To be effective, a business needs to operate like an efficient machine. To do that, you need to have a cohesive workflow and a systematic approach to identifying bottlenecks and improving productivity. A key pillar of any effective organization is the use of an approach known as the KPI-based Key Results Model (or simply Key Result Based Management or OKR).
It’s a proven method for structuring and managing the activities of your business in a way that allows you to see at-a-glance what needs to be done and what results should be expected from those activities. This will help you work towards your ultimate goal — creating value for your stakeholders by consistently exceeding expectations in every department.
How to use the OKR method
To improve productivity begins, you’ll need to define exactly what “productivity” means in your business. For many, this is a difficult concept to grasp. There are countless areas that could be improved if you look hard enough — everything from the timeliness of service delivery to the effectiveness of your sales team, or the frequency of product releases. Once you’ve got a clear understanding of what productivity means in your business, you’ll be better able to identify areas where it’s lacking. This is the first step to addressing any issues that prevent your organization from operating at the highest level of efficiency. Once you’ve identified the areas you want to improve, you need to establish a framework for measuring and tracking the results.This will allow you to quantify the impact on your business of any changes implemented to help improve productivity.
How to identify KPI in a business and define Key Results
Now we’ll get into the nitty-gritty of how you’ll actually track changes to your business. Once you’ve identified the areas you want to target, you need to identify the KPIs that will tell you how you’re performing in those areas. This will allow you to identify areas where you’re lagging behind your competitors. For example, let’s say you’re a digital marketing agency that specializes in creating compelling content that helps lead generation. You could use the metrics below to measure the effectiveness of your campaigns:- Total leads generated by your content – Lead activity — how many people convert from a lead into a paying client.- Lead retention — how many clients remain with your organization from the date they sign up through to the date they cancel their service?- Return on investment — the amount of money you’ve gained for your efforts. These are just a few metrics that you could use to track the success of your campaigns in the areas of marketing and lead generation.
How to track progress on your KPIs with the OKR method now
That you’ve defined your KPI and quantified the value of your efforts, it’s time to start implementing changes that will bring the results in line with expectations. As we said before, the essence of the OKR method is to identify areas in your business that are lagging behind, then begin to focus your efforts there. To do this, follow a four-step process that involves
- creating a vision and mission statement,
- creating a detailed strategy based on those principles,
- identifying the key results you want to achieve, and finally,
identifying the key result-level roles and responsibilities that will help you achieve the results. Creating a vision and mission statement: By creating a mission and vision statement, you’re starting to think about your business in a new way. By doing this, you’re likely to identify areas where your current approach is having a negative impact on your culture and employee engagement. It’s likely that someone is feeling frustrated or undervalued because of how they’re being incentivized to operate. Identifying key results: Once you’ve identified the areas in your business where you think performance is being held back, you need to begin identifying the KPIs that will help you achieve those results. To do this, you need to identify the key results that each role and responsibility is responsible for. Identifying key result-level roles and responsibilities: Once you’ve identified each role and responsibility in your business, it’s time to draw up a Key Result Map. This structure should help you identify the specific activities that should be contributing to the achievement of those results.
Wrapping up
this article, we’ve talked about why you need to use the OKR method and how it can help improve productivity, increase revenue, and decrease costs. We’ve also explored how to identify key results, track progress on your KPIs, and identify key result-level roles and responsibilities. We hope this article has given you an overview of how to use the OKR method and how to implement key results-based management. To be successful, you need to have a clear vision, create a mission, and identify key results.