Measuring performance toward a goal is often one of the initial things that need to be setup in a company to measure and successfully achieve goals. Common successful businesses implement performance measures are under the name of metrics, Key Performance Indicators (KPI’s) and OKRs (Objectives and Key Results).
OKRs are one of the most popular and effective ways to set goals, but they can be tough to put into practice. OKRs help you focus on what matters, measure your progress, and take action when things aren’t working out as planned. OKRs work for individuals and teams, whether you have a million-person company or just a team of two.
In this guide, we’ll show you everything you need to know about OKRs: what they are, establishing OKRs, and how to measure success to achieve your organizations ambitious goals. We will be presenting an overall goal setting framework that your company can leverage to put OKR goals in place.
What are OKRs?
OKRs stand for Objectives and Key Results. They’re a goal-setting system that was popularized by Silicon Valley companies like Google and Intel in the early 2000s. OKRs have since been adopted by companies of all sizes in various industries to deliver measurable results.
OKRs are different from other goal-setting systems because they’re designed to be flexible and adaptable. You can use OKRs at any stage of your company’s growth, and they can be modified to fit your changing needs.
I have seen them help an initial startup set clear objectives to deliver key results. Additionally, OKRs help larger companies break down their bigger target objectives into deliverables that individuals can take action on.
OKRs are also different because they’re designed to be transparent. Everyone in the company should be aware of the OKRs down to each individual team member so that everyone is working towards the same goal.
Establishing OKR’s: Individual & Team OKR’s
Setting objectives and achieving goals is essential to success in any field. However, simply setting goals is not enough, you also need a plan of action to achieve them.
OKRs are a simple yet powerful way to set and track progress towards your goals. They are popular in many businesses, OKRs support any size or type of company. OKRs have three key components: objectives, key results, and measures.
Objectives are the overarching goals that you want to achieve. They should be specific, measurable, achievable, relevant, and time-bound.
Key Results are the specific measures that you will use to track progress towards your objectives. Key results are not tasks, they could be the result of tasks that are carried out. They should be quantifiable and aligned with your objectives.
Measures are the metrics that you will use to track your key results. They should be actionable and allow you to track progress over time.
Setting OKRs requires creative thinking and planning. However, the process can be broken down into a few simple steps, an OKR framework per se:
- Define your objectives. What are the goals that you want to achieve? Be specific, measurable, achievable, relevant, and time-bound. The initial part of defining goals should not take the team too long. What specifically must get done this quarter? This will then help you define a clear objective or objectives for the quarter.
- Identify your key results. What measures will you use to track progress towards your objectives? Be quantifiable and aligned with your objectives. A key result often involves a number of some sort.
- Choose your measures. What metrics will you use to track your key results? Be actionable and allow you to track progress over time.
- Set a timeframe for each objective and key result. When do you want to achieve each goal?
- Write OKRs down. This will help you to remember them, stay up to date and track your progress.
- Review and adjust your OKRs regularly. As you achieve objectives and key results, you may need to adjust your OKRs to ensure that they are still relevant and achievable.
Following these simple steps and you will be setting OKRs for yourself or your team. OKRs are a powerful tool for setting and achieving goals, and can help you to make progress towards your objectives.
- Define your Objectives – A good objective is aligned with the organizational items that need to be delivered in the quarter. Working as a leadership team you need to align on the right OKRs.
- Create Key Results for each objective – what do you need to do to achieve the objective? What will the result be of achieving the goal? Does an individual or a team play a role in achieving the key result?
- What will success look like when you achieve the objective? How often will you need to touch base to ensure that focus stays on achieving the objective?
- How will you measure success with the objective? If an objective will last more than a quarter, break it down into measurable milestones. Breaking it down like this will help you and the team focus on reaching the objective for the quarter.
Typical OKR Cycle
OKR’s (Objectives and Key Results) can initially be established in a company at any point of the year. If there is a best time it is as you lay out a new strategy, need to deliver measurable results, or begin a new year. At these points in time, your opportunity to lay out new metrics for individual tasks or teams is front and center.
John Doerr worked at Goolgle and helped them implement OKR’s. He lays out a great process in his book Measure What Matters:
- 4-6 weeks before the quarter start brainstorming your annual and Q1 OKR’s for the company. Brainstorming OKR’s starts with the senior leadership team sitting down and outlining for key functions, marketing, operations, finance, etc. I often do this as a sticky notes exercise because it generally causes a lot of discussion among leaders about what is specifically needed to have a great objective. Additionally, writing OKRs is best to have widely adopted, clear, measurable ways that the team is going to deliver high level objectives.
- 2 weeks before the start of the quarter you will begin communicating the OKR’s for the coming year and the first quarter to the remainder of the company.
- 1 week after the start of the quarter OKR’s are communicated and individuals share their own OKR’s. Note: there is often a negotiation between contributors and their managers about specific key results that they can actually influence. As individuals are developing their objectives each leader needs to ensure that they agree that each person has OKRs that force them to aim high.
- Throughout the quarter individuals measure and share their progress at regular check-ins. I have found that this is most successful when managers and employees meet and go over OKR’s every two weeks at regular check-ins. Individuals should be able to see the performance of their teammates in addition to their own OKRs.
- At the end of the quarter, individuals and teams celebrate their successes with and learn from what did not go well. OKR’s are then readjusted for the upcoming quarter. One objective of this final step is to ensure that if there are issues that they are addressed.
This is a typical OKR cycle, but it does not need to be strictly followed. You can adjust for your company or team and the needs of your people. Once OKRs have been established, most companies choose to review and revise them on a quarterly basis.
Common Pitfalls for Setting OKRs
- Not getting started – The first step with setting OKRs would be to get started. The easiest way to get started is to meet as a leadership team and pick three objectives that must be achieved this quarter to be successful. Set the objectives. Leaders and their teams then establish the Key Results that support the objective and set a meeting to review performance every two weeks.
- Having too many objectives – OKRs are meant to be a focal point for the individuals in the company. If you have too many objectives and individuals cannot focus on them as a part of their day to day work then they most likely will not be achieved.
- Having too many key results – Similar to objectives, the key results are the specific items that support the objective. Having too many of them will again result in individuals not having the time to achieve the key result. Setting just a few key results will allow people to focus more on completing items.
- Punishing people for lack of performance – Key results are meant to be aggressive and ambitious. In setting them, individuals are asked to aim high. Additionally, achieving key results will move the company or team closer to achieving its objectives. Employee engagement in OKRs is critical to the success of implementing this system. You can set stretch goals inside of OKRs as long as everyone understands that missing a stretch goal might still mean significant support of the objective in having a key result that is a stretch goal. Having ambitious goals can mean the success of the company. However, having ambitious goals should also be recognized as ambitious. Individuals watch what happens when people miss and if individuals are punished it can further lead others to resent having OKRs or even setting easier targets. This is not to say that people should not be held accountable. The one objective for aiming high is to ensure that people are achieving the best work that will move the organization forward.
- Developing OKRs that do not support the strategic direction of the organization – OKRs need to be in alignment with where you are trying to take the company. Setting OKRs that do not support where you are wanting to go can be an opportunity for your teams to question business priorities.
Staying on Track with Your Goals
In order to achieve success, it’s important to have a clear roadmap of what you want to accomplish. OKRs (Objectives and Key Results) can help provide that clarity by setting measurable goals and tracking progress along the way. Here are some tips for setting and achieving your goals with OKRs:
1. Set realistic objectives that challenge you but are still achievable. Be specific in what you want to accomplish and make sure your objectives are measurable.
2. Create a few key results that support your objectives and make sure they are also quantifiable. This will help you track progress and ensure you’re on track to meeting your objectives.
3. Every 2 weeks review your OKRs and make changes with the quarterly cadence based on results achieved. This will help you course-correct and ensure that your OKRs are still relevant and achievable.
4. Celebrate your successes along the way! This will help keep you motivated and focused on your goals.
As you look to create OKR’s it is often good to take a look at OKR examples.
The OKRs of the CEO often start with the bigger picture and the highest level strategy for the organization and the items that are needed to be achieved to move the organization along. Organizations that are VC funded, going public or even public organizations that have set targets can provide an initial basis for OKRs for the CEO.
Objective: Improve profitability to secure our future.
- Gross Margin 80%
- Becoming profitable by: Month
- Implement proper budget planning by the end of the quarter
The role of the COO is one that focuses on cross functional efficiency. COOs are often tasked with getting the strategic direction of the organization in action. As organizations mature process improvement and transparency are often a large part of the scope of this role. Additionally, this role needs to be focused on the absolutely critical items for the quarter. COO’s often have broad responsibilities in an organization and they need to ensure that as they set OKRs each key result will deliver its objective.
Objective: Optimize processes that improve performance
- Reduce installation cycle-time by >20%
- Establish a baseline for customer satisfaction
- Work with the CIO on establishing a new website
- Improve the response time of the phone support team by 50%
If you follow these tips, you’ll be well on your way to setting and achieving your OKRs. This post has presented an overall goal setting framework. Remember to be realistic, monitor your progress, and adjust as needed. With a little bit of planning and effort, you can accomplish anything you set your mind to!
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