OKRs (objectives and key results) 101–what are OKRs
April 9, 2019

OKRs (objectives and key results) 101–what are OKRs

What are Objectives and Key Results (OKRs)?

Objectives and Key Results (OKR) is a powerful goal-setting methodology that drives alignment, performance, and results in growing and high-performing companies. At the most basic level, it is a simple tool to align and engage everyone at the company around measurable goals. It is a management goal-setting system and methodology that helps to focus everyone’s efforts on the most important priorities and connects the work of employees to what truly matters at the organization. The OKR methodology is a shared goals system which creates clarity and aligns your organization, connects everyone to your top company goals, increases performance and drives better results.

Since Google began using OKRs in 1999, this framework has revolutionized goal-setting and has become the standard for aligning company goals with employee goals for the world’s best-performing companies including Linkedin, Oracle, Twitter, Anheuser Busch, BMW, Amazon, and many others.

We will explain the basics of how OKRs help organizations improve execution, create organizational clarity, achieve a higher level of productivity, and ultimately succeed.

The OKR formula.

John Doerr’s formula is a great place to start. “I will accomplish ‘X’ Objective as Measured by ‘Y’ Key Result.”

This helps with the process of choosing your company’s top objectives and deciding how progress towards them should be measured. The OKR process depends heavily on setting measurable goals.

In this formula, Objectives are your company goals for the quarter. They are measured by Key Results (to follow). They should be clear, ambitious and inspirational so that employees at all levels understand the company’s primary goals and get on board.

Key Results reflect the outcome of your Objective’s accomplishment, for the specified period, typically, by the end of the quarter. 

Each Objective needs one to three key results. For greater alignment, OKRs are often used at all levels. This helps to ensure that everyone in the company is in line with your goals. 

Examples of OKRs at all levels.

Example 1

  • Role: Sales Executive

    • Objective: Achieve Exemplary Sales Performance

      • Key Result: Increase sales revenue by X

      • Key Result: Maintain average win ratio of X

      • Key Result: Increase annual subscribers by X

Example 2

  • Role: Marketing Executive

    • Objective: Drive Revenue Growth

      • Key Result: Acquire X Marketing Qualified Leads

      • Key Result: Contribute X through online sales funnel

      • Key Result: Carry out targeted customer acquisition promotion

 

Throughout the quarter, you must perform check-ins with your staff to keep track of measured progress. It is important to define your OKRs in accordance with top company priorities to make sure you are working towards the right goals.

7 benefits of using OKR goals.

  1. Align your company: OKR goals inform and align everyone’s work at your company to the top corporate objectives.

  2. Create clarity and focus: everyone knows their clearly defined goals and the entire company focuses on the things that matter most.

  3. Connect employees to your mission: connect your employees’ work to your company’s mission–this impacts your employees’ performance and your company’s results.

  4. Improve continuous learning: Through frequent check-ins, OKRs offer your company faster learning and improvement that drive better results.

  5. Accountability: Monitoring and measuring your key results and key performance indicators improve accountability and execution.

  6. Create transparency: OKRs bring transparency to your company, everyone see what others are working on driving collaboration and better performance.

  7. Accelerate your results: Through clarity, focus, alignment, connection and continuous learning, your company will accelerate performance, driving better results.

The value of goal alignment and check-ins.

OKRs ensure that your staff is working towards the company’s primary goals. An OKR must-do is participate in weekly check-ins. This weekly check-in ensures that your employees are on the right track. This may sound like a significant time commitment; however, check-ins are typically one hour or less and can reduce the time spent in meetings. If employees are struggling, guidance is provided, through one-on-one closed-loop meetings.

At larger companies, a CEO or executive manager does not have time to do this with every employee. Ordinarily, they would conduct goal-alignment Check-Ins with their direct reports, and subsequently, those executives would do Check-Ins with their team members. If individuals develop their OKRs with their manager’s input, the team understands precisely what they are supposed to be doing and how it relates to the company’s major goals for the quarter. This is what it means to be aligned, the result being a much more efficient and productive operation.

Note that setting OKRs is not complicated–it’s simply goal-setting in a way that is aligned and transparent. However, it can become slightly confusing when companies are just starting to use the OKR methodology without prior experience or when significant internal alignment is required. The good news is that all of this can be learned. When done consistently and in a disciplined manner, you and your team will become much more adept at the OKRs process and improve productivity.

The OKR system is an enabling mechanism for more effective, efficient, aligned, and high-performance business operation. It leads to operational excellence. It creates clarity and accountability for everyone in the company. 

History of OKR goals.

Cadence of OKRs.

There are no hard and fast rules of OKRs. It is an open source framework, unlike GAAP (Generally Acceptable Accounting Principles), in financial accounting. This affords companies a great deal of latitude in how they adapt the program to their culture and unique business situations. Frequency in setting OKRs is one of those areas of flexibility.

It may make sense to ease into OKRs. There is no religion and no one-size-fits-all. The best OKR cadence is the one that fits the context and culture of your business.

The default answer for “how often?” is quarterly. Some companies set OKRs every month, but that can quickly become overwhelming as the key to OKRs is planning, and planning takes time. We think it is better to set a quarterly OKR, ensure that everyone follows the rhythm of checking in and that about 10% achievement is occurring during each of the 13 weeks. Check-ins provide an opportunity for thorough reviews and course-correction.

Some objectives may need to span two or three quarters, or even an entire year, (basically annual goals). Many companies use a “dual cadence” of quarterly and annual objectives. Your organization’s needs ultimately determine cadence; the operative word is “consistency.”

Objectives.

  • An objective states “what” (what you want to achieve). It's a title that names a set or a group of Key Results

  • An Objective (in OKRs) is a “strategic theme”–it is a qualitative headline, an overarching theme of what you want to accomplish

  • It is qualitative because it is just a name of a group or a set of key results (i.e. and key results are used to measure the objective)

  • Quarterly cadence–you don’t want to set objectives monthly, try to stick to four per year

  • Each objective has 1- 3 key results which measure success against the objective

  • Google suggests: “Use expressions that convey endpoints and states, e.g., “climb the mountain,” “eat 5 pies,” “ship feature Y.””

Key Results (KR’s).

  • Key results are quantitative, the “target” that you seek (it is not a task)

  • Key results answer “how” you will achieve the objective, or how you will know if you succeeded

  • It is a “measurement” of the objective—KRs help you measure the progress made on your objective

  • A key result is very similar to a KPI (Key Performance Indicator), it’s written in such a way that it’s like an MBO (Management by Objectives)

  • Key results show progress against objectives

  • They can be milestones qualitative, but measurable by “Complete/Incomplete” or by % attainment

  • Or they can be a metric—quantified with a number ($ or monetary value, # of units, etc.)

  • Google suggests: “Key results should describe outcomes, not activities.”

Key results can be thought of as measurable steps to achieve the objective. They must be measurable and ideally should be quantifiable.

Key results vs. contributing goals.

When creating goals, please note that there is a slight difference between Key Results and subordinate Contributing Goals.

Key Result

A key result is what measures the progress of the goal. A key result is owned by the individual who is assigned the goal. Thus, this KR is updated only by the individual who owns the goal that is measured by this KR.

In many cases, at the senior levels, executive levels, group levels, and team levels, you will not see key results. Key results will typically only be seen at the bottom of the goal alignment tree. 

KRs will be owned by the junior-most hierarchy of employees who are in the system and have been assigned goals. These employees will own the key results and will update performance. Those above them will not have KRs and will instead receive automated contributions from contributing goals below them.

Contributing Goal

A contributing goal mathematically contributes to a higher-level goal using the same math contribution as a key result. The most important difference is that the contributing goal is owned by someone else, not by the owner of the more senior goal to which it is contributing.

Thus, a contributing goal is a more junior goal, aligned to more senior goals, driving progress towards the senior goal. You can think of it in database node relationship terminology as a “child to parent” relationship where a junior goal (child) is linked (aligned/contributing) to a more senior goal (parent). In most instances, a junior goal is not less important, but is simply owned at a lower level of the organizational hierarchy. 

For example, the CEO owns the very top goals of the organization, and thus those are the senior-most goals. And then a Marketing VP or Sales VP will own goals of their departments, and those will be the junior goals/contributing goals with respect to the CEO’s goals.

Contributing goals may have key results or may instead have junior contributing goals. The latter example is referred to as “cascading.”

What is unique about OKRs?

OKRs are unique in several ways:

  • OKRs communicate the top company objectives more clearly, accurately and consistently

  • Focus everyone’s effort on priorities & what really moves the needle

  • Align goals throughout the organization towards the key top goals

  • Give employees meaning & purpose (they see their contribution)

  • Allow for several measurements/KPIs to measure the objective, not just one like MBOs

  • Frequent progress check-ins and progress drive better execution

  • They create unparalleled transparency, accountability and empowerment

  • Strategic—they emphasize results and outcomes, not tactical tasks or activities

  • They tap into the collective wisdom of your group and are both top-down and bottoms-up

  • Help managers be more effective and improve coaching and continuous learning

  • OKRs are designed for operational teams to execute effectively, not just for HR

When writing OKRs, use simple, direct sentence structure. Phrase OKRs in the language that’s most relevant to the targeted group or individual so that they have a concrete understanding. 

Use action verbs to make them more powerful and clear – that will also ensure KRs will become more actionable and easy to understand when they are cascaded down as objectives.

How to use OKRs.

Your company’s OKR approach will vary from that of other organizations, each company has subtle nuances, but there are some best practices to keep in mind when implementing OKRs.

Quantify (use numbers).

It’s ideal if both the objectives and each of their key results are quantifiable. Avoid ambiguity and subjective language when composing OKRs so that you clearly define Objectives and the steps needed for execution. This practice will provide you with a target against which you can measure progress. Google believes that “it’s not a key result if it doesn’t have a number.”

Collaborate.

More than half of your OKRs should come from the bottom up. This allows leaders and lower-level employees to collaborate, align priorities, and provide upper-level management a different perspective. Not every employee’s OKR will be a company-level objective, but each individual’s OKR must contribute to the overarching organizational goals.

Maintain frequency.

Make OKRs a part of the weekly process. While OKRs are determined at the start of each quarter, they must be acted on daily and checked on a weekly basis. When a CEO, executive, or manager meets with their people each week to review progress, they must ask: “Where are you with regard to your objectives, what are the bottlenecks in meeting your objectives, and what do you need from me?” This develops check-ins and feedback as positive habits.

Keep it positive.

Avoid turning OKRs into a performance review. Not achieving 100% of an OKR should provide learnings, data, and indicators about what not to do next quarter. We believe it’s advisable if some portion of a bonus is tied to “operational” OKRs, (not “aspirational” goals). OKRs are not meant to be a central issue in performance reviews. There should be more to performance reviews than achieving a given OKR. OKR achievement should always be assessed in the right context when discussed in performance reviews. This creates an opportunity to assess why an objective couldn’t be met, which key results were too difficult, and how to address obstacles going forward.

Impose a limit.

Never assign more than four or five objectives per quarter. Also, avoid having more than three key results for each objective. Keep it between four or five objectives, with one to three key results for each. More than this will require too much “intellectual juggling,” and individuals won’t be able to dedicate enough time to executing each OKR.

Key Tactics

Key tips for effective implementation of objectives and key results:

  • Make annual goals and break them up into quarterly objectives. This creates long-term and quarterly clarity and focus.

  • Set top company objectives first This allows you to set the top priorities to which everyone can contribute and align.

  • Set the shared departmental, group or team objectives It's important to set shared OKR goals that belong to the actual department, group or team and not just to individuals.

  • Designate a DRI (Directly Responsible Individual) for every OKR. There is a saying that "without responsibility there is no accountability"—DRI needs to help drive the achievement of the OKR plus do the retrospectives for continuous learning. Also, the DRI doesn’t need to be the group manager—they can just serve as a project manager or owner of the OKR.

How goal cascading and alignment works.

To manage OKRs effectively goal cascading is crucial for medium to larger sized companies.

Insights from Google

“In late 1999, John Doerr gave a presentation at Google that changed the company, because it created a simple tool that let the founders institutionalize their “think big” ethos.”

– Eric Schmidt, Google

Google has shown the world the power that can be honed through the use of OKRs. Now that OKRs have existed for over a decade, we find ourselves able to learn from our predecessors. Using these insights from Google, you can make more informed decisions about where you can go to strategize the process even more, optimizing alignment, engagement, and extraordinary results. 

Here are the top 15 insights we collected from Google’s video:

  1. Companies should fight the urge to say: “Well that’s Google, we can never be like them.” As Klau put it, Google wasn’t Google until they began using OKRs–it was just a “young and ambitious” company. In other words, it could work for any company.

  2. The reason Google was so attracted to OKRs is because they provide data. The setting, tracking, and measuring of objectives and their corresponding key results provides concrete data, which can be used to benefit any organization.

  3. OKRs are connected across the individual, team, and company levels. Klau uses the example of a football team: the head coach, defensive coordinator, and individual player each has his own set of OKRs, but they are all connected to the overall goals of winning games and selling tickets.

  4. Objectives should be a bit uncomfortable. As Klau puts it, if you know you’re going to nail it, you’re not trying hard enough.

  5. All OKRs contribute to company-level goals, but each individual’s OKRs are not necessarily a company-wide priority. Back to the football analogy: although the defensive coordinator may not be concerned with getting a feature in the Sunday paper like the PR team is, each team and individual’s OKRs align back to the main priorities; playing well and driving attendance.

  6. OKRs inherently create discipline and transparency within an organization, because everyone can see what everyone else is working on.

  7. The writing and collaborating processes of developing OKRs often becomes a cyclical process – Klau uses the term “virtuous cycle.”

  8. Allowing individuals to be a part of the OKR writing process creates new discussions, and perhaps even provides new insights for upper-level management.

  9. More than half of objectives should come from the bottom up; in order for OKRs to be effective, they cannot all be dictated down from the top.

  10.  It’s important to understand the difference between objectives and key results. Klau explains the two by using examples of actual OKRs that he composed in the past.

  11. In his examples of past OKRs, Klau refers to making a “measurable impact” with Blogger–but we wonder if that phrase could be better defined. A “measurable impact” to him might not be the same as to another person. This one wasn’t so concrete and failed to have a number.

  12.  Low scores on OKRs should not be viewed as failures, because they still provide data and can act as a roadmap for subsequent quarter’s objectives.

  13.  According to Klau, OKRs “don’t take a ton of time.” He further says that leaders can establish a rhythm very quickly when it comes to implementing and grading OKRs.

  14.  Klau says you only need to have one or two one-on-one meetings per quarter. Because data and feedback are crucial, weekly one-on-ones may better facilitate the OKR process. Having regular check-ins could prevent the need for the lengthy quarterly meetings Klau kept referring to, as well as formal, antiquated performance reviews.

  15.  In response to a question about when a management team should adopt OKRs – Klau answers, “as soon as possible.” He says even if you’re a team of five, the earlier you adopt OKRs, the easier it will be.

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