Since you’re here I’m sure you’ve already heard (or read) about how LinkedIn, Intel, YouTube, Bill & Melinda Gates and perhaps most notably Google have used OKRs to achieve exponential growth.
“Culture eats strategy for breakfast.”Peter Drucker
Beyond delivering growth OKRs has also given them to tools to build a remarkable organisational culture that nourishes performance, collaboration and accountability.
In this article I’ll introduce the OKR management methodology, give examples of good vs bad OKRs and share advice on how you can get started with OKRs.
What are OKRs?
Objectives & Key Results is a management methodology that’s designed to help companies, of any level and at any stage, achieve their most important business goals.
A management methodology that helps ensure that a company focuses efforts on the same important issues throughout the company.John Doerr – Measure What Matters
We can trace its roots back to Andy Groove who developed and perfected it it at Intel. In his book High Output Management he wrote that the purpose of OKRs is to answer two important questions.
- Where do I want to go?
- How will I know I’m getting there?
The OKR methodology has two parts.
- Key Results
An Objective is your organisation’s most important goal. Achieving this goal has to be fundamental to the success of your business.
Objectives are significant, concrete, action oriented and ideally inspirational. When properly designed and deployed they are vaccine against fuzzy thinking and fuzzy execution.John Doerr – Measure What Matters
Key results are milestones that help you stay your course. Key Results outcomes that are specific, measurable and time-bound leading towards your objective.
The key result has to be measurable so at the end you can look and without any argument say did I do it or did I not do it. Simple. No judgements in it.Andy Grove – Intel
In summary, Objectives are Inspirational Goals while Key Results are the measurable and time-bound milestones that lead you towards fulfilling your objective.
A well-drafted OKR follows this structure: ‘We will (Objective) as measured by (Key Results)’.
Here you can watch Andy Grove explaining OKRs at Intel’s Organisation, Philosophy, and Economics course, known as iOPEC.
How I started using OKRs
I got my first job in business development right after finishing my undergraduate degree. It was at a rapidly growing business and I was over-the-moon happy about having a paycheck, even if the job wasn’t all that exciting.
Despite losing interest in the job, I was always able to find the motivation to do new things just to see what I could personally achieve and how far we could go as a team. It was really all because of my team leader. He was somehow able to get us to push for more without compromising what needed to be done to manage our day-to-day responsibilities.
After that job, I joined Resolution Media. A few months into the job, I was given the responsibility to build a new service portfolio and lead a small team of two and a half people.
Leading my first team
While I had run businesses before, it was the first time I was leading a product team at one of the leading agencies in Finland. I was ecstatic and sh*t scared at the same time. I had no doubt that we’d succeed but I knew I needed to create an environment where people wanted to do their best without excessive management.
In an agency, billable hours take priority over any internal development objectives. We’re always short-staffed, with a high burnout and churn rate. None of those facts made life any easier.
I knew I needed a different approach to managing my team than asking them to put in more hours or giving up on having any team objectives. That’s when I found OKRs.
At first, I used OKRs to manage my own responsibilities and later scaled it up to my team. During the first full year of leading product development, we exceeded our revenue target by over 200% and trained new people who could represent our offering in their own teams.
I have been using OKRs both personally and as a team leader for over 4 years. I love working in a demanding agency environment and I know what I’ve been able to accomplish wouldn’t have been possible without OKRs.
How did I benefit from OKRs
Objectives and Key Results is a framework. It requires planning, iteration, metrics and open communication. Being a growth marketing consultant working at an agency with other digital marketers, the first three requirements came easy.
Open communication needed a bit of work to establish and actively nourish. That’s where we really benefited following the OKR methodology.
Here’s a list of some of those benefits.
- We set shared Objectives for the team with shared responsibility for Key Results. That helped us define our focus.
- The fact that we had shared responsibilities despite the differences in our roles brought alignment.
- Knowing that our work output is tracked against set metrics regardless of seniority made everyone equally accountable.
- The fact that we shared a common objective and appreciated having a competitive streak meant that we tried pushing just a little bit harder. In other words, we set Stretch Goals.
- Each of us was only as successful as the team, this meant that individual financial rewards weren’t the root cause of better performance.
Good vs Bad OKRs
One of the common reasons why goal setting goes wrong is due to poorly defined goals. The cautionary tales of Enron and Ford Pinto are well-cited examples of how goals that are too narrow, too specific and missing an appropriate time horizon can lead towards disastrous results.
A good Objective is ideally inspirational and a well defined Key Result must always be measured against a qualitative and a quantitative metric.
Objective: Become the most trusted service provider and reach a revenue target of 1 000 000 € from New Business between January – December 2019.
Key Result 1: Send proposals worth 500 000 € per quarter. (Quantitative Result)
Key Result 2: Convert 40% of prospects to customers per quarter. (Qualitative Result)
Key Result 3: Maintain 80+ NPS among new customers. (Qualitative Result)
In the above example starting with the Objective, each Key Result includes a quantitative value (bolded). At the same time, there are two types of KRs. The first KR is purely quantitative e.g. send out proposals worth 500 000 € the remaining KRs are there to measure the quality of the proposals and the customer relationship.
Failing at either one of them will be a failure to accomplish the Objective.
Here’s an example of a poorly defined OKR.
|Objective||Increase New Business Revenue.||Yearly|
|KR 1||Send new proposals.||Quantitative||Quarterly|
|KR 2||Close new deals.||Qualitative||Quarterly|
A poorly defined OKR lacks clarity, measurability, time frame and does very little to ensure accountability.
Measurability combined with qualitative and quantitative types of Key Results is the hallmark of good OKRs.
Common mistakes while setting OKRs
The most common mistake when getting started with OKRs is thinking that its a productivity tool. Although organisations using objectives based management see a 56% increase in productivity, benefiting from OKRs requires a cultural change as well as an operational one.
Here’s a list of common mistakes to avoid when getting started with OKRs.
OKRs are not a To-Do list
OKRs are not another way to get things done. The true power of OKRs comes from increased collaboration and alignment across the whole organisation around its most important goals.
Setting too many OKRs
The OKR framework forces leadership teams to narrow their focus and direct resources towards a small number of meaningful and impactful objectives.
|Objectives (Yearly)||1 – 4|
|Key Results (Quarterly)||1 – 5|
Failing at alignment
In principle, leadership teams are only supposed to set top-level or organisational OKRs. Beyond that different functions and teams need to align their key activities around the organisational objectives by setting their own OKRs.
This process of open communication and accountability creates alignment which is essential for succeeding with OKRs.
|Strategic||Higher-level and Strategic organisational objectives.||1 Year|
|Tactical||Short-term and specific to a function or a team.||1 Quarter|
|Operational||Initiatives usually measured as KR on both levels.||1 week – 1 Month|
Lack of follow-through
Speaking from experience, adopting OKRs is an exercise in behaviour modification. No individual or group will become more open, more accountable or more collaborative just by filling an excel sheet.
Training, support and follow-ups are an essential part of getting started with OKRs.
It’s recommended to appoint an OKR coach during the transition period. The coach is responsible for helping people set and refine their OKRs as well as openly sharing the progress against them during monthly and quarterly follow-ups.
On average it can take up to 2 quarters to implement OKRs and often a bit longer to get better at setting stretch objectives.
Planning for successful adoption of OKRs
The table below is an adaptation from WhatMatters – the official website of Measure What Matters by John Doerr. It provides a schedule for how you can pace your OKR adoption process and continue it afterwards.
|4 – 6 Weeks before the quarter||Brainstorm annual and Q1 organisational OKRs.|
|2 weeks before quarter||Communicate upcoming annual and Q1 OKRs.|
|Start of quarter||Set and communicate team-specific OKRs for Q1.|
|First week of quarter||Set and communicate OKRs for individuals for Q1.|
|During the quarter||Track progress and Check-In.|
|End of the quarter||Check progress and score OKRs.|
An OKR score is typically between 0.0 – 1.0.
|0.0 – 0.6||No progress|
|0.61 – 0.70||Some progress|
|0.71 – 1.0||Success|
- OKR is a performance management method based on setting Objectives and Key Results.
- A good Objective is ideally inspirational while Key Results must always be measurable and time bounds.
- To get the best results OKRs must track qualitative and quantitative results.
- OKRs isn’t a tool for task management.
- The process of successfully adopting OKRs requires both discipline and experimentation.
- OKR should be systematically set, communicated and tracked following an organisational calendar.
- OKRs are typically scored on a scale of 0.0 – 1.0.
- Google’s OKR Playbook [PDF] – Link
- How OKRs are used at LinkedIn. – Link
- A typical OKR cycle [PDF] – Link