All About OKRs

OKRs as a goal-setting framework has been a massive success in companies like Google, Intel, and Netflix, and is gaining popularity as the business and talent context change.

OKRs have helped us to 10x growth, many times over. They have helped us make our crazily bold mission of “organizing world’s information” perhaps even achievable. They’ve kept us on time and on track when it mattered the most— Larry Page, Google

What is OKR?

OKR, which stands for Objectives(O) and Key Results(KR), is a method for identifying, tracking, and achieving goals that matter the most.

OKRs have 2 parts to it —-

1. The Framework which helps you to break-up big mission into actionable objectives with milestones.
2. The Mindset tells you to focus on what matters the most.

The OKR Framework

Objectives are “What” you want to accomplish.

Key Results are measures and milestones that indicate “How” you will accomplish your Objective.

Each objective should have its own set of 3–5 Key Results.

If you achieve all your key results you should achieve your objective. In the same way, achieving your objective should mean you have achieved all your key results.

Example:

Objective: Become the #1 free mobile banking app for developing countries.

➜ KR 1: Improve weekly sign-ups by 15% by July.

➜ KR 2: Launch a marketing campaign in every language by August.

➜ KR 3: Establish at least one ATM-access point across all countries by September.

A “Good Objective” should be:

• Meaningful — connect to the mission and top priorities of the organization/team.
• Audacious — represent a significant change from the current state.
• Inspiring — motivate and urge the team or individual to work towards it.

A “Good Key Result” should be Specific, Time-bound, and Measurable.

Key Results can be — Input (Things that you control. e.g., reach out to x customers, design and build XYZ features.), Output (The effects of your inputs. e.g. get x customer to agree for a demo, fewer than 2 bugs per feature) or Outcome (The ultimate desired end result. e.g. convert 3 customers, improve average customer rating by 0.3)

Outcome key results can be more difficult to define but they can help uncover the underlying challenge you are solving more directly than an Input or Output. On other hand, Input Key Results are within your control and can be a leading indicator in many cases. There is no one-size-fits-all recommendation for the type of Key Result to use and in most cases, you will end using all three.

Example:

Objective: Design a UX so intuitive that there are no customer service inquiries.

➜ KR1: Design matches 100% of customer requirements.

➜ KR2: Fewer than 1 UX-related customer service inquiries per week.

➜ KR3: Scale infrastructure to support 100,000 users by end of quarter.

OKR Mindset

OKRs are not “the sum of all your tasks”. OKRs are not BAUs.

OKRs the most important things you need to do to achieve over the next 30–90 days.

Think of the “Rock, Pebbles, and Sand in a Jar” analogy. If you start with putting sand into the jar, you will not have room for rocks or pebbles. You need to start with Rocks.

OKRs are your Rocks — the most important thing you need to achieve. Everyday tasks and OKRs can live together. Your existing processes and KPIs can live alongside your OKRs. But to achieve your mission you need to focus on OKRs.

A company should have anywhere between 3–7 OKRs per quarter depending on their size, while teams and individuals should have anywhere between 3–5 OKRs in a quarter.

Why OKRs?

Like any other goal-setting process, OKRs clarifies the expectations, enables objective measurement, and improves overall performance.

What makes OKR framework unique, and much better than any other goal-setting framework, is the focus on executing the ambitious organizational mission through more near term measurable goals, without losing the inspirational aspect of the mission.

OKRs give a sense of meaning and purpose to individuals and teams and helps them understand how their work relates to organizational mission, thus increasing engagement and motivation.

By focusing on what matters the most, OKRs help in prioritizing and adding structure to daily tasks and decision-making. This also helps people feel more grounded in times of uncertainty.

Writing OKRs

Step 1: Identify Objectives — Brainstorm and think about the most important things that you need to achieve in the next 30–90 days. Write them down.

Step 2: Evaluate your objectives:

• 🗹 Is it a significant change from the current state?
• 🗹 Is it concise and uses simple language?
• 🗹 Is it inspiring?
• 🗹 Is it connected to the team or the organization’s mission?

If the answer to any of these is NO, rewrite your objectives, and evaluate again.

Step 3: Identify Key Results — For each of your objectives, identify 3–5 biggest things that you would have to change in the next 30–90 days to make the objective reality.

Step 4: Evaluate the key results:

• 🗹 Are they specific and unambiguous?
• 🗹 Are they time-bound?
• 🗹 Are they measurable?
• 🗹 If you achieve all your key results, will you achieve the corresponding objective?

If the answer to any of these is NO, rewrite your key results, and evaluate again.

Step 5: Once you have gone through steps 1–4, share your OKRs with a peer or manager for feedback. Refine further if needed.

Implementing OKRs — Best Practices

1. Buy-in: Leadership buy-in is critical for the successful implementation of OKRs. Without the company’s leadership spending enough time thinking through and communicating the organization-level OKRs, the whole implementation is likely to fail.
2. Give it time: It takes at least a couple of quarters for employees to get comfortable with the OKR framework and mindset. Get a commitment to run it for at least 2 quarters without looking for any magic to happen. During this phase, focus on showcasing small benefits — good OKRs practices followed by teams, teams with the highest compliance, teams/individuals for whom OKRs have made life easier, etc.
3. Coaches and Advocates: It’s good to have an OKRs Coach to talk to the team when you launch. If you can’t afford that, identify few people in your organization who can act as OKRs Advocates — who have practiced it earlier or are familiar with the concept.
4. Transparency: OKRs should be visible to everyone. Apart from creating a culture of transparency, making OKRs public increases the commitment to follow through on them. It helps reduce the effort required to align OKRs across the organization.
5. Alignment: You don’t need to spend time ensuring perfect cascading OKRs from top to bottom. The transparent nature of OKRs prevents employees from siloing themselves from the rest of the organization. Follow a market-based approach where individuals create their own OKRs by looking at the company and team OKRs. Managers can then just ensure that OKRs are not grossly out of alignment.
6. Readjustment: OKRs are meant to be flexible. You should readjust your OKRs, even during the middle of the quarter, when you find your OKRs are not the “most important” things you need to achieve in the next 30-90 days. It doesn’t matter if it’s due to shifting business priorities or any other factor.
7. OKR Cycle: Typically, the senior leaders should start brainstorming about the OKRs 2–3 weeks before the quarter begins and communicate the company-level OKRs on the 1st day of the quarter. The respective teams should then create their own OKRs and share them with them by end of 1st week. Individuals should then create their quarterly OKRs by end of 2nd week of the quarter. The status of KRs should be updated as progress happens and discussed during monthly/weekly 1:1 meetings with the manager. Toward the end of the quarter, individuals and teams should score their OKRs, perform a self-assessment, and reflect on what they have accomplished.
8. Reflection: At the end of the quarter, before you move on to the next, you should reflect and contextualize your graded OKRs — what contributed to your success, what obstacles did you encounter, could you have written your OKRs differently, were you audacious enough with your objectives, etc. The lesson learned from these OKRs should be used to write better OKRs for the next quarter.
9. Don’t link it to compensation: When you directly link OKRs to compensation, employees start sandbagging — under-promise and over-deliver. Instead of stretching for the amazing, they are incentivized to focus on merely attainable and incremental goals. There are many different methods to determine bonuses and salary raises. How much one has stretched and achieved in their OKRs can further supplement those methods, but should never be used directly in a formula to determine bonus or salary.

Don’t let the best become the enemy of the good.

FAQs

• Should every employee own OKRs?

➜ If an employee has a degree of autonomy to decide what they should work on, they should own OKRs. If not, they should not own individual OKRs but should contribute towards team OKRs. They can still own learning or self-development OKRs.

• How to track and grade OKRs?

➜ Objectives can be tracked by marking them as — “On Track”, “Behind” or “At-Risk”. Key Results can be marked as “Complete/Incomplete”, “Yes/No” or percentage completion. At the end of the quarter, you should reflect on the overall objective and score it.

• Can we have both annual and quarterly OKRs?

➜ Yes, you can. If you are having both annual and quarterly OKRs, some of your KRs from the annual objective may become quarterly OKRs. Or you may have 1–2 annual OKRs focusing on long-term priority and independent from quarterly OKRs. John Doerr, author of the book “Measure What Matters” says, “The best OKR cadence is the one that fits the context and culture of your business.”

• Can we have only annual OKRs?

➜ It’s generally recommended to have quarterly OKRs to maintain a focus on execution, continuous progress, and feedback. Even if you have annual OKRs, you should have mandatory scoring of your annual OKRs every quarter.

References

1. https://www.whatmatters.com/
2. Book: WORK Rules by Laszlo Bock

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All About OKRs