OKRs Defined

Objectives and Key Results (OKRs) constitute a critical thinking framework and management discipline that ensures  employees work together, focusing their efforts to make measurable contributions that drive the company forward.

OKRs consist of 1) Objectives and 2) Key Results.

• Objective: A statement of a broad goal, usually qualitative in nature.
• Key Result: A statement that measures achievement of a given objective.

It’s easy to come up with objectives. It’s hard to define key results. A marketing vice president can easily name the objective “Increase demand in our solution.” The key results describe how we will know if we’ve achieved this objective. Taking the time to define key results is one of the most impactful things anyone can do at work.

Why OKRs Took Off in 2013?

OKRs are not a new phenomenon. Intel and Andy Grove are credited with introducing OKRs to the business world in the 1980s. Key executives coming out of Intel spread the word about OKRs. Gary Kennedy left Intel and introduced OKRs to Oracle in the 1980s, John Doerr left Intel and went on to introduce OKRs at Google.  Recently, dozens of successful companies including LinkedIn , Sears, and Twitter rolled out OKRs as a goals and performance management platform. So, if OKRs have been around over 30 years, why the sudden explosion of interest in OKRs? The short answer: Google.

In early 2013, Google Ventures partner Rick Klau delivered a presentation on how Google uses OKRs. Klau's tweet reflects his surprise that his OKRs workshop video was going viral: @klau tweet:

"My OKRs video just passed 150,000 views. That's about 149k more than I thought it'd get"

Benefits of Using OKRs

OKRs improves communications, focus, and alignment to drive better business results. It does these things by clearly defining goals, making it clear what’s important across the organization, and focusing effort.

John Doerr, a prominent VC and leading voice in the OKRs community, described the four general benefits of OKRs in the 1990s:

• Disciplines thinking (The major goals will surface)
• Communicates accurately (Lets everyone know what’s important)
• Establishes indicators for measuring progress (Shows how far along we are)
• Focuses effort (Keeps organizations in step with each other)

Here are three specific benefits I’ve heard from organizations using OKRs:

1. "Focus is a constant theme in every team meeting. We begin with OKRs and limit the number of objectives and key results to reduce our conversations so we make measurable progress on our most important goals.”
2. “Teamwork is way better! Everyone on the team and even on other teams now work toward the same goals (e.g. customer retention), which is encouraging for everyone. We all celebrate other team’s results, not just accomplishments within our own department.”
3. “Learning each quarter does not work unless you are focused and make the time to explicitly reflect on what you’re learning. In order to be better at what you’re doing, you need to look back. The work of defining and reviewing OKRs creates a continuous learning environment.”

The basic message is clear. Getting teams to define their most important goals and focus their work on achieving these goals sets the stage for better business results.

Ten Characteristics of Effective Key Results

1. Results, not tasks: KRs focus on results, not tasks. Tasks appear on a “to-do list” and can typically be completed in a day. Key results reflect measurable progress by a target date and cannot get done in a day. Tasks look like: “email a prospect” or “meet with the new VP of Sales.” No concrete result is expected. KRs are not tasks. They look like: “X% increase in key business metric Y” or “10 qualified opportunities added to pipeline by end of quarter.” KRs should get everyone focused on bottom-line results, not tasks!
2. SMART: Effective KRs are Specific, Measurable, Achievable, Relevant, and Time-bound. KRs that cannot be measured are meaningless.
3. Focused: Each set of OKRs should include at most 5 objectives focusing on 1-3 KRs for each objective. With OKRs, less is more. Focusing on the two or three most critical objectives is generally better than managing to a list of five.
4. Owned: Most of your OKRs should originate from you, the OKR owner, and not corporate mandate. You will achieve more if you develop and own your OKRs.
5. Aligned for Success: Effective OKRs measure success. While drafting OKRs reflects the owner’s definition of success, OKRs should be refined based on input from a more senior team member and any “dependent teams” to ensure alignment and agreement on what counts as success. Reviewing company-level OKRs first provides context and can help with alignment.
6. Frequently Updated: When setting your personal OKRs for the quarter, consider how frequently you plan to update progress on each key result. Breaking a key result into "baby steps" makes it easier to make progress, provide updates on progress, and reflect on how to refine your OKRs for the next quarter.
7. Clear: Effective communication can be one of the key benefits of using OKRs. Effective OKRs are written clearly and concisely and only include standard acronyms that an average high school student would understand.
8. Positive: Create metrics where “bigger is better” where possible. OKRs are typically self-reported, and we want everyone on the team to look forward to making positive progress rather than logging “bad” events.
9. Graded: Effective Key Results include grades that clearly communicate targets and manage expectations.
10. Aspirational: According to research on goal science, workers achieve more when setting the bar high. Use a grade of 1 for highly ambitious levels of achievement.

Examples & Types of OKRs

Before rolling out OKRs, it’s useful to see some examples of OKRs that follow best practices and distinguish between the types of key results. Let’s start with an example.

This focused set of OKRs includes 2 Os and 2 KRs for each O:

1. Performance Management: Complete a review process for every individual that is not only efficient, but also enables workers to do a better job.

• KR: 40 performance reviews completed and delivered by end of June.
• KR: At least 1 positive documented response from 10 employees to the open question “Describe a specific example where the performance management review process or the use of OKRs enabled you to do a better job by end of August.

The first KR reflecting “complete a review process for every individual,” was easily defined without assistance from an OKRs coach. However, defining measurable KRs for broad statements like “...enables workers to do a better job” is not a simple exercise.  The second KR emerged quickly with help from an OKRs coach. It’s an effective KR since it translates the “better job” component to a KR that is clear, positive, and measurable.

2. Employee Satisfaction: Measure and Improve Employee Satisfaction

• KR: Improve 1-question Employee Net Promoter Score by 5% as compared to June 2014 baseline by end of Q3
• KR: Improve “How likely you are to be working here” survey score by 5% as compared to June 2014 baseline by end of Q3