Objectives and Key Results, OKR:
What is an OKR?
OKR (Objectives and Key Results) is a goal setting methodology designed to track progress, and align teams around high-level measurable goals. This framework when properly utilized improves team focus, productivity & transparency within the organization.
The OKR method has rules that help employees prioritize and measure the outcome of the work they do.
The Objectives define what is to be achieved. They must be concrete, inspiring, difficult to reach, and time-bound. Like stretch goals, OKRs are designed to be difficult to achieve.
Because setting ambitious goals improves processes, and drives innovation. Here's an example: doubling quarterly revenue.
A Key Result is a metric with a starting value and a target value that measures progress towards an Objective. The Key Results determine how you get there, they are like signposts that show how close you are to your Objective.
Key results quantify the objectives enabling you to measure progress.
The objective above can be gauged thanks to several key results:
- X thousands of turnover via google ads
- sign 4 up-sells with our strategic clients
- double the acquisition of new customers through prospecting
Initiatives describe the work (tasks, projects…) needed to achieve the Key Results.
Key Results measure progress toward an Objective, and Initiatives are hypotheses for what work might deliver the biggest impact.
If the objective is where we're going and the key results show how we're getting there, the initiative describes what we could do to get to the location.
Monitoring your Key Results will help you decide whether your Initiatives delivered the desired results or not.
Here’s an example of an initiative linked to the key result "X thousands of turnover via google ads": Set up a google ads strategy and create a specific landing page for each keyword.
For the key result “sign 4 up-sells with our strategic clients” we can offer strategic sessions to customers. According to their current context & needs the appropriate adjustments can be made.
For "double the acquisition of new customers through prospecting" we can set up an effective Social Selling Strategy relying on valuable content.
OKRs must be defined by company levels.
Subsequently, each team, each manager, and each employee can create their own OKRs:
- Corporate/Company OKR: The vision and purpose. The company objectives.
- Team OKR: These are the priorities of a team, not a compilation of individual OKRs.
- Individual OKR: These are the missions that employees need to focus on.
What's the history of OKRs?
The OKR process was created in the 1950s by Peter Drucker, under the name “Management by Objectives”. This method was taken up and introduced in the 1970s by Intel CEO Andy Grove.
He uses this method in order to make a strategic change in his business. In his highly competitive market, Intel was able to beat the competition with clearly defined objectives by tracking progress. It enabled teams to correct errors quickly throughout the process.
In 1975, John Doerr, one of Google's investors presented it to Larry Page and Sergey Brin, who introduced the process to Google. They still attribute much of their success to the OKR method today.
If you want to know the whole story we encourage you to read ”Measure What Matters” by John Doerr. It is one of the best books on strategic planning you’ll ever read.
In 2020, companies like Apple, Microsoft, or Amazon routinely leverage OKRs, driving innovation and setting stock market records.
The advantages of OKR
Employees using this framework are more productive, resulting in increased performance and profits at all levels.
But the biggest impact for businesses is the cultural changes that take place once the method is set up. It allows the development of three essential points: focus, transparency, and alignment. By working together, these three factors lead to stronger employee engagement.
Employees feel better thanks to a better understanding of what their efforts are going to serve. Everyone can see how individual goals are progressing, and if the company is growing well. It’s a simple and effective way to ensure that your objectives support the business strategy.
OKRs should be transparent. This is necessary so that the WHOLE company can see each other's objectives, thus empowering each other. Also, it allows employees to gauge how their work influences the main purpose of the company and encourage collaboration between them.
There is so much you can do in a year or a quarter. OKRs force us to identify 3 or 4 objectives and reduce our priorities by focusing on those that are most important. It improves engagement by providing a clear direction.
The OKR method: How to use it?
Lay the proper foundation
Before you start implementing OKRs, you must have a clear understanding of what you want to achieve.
To carry out this method successfully, OKRs must have an “owner”, named an “Ambassador”. Its role is to make sure that everyone in the OKR process is trained, engaged, and provided with support and guidance.
OKRs must be inspiring to employees. Each team member needs to agree that these are the right things to focus on.
Here are some tips to help you:
- The closer your OKRs are to your company’s mission the better your team will respond.
- When setting goals check existing objectives to see if they all fit together. Are your OKRs aligned with the company's broader strategies?
- An objective must be ambitious, but they must also be achievable within the set deadlines.
- Monitor KPIs. Do they shed light on issues that need to be resolved? If so, what can you do to influence your KPIs?
- Always check your OKRs when the deadline is rolling. This will tell you if you need to set OKRs for the next period.
- OKR works when teams and individuals set quarterly goals. Ask your team to come with ideas on which objectives and supporting key results the team could tackle in the quarter ahead.
For most companies, OKRs are defined on an annual and quarterly basis. It is important to understand that different objectives lead to different paces. We are talking about tactical objectives and strategic objectives.
A strategic cadence
corresponds to very ambitious and long-term OKRs. They are defined by the company and are generally annual. It helps create corporate objectives.
A tactical cadence
corresponds to short-term OKRs, supported by the teams. They are quarterly. It allows for shorter review cycles and helps teams easily change direction if tactics don't favor strategic OKRs.
A follow-up cadence
allows regular checks to track current results, every week. Key results metrics are established at the start of the quarter and will be used for OKR tracking.
You can also customize your rhythm according to your needs. For example, Spotify has its own OKR called Spotify Rhythm which has a 6-month strategic rhythm and a 6-week tactical rhythm.
The characteristics of an OKR
Characteristics of objectives
Each objective must be time-bound. If you set OKRs on a quarterly basis, the deadline is usually the end of a quarter. This encourages concentration. You can quickly identify what works and what doesn't, and make the necessary adjustments.
Objectives should be tracked weekly and teams should have regular weekly meetings to track progress. Also, employees must plan "feedback loops" to exchange and comment on each other's work. This promotes collaboration between them by helping each other to fulfill their commitments by sharing the necessary resources and expertise.
Inspiring and straightforward
Some people in your company are motivated by numbers. Others need a more inspiring objective. Use language as a simple way to make your objectives more inspiring. You can use words like successful, awesome, best, etc.
You should also avoid the specific language of certain positions or certain teams and keep the descriptions as short as possible.
Characteristics of key results
Key results that don't take us out of our comfort zone are not ambitious enough. However, they should not discourage teams. Good OKRs motivate them to rethink the way they work, to ask the right questions, and to discuss “sensitive” subjects.
The key results of a team should be focused and clearly defined. They must be specific and time-bound, in order to remove any doubt.
Key results should always be able to be influenced. Writing 10 blog posts is a bad key result, it's something you do. Getting 1000 views on a blog post is a good key result because you cannot control it but you can influence it.
Characteristics of initiatives
An initiative must always be specific. Its purpose must be clearly defined and the owner of the initiative (responsible for carrying out the initiative) must know what to do. It cannot be as vague as an objective. An initiative must therefore contain precise and clear verbs (example: establish, write, etc.).
It is necessary to have full control over initiatives in order to be able to carry them out. This means that there should be no strong connection to anything or to anyone. It also means that we can be held responsible for not carrying out these initiatives properly.
Key results, OKR example:
To help you better understand the use of OKRs let’s discuss an example:
To become the ultimate blog to launch your freelance activity. As a reminder, an objective must be ambitious and inspiring.
We have defined three key results (you should determine three to four key results):
- Obtain 30,000 monthly freelance visitors thanks to SEO (in three months)
- That 50% of the people who fill out a form on the site are freelancers (in five months)
- Obtain 3 press publications about the blog (in six months)
Again, remember that key results will help you achieve your goal. They must be specific, in terms of time and measures. It’s something you cannot control but you can influence.
The third and final step when setting up an OKR is initiatives. Initiatives are tasks (to be carried out alone or with others) or assumptions that allow you to influence a key result. We have therefore chosen an initiative for each of our key results:
- create a semantic cocoon dedicated to freelancers on our blog (get 30,000 freelance visitors monthly)
- create valuable content downloadable on the website (50% of people who fill out a form on the site are freelancers)
- create and send a press release (get 3 press publications about the blog)
Leverage OKR Tools to improve outcomes
Now that you know what OKRs are, you probably want to implement them in your company. But it can be intimidating: Where to start? How can I measure my progress? Is it worth the extra work?
OKRs need to be simple and increase your productivity - not waste your time. A good way to get started and to get the most of the framework is to use OKR tools.
There are a lot of OKR tools, and we encourage you to do your own research, but here are some we recommend:
- CultureAmp –to identify goals
- Koan – to keep OKRs transparent
- Weekdone – to Track Goals (Status Reporting)
- Timely – to measure team performance
- Perdoo – to set OKRs
- Peoplegoal – to score OKRs
- Engagedly – for OKR inspiration
The more you grow, the more you’ll use OKR. You will get to a point where spreadsheets and dashboards aren’t efficient enough. This is when an OKR software can help.
If you already are using some of the tools we mentioned above you may not need additional software help.
An OKR Software is a tool used to develop strategies and process objectives You can think of a OKR software as an online goal tracker.
There are lots of OKR Software that fill different sets of needs. Every company is different, so find the right one for you!
To save you some time we compiled a list of the 7 best OKR Software:
Bonus: 5 common OKR pitfalls to avoid
# 1 Too often thought of as an administrative tool for organizing the tasks to be accomplished within the company.
# 2 Do not link OKRs and employee performance reviews. The performance of an employee is also measured on behavior, cooperation, initiative, etc.
# 3 Remember to communicate your objectives clearly. Everyone should know what the objectives of the company are.
# 4 The "top-down" method should be avoided when defining your OKRs. Let your teams define their own objectives. From there you can push them outside of their comfort zone without alienating them.
# 5 The difference between OKR and KPI: KPIs are Indicators measuring components of a process already underway. KPIs help monitor performance, identify problems and areas for improvement; OKRs help solve problems, improve processes, and drive innovation. You should use KPIs to measure your progress towards reaching your objectives.