clarity on ‘how’ to achieve an objective and its place in the overarching strategy. They do not provide the breakdown of tangible day-to-day actions that are necessary to achieve the goal. 

Cross-functional execution 

OKRs are not designed as a tool for tracking cross-functional execution. This can lead to misalignment, a lack of integration, and inadequate coordination among teams that are working on interconnected projects, where success is measured against the same goal.  

Lack of Flexibility

OKRs lack flexibility and have difficulty adapting to changing conditions or emerging priorities. This rigidity conflicts with Agile systems, which emphasize rapid iteration and frequent adjustments. A poorly framed OKR approach can hinder the ability to pivot quickly and respond to immediate feedback with frequent check-ins.

Focus on metrics over outcomes.

OKRs can lead to narrowed, siloed thinking and behavior that can cause teams to neglect broader or long-term strategic objectives. This focus can result in an overemphasis on their metric targets in contrast with the qualitative nature of outcomes. 

‍

‍

Why Teams Struggle with OKRs

Leaders commonly struggle to use OKRs effectively, particularly when they have little experience with them. Ineffectively executing an OKR framework can cause these pitfalls to affect team performance in several ways.  

Objectives often lack the context to tie back to product & company strategy. Without understanding the ‘why,’ teams cannot envision the strategic depth that drives their work and provides them with meaningful direction. Work risks becoming merely work, and the connection between individuals, teams, and the organization that drives success can deteriorate. 

There is too much emphasis on key results and not enough on objectives and the reasoning behind their inception. This can lead teams to prioritize focusing on the metrics over the outcomes. Teams become focused on superficial, short-term success, which encourages short-term behavior, undermining meaningful progress toward long-term strategic goals.  

In turn, Objectives and Key Results can be vaguely framed and are often without adequate distinction. A team must be able to truly understand the objective and the steps needed to take to reach it. When the ‘what’ and the ‘why’ lack clarity, teams can become disoriented and lose sight of the goals. 

Set objectives you want to achieve and commit to them. An overreliance on stretch goals that are ambitiously set can demotivate teams and lead to frustration and burnout. OKRs set best practices to aim to accomplish 50-70% of Key Results in a quarter.

This can be  problematic for two reasons:

>>> Firstly, it creates a ‘grey area’ of what is acceptable. This can contradict the idea that attaining goals should leave no room for doubt as to whether they have been achieved, making accurate tracking of progress difficult. 

‍“OKRs Assume 70%, making goals probabilistic vs. deterministic.” - Ravi Mehta. 

‍

>>> Secondly, they can potentially harm actual progress by creating a cultural standard of acceptable performance below the targets that have been set. Objectives and key results do not provide the roadmap for execution. ‘How’ achievement of an objective is measured through results does not translate to ‘how’ those results will be achieved. This can leave teams and individuals open to selecting their own routes to reach targets. 

‍

While team autonomy can be desirable, a lack of direction and collaboration with leadership in breaking down the clear, actionable, executable steps to follow runs the risk that those actions will not lead to meaningful strategy. A leader should proactively bridge and assist the team in directing actions toward that course. 

Cross-functional teams work on interconnected projects to achieve an organization's vision and mission. OKRs, however, do not provide the means to track cross-functional execution. Without such a method to facilitate collaborative integration and coordination, teams can become misaligned and risk pulling in different directions, affecting each other's progress and overall attainment of objectives.

Finally, poorly framed OKRs lack the flexibility to adapt to changing conditions or emerging priorities. This clashes with Agile systems, particularly in product environments that thrive on rapid iteration and frequent updates. In these dynamic work environments, this rigidity can impede a team's ability to quickly adjust and respond, making it difficult to pivot effectively and stay aligned with shifting project demands.

‍

In summary...

Ultimately, the proverbial ‘buck’ stops with leadership. An effective leader must choose effective strategies to set effective goals for their team. Leaders should evaluate whether OKRs are the right fit for their organization by analyzing the benefits and pitfalls of each and considering alternatives if necessary. 

An alternative and modern framework for goal-setting is NCT, which stands for Narratives, Commitments, and Tasks. Crucially, they emphasize the ‘why’ behind the goals, providing clear, actionable steps on ‘how’ to attain them. NCTs address many of the pitfalls that leaders and their teams encounter when setting and executing goals through the OKR framework.