The Pitfalls and Benefits of OKR
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The Pitfalls and Benefits of OKR
In 2009, Harvard Business School published a paper titled “Goals Gone Wild.” The article used a series of examples to explain “the destructive nature of excessive goal pursuit”: the Ford Pinto car gas tank explosion, the exorbitant pricing at Sears auto repair centers, Enron’s wildly inflated sales targets, and the 1996 Mount Everest disaster that claimed 8 lives. The authors cautioned that goals are like “a prescription drug that requires careful use and strict supervision.” They even issued this warning: “Due to excessive focus, unethical behavior, increased risk-taking, and decreased willingness to cooperate and work motivation, goals can cause systematic problems within organizations.” The disadvantages of goal setting may outweigh the benefits—that’s the viewpoint of this paper.
Reading “This is OKR”
I practiced OKR for 3 years at my previous company. Coincidentally, my new company is now transitioning to OKR, and my boss recommended this book This is OKR.
It took me two weeks to finish reading it intermittently. Here’s a simple and subjective sharing of my initial impressions without deep reflection.
OKR, originally objectives and key results, literally translates to objectives and key results.
According to Google’s OKR model, objectives can be divided into two types: committed goals and aspirational goals. Different evaluation methods apply to these two types of goals. Setting objectives requires careful thought. You can refer to Resource 1 Google’s Internal OKR Template in the last chapter of the original book or this link for comparison reading.
Setting key results also requires good consideration. You can think of this term as a milestone. Each time you move forward, you advance toward the nearest milestone, ultimately reaching the goal. This milestone is recommended to be measurable with numbers, to judge whether you’ve reached the goal or not, and to analyze the reasons for any gaps.
Since the key results in OKR are still recommended to be measurable with numbers, what’s the difference between it and KPI? KPI is key performance indicator. Clearly, KPI does not explicitly include objectives.
There are many cases of companies suffering harm from blindly assigning numerical tasks without considering objectives. The book provides numerous examples.
Besides explaining and promoting OKR, another important tool introduced later in the book is continuous performance management, using the CFR tool, which stands for Conversations, Feedback, Recognition.
It mainly discusses supervisors engaging in conversations with employees, obtaining feedback, and recognizing their performance. Although this sounds good, in real scenarios, misunderstandings and self-righteousness always occur due to incomplete understanding of different people’s work. Therefore, the book recommends more communication. What constitutes “more” isn’t clearly defined. How to avoid “conversations” turning into “pressure,” “feedback” into “complaints,” and “recognition” into “PUA” requires both parties to possess certain communication skills.
The continuous performance management mentioned in the latter part of the book sounds more like performance management on the surface. Meanwhile, the book repeatedly emphasizes that OKR completion must never be linked to salary and benefits, otherwise it will lead to data distortion and return to the old path where KPI harms companies.
So after implementing OKR, what indicators will affect employees’ income? The book doesn’t provide an answer. Based on my own understanding, OKR mainly adds the dimension of objectives compared to performance management. Therefore, it’s possible that the more this objective relates to the company’s overall interests, the more beneficial it is for personal promotion and salary increases. Thus, when setting personal objectives, one should consider the company’s interests and set objectives that maximize those interests. Avoid setting objectives for personal benefit that are detrimental to the company, such as obtaining certificates, exercising, work-life balance. Although it sounds somewhat ridiculous, I’ve seen many friends go down the wrong path.
That crude performance management harms companies is actually an expected outcome. Instead, I’m curious why many companies have persisted with KPI for years, and what their current operational status is. Many decisions don’t withstand scrutiny well. If several logically sound people discuss and communicate properly together, they’re more likely to make better decisions.
Summary
According to my usual standards, examples should help understanding, not prove viewpoints—they can only disprove viewpoints.
This book has the following flaws:
- It provides some cases to prove KPI failures, but cannot prove that KPI is completely useless, nor that wherever KPI exists, replacing it with OKR will lead to success.
- To prove OKR’s usefulness, it cites some successful companies that made partially correct choices, but countless companies that used OKR still failed. If failed companies are said to fail because they “lacked sincerity,” then OKR is just another form of mysticism.
- A company’s success depends on many factors, such as operational status, employee performance, customer satisfaction, customer support, etc., with no single factor being decisive.
- There are some assertions that cannot be proven correct. Isolated cases, whether successful or not, don’t prove anything, so it’s not a particularly rigorous book.
Although the book isn’t very rigorous, I still gained insights from reading it—perhaps they were my own ideas all along—that people working together need more communication, making transparency a corporate culture to promote collective effort, thus obtaining a “harmony” card.