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Objective and key results (OKRs) is a goal-setting framework that has grown in popularity over the past decade, and is now the most popular goal-setting method for many hypergrowth startups.
But with so many goal-setting frameworks around, what makes OKRs stand out, and why do companies like Google and LinkedIn attribute their success to OKRs?
What makes OKR different is that they drive focus, alignment, visibility, and accountability in execution, which helps fast-growing companies execute fast as they scale, and it helps in building an outcome-focused culture.
Here’s a deeper dive into OKRs and how to get started with them.
What are OKRs?
OKRs help you set challenging and ambitious goals with measurable key results. They can help establish corporate, team, and individual goals.
In combination with your company strategy, OKRs track progress. They ensure all your team members are aligned on critical goals and meet expectations.
Objectives determine what you’re trying to achieve. They should be SMART (specific, measurable, achievable, relevant, and time-bound). An objective is the desired business outcome, so it needs to be inspirational, specific, action-oriented, and aligned with your company strategies.
EXAMPLE: An objective could be “Bring SEO to top 3 channels of revenue generation by end of quarter 2”
These ascertain how you want to measure progress. You must complete a few milestones to achieve your goals, and key results identify the specific actions to take to achieve these goals. Key results are always quantifiable and time specific, yet realistic and empirical.
Initiatives are actionable and time-bound endeavors to achieve your objectives and key results. They tell you what exactly you need to do to achieve your OKRs. Basically, OKRs are your roadmap to what you want to achieve, and initiatives are what you will have to do to walk through the road map.
History of OKRs
In 1954, Peter Drucker introduced the concept of Management by Objectives (MBO) in his book The Practice of Management. Andrew Grove, the co-founder of Intel, was inspired by this concept and came up with the OKR framework in 1970.
In 1974, John Doerr learned about the concept while working at Intel and introduced OKRs to Google in 1999. Since then, OKRs have been adopted by many organizations worldwide, such as Google, Spotify, LinkedIn, Intel, Microsoft, Netflix, Accenture, Dropbox, Oracle, Deloitte, Bills & Melinda Gates Foundation, Twitter, and Airbnb.
5 superpowers of OKRs
With the right strategic focus, your business can achieve great results. Seventy-six percent of successful companies confirmed that their focus is always on a limited set of strategic initiatives to achieve goals.
OKRs, formed in conjunction with your strategic priorities, keep your teams focused on what matters, saving you time and money wasted on distractions.
Highly aligned companies have 58% faster revenue growth and are 72% more profitable compared to misaligned companies.
OKRs are formed considering the dependencies and alignment between teams. They align with the overall business goals and can help drive your organization’s strategic and cross-functional alignment.
OKRs stimulate a results-oriented mindset in your teams, allowing them to work autonomously and take ownership of the results they achieve. This makes your teams self-motivated and engaged to do their best without micromanagement.
Tracking metrics quantify success and hold employees accountable. They offer you the space to recognize and work on deficits, celebrate victories, and promote strengths. Besides, who doesn’t want to know if they’re succeeding or stuck?
OKRs are measurable and can therefore be tracked and monitored. They’re transparent and make everyone’s performance public, keeping your teams accountable yet involved.
To determine how far your teams can go, you need to experiment and push their boundaries – and OKRs do that for you.
With stretched goals, OKRs lead to innovations. They encourage setting ambitious goals. Stretched OKRs are still goals and should be realistic for your teams to achieve.
Types of OKRs
There are two main types of OKRs. First is committed OKRs, which help you set objectives you can achieve, and the second is aspirational OKRs which help you set objectives that you aspire to achieve.
There is a third type of OKR, which is known as learning OKRs. These help you to keep a tab on new skill sets you need to learn for your professional and personal development.
Aspirational OKRs, also known as stretched goals or “moonshots”, are goals with a 70% achievement target. Your teams are unlikely to fully achieve these goals as they’re ambitious and visionary and have no specific or well-defined way of accomplishment. They’re also referred to as 10x goals.
Co-founder of Google
Example of an aspirational OKR
An example of aspirational OKRs for a food brand might look something like this:
- O: Capture the Canadian food market
- KR1: Onboard 80% of customers to overthrow the competition by the end of Q2.
- KR2: Open two new stores in Canada by this quarter.
- KR3: Achieve a 60% sales rate in Canada this quarter.
Committed OKRs are goal-setting commitments usually met with a 100% target. For committed OKRs, your teams have a specific plan of action on how they will approach the goals. Your teams need to adjust their resources and schedules to achieve their goals within the set timeframe.
Example of a committed OKR
An example of committed OKRs from a grocery brand might look something like this:
- O: Expand business to Canada
- KR1: Open two new stores in Canada by the end of this quarter.
- KR2: Achieve a 10% revenue rate in Canada this quarter.
- KR3: Reach at least 10,000 customers in Canada.
These OKRs shift your team’s focus from what they want to achieve quarterly to what they want to learn quarterly. These types of OKRs are used in cases where the goal is not defined.
Let’s say your teams have a great idea, but you’re not sure about the results. Learning OKRs can be your weapon. They provide you with the knowledge to move forward with the idea and formulate OKRs for the next quarter. Learning OKRs leaves room for experimentation and exploring new possibilities and aspects.
Example of a learning OKR
Here’s an example of learning OKRs.
- O: Get in-depth knowledge of OKRs
- KR1: Attend at least two OKR training sessions by the end of this quarter
- KR2: Interact with one OKR expert every week
OKR vs. KPI
OKRs and key performance indicators (KPIs) are both goal-setting methods that may look similar on the surface, but differ in several ways.
- OKRs enable you to set ambitious goals and achieve them with the right plan of action. KPIs measure the quantity or quality of activities, such as results that are already in progress.
- OKRs are action-oriented, while KPIs are result-oriented.
- OKRs can be set at different levels but ultimately relate to the company’s goals and strategies. KPIs are initiated for specific projects to scale or improve them.
- OKRs are adjustable and may be modified from time to time, according to business and market needs. KPIs don’t change often.
Simply put, OKRs are best for you if you want to improve the overall performance of your business or plan to scale. On the other hand, KPIs work best when you want to improve the performance of your team, a specific product, or a project.
How to write OKRs for your business
Writing OKRs may be a daunting task if you are doing it for the first time. You have to write and rewrite until you pen down the OKRs that work best for your business. Here are nine key steps to writing and rolling out OKRs in your organization.
- Start with understanding the goals and needs of your company. Understand your needs and create goals accordingly. Having a clear vision of what you are trying to achieve as an organization will help your teams form their OKRs around these visions.
- Choose the tool that will work best for you. The right tools will help you to brainstorm, design, align, and track your OKRs across all levels of the organization. Whether you are working with remote or in-office employees, tools can make your OKR functioning smooth and hassle-free.
- Communicate across the organization. Your teams will never achieve what you want them to do if you fail to communicate your expectations clearly. Likewise, a good communication loop is required to help each team member know what they are supposed to do within a fixed time frame.
- Develop the objective statements. Before you set about a journey, you need to decide where you want to go. Objectives are your destination when it comes to the OKR journey. So set a defined, ambitious objective statement before deciding on your roadmap to reaching the goals.
- Define the key results. Key results are the path that will lead you to your destination (AKA the objectives). Set measurable key results, but remember there will always be many ways to reach a destination – the trick is to choose the ones that suit your functioning and purpose.
- Map out the initiatives. After deciding the road to take, you will have to choose which vehicle will take you to your destination in the shortest possible time. Initiatives are the vehicles to reach your objectives and put the key results into action.
- Track your OKRs consistently. OKRs will only work when tracked and measured consistently. Leverage the selected tools for the purpose.
- Follow up and review. Check in with your teams and review their OKRs. Find out what worked and what didn’t to point out the areas of improvement.
- Recognize, reward, and celebrate wins. Lastly, don’t forget to celebrate and recognize the hard work of your teams. Without them, the objectives wouldn’t have become a reality for your organization. Reward them for their contribution.
You can also find many good examples of functional OKRs and take inspiration to create your own.
How to write objectives
The objective is something you aspire to achieve. In terms of OKRs, it is called the North Star. So to write a good objective, pause and identify your business’s North Star.
Below are a few questions you should ask yourself before finalizing your objectives.
- Does it align with the company’s vision and mission? Imagine what will happen if you want to go to London and board a flight that’s heading towards China. Now calculate the time, effort, and money wasted, along with the consequences. Not aligning objectives with your company vision and goals will result in a similar fashion.
- Is it meaningful? You need to write objectives that can help you achieve company goals. It must clearly define whether it is outcome-based or output-based.
- Is it inspiring? OKRs are meant to be ambitious to inspire you to step ahead of your pre-defined comfort zone. The set objectives thus should inspire your teams to experiment and be creative.
- Does it clearly define the goal? A meaningful objective will convey itself in clear and precise words. There shouldn’t be any superfluous or vague statements.
- Is it time-specific? OKRs are meant to be achieved within a short period of time and are usually set quarterly. To cater to this need, your objectives need to be time-specific. It has to be a goal that can be achieved within a set period of time.
How to write key results
Once your objectives are set, the next step would be to decide what your key results should be.
Key results will be the outcomes you will require to reach your objective. In other words, KRs will be the roadmap for your objectives.
Below are a few questions to ask yourself while writing your key results.
- Is it quantifiable? Key results should include numbers instead of binary results. They should indicate the milestones you want to achieve. For example, your key result would say “hire 3 content writers within 2 weeks”, rather than just “hire new content writers”.
- Is it measurable and time-bound? Make sure that your key results are put in measurable terms. It should indicate a measurable aim to be achieved before the deadline.
- Is it aspirational? Avoid sandbagging. Set ambitious targets instead of falling prey to under-promising.
- Is it achievable and realistic? Aspirational doesn’t mean unrealistic or unachievable goals. So make sure your key results are inspirational but are not impossible to achieve.
- Is it specific? Use specific numbers, measures, and precise terms while writing key results. It must avoid ambiguity.
Once you are done writing the OKRs, the next process of implementing them begins. Here are a few tips for you to successfully implement OKRs at your organization and turn your dreams into reality.
- Make yourself familiar with the OKR framework and how it’s going to help your organization. Don’t rely on secondary sources only. Do your research and talk to industry experts if required. Evaluate the changes you want in your organizational performance and whether the framework can help you initiate those changes.
- Get all your team members across all departments to understand OKRs and ‘what’s in it’ for them. This will help your team members better adopt and adapt to the changes that the OKR framework will bring to the overall function of your organization.
- Inspire your teams with success stories of great companies who have reached new heights with OKRs. Help them understand why it worked for these companies and why it should work at your organization.
- Decide your OKR approach and framework. Every company or startup has different requirements and goals. They have their unique ways of functioning. Choose your OKR approach and framework as per your organizational needs, instead of blindly following the footsteps of another successful organization.
- Define your company’s vision and mission. As already mentioned, you need to have a clear company vision to help your teams decide on their priorities and set OKRs accordingly.
- Set an OKR rhythm. Establishing a rhythm can help you achieve smooth OKR functioning at your organization. Set your OKR rhythm that best suits your pace to accelerate organizational performance.
- Write the OKRs at different levels of your organization. Setting company-level OKRs won’t be enough if you are a large organization functioning across multiple departments and levels. To make OKRs work best for your organization, set OKRs at different levels of the organization, like company-level OKRs, department-level OKRs, team-level OKRs, and individual OKRs.
- Run a pilot OKR if you are rolling them out for the first time. The first time can be scary. There might be doubts about how far the framework will work for your teams. It’s more about experimenting, hence why industry experts usually prescribe piloting OKRs with one or two teams to start, and then eventually expand.
- Align your OKRs with company strategy and vision. Maintain this alignment not only while writing company-level OKRs, but across all levels of the organization.
- Evaluate, monitor, and track the progress constantly. Evaluate the strengths and drawbacks, monitor how far the goals have been achieved, and track the progress in quantifiable terms. You can utilize tools for the purpose as well.
- Iterate for the next cycle. Use all the experiences and learning your teams have gathered and repeat the cycle in the next quarter. Exclude the flaws and highlight the strength while planning OKRs for the next cycle.
To make OKRs effective, you will have to track your progress regularly. This will help you spot the obstructions and weak points to avoid achieving better outcomes. It’s essential to keep your employees aligned and help them stay on the same page.
Weekly and monthly OKR check-ins
These check-ins will help you monitor the progress of the key results, find obstacles (if there are any), learn from your mistakes, and employ the lessons learned to make OKRs more effective.
Integrate OKRs with 1:1s
This will help you track individual and team performance. It will also enhance employee model accountability and engagement.
Implement OKR scoring
OKR scoring is a measurement of whether key results are achieved. It also helps you track how far they have been achieved. You can score OKRs on a scale of 0.0 to 1.1.
There are many free and paid OKR tools available on the market. You can even use pen and paper for writing and tracking your OKRs.
However, manual OKR tracking can be exhausting. An OKR software can give you a central space where all the work and progress can be documented. It not only tracks everyone, but also makes metrics easily accessible.
Pen and paper
If you are a small company of 3-4 employees, a pen and a paper are all you need to write and track your OKRs. You can consider printing the sheets later and pasting them all over the walls so that your team stays driven and focused on their priorities.
Google Sheets are easy to use and maintain. They can be shared with everyone and thus makes the OKR progress tracking more transparent.
OKRs are evolving in nature. Google Sheets let you change and edit your OKRs transparently when required. For example, any changes made by the sales team in their OKRs in the Team tab will get displayed in the Dashboard tab. You can also add OKR cycle-related information.
OKR software makes tracking OKR progress at all levels (company, departmental, team, and individual) more effective, easy, and error-free. It helps you better support your teams and keeps them aligned.
OKR software ensures that you provide all the resources your teams need for OKR matters and holds up your performance management system.
Many OKR software options are available in the market. You might feel overwhelmed while choosing the one best for you. To make the process easy for you, here’s a list of features you should be looking for in your OKR software.
The use of OKR software is becoming increasingly popular among organizations that use OKRs for goal setting. When it comes to aligning teams and tracking their performance, a dedicated OKR tool can be very useful.
Features to look for in an OKR software
With so many choices available, it’s important to choose the right one. Below are some pointers you should consider before choosing an OKR software.
- Simple interface
- Allow review and feedback
- Align and cascade OKR
- Reports and analytics
- Follow-up and check-ins
- Allows transparency
- Goal mapping
- OKR dashboard
- Option to comment
OKR and performance appraisal
OKR is a management tool. You shouldn’t mix OKRs with performance appraisals. Performance appraisal is related to an employee’s ability to perform and the related compensation.
While OKRs are about setting goals and determining a clear path to achieve the desired outcome. It’s wrong to use OKRs for performance appraisals (PA) because OKRs don’t include daily tasks done by employees. It can be part of the PA process, but not the wholesale criteria of doing PA.
In addition, when OKRs are linked with PA, it can hamper your entire OKR framework. Because when employees won’t be able to achieve the set OKRs (which is not uncommon as OKRs are mostly aspirational), they will get demotivated and feel less engaged. It may also result in employee burnout.
In other cases, you might find employees setting low OKRs, which can be easily achieved. As a result, OKRs will simply lose their significance.
- Setting easy goals: OKRs are meant to encourage, inspire, and stretch your team’s limits. When you set easy goals, OKRs lose their significance, and you will not get the expected growth.
- Setting a goal that is far from achieving: OKRs encourage you to set ambitious goals. But don’t confuse ambitious goals with impractical ones – a common OKR mistake that can ruin your business. Your OKRs always have to be practical, realistic, and achievable.
- Lack of data-driven goals: Your OKRs should not be vague or ambiguous. They shouldn’t be just qualitative, but quantifiable, as well.
- Lack of clarity about the goals: OKRs can’t bring the desired results if you are not sure about what you want to achieve in the first place.
- Benching OKRs as criteria of performance management: As discussed above, OKRs and performance management should run parallel but never intersect. Never commit the mistake of using OKRs as benchmarks for performance evaluation.
- Implementing OKRs at once for the entire organization: It ‘might’ work for some people, but what if it doesn’t work for you? Your teams will be left demotivated about the entire OKR process on top of wasted time, resources, and money. It’s always better to run an OKR pilot before expanding it to the entire organization.
- Set and forget the OKRs: OKRs must be checked, monitored, and tracked regularly to get the most out of them. If you set and forget, the entire system will fall, and everything will have to be rebuilt again.
- Setting too many objectives: Too many objectives distract and confuse your teams, shifting the focus from what’s most important and making OKRs lose their essence.
If you ask someone to sum it up and tell you why you should go for it right now, you won’t get a one-liner answer.
Although the framework is pretty simple, as you have already read, OKRs stand out from other goal-setting frameworks for several reasons, including their:
- Applicability to different settings and business dynamics
- Elastic nature
- Quantifiable essence
OKRs are not a silver bullet, but if implemented correctly, they can help your organization achieve hypergrowth through the five superpowers. OKRs can help you strengthen the foundation of your organization and increase your operational excellence.
Now that you’re an OKR wiz, it’s time to help your marketing team accomplish targets that align with business goals. Learn how to assign KPIs to marketing objectives.