Ultimate Guide to Objective and Key results – OKR Meaning and Examples
3 April, 2023
Do you dread setting goals for your organization as you don’t see useful results? Do you find measuring progress on your most important business metrics and goals difficult? Do you fail to align your team members toward shared business goals and priorities? If yes, it is time to step back and understand OKRs.
Irrespective of the size of your business, you can leverage the OKR framework to overcome big roadblocks to your company’s success. OKRs, or Objectives and Key Results, are a proven management framework for setting, measuring, and achieving aspirational goals.
OKRs enable your leaders and team members to align with your business objectives. They provide a simple way to track progress, stay focused on these goals, and motivate your team to do their best. But what exactly is the OKR framework, and how can you implement them effectively in your company?
In this blog, we’ll take a deep dive into the OKR framework – What are OKRs? History of OKRs, How to set effective OKRs? etc. Whether you’ve heard about OKRs for the first time or want to take your OKR implementation to the next level, this guide is all you need. Let’s get started!
What does OKRs mean?
OKR stands for Objectives and Key Results. It is a goal-setting framework consisting of Objectives (The Whats) and Key Results (The Hows).
Objectives define the end goal you aim to achieve, while key results are the tangible steps and measures you will use to track progress toward that goal. They should be SMART-specific, measurable, achievable, relevant, and time-bound.
Objectives can be aligned with company goals, while key results are the metrics you will use to measure success. The OKR system should be revisited regularly to check progress and make adjustments as needed.
OKR framework is a powerful tool for setting and tracking goals, providing a clear framework for setting objectives and measuring progress. They also help ensure that everyone in the organization works towards the same goals.
Additionally, this framework can measure individual, team, and organizational performance. By setting and tracking OKRs, organizations can ensure they are on track to achieve their goals and objectives.
History of OKRs
Andrew Stephen Grove, a Hungarian-American businessman and engineer who was the third CEO of Intel Corporation, is considered the ‘Father of Management Science’ and ‘Father of OKRs.’
When Andy came to Intel, he immediately realized it would be his dream company. He said – “In Intel, it does not matter what you know but what you can accomplish with whatever you have.”
Intel was doing great but still needed a more advanced system to help its people achieve more than the mediocre. He wanted to establish a management framework that valued ‘outcomes’ the most.
Getting inspiration from the MBOs (Management by Objectives) framework introduced by Peter Drucker in the 50s, he developed the OKR framework.
He simply described OKRs as the objective is ‘what’ you want to accomplish that matters for your business, and key results are ‘how’ you will get to that objective.
His version of the OKRs at Intel was called iMBOs, but it differed significantly from the original MBOs framework. John Doerr, an ex-Intel employee, and the OKR ambassador, called them ‘OKRs.’
John stressed the importance of combining bottom-up goals with cascading goals which revolutionized the goal-setting process. He believed everyone should own goals that align with the top-level business objectives.
Types of OKRs
All OKRs are realistic, but not all are 100% achievable. Companies like Google have established mainly two types of OKRs for their teams.
Committed OKRs
These OKRs are expected to be fully achieved within a specific time frame, typically a quarter. They are framed as 100% achievable, and the organization must provide all the required resources to achieve committed OKRs.
Example of a committed OKR
Objective: Increase the client base by 20%
KR: Ensure 70% of the sales team meet their targets
Aspirational OKRs
They are more ambitious and have longer timelines than committed OKRs. They are stretch goals that may not be 100% achievable within the given time frame, but they help people get out of their comfort zone and put in the extra effort. The team does not know how many resources they need for these OKRs.
Example of an aspirational KR
Objective: Increase sales by 60% in the coming quarter
KR: Achieve 90% customer satisfaction
You must clearly differentiate the two types of OKRs to avoid sandbagging and set the right expectations for people.
OKRs vs. KPIs
The primary difference between OKRs and KPIs is that you use OKRs to bring change to your business via outcome-based tracking and KPIs to keep your operations running smoothly.
Difference between OKR and KPI
| OKR | KPI |
|
|
| Example: Boost user engagement by 30% by the end of Q1 by launching a new marketing campaign and optimizing the UX. | Example: Increase the monthly active users from 100k to 120k by the end of the Q1 |
How to Set Objectives and Key Results
Before you read this actionable OKR-setting guide, understand that each organization has its unique business situation, goals, priorities, challenges, needs, culture, etc. You must pay attention to these things when creating any business strategy. It’s helpful to consult OKR experts and create your OKRs strategically.
Identify business objectives
Start by deciding the top 3-5 company objectives that align with its mission, vision, and short and long-term priorities. You must make the objectives specific, measurable, and time-bound.
For example, if you are a SaaS company, your top-level objectives could be to increase revenue, reduce customer churn, and enhance product experience.
Cascade objectives down
Once you have listed the main objectives, cascade the top-level objectives into the team and individual-level OKRs. Ideally, you should have a mix of top-down and bottom-up goals for enhanced team alignment with the main business objectives.
Everyone must be clear about their OKRs and how they link their work to the business outcomes that matter.
Break Objectives into Measurable Key Results
Break your objectives down into 3-5 measurable key results. These key results must tell you how to achieve the objectives and be trackable with numbers.
For example
Objective
Increase monthly recurring revenue (MRR) by 20%
Key Results
Achieve a 90% customer retention rate
Increase the number of new monthly subscriptions by 20%
Increase the average revenue per user by 5%
Reduce churn rate by 10%
Assign ownership
Ensure that everyone onboard the OKRs have clear ownership of their OKRs and are well-aware of them. This will help boost your team’s accountability when you review your OKR progress regularly.
Review and Update
Any goal-setting framework is not foolproof, and you cannot plan it impeccably. Regularly review your OKR progress to identify any discrepancies in the goals and essential business outcomes you want to achieve. Update your OKRs if necessary.
Use OKR Software
You don’t have to use the OKR tool in your company unless you have plenty of time and the patience to bear all the manual and slow work of managing OKRs on spreadsheets.
Another option is to use simple and fast OKR software to track and manage your OKRs effectively.
Benefits of Implementing the OKR management framework
Improved Performance Management
OKR software can help organizations and teams manage employee performance more effectively. The software enables managers to set objectives that align with the overall company goals and evaluate the performance of team members based on how well they achieve their objectives.
Additionally, OKR software can help managers identify top-performing employees and those needing additional support.
Better Decision-Making
OKR software generates real-time data that helps individuals and organizations make informed decisions. With the help of the software, individuals can monitor the progress of their goals, identify potential roadblocks, and adjust their plans accordingly.
The data generated by the software also enables managers to make informed decisions about resource allocation, project prioritization, and team management.
Greater Flexibility
OKR software provides greater flexibility in terms of goal-setting and tracking. The software enables individuals and organizations to set objectives that align with their specific needs and allows them to change or adjust their goals in real-time.
This flexibility ensures that teams and organizations can stay agile and adapt quickly to changing circumstances.
Improved Collaboration
OKR software encourages collaboration among team members. The software allows teams to share their objectives, track progress, and work together to achieve their goals.
It allows individuals to provide feedback, which can help to improve communication, build trust, and foster a sense of teamwork.
How to Measure OKR Progress
Measuring progress toward achieving OKRs (Objectives and Key Results) is critical to the success of the goal-setting framework. Here are some strategies for measuring OKR progress:
Set Key Results with measurable outcomes
Key Results should be specific, measurable, achievable, relevant, and time-bound (SMART). By making Key Results measurable, progress can be tracked, and success can be quantified.
Measurable outcomes clarify how much progress is being made toward the objective.
Establish metrics
Establish metrics to track progress toward Key Results. Metrics should be relevant to the Key Results and easily measurable.
Metrics can be quantitative or qualitative, depending on the nature of the Key Result.
Monitor progress
Regularly monitor progress toward the Key Results. Establish a schedule to review progress, such as weekly, bi-weekly, or monthly, depending on the duration of the OKR cycle.
Use a dashboard or other tracking tool to monitor the progress toward each Key Result visually.
Identify roadblocks
Identify roadblocks or obstacles that prevent progress toward achieving Key Results.
Regularly assess progress and identify why Key Results are not being met. Use this information to adjust strategies and tactics as needed to remove roadblocks.
Celebrate milestones
Celebrate progress towards achieving Key Results. Celebrating milestones helps keep employees motivated and engaged.
Celebrating success also creates a sense of accomplishment and encourages employees to continue working towards meeting OKRs.
Evaluate overall success
Evaluate the overall success of the OKR cycle. Determine if the objectives were achieved and, if not, why they were not achieved. Use this information to adjust OKRs for future cycles.
Best Practices for Managing OKRs
Align OKRs with company strategy
Ensure that the OKR management framework is aligned with the company’s mission, vision, and long-term strategy. This ensures that everyone is working towards the same goals and increases the chances of success.
Make OKRs clear and measurable
Objectives should be specific, measurable, and time-bound. Key results should be quantifiable and indicate progress toward achieving the objectives. This makes tracking progress easier and ensures everyone works towards the same goals.
Communicate OKRs effectively
Communicate OKRs to all stakeholders, including employees, managers, and executives. Ensure everyone understands the goals, their importance, and how they will be achieved.
Assign accountability and ownership
Assign accountability for each objective and key result to specific individuals or teams. This ensures everyone knows who is responsible for achieving each goal and who to contact for updates.
Review progress regularly with check-ins
Review progress towards achieving OKRs regularly, with weekly or monthly OKR check-ins depending on your needs. This allows for early detection of potential issues and makes it easier to adjust plans.
Celebrate success
Celebrate when objectives and key results are achieved at the individual and team levels. This recognition encourages continued progress toward achieving goals.
Adjust plans as necessary
If progress towards achieving OKRs is not on track, adjust plans as necessary. This flexibility ensures that the organization can adapt to changing circumstances and continue to make progress toward achieving goals.
Strategies for Communicating OKRs to Employees
Start with the big picture
Before diving into the specific OKRs, it’s essential to communicate the company’s mission, vision, and values.
This will help employees understand how their work aligns with the company’s overall strategy and goals.
Keep it simple
OKRs can be complex, but it’s essential to communicate them in a way that is clear and easy to understand.
Use simple language, avoid jargon, and provide examples to help employees visualize what success looks like.
Connect OKRs to employee goals
Employees need to see how their work aligns with the company’s goals and how their success contributes to achieving them.
Connect OKRs to individual employee goals and show them how their work contributes to the company’s success.
Use visuals
Visuals such as graphs, charts, and diagrams can help employees understand complex concepts more easily.
Use visuals to show progress towards OKRs and illustrate how individual contributions contribute to overall success.
Create a sense of urgency
OKRs are time-bound, so creating a sense of urgency around achieving them is essential.
Use language that conveys the importance of meeting the objectives and the consequences of not meeting them.
Celebrate success
Celebrate when employees achieve OKRs, both at the individual and team levels. Recognize and reward employees for their contributions to achieving company goals.
Celebrating success creates a sense of accomplishment and motivates employees to continue working towards meeting OKRs.
Conducting effective OKR check-ins
Check-ins are crucial to bring everyone on the same track as your top-level company OKRs. They also give you a reality check when you get too involved in your work and need help seeing the bigger picture of your business.
Stick to the agenda
Don’t let the meeting get sidetracked by getting into too much detail and starting on irrelevant topics.
Assign a check-in host
Let the host keep the conversations on track and ensure the check-in goes smoothly.
Check confidence level
Talking about people’s confidence in how likely they will achieve their OKRs helps identify challenges or areas that hinder progress.
Be open to any feedback and suggestions from OKR owners
Encourage everyone to participate and provide feedback to each other. It helps to strengthen communication and improve the OKR progress.
Come prepared and update your values before the check-in
This saves time and ensures that the meeting is productive.
Note down takeaways and create actions
This enables team members to problem-solve and move the needle on their OKRs.
Follow-up on previous incomplete actions
Discuss any incomplete actions and see why they are failing.
Recognize publicly
Celebrate any progress publicly, either in the meeting or in company communication. It boosts people’s morale.
Creating an Effective OKR System
Now that you have understood the basics of OKRs let us look at how you can establish an effective OKR management framework in your organization.
Define your objectives
Define the high-level objectives you want to achieve. These should be specific, measurable, and time-bound. Objectives should be ambitious but also achievable.
Break down your objectives into key results
Next, break down your objectives into smaller, more specific key results to help you measure progress toward achieving your objectives.
Key results should be measurable and specific, providing a clear indication of whether or not progress is being made.
Make your OKRs visible
It is essential to make your OKRs visible to everyone in the organization.
This will help to create transparency and accountability and will also help to ensure that everyone is working towards the same goals.
Set targets and track progress
Once your OKRs are in place, setting specific targets for each key result and tracking progress regularly is essential.
This will help you to identify any issues early on and to make any necessary adjustments to keep your team on track.
Encourage collaboration
OKRs are most effective when everyone in the organization works towards the same goals.
Encourage collaboration between teams and individuals to ensure everyone is aligned and working towards the same objectives.
Review and adjust regularly
Finally, it is important to review and adjust your OKRs regularly.
This will help you to identify any areas that are not working as well as they should be and to make any necessary adjustments to keep your team on track.
Tips to structure OKRs in the right way
Structuring OKRs correctly ensures they are effective and useful for the organization or individual. Here are some tips for structuring your Objectives and Key Results in the right way:
Start with a clear objective
The first step in structuring an effective OKR is to define a specific objective you want to achieve.
The objective should be ambitious but realistic and align with the organization’s overall vision and strategy.
Focus on key results
Once you have a clear objective, it’s time to identify the key results that will help you achieve that objective. Key results should be specific and measurable and indicate progress toward achieving the objective.
Prioritize and limit
It’s essential to prioritize your objectives and key results to ensure that you focus on the most important areas. Limiting the number of objectives and key results can also help ensure you are not spreading yourself too thin.
Make it measurable
Measuring progress is essential to the OKR framework.
You should ensure that your key results are measurable, so you can track progress over time and adjust your efforts as needed.
Be transparent and collaborative
OKRs work best when they are shared and discussed openly within the organization.
Encourage collaboration and feedback from others to ensure that everyone is aligned toward the same objectives.
Review and adjust
Finally, it’s important to regularly review your progress and adjust your objectives and key results as needed.
Be flexible and willing to adapt to changes in the business environment or shifting priorities.
The Role of Leadership in Driving OKR Adoption and Success
Leaders must clearly communicate their and the company’s vision to their team and make them tangible through OKRs.
Train yourself
You must understand the OKR framework well to drive its successful implementation. Read books, attend workshops and webinars, and consult experts to learn how to execute OKRs well.
Tell the team why they need OKRs
Share how the OKR framework can help the team to transform the business by focusing on the things that matter the most for business success.
Tell them how OKRs help the business achieve its long-term goals and how their contribution can make a difference.
Involve the team in goal-setting
Encourage your team to brainstorm and create OKRs that align with the top-level company objectives. Help them understand how OKRs make their work more directional and how their actions will move the needle on the top-level company OKRs.
Set clear expectations about processes
Ensure your team understands the OKRs they own and follows a standard procedure and routine to update their progress, come for the check-ins, use a specific OKR software, etc.
Support and OKR champion
Estimate what resources you need to achieve your company objectives and provide the same to your people. Give them all the essential training, like workshops by the experts.
You must also have OKR champions responsible for successful OKR implementation in your organization.
Celebrate wins
Always celebrate milestones achieved, big or small. This helps to boost the team’s morale and encourages them to work more productively.
You can recognize them in team meetings or real-time through an OKR management platform.
Commonly made OKR mistakes
New companies often make OKR creation and implementation mistakes that affect organizational performance.
You must know that OKRs require you to implement changes in management so that you can leverage them. It’s not hard, but it takes some time to establish throughout the company.
Not differentiating between committed and aspirational OKRs
Committed OKRs must be achieved no matter what, whereas aspirational OKRs are challenging and hard to get.
Making committed OKRs aspirational encourages the team not to take them seriously and may focus more on achieving those OKRs.
Making aspirational OKRs committed encourages the team to focus on the aspirational labeled OKRs. In both cases, the chances of failure increase.
Confusing OKRs with KPIs and other metrics
OKRs are set to change the business for success, while KPIs track the BAU. OKRs tell you where you want your business to be in the future.
For example, you set a KPI for website traffic but do not have an OKR for improving website content and user experience.
Creating too many OKRs
Unnecessary OKRs can cause confusion, lack of focus, and dilute the efforts of your people.
Not having a mix of top-bottom & bottom-up OKRs
Having only cascading OKRs can lead to disengagement as they may not fully align with the individuals in the teams.
Having about half of the bottom-up OKRs helps team members align better with the top-level objectives and engage them better.
Not being flexible with OKRs
When circumstances demand change, business goals must be adjusted to focus on the right priorities. For example, the revenue OKR for a quarter may need to change when the market conditions change.
Using spreadsheets for medium to bigger teams
Spreadsheets can be cumbersome to manage when your team size is big. A simple OKR management platform can boost the team’s productivity.
Not having an OKR champion
Every organization must have someone championing the OKR framework. OKRs are simple but take time to implement. Team members need someone to guide them using the best OKR implementation practices.
Not following OKRs with change management
Change management is required when implementing any new process or tool. A company introducing OKRs without proper training and communication may lead to less adoption rate.
OKRs for employee engagement, development, and growth
Personal OKRs are powerful because they allow you to focus on the quality of your work.
For example, you don’t just complete a few courses for the sake of it but produce evidence that shows how you applied your learnings from any particular course.
Identify your career goals
Decide on what you want to achieve in your career in a year. For example, become a manager in your domain.
Example: To become a project manager, you can create an OKR to complete a project management course within the next quarter.
Break your main goal into KRs
Set more specific smaller goals that will help you achieve your long-term goal. For example, learn a new skill.
Example: To acquire a new skill, you could set a KR to research and complete a relevant course within the next two weeks.
Regularly track your progress
Regularly check your progress and make adjustments to improve your performance. Celebrate your wins and learn from any failures.
Share your OKRs with your manager
Seek your manager’s feedback and support in setting and working on your development goals.
OKRs Success Stories
Engaging employees with ‘Check-in’ at Adobe
Adobe’s annual performance reviews were demoralizing and contributed to high voluntary turnover. In 2012, Donna Morris, HR Officer at Adobe, announced a new framework of continuous performance management called Check-in to replace the annual review process.
Adobe check-ins have three focus areas: Quarterly OKRs, continuous feedback, and career development conversations and initiatives.
These check-ins helped Adobe’s entire business operation by reducing voluntary attrition and fulfilling its four values – genuine, exceptional, innovative, and involved. OKRs helped them make these values tangible to each team member.
Adobe also observed improved employee engagement through specific and continuous performance feedback. Employees now know where they stand and how they’re providing value to the company with their actions.
Employees just need to find an organization where they feel they can make a real impact. At Adobe, their check-in framework is making that happen.” said Donna Morris.
Idagio’s commitment to deliver
Idagio, the Germany-based classical music app, has three main parts to its mission: aggregating content, easy navigation, and curation.
Essentially they want to recreate a record store experience online. However, they discovered their price stopped people from experiencing their app, so they introduced a free tier.
They created an objective – ‘Give the world free access to classical music by September 30. ‘ and supporting KRs for all the stakeholders.
They reached their objective in September and launched the free version of Idagio on November 19.
“It was challenging but also pretty inspiring. Our teams could feel that everyone was on the same page. Everyone understood it was all about freemium, and they had to finish it by September. It was inspiring.” said Birgit Gehring, Communications Director.
Examples of OKRs
Some examples of mixed OKRs to understand the framework and how to create effective OKRs.
Objective
Increase revenue by 20% in Q2
Key Results
Launch two new products in Q2
Increase sales from existing customers by 15%
Acquire 500 new customers in Q2
Objective
Improve customer satisfaction
Key Results
Achieve a Net Promoter Score (NPS) of 9 or higher
Respond to all customer inquiries within 24 hours
Reduce the average resolution time for customer issues by 20%
Objective
Increase employee engagement
Key Results
Conduct an engagement survey and achieve a score of 80% or higher
Host at least two team-building events per quarter
Implement one new employee development program per quarter
Objective
Reduce website load time
Key Results
Reduce website load time by 30% in the next six months
Optimize website images to reduce the file size by 20%
Reduce the number of HTTP requests by 10%
FAQs
Where can I find some more examples of OKRs?
You can find OKRs for different industries and companies on several OKR software company blog posts and detailed OKR resources such as OKR Academy on getjop.com
Can OKRs be used for individual goal-setting?
Absolutely, you can use OKRs to transform your life or specific aspects of it by setting meaningful OKRs. Here is an excellent personal OKR example by Peter Kappus, Organizational Coach.
How can OKRs help with alignment across different departments?
OKRs are all interconnected and serve the same purpose or goals, i.e., top-level business objectives. The OKR framework is especially effective because it connects individuals from different departments to the same objectives, bringing them on the same page and facilitating collaboration.
How can OKRs be used to drive innovation and creativity within a team?
OKRs push you to be more innovative because they are ambitious, make you more accountable, and encourage you to take the initiative and more risks.
What’s the best way to track progress toward an OKR?
Update the key results regularly, set specific milestones, conduct routine check-ins, and use data to derive valuable insights.
How can OKRs be integrated into our existing performance management process?
You can use a multi-functional OKR management platform that also allows you to conduct effective performance reviews.
How can we ensure that our OKRs are challenging but achievable?
If you are new to OKRs, you must remember that OKRs are ambitious and challenging but realistic. You may initially fail to create meaningful OKRs but experiment to improve with time.
You can also consult the OKR experts to ensure you have the right OKRs.
How can we prevent OKRs from becoming a source of stress for employees?
OKRs should motivate your employees, not scare them. If they are scary, you may have made some mistakes in creating them.
Communicate clearly, give proper training, create an OKR champion, and keep it realistic to make OKRs more relevant and motivating.
Additionally, you can follow some impactful employee engagement practices to motivate your employees.
Can OKRs be used in non-profit or public sector organizations?
Absolutely; here is an excellent example of Upsolve that turned their mission into reality with the OKRs.
How can we get buy-in from all levels of the organization to adopt OKRs?
The buy-in starts from the top-level leaders. They must believe that OKRs can help their team transform the business and boost individual performance.
Ensure all the top-level stakeholders buy into OKRs and then start training and educating the subsequent level stakeholders.
Do roll out the OKRs all at once if you have a big team. Start with one or two teams, learn through it, and then move forward to other teams. This way, you will have the evidence to back it up.
