OKR for Small and Mid-Sized Companies: Goals Without a Big Project

Why do OKR so often turn into a big project in mid-sized companies?

A managing director reads about OKR, commissions a workshop, buys software, and has every department write its own goals. After six weeks there are 24 objectives and 80 key results. In the second quarter people still measure, in the third only occasionally. After that, the verdict is that OKR do not suit the company.

What failed was rarely the idea. What failed was the volume. A method meant to set priorities was introduced in a way that created new priorities: maintaining goals, filling in progress values, coordinating between departments. Day-to-day business was stronger.

This article shows a minimal form that gets by with a few hours per quarter in a mid-sized company. When it is worthwhile at all, and when another method fits better, is covered in the article on OKR, Kanban, and weekly planning. The guiding question is: how can OKR be used in a mid-sized company so that they set priorities instead of creating new work? To answer it, I first briefly explain what OKR are and when they pay off, then summarize what research says about goals, and finally show the minimal form, an example from sales, and typical mistakes.

A goal method that produces more goals than the team can keep in mind has missed its purpose.

What are OKR, briefly explained?

OKR stands for Objectives and Key Results. An objective describes in words what should be achieved. Two to four key results make progress measurable. A quarterly rhythm is common. The method goes back to Andy Grove at Intel and became known through John Doerr and its use at Google. The handbook by Niven and Lamorte (2016) places its origin in the 1980s.

The Mittelstand, Germany's small and mid-sized, often owner-run companies, starts from a different position than a technology corporation. Paths are short, the owner knows most processes personally, and there is rarely a staff unit that maintains goals. What was created there as a management system for thousands of employees has to fit on one page here.

When are OKR worthwhile for small and mid-sized companies?

The strength of OKR lies in alignment across team boundaries. When sales, engineering, and the office each pursue their own priorities, shared goals force an order. In a team that talks every day, weekly planning usually achieves this with less effort.

These recommendations match those in the comparison of methods. The one-method rule from there applies as well: never introduce more than one new method per quarter. Whoever starts OKR, a new CRM, and new meetings at the same time ends up with none of them anchored in daily work. How sales goals are derived from annual revenue is described in the article on planning sales targets. OKR add to such revenue targets the question of what has to change in the company to make them achievable.

What does research say about goals and OKR?

There is little robust research on OKR themselves. A systematic mapping study by Silva and Souza (2023) found 30 studies mentioning OKR and their use, 23 of them published after 2020. Most contained little or no information on why or how OKR were used. An analysis of implementation frameworks (Herkenrath, Hoeborn, and Stich, 2023) finds that numerous implementations fail and that existing frameworks barely address the difficulties of practice.

What OKR build on, by contrast, is well researched: the effect of goals. Locke and Latham (2006) summarize a theory based on some 400 laboratory and field studies. Specific, high goals lead to better performance than easy or vague goals such as the exhortation to do one's best. This holds under three conditions: the person is committed to the goal, has the necessary ability, and does not pursue conflicting goals. The authors name feedback on progress, commitment to the goal, task complexity, and situational constraints as important moderators. One study they cite found that goals only raised performance when work overload was low.

Two further findings matter for OKR. With new, complex tasks, a pure performance goal can lead to tunnel vision. A learning goal, meaning the goal of acquiring the necessary knowledge, then works better. And in groups, personal goals that are incompatible with the group goal harm the group's performance. For sales this means: a team goal and individual goals that run against each other cancel out. Why targets set too high hurt in sales is described in the article on leading a sales team. The conditions from goal research explain it: without confidence that the goal can be reached, there is no commitment.

What does OKR look like in its minimal form?

The minimal form follows the 1-3-1 rule: one objective for the company, at most three key results, one five-minute check-in per week. Companies with ten to fifty employees can set two to three objectives if different teams are affected. The minimal form does not need team goals below that.

1. Week 0: Set (90 minutes)

   The owner and team leads agree on one objective and at most three key results with starting and target values. Each key result gets a responsible person.

2. Every week: check-in (5 minutes)

   In the existing weekly meeting, the current value of each key result is stated. If there is an obstacle, it goes into the obstacles block.

3. Week 6: midpoint (30 minutes)

   If a key result is far behind, a decision is made: more effort, a different route, or a deliberately lower target.

4. Week 13: review (60 minutes)

   Each key result is rated yes, partly, or no. What did we learn? What continues next quarter?

The weekly check-in needs no meeting of its own. It belongs in the block on the status of the goals, as provided for in the articles on weekly planning in the team and the weekly sales meeting. That keeps the effort per quarter at a little over three hours for leadership.

What do OKR look like in sales?

The following example shows one quarter in a company that wants more revenue from existing customers. The numbers are freely chosen. How to develop existing customers systematically is described in the article on growing existing customers.

What is not in the table is notable: “create a CRM field for annual reviews” or “draw up a list of the top 30 customers.” Those are tasks needed to reach the key results. They belong in weekly planning, not in the OKR.

Which mistakes make OKR ineffective in mid-sized companies?

• Too many goals: More than three objectives in the company dilute the priorities.
• Tasks as key results: “Introduce a new CRM” is a task. “Every quote has a follow-up date” is an outcome.
• OKR for every person: Personal OKR multiply the effort and quickly create goals that run against each other.
• Linking to compensation: Tie money to key results and you get cautious targets and polished measurements.
• No check-in: A goal that is only looked at again at the end of the quarter is a wish.

The point about compensation is a position derived from the conditions of goal research: an honest interim status is only available if a poor value has no financial consequences. How sales compensation can be structured is compared in the article on sales compensation.

What you can do this week

1. Use the table to check whether OKR fit your company right now or whether weekly planning is enough.
2. Phrase one objective for the next quarter in a sentence everyone in the company understands.
3. Derive at most three key results with starting and target values and strike everything that is a task.
4. Name a responsible person for each key result.
5. Add the five-minute check-in to the existing weekly meeting.

After the first quarter you will know whether the method holds up in your company. If the review shows that everyone talked about the same goal, it has served its purpose, even if not every key result was reached.

OKR set priorities in a mid-sized company when they stay small. One objective, no more than three key results with starting and target values, one responsible person per key result, and a short check-in in the existing weekly meeting are enough. Once the number of goals grows beyond what the team can keep in mind, the method loses its purpose.