Although the buzzword OKRs have been around since the 90s, only around 29% of working US adults are familiar with the term. Interestingly though, of the workforce who are acquainted with the term, a massive 95% believe they have a solid understanding of how their work directly ties into the company’s larger business goals.
If you’re not familiar with OKRs and how they can positively impact your company, then they are certainly worth paying attention to. With the onset of the Great Resignation in recent times, now it’s more important than ever to start to implement OKRs.
Perhaps you’re struggling to see growth in your business but are not sure how to achieve it, then bringing in OKRs could be the answer you’re looking for.
If you’re looking to boost company productivity while improving employee morale, then this article is for you. We answer everything you need to know about OKRs, including what they are, how they can lead to business growth as well as exactly how you can start using them. Read on to find out more.
What Are OKRs?
OKRs is an abbreviation for Objectives and Key Results. It’s a goal-setting methodology that can help your team define, set and track measurable goals. The purpose of this goal-setting framework is to help drive your company toward success.
The thinking behind it is that if a company shares its goals, and communicates this to its employees, they will have a better understanding of why their work is relevant. In turn, this leads to increased engagement and a greater feeling of the purpose of the work they are doing.
The History Of OKRs
Objectives and Key Results were first developed in the late 1960s by Intel CEO, Andy Grove. The theory held roots in Peter Drucker’s methodology mentioned in Management by Objectives (MBOs). It was then that OKR was first introduced and used as a framework that helped to define and implement Intel’s ambitious goals.
In later years, one of Groves’s students, John Doerr, went on to write Measure What Matters. This features a pioneering approach based on the foundations of what Grove laid out. In Doerr’s methodology, he set about pairing objectives with a goal a company wanted to achieve and what the key results were to prove they had achieved this.
Doerr went on to work on the board of Google. This is where he introduced the procedure of OKRs to Google’s founders, Larry Page and Sergey Brin. Because of this, he was credited with helping Google rapidly scale its business from a small team to a major company with over 150,000 employees,
Since then, the approach of OKR has been used by companies all over the world in a multitude of industries. They’ve helped to dynamically focus employees and resources on what the business’s most important and ambitious goals are to bring out tremendous growth. The technique is used to measure progress and is directly linked to how a team’s day-to-day work looks like.
What Are The Components Of An OKR?
The great thing with OKR is that they follow a simple but incredibly flexible template, It has been developed in such a way that it allows users to bend it to fit nearly every purpose. The standard statement is as follows;
- I will [objective] as measured by [key result]
In this statement, the Objective refers to the goal you want to achieve. It should be something specific such as driving an ‘Increase mobile sign-ups or ‘Improve staff morale’.
The Key Result is what you’ll use to measure your progress towards the objective. This is a metric you’ll use to track performance and progress towards meeting your goal. An example could be to redesign and launch a new mobile app or increase staff CPD time by 5%.
When you have completed your key results, you will have taken steps toward fulfilling your objective.
The Difference Between OKRs and KPIs
Both OKRs and KPIs are methods used to manage performance. They are both useful in providing value to a company’s progress, however, they provide this value in different ways.
KPIs are an abbreviation for Key Performance Indicators and are a way a team can track performance within a project. They differ from OKRs because KPIs determine the factors needed to achieve success in an organization.
An OKR is a framework used to set and achieve goals. Although they do have some similarities to each other, when it comes to OKRs vs KPIs, they differ because of the relationship between an objective and the key result.
OKRs allow for a more holistic approach and are better at allowing a team to think about how their day-to-day work relates to the company goals. A team may use a combination of KPIs and OKRs and they can be interwoven.
Also, OKRs are a strategy execution framework, in contrast, KPIs focus more on the operating metrics and are used to track and measure the status of tasks and activities.
OKRs also encourage the discussion around what tasks or activities matter most in a given quarter. OKRs focus more on the company’s highest priorities, communicate this across the whole team and dictate the tasks and allocation of resources for the next 90 days.
This differs from the methodology of KPIs which focuses on the progress of a given activity with dozens or hundreds of individual KPIs being tracked across a company to gauge how much progress has been made towards a goal.
Objectives and Key Results (OKRs)
- Based on a Strategy Execution Framework
- Have 3-5 Objectives and 4-6 Key Results
- They are time-bound for 90 days, or quarterly
- The task focus on the “What” and “Why” of work carried out
- Results are outcome-oriented
- They drive focus to the highest priority outcomes
- It enables vertical and lateral alignment
- OKRs cascade from the top and are authored locally by the team
- They feature leading and lagging measures
Key Performance Indicators (KPIs)
- Based on Operating Metrics
- They have 100s of measures
- The time scale is on-going
- Progress measured on activities
- It’s activity-oriented
- Progress is tracked against company activities
- Activities don’t provide context or learning
- There is no alignment
- Tasks are typically authored and managed from the top-down
- Little team intervention
- They feature lagging measures
How Do OKRs Give Your Business Clarity And Direction
Traditionally, businesses set high-level company-wide goals at the start of the year. Typically, these are forgotten about by the majority of staff which leads to it being difficult to track and measure the progress their employees are making, along with goal accomplishment.
Static approaches to goal tracking using things like spreadsheets can make it challenging to track progress. Furthermore, static systems aren’t always visible to everyone in the company nor do they show information in real-time. These are the main reasons businesses adopt an OKR model. However, there are loads more reasons why OKRs give your business clarity and direction.
- They help to connect and align your employees to the business goals
- They allow the companies vision to be shared
- They offer clear tasks to every team and individual
- They show how this task fits into the bigger picture
- They provide focused goals
- They help increase morale, purpose, and productivity
- They track real-time progress towards a goal
- They allow the whole team to see progress
- They can help make more effective and informed decisions
- They promote accountability and transparency across managers, teams, and employees
- They encourage management to set clear and specific goals
- They clearly show which goals or objectives are not being achieved
- They allow managers to allocate resources better
- They help to boost an individual’s engagement in work
- They allow employees to be involved in the goal-setting process
Who Uses OKRs?
OKRs are is a goal-setting framework that can be utilized by every type of business. They can work for small start-ups, and entrepreneurs right up to large-scale organizations with multiple teams. They can also be used in any sector from marketing to finance or engineering.
As long as you have a company with employees and a business road map with a set of goals, then OKRs can be used. In fact, we’d go as far as saying OKRs are vital for any leader or manager.
CEOs can make use of the OKR framework because of its effectiveness in communicating the company’s objectives. Targets can be defined every quarter to help with the company’s growth.
The CEO can define the big, aspirational long-term goals to their staff in a transparent way with the aim of inspiring teams. CEOs will be able to use the KRs to measure progress in real-time toward the Objectives.
Frontline managers can utilize OKRs because it makes reviewing the company’s Objectives much easier. They can use the information to set their own team’s Objectives so that they align with the OKR defined by the CEO.
It enables frontline managers to see with transparency what tasks need to be prioritized to meet the business’s goals and helps them to distribute resources within the team.
Do OKRs Work With Agile?
If you’re currently using Agile as a way to track progress within your teams, then it’s useful to know that OKRs won’t work with them.
Indeed, both OKRs and Agile can both be used to measure progress as well as plan tasks. However, OKRs strategy is based on an execution framework, and Agile works on an iterative product development framework.
OKRs specifically measure the progress a specific team has made towards achieving objectives, and in comparison, Agile doesn’t provide full-cycle visibility of how task drives business outcomes.
Essentially, OKRs, are tied to the business’s results. They provide more opportunities for teams to step back, analyze and scrutinize Key Results and look at how these work with the company’s Objectives. They enable staff to see directly how their work contributes to fulfilling the company’s strategy.
Will Adopting OKRs Require New Project Management Tools?
This very much depends on the structure of your company, and the needs of a small business in a single building will be very different from a large-scale multi-team company spread across various buildings and departments.
If you’re looking at implementing OKRs within your organization, you’ll need to consider your current technology stack, and of course, any anticipated needs. This may require adapting a new project management tool.
Having a clear set of goals is a bit like having a north star. They are what guide your team and what helps them to make relevant decisions on what work to prioritize and focus on. If your employees don’t have a clear understanding of how their work impacts and contributes to the company goals, it will cause problems.
Problems can happen if a team who is responsible for setting the worker tasks is unsure of what the company objectives are. They may be set tasks or assignments that aren’t aligned with the business goals, and this lack of knowledge and understanding is filtering down to other workers.
Another issue of workers not having a clear understanding of the relevance of their work is due to what tool is being used to set and track the OKRs. There is little point in setting OKRs and the related tasks if no one is referring back to them regularly.
To combat this, the tool you use for your goal-setting framework should live in the same place work happens rather than a separate application altogether. The software should be intertwined into how work is carried out so that employees are actively reminded of why the work they are doing is relevant, helping them to actively work towards the goals every day.
Using An OKR Template
By using an OKR template, you can efficiently set objectives and key results that your team can use. Although there are several ways of doing this, it should be clear to see the information and intuitive to use.
Rather than starting from scratch at the beginning of each business quarter, it’s easier to use an OKR template and fill in the predefined fields for each of the objective and key results.
This helps you to standardize the OKR goal-setting process and will help form a roadmap for success. By following the same format, it becomes much quicker to fill in, but also, employees know exactly where to find the information they need.
You could create an OKR template using a static document like Excel or Google Sheets, however, these do have their limitations and can be difficult to see visually how well a goal is progressing.
We advise using one of the project management tools below to create your OKR template. This should be a tool that can integrate into other areas of your business as opposed to a stand-alone application that has to be logged in to.
Benefits Of Using Project Management Software
- They can show progress towards initiatives in real-time
- It’s easy to update timeframes if priorities change
- A template can be saved and reused every time new goals are set
- The goal-setting process can be standardized across the entire team and the company
- It ensures that goals don’t get lost as they are created
- They use a live platform that saves as you go
- It makes it easy to share relevant documents
- It keeps all your information in one place as opposed to sifting through emails
- Tasks can be assigned quicker to different staff in the case of an emergency or absence
By using an application that integrates seamlessly into the daily lives of your employees, they will have a much clearer and more transparent view of why the work they are doing is relevant, and how it fits into the overall goal.
Everyone can track progress in real-time.
OKR-Friendly Project Management Software
Although there are lots of project management software and apps out there, not all of them are geared up as well to help manage OKRs. The best OKR software will streamline the OKR process for you.
They should let you easily set, track, and measure your goals and results as well as provide a visual overview of how well a goal is making progress in real-time.
Below are our top choices of OKR-friendly project management software. They all help the project managers to assign tasks and to track their progress and performance. They will also help managers to align an individual or team with the relevant OKRs to meet the company goals.
This is one of the top-rated productivity and OKR tools and is used by small teams right up to large companies. It has some advanced features, one of which includes team management. This may be particularly useful if a large portion of your workforce doesn’t work in a single office.
ClickUp allows you to set goals and targets for larger teams as well as personal OKRs. In ClickUp you can assign a due date, the team member responsible for the goal, plus a breakdown of the goal that has been assigned. It also clearly states what the measurable targets are in the key results. You can also assign more than one target for a goal.
Once your targets and goals have been set up in ClickUp, you can then select an option to track progress to see how close, or far away, you are from achieving each target. Progress is displayed on bold and easy-to-see charts on the Dashboard. Goals can be assigned to folders, so it’s easy to organize which team or department is responsible for a particular goal.
There’s also a nifty little feature that sends out weekly scorecards. This can help productivity as it shows teams what goals have been achieved each week, what goals are still in progress, and also do a shout-out to team members who are contributing the most to the company’s OKRs. This helps to boost team morale and keep teams motivated.
This is a great app for helping businesses prioritize their goals, assess their progress, and achieve better outcomes. Once you sign up, one of their in-house onboarding specialists will assist you with the setup process, if you need it. They will walk you through how to create powerful OKRs with different hierarchical structures. If you prefer to work it out yourself, this app also comes with several guides and OKR templates.
Their dashboard gives an entire company an overview where your employees can see not only the company’s overall vision but clear graphs of how the objectives assigned to them are doing. As a project manager, one of the useful features of Profit.co is the ability to customize specific OKR performance periods and review cycles.
Progress charts are updated weekly and there’s the option of filtering and exploring specific team or departmental information to assess their performance. Profit.co also makes use of real-time heatmaps to see what team members are looking at and working on.
This is a multipurpose OKR management app that brings together goal-setting for cross-functional teams. It does this by helping them to capture ideas, plan and set schedules, as well as track progress. Aha! is a popular software solution for product and marketing teams as it allows both customers and non-Aha! users to submit product ideas via an ideas portal.
Aha! Allows project managers to build strategic roadmaps, visualize progress and specify clear OKR targets in real-time and with measurable results. It also allows for the customization of workflows so they can be tailored to how different teams work.
This app also features real-time document editing, which is a useful attribute if you have different teams in a meeting who need to build on ideas together
Weekdone is another dedicated OKR software that focuses on setting clear structured goals with real-time measurable outcomes. One of the nice features of Weekdone is that it’s one of the top OKR management apps for boosting employee morale.
Any team member can upvote another team member. This is transparent to the rest of the company, who can see which team member did the upvote, and to who the upvote was given. This is a great way to make employees feel valued and encouraged.
This is an intuitive platform where it’s easy to track and share goals among the team, with weekly check-ins to track what has been achieved. Weekdone also has a great feature of being able to organize one-on-one meetings within the software as well as feedback-giving functions.
Also, if you need to set yourself a reminder, there are private notes functions to let you jot down personal messages to yourself.
If you liked the employee morale features in Weekdone, then similarly 15Five allows for this. 15Five is another great performance management software that’s known for its High Five feature and one-on-ones.
Like the other management software we’ve mentioned, 15Five has excellent OKRs goal-setting capabilities. It also makes use of heat-mapped dashboards so project managers can see what individuals are looking at.
15Five makes use of detailed reporting insights with weekly check-ins for team performance and feedback. This is one of the most employee-centric apps thanks to the15Five having 30 evidence-based surveys that you can send out to employees.
How To Use OKRs
It can be confusing knowing when and how to use OKRs. When done badly, they won’t have the desired impact you’re after, but if you use them correctly, they can transform your company’s growth and goal achievement.
Essentially, any objective you set should be aimed at encouraging your employees to prioritize and align the work they are doing with the goal of the business. You should be asking yourself if your staff understands the set objectives, and can see how they contribute to the company.
OKRs can be used at any point in the business year, most commonly they are used at the start of a new calendar or tax year, and then dived into quarterly goal-setting strategies. You can also use OKRs on a project basis.
The Objective is a statement of intent. This is where the organization or team wants to go. It doesn’t necessarily need to be the end or final result, but it should be something that’s on the company’s roadmap to success. An Objective is not meant to describe or explain how the team will get there. When you’re thinking of Objectives, they should meet the following criteria.
An Objective should describe the future state of the company. Although a company might have ambitious plans, in the long term, it’s a good idea to break these down into stages. This is called the road map. The Objectives should aim to inspire and motivate your staff and give them a sense of purpose.
Objectives that are either too ambitious, or vague won’t give enough structure or appear unachievable. They need to motivate your team.
Objectives are not meant to have numbers or data in them. They aren’t supposed to be measurable. This is the purpose of the Key Result
Short or Long-Range
Although you can have Objectives that are months or years down the line, these can appear a bit lofty. It’s a good idea to have these on your roadmap, however, it’s also important to have shorter-term Objectives that can be achieved within a matter of weeks, months, or quarters.
Aim for 5 or Less
It can feel overwhelming if employees are bombarded with a great long list of objectives, and it can distract them from what’s important. As a loose goal, stick to between 3-5 objectives per quarter to keep the focus laser-like.
If you find yourself with a list reaching double figures, then it’s probably a sign that you need to enlist another team to delegate some of the objectives.
Setting Key Results
Setting ambitious Objectives and sharing these with your employees can help to inspire your teams to reach high. But you might be wondering how to work out if they’ve successfully achieved an Objective. A Key Result is a measurable outcome that helps to move the associated Objective forward.
Key results should have a number associated with them. This is a target that clearly defines the completion of a task.
We mentioned earlier that Objectives can be at any time point in the future. Unlike Objectives, Key Results are designed to be completed every quarter. You may need several Key Results to complete an Objective.
4-6 per Objective
Like there’s a limit to the number of Objectives you should give to a team, there’s also a limit to the number of Key Results linked to an Objective. The purpose of this is to focus people’s energy, time, and resources. Aim for between 4 and 6 Key Results per Objective.
It might feel more natural to think of a Key Result as a single specific activity. However, a great Key Result describes the outcome achieved by completing that activity.
Examples of OKRs
While you’re learning about the methodology of OKRs it can be a bit confusing to get your head around. We’ve just talked about the components of an OKR and what they should and shouldn’t be. In this section, we’re going to look at an example to put this into context.
‘Create an employee experience that allows all members of the team to attain their greatest potential’
- This is an aspirational objective because it describes a goal
- Goals will inspire and motivate the team
- The objective is not measurable
- The objective doesn’t attempt to define how reaching this goal will be measured
- This objective works without a time frame
- This objective could last several months or even years taking several quarters to achieve
For the Objective we’ve exampled above, these could be four possible Key Results.
- 80% of staff understand our company strategy and goals and they feel confident about how their work contributes to them
- Participation in group strategy sessions increases from 8% to 16% for employees to build relationships with other departments
- <4% increase in under-represented groups for management roles and new hires
- <5% increase in staff CPD time and skills-specific training
- Each of the Key Results is measurable with a numerical target associated with it
- The team can immediately identify when a target has been achieved
- These Key Results describe what will be worked on in the current quarter
- These KRs should be achieved in 90 days and no longer
- There are 4 Key Results for the one objective
- It meets the guideline of between 4-6 KRs which makes it easier to focus people’s time and resources
- The Key Results are outcome-focused
- The KRs clearly define and describe an outcome and not a specific activity
Who Leads The Implementation Of OKRs In A Company?
Depending on your company size and structure, you might be wondering who will lead the implementation of OKRs within a company.
Ideally, it will be most effective if it’s led by team members who are responsible for company strategies. This could be the CEO or a managerial role.
The most important step in adopting an OKR strategy successfully is by getting the go-ahead of the top executives. Whoever is on the Executive Leadership Team will be the ones who validate the value of what OKRs can bring to the company.
The Importance Of Connecting OKRs With Monthly Business Reviews
It’s important to connect OKRs with Monthly Business Reviews (MBRs) as well as weekly status reports. They provide teams with valuable opportunities to realign any targets and to measure progress towards a goal.
Reviews should be scheduled into weekly and monthly meetings to ensure there’s no disconnection between what work should be a priority, and what work is actually being done. This also helps to account for any strategic conversations that have taken place during the week. These review meetings should purely focus on the OKRs and have a strategic emphasis.
MBRs should feature reliable and tangible data that can accurately display KR progress so that team leaders and CEOs can make efficient and well-informed business decisions.
Connecting OKRs to MBRs ensures that the relevant people attend the meetings with a clear understanding and any relevant data on current progress towards the Objectives. They should also know whether or not they are on track to meet the KRs, or if any risks or problems have arisen.
The Best Practices For Setting Great OKRs
To use OKRs effectively, organizations and teams need to define their strategy. One way of doing this is to determine where to allocate their teams’ resources. Here are some other things you should be conscious of when you are setting OKRs.
- OKRs should ideally be set by the end of the first week of a quarter
- OKRs should be set not any later than the third week of the quarter
- OKRs should allow the teams to have enough time to achieve each KR
- Keep on track by dedicating ample time for reviewing KR and progress
- Reviews should happen at the end of each quarter
- OKRs should be focused on what the most vital outcomes are for that specific quarter
- Remember that having 15 KRs does not equate to 15 activities a team has to do, it refers to 15 outcomes
- Any KRs set should be linked to moving the Objective forward
Do You Set OKRs Quarterly Or Annually?
Objectives are designed to be aspirational goals. They should describe a future state and be written and shared to motivate employees with a sense of purpose.
These aspirational goals may take multiple quarters and even years to reach, therefore an Objective is not time bound as they will frequently take over one quarter to complete.
In contrast Key Results, are specifically created every quarter and should state what can be achieved in that period. Therefore, every 90 days a team should set new KRs.
Can OKRs Fail And Why?
No matter how much time and care has been taken over adopting OKRs within your organization, on occasions, they can fail. It can take time, practice, and continual iterations over several quarters to see results. If done properly, you will be rewarded for your efforts. Here are some reasons why OKRs might not work.
New Name, Same Process
You may already have a process in place for goal-setting, but are still doing the same old thing but calling it the OKR method. Your team should fully understand the framework and strategy so you can successfully implement OKR. Just renaming something that you’re already doing as ‘OKRs’ is a recipe for failure.
Using the Acronym Without the Intent
If you fail to communicate the purpose of switching to OKRs, then the likelihood is that it’s not going to be adopted by the greater organization. You should communicate the reasoning behind it.
Set It and Forget It!
With many things, the intent is there, but the continuity and perseverance aren’t. It’s the same with OKRs. You’ve invested the time to set up your OKRs at the beginning of the quarter, and there’s a buzz and excitement at first. However, this excitement dwindles as the quarter goes on, and everything is forgotten about until the last week of the quarter when it comes to measuring progress.
To ensure successful OKRs, you need to keep chipping away at the KRs and not just ‘set it and forget it and hope that somehow the magic will work.
Hire a Fractional COO
If you’re looking for more business advice, including using OKRs, you could enlist the help of a Fractional COO. Services can include
- Research and execution of business strategies, and SOPs
- Determination of KPIs
- Long-term strategy planning and execution
- Daily oversight of operations in all departments
- Evaluation and implementation of productivity SOP’s
- Data analysis and creation of a data-driven plan of action
- Manage partners/vendors
What Does Your Business Strategy Look Like?
Are you ready to start using OKRs and see how they can transform your business’s growth?
Hiring a business advisor is a major decision in any business, no matter how established you are, and shouldn’t be taken lightly. If you’re thinking of utilizing the knowledge and expertise of a business consultant, then contact our experienced staff at Kamyar Shah.
Speak to one of our advisors, who will guide you through the most up-to-date methods and strategies from a Fractional COO to help improve your business leadership capabilities and organization
Each of our consultants has their own specific field of expertise and will work with you on a growth strategy. Whether you’re a start-up company with a small team or an established business with a multi-faceted team, we can supercharge your growth. Contact us today to arrange an appointment.