I recently met with a construction company committed to using the “OKR” (Objectives and Key Results) approach. This reminded me, that the Entrepreneurial Operating System (EOS) uses a modified version of OKRs, called Rocks. In my experience Rocks work better than OKRs, most of the time. The reason is, that EOS wraps Rocks into a complete operating system to make sure they make sense and get done.
Incidentally, I have been helping two fast growing tech companies to implement EOS, including Rocks. Both had earlier experimented with the OKR approach, but eventually realized that Rocks trump OKRs.
So what are “OKRs” anyway?
Andy Grove, the famed CEO of Intel invented “Objectives and Key results” in the 1980s. He did that by adjusting Peter Drucker’s “Management by Objectives” (MBO) system to be more tangible and practical. One of Grove’s executives, John Doerr took the concept with him to a venture capital firm, and started introducing it (abbreviated as “OKRs”) to Google and to other tech businesses his firm invested in.
So which tool tech firms prefer to use for goal setting and why?
Fast growing tech firms love OKRs, which they use to channel corporate energy around lofty objectives. Achieving 60% of an impossible goal is success for a Silicon Valley firm. They shoot for the stars and happy to land on the moon. When using Other People’s Money, while racing against competing innovators, this makes perfect sense.
But compare “60%-is-success” OKRs to EOS Rocks that you have to complete 100% to count. Companies in traditional and slower growth industries, like professional services, distribution or construction, you are better off “shooting for the moon and landing on the moon”. You want to become great predictor and executor of your plans, picking the right goals and achieving them completely. You have to deliver 100% right bridges and tunnels to your clients at the right time for the right budget. 60% doesn’t cut it.
When you are using Your Own Money and have to nail it, then Rocks trump OKRs.