During my 15 years at Amazon, we did not use OKRs. However, many other successful companies, like Google and LinkedIn, use OKRs. So, it must be effective… right?
I haven’t worked for a company using OKRs, so I can’t provide an honest assessment. But, since my time at Amazon, I have advised CXOs at dozens of companies, and most use the OKR method.
I have seen and reviewed how teams use OKRs to plan and track results. In my experience, there are three common pitfalls with how OKRs are used:
1) Lack of Specificity
2) Output Centric
3) Complexity
For the lack of specificity problem, here is an example:
Objective: “Become the leader in sustainable packaging solutions.”
Key results could include:
1) “Increase market share of sustainable packaging solutions by 20% in Q2”.
2) “Launch three new sustainable packaging solutions by Q3”.
3) “Achieve a 95% customer satisfaction rating for sustainable packaging solutions by Q4”.
The problem with this example is that it has no teeth. Goals are only meaningful when they are specific and represent affirmative decisions and trade-offs.
The problem with the objective here is that it merely expresses a desire to “be the best.”
Other objectives that fall into this category include goals like “Maximize conversion” or “Improve customer satisfaction.”
They are general and indisputable, and therefore too weak to drive true action.
But, by adding a bit of specificity, these goals can take on new meaning.
For example:
“Become the leader in sustainable packaging solutions, growing at 33% CAGR, achieving an ARR of $X by Q4 2027.”
The ‘Objective’ is now specific and clearly defined—it represents concrete decisions that need to be made. Proposing such a goal to a Board or Executive team will provoke debate.
The specifics of goals (growth rate, revenue, timing) can be refined through debate. The debate process creates alignment between the leader setting the goal and their executives, helping everyone better understand what the company is trying to achieve.
At Amazon, we learned that increasing the granularity of each goal increased our operational effectiveness. We didn’t use OKRs, but the same lesson applies.
In the example above, a goal like “Launch 3 new sustainable packaging solutions by Q3” is well below the Amazon bar for detail.
The Amazon version of that goal would need to include a short description, launch date, cost, owner, and team members assigned for each of the three new package types. Furthermore, the team would need to provide a Working Backwards PR/FAQ document that provides a hyper-detailed description of this new packing initiative.
In other words, the team would have documented most of the initiative’s details before proposing the goal.
This method requires more time and effort up front, but it enables speed and a higher goal attainment rate than methods with less specificity.
I will post separately about the other two pitfalls of the OKR system, follow to read them.
