The Pitfalls and Boosts of OKR
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The Pitfalls and Boosts 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 gas tank explosions, Sears Auto Center’s exorbitant pricing, Enron’s wildly inflated sales targets, and the 1996 Mount Everest disaster that caused 8 deaths. The authors warned that goals are “like prescription drugs that require careful use and strict supervision.” The authors even issued this warning: “Due to excessive focus, unethical behavior, increased risk-taking, and decreased cooperation and motivation, goals can cause systemic problems within organizations.” The drawbacks of goal setting may offset its benefits - this is the paper’s viewpoint.
Reading “Measure What Matters”
I practiced OKR for 3 years at my previous company, and coincidentally, my new company is now also transitioning to OKR. My boss recommended this book Measure What Matters. It took me two weeks to finish it intermittently, so I’ll share some simple and subjective impressions that haven’t been deeply considered.
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 objectives and aspirational objectives. Different evaluation methods apply to these two types of objectives. Setting objectives requires careful consideration. You can refer to Resource 1 in the last chapter of the original book Google’s Internal OKR Template or this link for comparative reading.
Setting key results also requires careful consideration. You can understand this term as a milestone. Each time you move forward, advance toward the nearest milestone, eventually reaching the objective. This milestone is recommended to be measurable by numbers to determine whether you’ve achieved the objective and analyze the reasons for any gaps.
Since key results in OKR are still recommended to be measurable by numbers, what’s the difference between them and KPIs? KPI stands for key performance indicator. Obviously, KPIs don’t explicitly contain objectives.
Without considering objectives, blindly assigning numerical tasks can harm companies, and there are many cases in the book.
Besides explaining and promoting OKR, another important tool is introduced in the later part of the book: Continuous Performance Management, using the tool CFR, which stands for Conversations, Feedback, Recognition, that is Conversations, Feedback, Recognition.
It mainly introduces supervisors conducting conversations with ordinary employees, receiving feedback, and recognizing their performance. Although this sounds good, in actual scenarios, misunderstandings and self-righteousness always occur due to incomplete understanding of different people’s work. Therefore, the book recommends more frequent conversations. There’s no clear indicator of what “more” means. How to avoid “conversations” becoming “pressure,” “feedback” becoming “complaints,” and “recognition” becoming “PUA” requires both parties to have certain communication skills.
The Continuous Performance Management mentioned in the latter part of the book seems more like performance management on the surface. At the same time, the book repeatedly and solemnly emphasizes that OKR completion must absolutely not be linked to salary and benefits; otherwise, it will lead to distorted numbers and return to the old path of KPIs harming companies.
So after implementing OKR, what metrics affect employees’ income? The book doesn’t provide an answer. According to my understanding, OKR mainly adds the dimension of objectives compared to performance management. Therefore, the more closely these objectives relate to the company’s overall interests, the more beneficial they are for individual promotion and salary increases. Thus, when setting personal objectives, one should consider the company’s interests and set objectives that maximize benefits. Avoid setting objectives that benefit individuals but harm the company, such as obtaining certificates, exercising, work-life balance. Although it seems ridiculous, I’ve seen many friends who took the wrong path.
Harsh performance management can harm companies, which should have been an expected result. Instead, I’m curious why many companies have persisted in using KPIs for years and what their current business status is. Many decisions don’t stand up to scrutiny. If several logically excellent people discuss and communicate properly together, they are more likely to make more correct decisions.
Summary
According to my usual standard, the purpose of examples should be to help understanding, not to prove viewpoints, only to refute them.
This book has the following flaws:
- It cites some cases to prove KPI failure, but cannot prove that KPIs are completely useless, nor can it prove that all places with KPIs can achieve success by replacing them with OKRs.
- To prove OKR’s usefulness, it lists some partially correct choices made by successful companies, but there are countless companies that still fail despite using OKRs. If it’s said that the failures failed because of “insincere hearts,” then OKR is just another metaphysics.
- Company success depends on many factors, such as business conditions, employee performance, customer satisfaction, customer support, etc. No single factor is decisive.
- There are some assertions, but they cannot be proven to be correct. Isolated cases, whether successful or not, cannot explain much, so this is not a very rigorous book.
Although the book isn’t very rigorous, I still gained something from reading it. Perhaps it was originally my own idea: people who cooperate need more communication, making transparency a corporate culture to promote everyone working together with one heart, thus collecting a “harmony” card.