Objective and key results (OKRs) is a goal-setting framework that has grown in popularity over the past decade, and is now the most popular goal-setting method for many hypergrowth startups.
But with so many goal-setting frameworks around, what makes OKRs stand out, and why do companies like Google and LinkedIn attribute their success to OKRs?
What makes OKR different is that they drive focus, alignment, visibility, and accountability in execution, which helps fast-growing companies execute fast as they scale, and it helps in building an outcome-focused culture.
Here’s a deeper dive into OKRs and how to get started with them.
OKRs help you set challenging and ambitious goals with measurable key results. They can help establish corporate, team, and individual goals.
In combination with your company strategy, OKRs track progress. They ensure all your team members are aligned on critical goals and meet expectations.
Objectives determine what you’re trying to achieve. They should be SMART (specific, measurable, achievable, relevant, and time-bound). An objective is the desired business outcome, so it needs to be inspirational, specific, action-oriented, and aligned with your company strategies.
EXAMPLE: An objective could be "Bring SEO to top 3 channels of revenue generation by end of quarter 2"
These ascertain how you want to measure progress. You must complete a few milestones to achieve your goals, and key results identify the specific actions to take to achieve these goals. Key results are always quantifiable and time specific, yet realistic and empirical.
Initiatives are actionable and time-bound endeavors to achieve your objectives and key results. They tell you what exactly you need to do to achieve your OKRs. Basically, OKRs are your roadmap to what you want to achieve, and initiatives are what you will have to do to walk through the road map.
In 1954, Peter Drucker introduced the concept of Management by Objectives (MBO) in his book The Practice of Management. Andrew Grove, the co-founder of Intel, was inspired by this concept and came up with the OKR framework in 1970.
In 1974, John Doerr learned about the concept while working at Intel and introduced OKRs to Google in 1999. Since then, OKRs have been adopted by many organizations worldwide, such as Google, Spotify, LinkedIn, Intel, Microsoft, Netflix, Accenture, Dropbox, Oracle, Deloitte, Bills & Melinda Gates Foundation, Twitter, and Airbnb.
With the right strategic focus, your business can achieve great results. Seventy-six percent of successful companies confirmed that their focus is always on a limited set of strategic initiatives to achieve goals.
OKRs, formed in conjunction with your strategic priorities, keep your teams focused on what matters, saving you time and money wasted on distractions.
Highly aligned companies have 58% faster revenue growth and are 72% more profitable compared to misaligned companies.
OKRs are formed considering the dependencies and alignment between teams. They align with the overall business goals and can help drive your organization's strategic and cross-functional alignment.
OKRs stimulate a results-oriented mindset in your teams, allowing them to work autonomously and take ownership of the results they achieve. This makes your teams self-motivated and engaged to do their best without micromanagement.
Tracking metrics quantify success and hold employees accountable. They offer you the space to recognize and work on deficits, celebrate victories, and promote strengths. Besides, who doesn't want to know if they're succeeding or stuck?
OKRs are measurable and can therefore be tracked and monitored. They’re transparent and make everyone's performance public, keeping your teams accountable yet involved.
To determine how far your teams can go, you need to experiment and push their boundaries – and OKRs do that for you.
With stretched goals, OKRs lead to innovations. They encourage setting ambitious goals. Stretched OKRs are still goals and should be realistic for your teams to achieve.
There are two main types of OKRs. First is committed OKRs, which help you set objectives you can achieve, and the second is aspirational OKRs which help you set objectives that you aspire to achieve.
There is a third type of OKR, which is known as learning OKRs. These help you to keep a tab on new skill sets you need to learn for your professional and personal development.
Aspirational OKRs, also known as stretched goals or "moonshots", are goals with a 70% achievement target. Your teams are unlikely to fully achieve these goals as they’re ambitious and visionary and have no specific or well-defined way of accomplishment. They’re also referred to as 10x goals.
Co-founder of Google
An example of aspirational OKRs for a food brand might look something like this:
Committed OKRs are goal-setting commitments usually met with a 100% target. For committed OKRs, your teams have a specific plan of action on how they will approach the goals. Your teams need to adjust their resources and schedules to achieve their goals within the set timeframe.
An example of committed OKRs from a grocery brand might look something like this:
These OKRs shift your team's focus from what they want to achieve quarterly to what they want to learn quarterly. These types of OKRs are used in cases where the goal is not defined.
Let's say your teams have a great idea, but you're not sure about the results. Learning OKRs can be your weapon. They provide you with the knowledge to move forward with the idea and formulate OKRs for the next quarter. Learning OKRs leaves room for experimentation and exploring new possibilities and aspects.
Here’s an example of learning OKRs.
OKRs and key performance indicators (KPIs) are both goal-setting methods that may look similar on the surface, but differ in several ways.
Simply put, OKRs are best for you if you want to improve the overall performance of your business or plan to scale. On the other hand, KPIs work best when you want to improve the performance of your team, a specific product, or a project.
Writing OKRs may be a daunting task if you are doing it for the first time. You have to write and rewrite until you pen down the OKRs that work best for your business. Here are nine key steps to writing and rolling out OKRs in your organization.
You can also find many good examples of functional OKRs and take inspiration to create your own.
The objective is something you aspire to achieve. In terms of OKRs, it is called the North Star. So to write a good objective, pause and identify your business’s North Star.
Below are a few questions you should ask yourself before finalizing your objectives.
Once your objectives are set, the next step would be to decide what your key results should be.
Key results will be the outcomes you will require to reach your objective. In other words, KRs will be the roadmap for your objectives.
Below are a few questions to ask yourself while writing your key results.
Once you are done writing the OKRs, the next process of implementing them begins. Here are a few tips for you to successfully implement OKRs at your organization and turn your dreams into reality.
To make OKRs effective, you will have to track your progress regularly. This will help you spot the obstructions and weak points to avoid achieving better outcomes. It's essential to keep your employees aligned and help them stay on the same page.
These check-ins will help you monitor the progress of the key results, find obstacles (if there are any), learn from your mistakes, and employ the lessons learned to make OKRs more effective.
This will help you track individual and team performance. It will also enhance employee model accountability and engagement.
OKR scoring is a measurement of whether key results are achieved. It also helps you track how far they have been achieved. You can score OKRs on a scale of 0.0 to 1.1.
There are many free and paid OKR tools available on the market. You can even use pen and paper for writing and tracking your OKRs.
However, manual OKR tracking can be exhausting. An OKR software can give you a central space where all the work and progress can be documented. It not only tracks everyone, but also makes metrics easily accessible.
If you are a small company of 3-4 employees, a pen and a paper are all you need to write and track your OKRs. You can consider printing the sheets later and pasting them all over the walls so that your team stays driven and focused on their priorities.
Google Sheets are easy to use and maintain. They can be shared with everyone and thus makes the OKR progress tracking more transparent.
OKRs are evolving in nature. Google Sheets let you change and edit your OKRs transparently when required. For example, any changes made by the sales team in their OKRs in the Team tab will get displayed in the Dashboard tab. You can also add OKR cycle-related information.
OKR software makes tracking OKR progress at all levels (company, departmental, team, and individual) more effective, easy, and error-free. It helps you better support your teams and keeps them aligned.
OKR software ensures that you provide all the resources your teams need for OKR matters and holds up your performance management system.
Many OKR software options are available in the market. You might feel overwhelmed while choosing the one best for you. To make the process easy for you, here's a list of features you should be looking for in your OKR software.
The use of OKR software is becoming increasingly popular among organizations that use OKRs for goal setting. When it comes to aligning teams and tracking their performance, a dedicated OKR tool can be very useful.
With so many choices available, it’s important to choose the right one. Below are some pointers you should consider before choosing an OKR software.
OKR is a management tool. You shouldn't mix OKRs with performance appraisals. Performance appraisal is related to an employee's ability to perform and the related compensation.
While OKRs are about setting goals and determining a clear path to achieve the desired outcome. It’s wrong to use OKRs for performance appraisals (PA) because OKRs don't include daily tasks done by employees. It can be part of the PA process, but not the wholesale criteria of doing PA.
In addition, when OKRs are linked with PA, it can hamper your entire OKR framework. Because when employees won't be able to achieve the set OKRs (which is not uncommon as OKRs are mostly aspirational), they will get demotivated and feel less engaged. It may also result in employee burnout.
In other cases, you might find employees setting low OKRs, which can be easily achieved. As a result, OKRs will simply lose their significance.
If you ask someone to sum it up and tell you why you should go for it right now, you won't get a one-liner answer.
Although the framework is pretty simple, as you have already read, OKRs stand out from other goal-setting frameworks for several reasons, including their:
OKRs are not a silver bullet, but if implemented correctly, they can help your organization achieve hypergrowth through the five superpowers. OKRs can help you strengthen the foundation of your organization and increase your operational excellence.
Now that you're an OKR wiz, it's time to help your marketing team accomplish targets that align with business goals. Learn how to assign KPIs to marketing objectives.
Sagrika Jain is a Content Marketing Lead with over 10 years of experience in curating and writing about HR issues and practices. She holds a master's in Mass Communication and an MBA (HR Specialisation) degree. With her expertise in crafting SEO and social media-friendly content, she pens content that is a combination of communication tactics and the latest HR practices that assists companies in achieving desirable outcomes.
Big or small, setting goals is an important part in reaching our potential and becoming the...
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