Organizations need structure to continually improve and innovate. One of the most effective ways to give teams the structure they need to drive innovation is through OKRs.

OKRs (or Objectives and Key Results) create a framework for teams to effectively set goals and measure their progress. When used effectively, OKRs can inspire creativity, collaboration, and innovation across an organization.

Want to apply this in your workplace? Read on to learn how OKRs contribute to company innovation — and how managers and leadership can leverage OKRs to inspire their teams and drive innovation within their organizations.

What Are OKRs?

Not every organization is familiar with OKRs so before we jump into how OKRs contribute to organizational innovation, let’s first define what they are.

Essentially, OKRs define a key goal (or objective) the organization is working on, and then put metrics (or key results) in place to measure teams’ and employees’ progress toward that goal. 

“The basic idea [of OKRs] is to extract the most imminent and consequential objective to achieve goals, and to extract their key results,” said Amie Devero, strategy consultant, executive coach for high-growth startup founders and leaders, and founder of consultancy Beyond Better. “That way, every team and project can be defined in terms of its relationship to the key results and objectives — and those can be tracked and measured.”

“‘Objectives’ are descriptions of the organization’s strategic goals and should be concise, motivating, and challenging,” advised Soren Kaplan, leadership and innovation expert and cofounder of business best practices platform upBOARD. “‘Key results’ are the metrics that indicate quantifiable progress, like number of new customers, web traffic, conversion rates, revenue, or other measures.”

Now that we have a working definition of OKRs, let’s explore how they support innovation across an organization.

3 Ways OKRs Drive Innovation

1. OKRs get teams aligned.

Innovation is virtually impossible without alignment; if your employees aren’t aligned on your team and organizational goals — and how what they’re doing on a daily basis is contributing to making those goals a reality — it creates a disconnect that hinders innovation.

OKRs get everyone on the same page; they create a sense of alignment on what teams are doing, why they’re doing it, and how their work is helping to move the organization forward.

“[When you educate employees] on the way their OKRs drive toward the bigger picture, the individuals know the why behind the what,” Devero explained. “That ensures they will be aligned and focused.”

For example, let’s say you manage a team of copywriters. If they don’t understand how their copy fits into the larger strategy, they’re going to have a hard time writing effective messaging. But if they’re aligned with the company’s larger objective, they can take a more strategic approach to their copy projects and make sure that their messaging is ultimately helping the company reach its goals.

As you’re setting OKRs, make sure you’re keeping your employees informed and that they understand exactly what they’re working on, what they’re working toward, and how it connects to the strategy as a whole. As time goes on, continue to check-in regularly to ensure that teams are still aligned and on the same page with their OKRs.

“When people can’t remember what the OKRs are, or how they connect to the strategy, something is missing,” cautioned Devero. “It’s time to regroup and re-educate everyone — including managers.”

2. OKRs give employees ownership over their work.

OKRs help to get your employees on the same page — but, if you really want OKRs to drive innovation, your team should be a part of creating that page.

“In an ideal universe, the OKRs emerge from the entire team while reviewing the strategy,” Devero said. “[This] creates ownership — and therefore, more commitment to the OKRs.”

When you allow your team to be involved in the process of setting OKRs, it gives them a sense of ownership over their work. When employees feel like they have more control over how they’re contributing to the organization’s goals, what projects they’re working on, and how their success is being measured, it drives performance, employee engagement, and, importantly, innovation.

While it might not be feasible to have every team member involved in every part of the OKR-setting process (particularly if you manage a large team), you do want to get their input as much as possible. Hold a team meeting to brainstorm ideas for effective metrics for your team’s objectives, and then bring those ideas to your leadership team to use as a guide for finalizing your team’s OKRs. Next time you host an all-hands meeting to discuss company goals, send a feedback request to your team for their thoughts on effective OKRs to meet those goals. Once you’ve set OKRs, continue to check-in with your team for their thoughts on what’s working, what’s not, and how you can optimize the OKRs moving forward.

By involving your team in the process of creating OKRs, you’re giving them a sense of ownership in their work, and when they have that kind of ownership, they’re more likely to show up with the drive, commitment, and creativity necessary for innovation.

3. OKRs help break down the big picture.

Some organizations have a big vision for where they want to take their company, but they get so caught up in their vision that they don’t focus on the day-to-day operations necessary to bring that vision to life. On the flip side, some companies get so bogged down in the minutiae of running a business that they never bother to envision where they want to go or how they want to move forward.

Innovation can’t thrive in either of those environments. “Real innovation happens when you have both vision and results,” Kaplan said.

The way to bridge the gap between big-picture goals and the daily work necessary to achieve those goals is through effectively implementing OKRs.

OKRs take a big-picture vision and break it down into actionable, measurable strategies. In doing so, they create a roadmap for innovation that takes businesses from where they are to where they want to go by clearly outlining the steps it’s going to take to get there, and how teams can measure their progress and ensure they’re on the right path along the way.

In order for OKRs to create a clear path to achieving innovation and hitting big-picture goals, managers and corporate leadership “should complete OKR exercises in specific cadences and [timeframes], broken out into high-level annual OKRs, quarterly tactical OKRs, and weekly check-ins to review status and track results,” Kaplan advised. “These OKR actions should also nest into one another, so that weekly check-ins relate to quarterly OKRs, and quarterly OKRs relate back to annual ones.”

By taking large innovation goals and breaking them down into small, actionable, measurable steps, you give your team the best of both worlds: the inspiring vision of where they’re headed, as well as clear direction on the weekly, quarterly, and annual tasks they need to accomplish in order to get there.

Inspiring innovation within your company is a must if you want to be effective and stay competitive in today’s market. OKRs are a practical tool that can take the complex, intangible idea of ‘innovation’ and make it a reality in your organization. By aligning teams, giving employees a sense of ownership over their work, and breaking down large goals into actionable, measurable strategies, OKRs spark innovation and create a clear path to take your company from where it is now to where you want it to go.