A conceptual Framework of Objectives and Key Results

(OKRs) for Achieving Sustainability Goals in Organizations.

Literature Review.

Bachelor’s Thesis
Anna Ciuba
Aalto University School of Business
Accounting
Spring 2023
Author Anna Ciuba
Title of thesis Conceptual Framework of Objectives and Key Results (OKRs) for Achieving
Sustainability Goals in Organizations.
Degree Bachelor’s degree
Degree programme Accounting
Thesis advisor(s) Kerstin Falk
Year of approval 2023 Number of pages 25 Language English

Abstract
In this literature analysis, I examine existing academic research exploring sustainability goal setting
in organizations. I also present existing literature on the topic of Objectives and Key Results. The
purpose of this work is to explore how OKR methodology can be utilized for the purpose of
sustainability goal setting in organizations. Based on this analysis, OKR can be utilized for the
sustainability goal setting on the company level with certain adjustments to the framework.
However, there is little academic evidence of this specific methodology to be successfully used in the
organisations for the sustainability goal setting purpose. The proposed OKR for sustainability
framework requires further research and empirical validation in the future.

Keywords OKR, Objectives and Key Results, Sustainability, Sustainability goal setting

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Table of contents:

1 Introduction .......................................................................................................... 4

2 Overview of Objectives and Key Results (OKR) framework ............................ 6

2.1 Background and History ................................................................................... 6
2.2 OKR Definition and Characteristics .................................................................. 7
2.3 Criticisms and Limitations of OKRs ................................................................ 10

3 Overview of Sustainability Goals ..................................................................... 11

3.1 Sustainable Development in Organizational Context ..................................... 11
3.2 Perspectives on Sustainability Reporting and Goal Setting ........................... 13
3.3 Sustainability Goal Setting Success Factors .................................................. 14

4 OKRs for Sustainable Development Framework ............................................. 15

4.1 Proposed Framework Characteristics ............................................................ 15
4.1.1 High Level Characteristics ............................................................................ 16
4.1.2 Implementation Granularity .......................................................................... 17
4.1.3 Operational Execution ................................................................................... 18
4.2 Setting Objectives and Key Results for Sustainability .................................... 19
4.2.1 Objectives for Sustainability ......................................................................... 19
4.2.2 Key Results for Sustainability ....................................................................... 21
4.2.3 Key Challenges Mitigation Strategies ........................................................... 23

5 Conclusion and Implications ............................................................................ 24

5.1 Conclusion ..................................................................................................... 24
5.2 Limitations and Future Research Directions................................................... 26

6 References.......................................................................................................... 28

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1 INTRODUCTION
This Bachelor thesis is going to discuss the sustainability goal setting in
corporations, and in particular, Objectives and Key Results framework as a tool for
sustainable development goal setting.

In recent years, sustainability in the enterprise context has been viewed

not simply as ‘good to do,’ but ‘imperative to do’ (Lubin & Esty, 2010). Enterprises are
being scrutinized for their sustainability performance and for the related goals they set.
Investors look for meaningful, quantitative, aggressive performance goals and the
sustainability goals are becoming an arena of corporate competition and a way of
staking out a position of leadership (Schatsky, 2013). There has also been a vivid
discussion around the connections between sustainability and business results during
recent years (e.g., Alshehhi et al., 2018; Ioannou and Serafeim, 2011; Orlitzky et al.,
2003). The conclusion of the discussion has been, that driving and pursuing
sustainable goals efficiently will impact the business positively.

Sustainability goals are the objectives that organizations set to promote

sustainability, which by a known definition refers to the ability to meet the needs of the
present without compromising the ability of future generations to meet their own needs
(Brundtland, 1987). Sustainability goals can include a wide range of objectives, such
as reducing carbon emissions, increasing the use of renewable energy, promoting
social equity, and reducing waste and resource consumption (Epstein & Buhovac,
2008).

Goal setting frameworks are essential for companies as they provide a

structured approach to defining and achieving objectives, which helps ensure that
resources are used effectively and efficiently towards achieving the desired outcomes.
Additionally, goal setting frameworks can increase employee motivation and job
satisfaction by providing clear direction and a sense of accomplishment when goals
are met (Locke & Latham, 2002).

Among the variety of goal setting frameworks, OKRs have been widely adopted as a
strategic planning and performance management tool by extremely successful
companies such as Google, Intel, and LinkedIn, among others (Doerr, 2018). In recent
years, there has been growing interest in applying OKRs to achieve social and
environmental objectives (Santos & Silva Bastos, 2021), therefore more research on

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this subject is relevant and needed. OKR stands for Objectives and Key Results, and
it is a goal-setting framework used by individuals and organizations to set and track
progress towards achieving specific objectives. According to John Doerr, who
popularized OKRs at Google and authored a book on the topic, "Objectives and Key
Results”, are a collaborative goal-setting tool used by teams and individuals to set
challenging, ambitious goals with measurable results" (Doerr, 2018, p. 9).

As sustainability is clearly an important topic, and effective sustainability

goal setting is a vital step towards achieving sustainability progress, it is worth
exploring practical approaches in detail. Therefore, the research question presented
in this work is the following: “How can Objectives and Key results be used as a
conceptually relevant framework for sustainability goal setting?”

The chosen methodology for the thesis is an integrative literature review,

where the aim is to synthesize available research articles and books qualitatively.
Additionally, the review will analyze and evaluate the literature and contribute with own
suggestions on applying OKR for sustainability goal setting (Snyder, 2019).

For this analysis, relevant literature search was executed with Scopus and
Google Scholar databases with a relevant search phrase: OKR, "OKR method",
"Goals and key results", "goal setting", “sustainability goal setting”, “SDG
management”, “sustainability, OKR” and “sustainability accounting”. The results of
database search were limited to publications in English and focused on the
publications that were most quoted to ensure the quality of references.

Most relevant prior studies on the OKR topic were classified within social
sciences and psychology fields, with wide applications within management research,
technology and IT. Due to a limited OKR -specific scientific research, this work will
also refer to a wider goal setting related literature. Geographically, most articles about
my topic have been published in the United States, Great Britain, and Australia. The
OKR and goal setting topics have been studied more and more every year for the past
seven decades.

When it comes to the sustainability topic, it is mainly researched within

business management and economics, social sciences, environmental studies, and
computer science fields. Most of the research comes from the United States and Great

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Britain, followed by China and India. Timewise, the research in SDG has picked up
around 2009 and has been especially active during the past decade.

This paper is going to be structured as follows: the first chapter will present
the overview of Objectives and Key Results (OKR) framework, including its
background, definition and limitations. The following chapter will go over the corporate
sustainability background in organizational context and present literature’s view on
sustainable development goals and its’ success factors. Further on, the paper will
combine OKRs and sustainable development perspectives, combining their elements
into a suggested conceptual framework: OKR for sustainability. The final chapter will
summarize the findings, discuss the implications and limitations of the research and
suggested framework for theory and practice, as well as suggesting further research
on the topic.

2 OVERVIEW OF OBJECTIVES AND KEY RESULTS (OKR) FRAMEWORK

2.1 Background and History

Objectives and Key Results methodology has got some well-established

predecessors that inspired its’ core and were its’ starting point.

Firstly, goal setting is a widely researched organizational psychology

area, with a scientifically proven connection between goal setting, motivation, and
performance. Well appreciated studies of the theory by Locke and Latham indicate
that especially setting goals, and in particular setting challenging and difficult goals,
leads to better organizational performance (Locke & Latham, 2002).

Secondly, Objectives and Key Results methodology sources from the rise
of management science in the fifties and the Management by Objectives methodology,
which was developed by Peter Drucker to help improve companies’ performance
(Wodtke, 2016). The evolution of management thinking that introduced the
management by objectives - MBOs and later OKRs was fundamental. It is an evolution
from management-based supervision and control towards bottom-up goal definition
and consensus with employees.

Thirdly, an important management concept that contributed to OKR

methodology was SMART goals, a framework introduced by George T Doran in the

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1980s. In this concept, the goals that an organization should take on, were abbreviated
as SMART: specific, measurable, achievable, results-focused, and time-bound
(Wodtke, 2016, Sull & Sull, 2018).

Another influential stream of thought that had its impact on the OKR is
KPIs (Key Performance Indicators), which is a result focused approach to performance
measurement, where a set of metrics would be proposed to evaluate a company’s
performance (Wodtke, 2016).

OKR method itself was defined by Andy Grove in his management

manual, High Output Management (Grove, 1983). The book was a result of Grove’s
15 years’ experience in various management and executive roles at Intel. During the
time of Grove’s tenure, the company had to change fast, adapt to new market
conditions, as well as focus on the company’s output in the changing environment.
OKR was modeled to help firms achieve their business goals in a more efficient and
effective way, incorporating employees in the decision-making (Niven & Lamorte,
2016).

The OKR method got more discussed during recent years thanks to John
Doerr, who popularized it in his 2018 book Measure what matters. Doerr was first
exposed to the framework in Intel and later, in 1999 introduced it to Google, where it
became the main management methodology, getting positive feedback for its cross
functional alignment enablement and frequent priority setting (Doerr, 2018).

2.2 OKR Definition and Characteristics

There are multiple OKR definitions available in literature, all of which

suggest alignment and focus as vital part of the description. John Doerr defines OKR
as “A management methodology that helps to ensure that the company focuses efforts
on the same important issues throughout the organization” (Doerr, 2018, p. 7). In his
book, “Objectives and Key Results: Driving Focus, Alignment, and Engagement with
OKRs”, Paul R. Niven and Ben Lamorte present a following OKR definition: “OKRs is
a critical thinking framework and ongoing discipline that seeks to ensure employees
work together, focusing their efforts to make measurable contributions that drive the
company forward.” (Niven & Lamorte, 2016, p. 6).

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 Structural parts of the methodology are clearly laid out in its name. In the
Objectives and Key Results, the Objective is always the qualitative part of the
framework and Key Results are the quantitative part (Wodtke, 2016).

An Objective is a “concise statement outlining a broad qualitative goal

designed to propel the organization forward in a desired direction .” (Niven & Lamorte,
2016, p.30). In other words, it is what needs to be achieved. Objectives should be
significant, concrete, action oriented and inspirational. Calendar wise, objectives are
determined for a specific time, optimally 3 months. They should clearly state what it is
to be achieved and they should reflect a collective vision. Objectives should be set at
a level that makes people excited and motivated to achieve them, yet still achievable
with hard work and dedication. Doerr suggests that objectives should be aligned with
the organization's mission and vision, reflecting the company's long-term aspirations
(Doerr, 2018).

In "Measure What Matters," Doerr provides several examples of effective

objectives, including Google's objective to organize the world's information and make
it universally accessible and useful. This objective is both ambitious and inspiring
Google employees to work towards a common goal, whereas its’ achievability is
constantly verified via Key Results (Doerr, 2018).

Additionally, according to Paul Niven and David Lamorte, objectives

should be set collaboratively, involving input from all levels of the organization. This
collaborative approach helps to ensure that objectives are aligned with the
organization's overall goals and that they reflect the most critical areas for the
organization to focus on. Objectives should also be revisited regularly, with ongoing
evaluation and adaptation to ensure that they remain relevant and achievable. Niven
and Lamorte suggest that objectives should be reviewed at least quarterly, with
progress tracked and evaluated against the specific milestones and deadlines set for
each objective (Niven& Lamorte, 2016).

A Key Result is a “quantitative statement that measures the achievement

of a given objective” (Niven & Lamorte, 2016, p.30).

Key results are the specific, measurable outcomes that an organization will pursue to
achieve its objectives. According to Christina Wodtke, key results should be outcomes-
oriented, focusing on the specific results that the organization wants to achieve. They

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should also be quantitative, providing a clear measure of progress towards the
objective. Finally, key results should be achievable, yet challenging, pushing the
organization to stretch beyond its current capabilities (Wodtke, 2016). Key results
define and monitor how an organization will get to the objective. They force an
organization to quantify the objectives, making the teams reflect on the vague or
unclear aspects of their objectives. Key results are specific, time bound, realistic,
measurable, challenging, and verifiable (Doerr, 2018; Niven and Lamorte, 2016).

Like objectives, key results should be set collaboratively, involving input

from all levels of the organization. This collaborative approach helps to ensure that
key results are aligned with the organization's overall goals and that they reflect the
most critical areas for the organization to focus on.

On his website “whatmatters.com”, Doerr presents several examples of

good key results, including “Get 25% response rate from a direct mail campaign to
diverse ZIP codes.” (What Matters, 2020). This key result is specific, measurable, and
reflecting a clear outcome that will lead to the achievement of Google's objective to
organize the world's information and make it universally accessible and useful (Doerr,
2018). It is important to note that key results should not be confused with activities or
tasks. Rather than simply listing out the activities that an organization will undertake
to achieve an objective, key results should focus on the specific outcomes that will be
achieved because of those activities.

According to Wodtke, key results should also be challenging yet

achievable. Setting key results that are too easy will not push the organization to reach
its full potential, while setting key results that are too challenging may lead to
demotivation and burnout. Finding the right balance between challenging and
achievable is critical to the success of the OKR framework (Wodtke, 2016).

To drill down the structure more, key results can be classified into three
categories: 1. Baseline (key results that provide information about the existing
situation), 2. Metric (key results that numerically measure current performance and 3.
Milestone key results, which measure progress of a project (Niven and Lamorte,
2016).

OKRs cascade from top management to employees like traditional

performance indicators and are followed up quarterly or yearly. How OKRs differ from

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the traditional performance systems is that they are not linked to financial
compensation or reward, they much rather emphasize the intrinsic motivation of the
employees (Rompho, 2023). Four distinct superpowers of OKRs are: focus on and
commit to priorities, align and connect for teamwork, track for accountability and
stretch for amazing (Doerr, 2018).

2.3 Criticisms and Limitations of OKRs

OKR is considered a successful framework, which provides a clear

measure of goals and job success for employees, promotes innovation and customer
centricity, however, it is not free from limitations.

As common challenge with the OKR framework is that it can be difficult to

identify the right key results to track. According to Niven & Lamorte, it is important to
identify key results that are directly linked to the objective, rather than focusing on
outcomes that are indirectly related or not relevant to the objective. Organizations
need to be able to verify that all teams work toward the same goals. When team goals
conflict with organizational goals, many teams to act in their own self-interest (Stray et
al. 2022). OKRs may cause employees to focus excessively on their work without
considering the long-term results (Den Haak, 2022). Addressing this challenge
requires careful consideration and collaboration between all levels of the organization
to ensure that the key results identified are truly aligned with the organization's overall
goals (Niven & Lamorte, 2016).

Another challenge with the OKR framework is ensuring that the

organization remains flexible and adaptable. According to Wodtke, objectives and key
results should be revisited regularly to ensure that they remain relevant and aligned
with the organization's evolving needs. This requires ongoing evaluation and
adaptation, with a willingness to pivot as needed based on new information and
changing circumstances (Wodtke, 2016).

There can also be challenges in understanding the OKR concept,

especially when organizations use OKRs and KPIs simultaneously (Rompho, 2023).
Teams struggle with the level of abstraction, where objectives are general and key
results concrete, with the middle ground considered missing. Teams often suffer from
lack of practical guidance on transforming a qualitative objective into quantifiable key

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result (Stray et al. 2022; Trinkenreich et al., 2019). A significant amount of time and
resources is required to coach the organization through the initial phase of introducing
the new methodology to address these potential problems. This applies especially to
large organizations, where executing any change is never easy and straightforward
(Stray et al, 2022).

Moreover, some difficulties with making the key results challenging

enough for employees were observed in cases where employees were not given
autonomy to create their own targets (Rompho, 2023). Employees who can set their
own bar high, without key results coupled with financial rewards manage better on that
ground.

3 OVERVIEW OF SUSTAINABILITY GOALS

3.1 Sustainable Development in Organizational Context

It has been widely accepted in the corporate world, that sustainability is a

non-disputable condition for doing business. Nowadays, firms create sustainability
offices, report, and communicate widely on the related matters (Dyllick & Hockerts
2002). In the following chapter, sustainability is going to be described in a wider
corporation context. Perspectives on sustainability reporting and goal setting are going
to be presented and eventually, an overview on sustainability goal setting success
factors will follow.

Literatures’ well known Brundtland’s sustainability definition can be

transposed to the corporate level in the following way: it is “meeting the need of a firm’s
direct and indirect stakeholders, (such as shareholders, employees, clients, pressure
groups, communities etc.), without compromising its ability to meet the needs of future
stakeholders as well.” (Dyllick & Hockerts 2002).

The sustainability development concept in business organizations has

evolved over the recent years. In the initial phase of corporate sustainability tracking
is characterized by certain shortcuts. Be it for clarity or simplification needs, when
planning for sustainability, companies had concentrated mainly on the environmental
factor. Moreover, the typical trait of sustainability in business context had been short
– term gain emphasis. The cadence had been adjusted to the stock market’s quarterly

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and yearly rhythm. Another significant aspect had been focusing on the economical
capital exclusively.

However nowadays, sustainability in the business context can be better

categorized into three types of capital: economic, natural and social capital. All three
types are vital for corporations. It can be justified, that long term sustainability
management of those three types of capital is relevant in the business context (Dyllick
& Hockerts 2002). The three sustainability dimensions and types of capital are a
fundamental underlying concept of modern sustainability discussion in the business
environment. They have been discussed as a triple-bottom line concept (Elkington,
1997) where three aspects are inter-related and cross-influential.

Economic capital can be categorized into financial, such as equity and

debt; tangible, such as machinery, land, stocks; and intangible, for example reputation
and company culture. These in common are defined as sustainable when a company
guarantees cashflow sufficient to ensure liquidity while producing constant above
average return to its shareholders (Dyllick & Hockerts 2002).

Natural capital can be contextualized in a metaphorical industrial

organism which consumes natural resources and creates both desired output, such
as services and goods; and undesired one, waste emissions. From this category point
of view, companies that are sustainable, use the number of natural resources below
the rate of natural reproduction and produce less emissions than the natural
absorption capacity of the environment. Additionally, environmentally sustainable
companies do not degrade other sustainable actors (Dyllick & Hockerts 2002).

Social capital can be sub-divided into human (which contains skills,

motivations and business partnership loyalty) and societal (education, infrastructure
and other public services that support entrepreneurship). In this context, socially
sustainable companies increase human capital and positively contribute to the societal
capital of the community where they operate. Additionally, they manage the social
capital in an understandable manner, so that their stakeholders agree with the
company’s value system and understand it (Dyllick & Hockerts 2002).

The most common way to relate the three types of capital described
above (economic, natural and social) to business is through efficiency and economical
value added. Eco-efficiency, for example, means to satisfy human needs and bring

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quality of life in line with earth’s carrying capacity (DeSimone & Popoff, 1997). Socio-
efficiency means is to minimize negative social impacts (such as work accidents,
bullying at workplace) and maximize positive social impacts (employment, donations)
(Figge & Hahn, 2001).

3.2 Perspectives on Sustainability Reporting and Goal Setting

The triple bottom-line concept is a structured realization of an underlying

assumption that companies need to integrate sustainability in their strategies to
perform well in the long run. Consequently, we see the extensive recent research on
extending business models to cater for sustainability in strategy planning (Perrot 2014,
2015). Companies do actively integrate sustainability into their strategies and actively
communicate it. At the same time, they are looking for ways to streamline and
standardize the process (Lloret, 2016).

In the current environment, the triple bottom-line concept of sustainable

business comes in relevant to the sustainability reporting for firms. As part of the
strategic sustainability reporting starting point, researchers suggest identifying
economic, environmental and social issues, also called “profit, planet, people”, that a
company sees vital for its development. (Baumgartner & Korhonen, 2010). Currently,
a widely popular sustainability reporting taxonomy, the Global Reporting Initiative
(GRI) is developed in alignment with the triple bottom-line concept and other reporting
frameworks are similarly structured (Milne & Gray, 2013).

One more step forward towards more efficient sustainability agenda, after
reporting, is goal setting. The first attempts to unify sustainable goal setting root
deeply in the United Nations’ activity. General sustainability goal setting goes back as
far as 1961, when the first development decade was launched. Back then, the goal
focused on accelerating growth of the developing countries. Later, in the 1990, health
and nutrition development goals for children were proclaimed by the same institution
(Hickmann et al., 2022).

One of the most known and widely adopted structure was put forward
globally by the United Nations in 2000 and evolved over time. Firstly, the eight
Millennium Development Goals (MDG) were declared in followed by the Sustainable
Development Goals in 2015 (Hickmann et al., 2022). United Nations’ Sustainable

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Development Goals are a general compass for nations to follow towards more
sustainable future. It is also a reference points for corporations, where firms commit to
develop strategies and set measurable short-, medium- and long-term goals for the
areas of human rights, environment, labor and anti-corruption (UN Global Compact,
2010). Companies thus widely adapt a clear goal setting focused Sustainable
Development Goals taxonomy in their strategies.

Although the global compass of SDGs exists, currently, there is no

common framework or standard for sustainability goal setting. Companies tend to lean
on the “profit, planet, people” core on the high level. Studies show that companies on
average do set sustainability goals (About sustainability 15 goals per company on
average) (Palmer et al. 2019; Palmer & Flanagan, 2016). Planet goals are the most
common ones, followed by people and profit. The most common sub-categories of
planet goals were emissions and waste, energy, water and certifications and
standards compliance. The most common sub-categories of people goals are health,
safety, diversity, and educational growth (Palmer et al. 2019).

3.3 Sustainability Goal Setting Success Factors

Researchers argue, that similarly to existing traditional corporate goals,

sustainability goals play crucial role in the companies. The role is to provide focus,
state commitment and assess performance (Schatsky, 2013). On the contrary to the
standardized financial performance goals, however, sustainability measurement still
varies from company to company. Moreover, the capability to access and measure
sustainability performance data tends to be limited.

However, certain factors of sustainability goal setting success can be

determined based on existing practitioner data (Schatsky, 2013).

The first factor of the goal is a clear issue statement accompanied by a

quantitative target (either absolute or relative) and a timeline (including base year and
the accomplishment year target). The second factor is broad stakeholder consultation.
The stakeholders should involve competitive analysis, internal consultation and
external stakeholders such as NGOs and suppliers. The goal of the consultation is to
identify the areas of company influence on the direct and indirect levels, as well as
identify the availability of data to verify progress. The process often includes

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macrotrend analysis, which impacts organizational goal setting. At this stage, the
company will also identify regulators’ guidelines on the impact targets locally. Thirdly,
there should be a clear distinction of so called “stretch goals”, which are challenging,
but not unrealistic. A clear distinction between realistic goals and stretch goals will help
to focus and prioritize the work. It is also recommended to identify “aspirational” goals,
where it is yet to be defined how to measure the progress (Schatsky, 2013).

When it comes to the goal setting time horizon, practitioners recommend

a 3–5-year period for public goal setting and a yearly horizon internally, justifying that
shorter windows implement rephrasing burden for sustainability goals (Schatsky,
2013).

Ownership of the goals is an often-outlined success factor from the

practitioners’ point of view. Especially the executive level, such as the CEO
commitment and support, as well as all functions operating executives’ accountability
for the results was quoted as vital. Lack of function alignment of often quoted as
challenge of the execution level. Closely related to the ownership is a structured
process of reviewing progress frequently. Some practitioners vouch for reviews as
often as monthly, the current common practice being quarterly (Schatsky, 2013).

4 OKRS FOR SUSTAINABLE DEVELOPMENT FRAMEWORK

4.1 Proposed Framework Characteristics

Chapters 2 and 3 of this work covered OKR frameworks and sustainability

goal settings’ fundamentals, based on available literature. The preceding chapters
have identified limitations and outlines success factors of both areas separately. The
upcoming chapter attempts to characterize a framework that will support sustainable
goal setting for companies with the help of the OKR method.

“Conceptual frameworks are mental representations that order

experience in ways that enable us to comprehend it.” (Gray, 2021, p.1). The presented
approach utilizes some key factors that make successful frameworks rise above the
rest: Clarity, Memorability, and Integration. It uses clear, familiar, understandable
language, reduces the number of explanatory elements, and reduces complexity and
can be integrated into business operations to support its development (Gray, 2021).

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 The synthesis addresses the most common challenges with OKR, and
sustainability goal setting identified in the analyzed literature prior in this work. On the
other hand, the aim of the proposed framework outline is to utilize the elements of
OKR and sustainability goal setting that have been identified as beneficial in the
analyzed literature earlier in this paper.

The chapter is going to describe high level characteristics of the OKR for
sustainability framework to support the fundamentals that should be reviewed before
starting the implementation of OKR for sustainability. Further on, the paper will suggest
implementation granularity and operational execution phases. Furthermore, in chapter
4.2, objectives specificity, relevance and achievability aspects are going to be
discussed, as well as the key results progress measurement. The reason for bringing
these elements forward in the paper is due to them being the biggest differences
between existing OKR framework’s characteristics and sustainability goal setting
practices described in the analyzed literature. Another reason behind the selection is
these aspects causing most empirical challenges, according to existing research.

The proposed approach is gradually depicted in Figures 1, 2 and 3 along the chapter.

4.1.1 High Level Characteristics

The high-level characteristics presented next build upon the proposed
OKR definition dimensions from “Objectives and Key Results” by Paul Niven and Ben
Lamorte (Niven & Lamorte, 2016), with adjustments for the sustainability topic. Firstly,
the proposed framework needs to be underlined by critical thinking. When setting and
executing objectives and key results, practitioners need to re- assess them critically
and systematically. Secondly, the framework is an ongoing commitment, as opposed
to one-off exercise. As research shows, a significant number of resources needs to be
dedicated to the implementation for it to be successful. Thirdly, collaboration and
alignment need to be enabled cross-functionally. The framework can achieve best
results by complying to full transparency of objectives and key results. The fourth
characteristic is laser sharp focus – the list of impactful OKRs should be limited to only
the critical ones and there should be clarity, that no focus is given on the activities that
do not contribute to the list. The fifth aspect is measurement – key results are
quantitative and there is no room for interpretation of the result achievement. One
additional element of the high-level description is long term executive sponsorship and

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dedication requirement. Without senior leadership involved, the topic loses
significance and therefore organizations’ attention to it will be limited (Niven, 2016).
These fundaments have been depicted in Figure 1 bottom as supporting the structure
and carrying the weight of the overall model.

4.1.2 Implementation Granularity

The next discussed aspect of the OKR for sustainability framework is the
organizational level implementation granularity. Among these, the organizational level
granularity and the timeframe granularity and the sustainability theme granularity is
going to be discussed.

As suggested by literature the high level of features applies to the entire

organization. Authors claim, that OKR rollout is more efficient is started on one level
only and cascading futher. Same applies for the OKR for sustainability setting in
practice. The general objectives should only be set on company level first. (Doerr
2018). The proposed model does not suggest the cascading of sustainability
objectives and key results to sustain the benefit of clarity. Therefore Figure 1 depicts
one level of OKR for sustainability exclusively.

To ensure that sustainable goals are achieved in a timely and efficient

manner, it is important to have a clear accountability framework in place. This requires
assigning ownership and responsibility for each objective and key result, as well as
ensuring that progress towards these goals is regularly reviewed and evaluated. By
establishing clear lines of accountability and responsibility, organizations can ensure
that progress towards sustainable goals remains a priority and that resources are
allocated appropriately. (Doerr 2018). Thus, in Figure 1 we can observe a single
Owner role assigned to each Objective and key result.

When it comes to the timeline granularity, there should be a short term

(quarter, year) and long-term (3-5 years) time horizon incorporated in the framework.
Preceding the execution phase, there should be initial consultation phase which will
ensure organizational and stakeholder alignment (Schatsky, 2013). It is good to note
that although 3-5 years horizon goes against the OKR more frequent recommendation
for goal setting, (Schatsky, 2013) it is aligned with the UN time horizons for global
sustainability agenda. The time granularity is depicted in the upper right-hand side of
Figure 1.

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 When it comes to sustainability theme granularity, one way to ensure that
sustainable goals are balanced and holistic is to use a triple bottom line approach.
This approach considers, as described earlier, not only financial performance but also
social and environmental performance. By using this approach, organizations can
ensure that their sustainable goals are aligned with their overall mission and values,
and that they are pursuing sustainable development in a holistic and balanced way
(Elkington, 1997). Three levels of OKRs will also accommodate for the missing middle
ground, described as a known challenge with existing OKR implementations. (Stray et
al. 2022). Tripple -bottom line approach has been depicted in Figure 1 as three blocks
beneath the company level objectives, with an indication of three objectives per area.

4.1.3 Operational Execution

In addition to setting objectives, it is important to measure and evaluate
progress towards sustainable goals. This requires tracking and reporting on key
results that are relevant to the organization's sustainability goals. Those may include
measures such as carbon emissions, water usage, waste reduction, employee
engagement, and social impact. By regularly tracking and reporting on these,
organizations can identify areas of success and areas that require improvement and
adjust as needed. The more frequent tracking process for key results has been
depicted in Figure 1 right pane.

To enable the tracking process, an online OKR tracker tool is suggested

as beneficial for distributed teams (Stray et al. 2022). The tool needs to enable the
OKRs transparency and alignment principle, therefore it should be graphically obvious
that all levels or organizations’ goals are visible to everyone. On the operational level,
initial and ongoing training and qualified facilitation is a part of each rollout. Regularly
reminding of the right process and principles of the methodology is necessary (Stray
et al. 2022).

It is also important to effectively communicate progress towards

sustainable goals both internally and externally. By communicating progress towards
sustainable goals, organizations can inspire and motivate employees, customers, and
other stakeholders to support their efforts towards sustainability. Communication can
take the form of regular updates, reports, and presentations, as well as engaging with
stakeholders through social media and other channels.

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Figure 1. OKR for Sustainability Goal Setting

4.2 Setting Objectives and Key Results for Sustainability

4.2.1 Objectives for Sustainability

In the proposed framework, sustainability objectives are set on the
company level and are the same for all levels below. Setting specific long-term
objectives is critical to successful implementation of the OKR framework for
sustainability. To characterize effective sustainability objectives, this work refers to the
set that is available in the “Objectives and Key Results” book (Niven & Lamorte, 2016),
making simplifications to increase clarity (Gray, 2021). The proposed characteristics
of good objectives in the OKR for sustainability framework are inspirational,
controllable by the company, brings value to business and stakeholders, attainable,
and qualitative.

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Figure 2. Objectives for Sustainability

Firstly, inspirational sustainability objectives can motivate employees

and stakeholders to support sustainability efforts. For example, an inspirational
sustainability objective could be "become a carbon-neutral company by 2030." This
long-term objective can inspire employees and stakeholders to work towards a
common goal and drive innovation in sustainability efforts (Niven & Lamorte, 2016).

Secondly, sustainability objectives should be controllable by the

company. This means that the management team members must have the power to
influence the outcome of their respective triple-bottom line objective. For example, a
controllable sustainability objective could be "improve the health and well-being of
employees by promoting sustainable commuting options." This objective is
controllable by the facilities management team, who can implement the necessary
changes to achieve the objective (Niven & Lamorte, 2016).

Thirdly, sustainability objectives should bring value to the business and

stakeholders. The proposed framework suggests that sustainability efforts should be
an integral part of the organization's overall strategy and contribute to its long-term
success. For example, a sustainability objective of "implement a circular economy
model to reduce waste and increase resource efficiency" can bring value to the
business by innovating new products, reducing costs, increasing customer loyalty and
even reducing employee turnover (Niven & Lamorte, 2016).

Fourthly, sustainability objectives should be attainable. This means that

the objectives are realistic and achievable within the given timeframe, even though the
framework proposes a long horizon approach for objective setting. For example, an
attainable sustainability objective could be "use renewable energy sources for Finnish

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operations within the next 3 years." This objective is attainable in the Finnish business
environment with the necessary investments and partnerships (Niven & Lamorte,
2016).

Finally, sustainability objectives should be qualitative. This means that

objectives should focus on achieving a specific outcome, rather than a quantitative
measure. For example, a qualitative sustainability objective could be "improve
biodiversity on company-owned land by implementing a regenerative agriculture
model." This objective focuses on achieving a specific outcome, rather than a
quantitative measure such as reducing carbon emissions (Niven & Lamorte, 2016).

4.2.2 Key Results for Sustainability

Once the sustainability objectives are set on the company level for the
three suggested pillars, the next phase is to concentrate on the key results, that
consequently build on the available characteristics from “Objectives and Key Results”
(Niven & Lamorte, 2016) with the aim to simplify (Gray, 2021). The characteristics are
the following: specific, drive the right behavior, aspirational, owned, progress based,
quantitative and aligned.

Figure 3. Key Results for Sustainability

Sustainability key results should be specific and measurable, allowing

progress to be tracked over time, which is here suggested to be much shorter than in
the objectives case. For example, a key result for reducing carbon emissions could be
"reduce emissions by 20% by the end of the year." This key result provides a specific
and quantifiable target that can be measured and monitored over time.

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 Sustainability key results should drive the right behaviors and actions
to achieve the desired sustainability outcomes. In other words, it should be possible
by a responsible person to execute it. For example, a key result for promoting
sustainable commuting options could be "increase the number of employees using
sustainable commuting options by 50% by the end of the year." This key result drives
the behavior of employees to adopt sustainable commuting options, leading to
reduced environmental impact and is easily understandable.

Sustainability key results should be aspirational and challenging to

motivate teams to achieve ambitious sustainability targets. For example, a key result
for reducing water consumption could be "reduce water consumption by 50% by the
end of the year." This key result is an ambitious target that motivates teams to work
towards achieving significant water savings.

Similarly to objectives, sustainability key results should be owned by

specific teams or individuals, who are responsible for achieving them. For example, a
key result for reducing food waste, which is formulated: "reduce food waste in the
company cafeteria by 30% by the end of the year" is owned by the facilities
management team responsible for managing the cafeteria.

Sustainability key results should be progress-based, which justifies the

higher timeline granularity in comparison to objectives. They should be measured over
time to track progress towards achieving sustainability objectives. For example, a key
result for increasing renewable energy use could be "increase the percentage of
renewable energy used in local operations by 10% by the end of each quarter." This
key result can be compound at the end of the year, allowing the team to monitor
progress towards achieving the longer-term objective and adjust actions in time, if
necessary.

Sustainability key results should be quantitative and measurable,

allowing progress to be tracked and evaluated over time. A specific and quantifiable
target is easily understandable, and it can clearly be identified whether it has been
achieved or not.

Sustainability key results should be aligned with the organization's overall

strategy and goals. For example, a key result for promoting sustainable product design

22
could be "design 100% of new products to be recyclable by the end of the year." This
key result aligns with the organization's overall sustainability goal of reducing waste.

4.2.3 Key Challenges Mitigation Strategies

Now that the work has described the overall characteristics of OKR for
sustainability, it is vital to be able to critically assess the risks of using the OKR for
sustainability goal setting purpose and mitigate them in advance. The following part of
this work suggests some mitigation strategies to the most common risks that were
identified by the literature analyzed. These are: the complexity and newness of
sustainability issues, limited sustainability-related data availability, dilution of the long-
term focus, impact measurement and alignment.

Complex sustainability issues: Sustainability issues are complex and

multifaceted, making it difficult to set specific and measurable key results (Lloret,
2016). One solution to this challenge is to break down sustainability issues into
smaller, more manageable key results and limit the company to focus on three of them
that can be achieved within a shorter time frame. This decisive focus approach makes
it easier to set specific and measurable key results and reduce complexity.

Limited sustainability data availability: All sustainability issues require

data to track progress towards objectives and key results. However, data on
sustainability issues may be limited or difficult to obtain within the company (Schatsky,
2013). One solution to this challenge is to set one of the objectives and key results set
to leverage technology to collect and analyze data. Additionally, organizations can
partner with external stakeholders such as suppliers to collect data on sustainability
performance.

Long-term focus: The OKR for sustainability framework emphasizes

setting and achieving long term objectives and short term incremental key results. As
sustainability issues require long-term solutions, they are often not achievable within
a single quarter or year and loose the attention of stakeholders (Palmer et al. 2019;
Palmer & Flanagan, 2016). One solution to this challenge is to develop a visual
sustainability roadmap that outlines long-term sustainability objectives and ties them
to short term KRs. This roadmap can guide the development of short-term objectives
and key results that contribute to broader sustainability goals.

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 Difficulty in measuring impact: Measuring the impact of sustainability
initiatives can be challenging especially in the long run (Schatsky, 2013). One solution
to this challenge is to use a simplified combination of qualitative and quantitative data
to measure impact. The suggestion is to only one metric per key result to increase
clarity. For example, tracking employee engagement index as a measurement for the
internal people dimension is suggested.

Lack of alignment: one challenge with pursuing sustainable goals using

the OKR framework is ensuring that the goals are truly aligned with the organization's
purpose and strategy (Dyllick & Hockerts 2002). It is important to ensure that
sustainability goals are not just a marketing ploy but are truly integrated into the
company's core strategy and understood as integral. This requires buy-in and
commitment from all levels of the organization, as well as ongoing evaluation and
adaptation to ensure that the organization remains on track towards its sustainable
objectives.

5 CONCLUSION AND IMPLICATIONS

5.1 Conclusion

This Bachelor thesis focuses on the use of the Objectives and Key Results
(OKRs) framework for sustainability goal setting in corporations. It highlights the
importance of sustainability in the enterprise context and the need for effective goal-
setting frameworks to achieve sustainability objectives. OKR is presented as a
relevant tool for sustainability goal setting, with a high-level framework outlined. The
research question aimed to explore the practical approaches of using OKRs for
sustainability goal setting, and the methodology presented is an integrative literature
review, taking into consideration benefits and challenges of both areas of research.
Effective goal setting means adopting a proactive approach towards sustainability, by
which corporations can position themselves as leaders in their respective industries
while contributing to a better future for all.

The overall conclusion of the above literature analysis is that, as

companies continue to prioritize sustainability, there is a rich history in and a growing
need for research on effective sustainability goal setting and management. (Rompho
2023, Stray et al. 2022). Answering this work research question “How can Objectives

24
and Key results be used as a conceptually relevant framework for sustainability goal
setting?”: by exploring the development of specific and measurable sustainability
goals, different timeframes for sustainability goals, levels of granularity within the OKR
framework, and the impact of organizational culture and values on sustainability goal
achievement, researchers can help organizations to better align the OKR framework
with sustainable development goals. OKR is feasible to support sustainable practices,
however its’ known fallbacks should be well addressed in the sustainability goal setting
context. In general, goals should be challenging, otherwise people do not commit
execution (Locke, Latham, 2002, Rompho 2023) and what could be more challenging
than the sustainable future of companies and wider to sustainable future of the planet?

The discussion of implications for theory and practice related to

sustainability and OKR goal setting is a critical area of research for organizations
seeking to align their sustainability practices with the broader goals of sustainable
development. Based on the literature analysis presented earlier, several key
implications for practice and theory can be identified.

For practice, the use of the OKR framework for sustainability goal setting requires a
mindset shift. Sustainability goals need to be treated as other strategic goals and move
towards more specific and measurable. This shift is necessary to ensure that
organizations are effectively addressing the environmental, social, and economic
impacts of their operations. New tools and resources to support organizations in
setting specific and measurable sustainability goals with the use of OKR framework
will be needed, as well as new sets of skills. Another practical implication is that, as
mentioned in the paper, the use of the OKR framework for sustainability goal setting
requires consideration of different timeframes for goal achievement than the OKR
method itself suggests. Sustainability goals often require longer timeframes than
traditional organizational goals, given the complex and systemic nature of
sustainability challenges. Lastly, OKR framework for sustainability goal setting
requires consideration of the impact of organizational culture and values on goal
achievement. Organizations with a strong sustainability culture and values may be
more effective in achieving sustainability goals within the OKR framework than the
ones where focus has been merely on the economic resources and financial results.

25
From a theoretical perspective, the OKR for sustainability has a strong pool of
traditional goal-setting frameworks to source from. OKR is one of the effective
methods that has been less researched on by academics and its’ further research with
a sustainability focus should produce better scientific evidence for its’ value.

5.2 Limitations and Future Research Directions

This literature review attempts to synthesize the sustainability goal setting

and aims to suggest ways to utilize OKR framework for that purpose. Understanding
the limitations of this paper is important to ensure that the conclusions drawn from the
lecture are accurate.

The first limitation of this literature review is the limited availability of

scientific literature that is recent and verified. The lack of abundance in literature on a
particular OKR research topic made it challenging to perform the thorough review and
to draw meaningful conclusions or identify gaps in the literature. Another limitation of
this literature review is the potential for outdated or incomplete information. Although
a comprehensive search for relevant studies has been completed and use a range of
sources was employed, there could be more available sources that are now included
here. Furthermore, there is a potential for conflicting or inconsistent findings across
studies. Limited studies tend to use different definitions, making it difficult to compare
or generalize. The literature on sustainability goal setting and OKR is quite recent, and
the fields have not yet been standardized. Additionally, examined studies may have
methodological limitations or biases that affect the reliability or validity of their findings.
To address this limitation, the author of this work would need more resources critically
evaluate the quality of individual studies and consider the consistency and variability
of findings across studies, which was not available at this time. Lastly, this literature
review may not identify emerging or innovative research that has not yet been
published. To address this limitation, alternative sources of information were
consulted, such as expert opinions or internet resources and practitioners’ case
studies. The OKR for sustainability researcher needs to be open to new or alternative
perspectives on the research topic.

As companies continue to prioritize sustainability, there is a growing need

for research on effective sustainability goal setting and management (Dyllick&
Hockerts 2002). As this work shows, there is a need for more research on OKR itself
26
and on how the OKR framework can be adapted to better align with sustainable
development goals and support sustainable practices in organizations.

One area for future research is the development of understandable sustainability

objectives within the OKR framework. Additionally, research could explore how the
OKR framework can be adapted to support sustainability objectives that may not have
clear key results, such as social impact or community engagement. Another area for
future research is the exploration of different timeframes for sustainability goals within
the OKR framework on a more practical, case study levels. While the standard time
frame for OKRs is typically quarterly or annually, sustainability goals may require
longer timeframes to achieve significant impact, as this literature review has
discovered. Additionally, research could explore the impact of different levels of
granularity within the OKR framework on sustainability goal achievement. For
example, research could examine how setting sustainability goals at different
organizational levels, such as individual departments or teams, versus at the
organizational level, impacts sustainability objectives and key results achievement.

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