OKRs
Objectives and Key Results
The Ultimate Guide
OKRs make it easy for you and your team to know what's important
While this detailed guide is about OKRs, Objectives and Key Results, it's really about goal setting and being a bold, ambitious leader or manager for you and your organisation. The unique thing about the OKR system is that it's so simple. Although despite its simplicity, approximately 80% of small businesses don't track their goals. If you're in this group, you have a great opportunity moving forward. For sure, OKRs can't fix everything, such as replacing the culture of your workplace or transforming less than effective leadership. But what they can do is help surface the right priorities that you and or your team should be focusing on and help point you and them in that direction.
Today, many successful businesses use OKRs to help grow their organisation, from Intel to Google. But don't worry if you've never heard of OKRs or aren't sure what they are because we have you covered.
What Are OKRs?
So now, let's get into it and learn more about OKRs.
OKRs were first introduced to the business world when author and venture capitalist John Doerr showed Google founder Larry Page the beauty of this simple goal-setting framework.
What does OKR stand for?
The acronym OKR stands for Objective Key Results. And the simplest OKR definition is that they are a straightforward system for enacting change within your organisation. Every organisation has a mission or purpose, and OKRs are an excellent vehicle for turning that mission or purpose into action. However, the challenge we've all encountered is that many organisations and leaders today can share their mission and visions but don't do as good in articulating how to get there, including what measurements, milestones, and markers are needed to show progress.
Do you recognise or have you experienced this situation? You're a crucial member of the team where you love the mission and organisation, but the process (or lack of a system such as OKRs) is getting in the way of actually getting real work done. Whether you're an executive or a project leader, the OKR goal-setting system has a powerful ability to turn what you want to get done into an incredibly concise way to articulate it in a way that adds a layer of measurement and progress, and ultimately a way that you can use to communicate with your team.
As outlined above, OKRs are in two parts. You have an objective and a set of key results. An objective is the what. It's the thing that you and your team are setting out to do and the time frame for them. You know, we can think audacious and think two to five years out. But to make the best use of this goal-setting system, you're going to want to think, what's the most important things we're trying to get done in the next 90 days or even 30 days? And once you articulate that objective, it becomes the rallying point for your team. And what are the key results? If objectives are the what, then key results are the how you get there. And a great set of key results are the measurable benchmarks and milestones that show you're making progress.
OKRs vs KPIs
Today you could be more familiar with KPIs, Key Performance Indicators. And many organisations use KPIs, which are a list and set of measures. But the difference between KPIs and OKRs is that OKR conveys intention.
While KPIs are business metrics that reflect performance, OKR is a goal-setting method that helps you improve performance and drive change. So KPIs let you know what you need to analyse to determine the basis for your OKRs. Both OKRs and KPIs are measurable and reflect the team's performance.
In short, your KPI will show you what metrics to measure to see growth in your business over time. In contrast, your OKR will direct your path in telling you what you should focus on each day in your business and what activities align with your goals to help you reach them.
When you have a trackable system you can follow, you can begin to see how your daily activities contribute to your overall goals. Too many times, employees find their days filled with busy work and meetings. However, knowing your quarterly and annual goals can make it easier to plan your day around reaching them.
OKRs follow a simple formula as shown here:
- I will attain (Objective) as measured by the following (Key Results).
While the formula may look deceivingly easy, in reality, it takes some practice and discipline to get it right. We will cover this in more detail throughout this guide.
Why you need OKRs
Following an effective OKR methodology can help you and your company see many benefits.
Some of the more common ones are:
- Focus
- Alignment
- Engagement
- Transparency
- Accountability
Let's look at some of the top benefits in more detail:
Building Clear Goals Provides Focus
Having clear goals is imperative to growing your business. However, many business owners find it challenging to articulate their goals to their team. And, unfortunately, many more business owners never take the time to sit down and create their goals.
A system such as OKRs can help you articulate your goals so your team knows the key priorities to focus on; outlining the actionable key results is imperative to help reach your goals.
Too many business owners set a goal such as "Make XYZ next year" without breaking down what actions and key results are needed to reach that goal, much less outline where you are now and what sort of growth entails getting there.
Building Alignment to Maximise Performance
The OKR goal-setting system helps align organisations from the company-wide to individual-level objectives. Without alignment, separate departments and employees can diminish the impact of their efforts by pulling in too many different directions. Cascading OKRs enables a company to maximise its performance by moving forward together.
Alignment happens in two ways, either absolute or guiding. First, we have absolute alignment, and that's when you take a key result from someone else's OKR and make it your objective. Sometimes it's given to you because it's a leadership team articulating their OKRs and saying this key result should be your objective. But often, it's a mutual agreement that this is an OKR that you're going to take. This key result is what you want to lead your team on. So, you're bringing this milestone, this measurable thing and turning it into your objective. And then, it's your task to come up with the three to five key results that show how we get there.
Next, we have guiding alignment, and that's not where you're inheriting a key result - top-down, but it's when you're using other OKRs within your organisation as a guide for yours being able to choose how you align your OKRs.
Alignment happens when you want your teams to be rowing in the direction. And that's why it's so essential that the OKR system is transparent. Not just your team to see what's happening, but all groups across your company, as it takes the collective to get it right.
Tracking and Measuring Your Success
Individuals want to drive their success. They don't want to wait until the end of the year to understand whether they passed or failed. Instead, they want to know how they're doing while doing it and what they need to do differently. Under the OKR system and using gloo's partner's technology platform/hub, your employees can get precise performance feedback (in some cases on demand). Having everyone tuned into knowing where they stand and how they're contributing value to the company.
When creating OKRs, you have specific milestones to attain growth/progress. Therefore, it is vital that you make SMART goals. You can't track and measure your success; if you don't, write clear goals with quantifiable actions from the outset.
Some thoughts below from Paul David Hewson KBE, better known by his stage name Bono, the lead singer of U2. Here are his views on OKRs:
"So you're passionate, how passionate, what actions does your passion lead you to do? Your passion means nothing if the heart doesn't find a perfect rhyme with the head. The OKR framework cultivates the madness and chemistry inside it. It gives us an environment for risk for trust, or failing is not a fireable offence. And when you have that sort of structure and environment and the right people, magic is around the corner."
Taking on the OKR method is a way of thinking, working and achieving, which is akin to becoming a Black Belt in strategic execution. – where woolly wording and overly idealised marketing speak isn't effective and finds no home unless it converts into a quarterly, prioritised Objective that links directly to the higher-level Objectives in achieving goals and targets as part of your overall strategic mission. Helping you and your teams pave a new way forward ensures you keep up with your trading environment and industry demands. It is ultimately enabling you to stay ahead and outperform competitors.
How to create OKRs that work
Good OKRs are the detailed criteria that help communicate to your team if you're successful or not in the actions that you decided to take together. That information helps your team understand if they need to course correct or change action, and that's why using a technology OKR platform such as gloo's partners hub for OKRs, allows you to present all your OKRs transparently to your organisation. So this becomes a robust and transparent communication tool to improve your entire team's execution and continuous improvement efforts. When you follow a proven path, you can ensure that you're creating a system that is clear, transparent, and easy to follow for everyone involved.
It can be challenging to create great OKRs, so we've outlined the four steps you need to take to ensure that you're creating objectives and key results that will drive your goals forward and not add more confusion for your team.
Pick the Right Objective (Tip: Objectives are not BAU)
OKRs describe a future state of where we'd like to get to in a specific amount of time. The objective is the description of that goal. What is the endpoint you are trying to reach? Most organisations describe a high-level goal of what they're trying to accomplish within a year. But with OKRs, you typically work at a shorter frequency. Where are you trying to get to in the next 90 days? Some organisations say the next 60 days, and others may say, what are you trying to get done this month?
Let's focus on just the 90 days since that's the most common use case. However, before picking the right objective, it is essential to remind yourself of your organisation's mission.
- Why are you here?
- Why has this team come together?
- What's that target in the sky thing we're all going after?
You're objective is your North Star, a clear picture of the direction you want to go. Next, outline the most important thing you're trying to accomplish?
- What do we want to change?
- What are we going to try to start doing?
- Stop doing?
- What does success look like upon completion?
All of the answers to these questions can begin to articulate those lists of priorities and potential objectives that you can pick from your process.
It is essential to note that the OKR framework is not the sum of everything. Instead, the framework focuses your team's attention on what's important. So if your list is long, this is that moment to start to whittle down, prioritise, and maybe merge and combine. But the ultimate goal is to come up with the two or three objectives that matter the most that answer those earlier questions posed above. But remember, OKRs aren't forever. So you would typically hold on to these for 90 days. Then, after that, ask yourself those same questions again at the end of that period.
- What's the most important thing we need to do?
- What do we need to change?
- What do we want to see different?
What you're doing is setting up a framework for enacting change within your organisation? You get into this rhythm of always asking what's vital of resetting and lifting the bar every time you do this cycle. For some teams and companies who adopt an annual or biannual year planning process, the OKR Goal Setting system lets you adapt and change more frequently and respond to the ever-changing world.
As you're narrowing down your objectives, you might be wondering, are these any good? Objectives should represent what you want to see in your organisation and team. So it is crucial to get feedback and refine before you launch your selected objectives more widely/officially.
Finally, when reviewing your Objectives, here are three final summary checks for you to consider:
Is the objective meaningful?
- Is it a top priority?
- Does it convey a clear direction?
Is it bold?
- Is the outcome taken for granted, or does it take what you do every day to the next level?
- Does it represent a significant change from where we are today?
Does it inspire?
- Is the Objective easy to remember?
- Does it empower your teams?
Determine What You'll Measure
When writing your OKR, keep in mind lead vs lag indicators.
In simple terms, think about them as something that happens or things you do.
For example:
Objective: Become cash-flow positive
As a first step towards profitability, we need to become cash-flow positive by the end of Q2 2022.
KR1: Increase cash collection to $1.2m by the end of Q2 2022.
KR2: Expenses below $1.1m by the end of Q2 2022.
KR3: Quarterly growth at 40% by the end of Q2 2022.
This set-up provides the right tone and gives you more control over reaching your goals, as you can only control what you do each day.
Write Specific Key Results
Effective Key Results have some common characteristics that you can check against to make sure they're doing their job:
Are they specific and time-bound?
- Is it stated what needs to occur and by when?
Are they aggressive yet realistic?
- Are they aspirational but not wildly unattainable?
Are they measurable and verifiable?
- Is there clear success criteria that can be measured/verified?
Here is an example based on a Marketing Leader's OKR for the end of Quarter 1 2022:
Objective: Nail the value proposition on the homepage
Key result 1: Reduce homepage bounce rate below 40% by the end of Q1 2022.
Key result 2: Achieve a 3% click rate on the main call-to-action by the end of Q1 2022.
Key result 3: Achieve a 5% watch rate of explainer video by the end of Q1 2022.
Create Your Plan of Action
Finally, it would be best to create an action plan or playbook so your team knows what is expected of them each day.
Many businesses that adopt OKRs improve employee engagement because everyone can see how their actions help reach the company goals.
Summary
- Effective OKRs represent meaningful change, improvement and growth. They're your priorities for the next 30-90 days.
- Effective Objectives are meaningful, audacious and inspiring.
- Effective Key Results are specific and time-bound, aggressive and realistic, and measurable and verifiable.
OKR Examples
Now let's look at some OKR examples so you can get a better idea of what to set for your own goals.
Company OKR Example:
Objective: Make our company profitable by the end of Q2 2022.
Key result 1: Increase MRR to $100k by the end of Q2 2022.
Key result 2: Keep customer churn below 15% by the end of Q2 2022.
Key result 3: Lower operating expenses by 8% by the end of Q2 2022.
Example of CEO OKR:
Objective: Build a world-class sales and marketing team.
Key result 1: Hire five telemarketers by the end of Q1 2022.
Key result 2: Increase employee retention to 95% by the end of Q1 2022.
Key result 3: Achieve employee NPS of +50 by the end of Q1 2022.
Reaching your goals with OKRs
Be sure to bookmark this article so you can come back to it each time you review your goals and set new objectives and key results.
If you and your team find yourselves stuck in unclear and unmeasurable goals, then you need to spend the time to get clear. Unfortunately, too many businesses make the mistake of thinking that they can't afford the time to sit and work on their goals or objectives. However, if you don't, you'll find yourself working on the wrong things and not seeing the level of growth you want for your business. Instead, invest in your business by investing in your goals.
Click here to set up your free 30-minute strategy consultation so we can show you how setting clear goals can help you focus and grow your business, faster than your peers. Also, register with us below to stay in touch with the latest news, developments and offers.
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Reaching your goals with OKRs
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