Since the early 2000s, OKRs have been gaining in popularity as a tool for setting and measuring progress and success in organizations. OKRs (Objectives and Key Results) are a simple yet powerful way to keep everyone within a group aligned and focused on the most important things, and they can be used in businesses of all sizes.
If you're new to OKRs, this article will explain what they are, how they work, and how you can get started using them in your own organization.
What are OKRs?
OKRs stands for Objectives and Key Results. They are a framework for setting goals and measuring progress.
An Objective is a broad, overarching goal that an organization or individual wants to achieve. If you're familiar with the SMART Goal format, it's very similar, and should hit all the same qualities: Specific, Measurable, Achievable, Relevant, and Time-bound.
For example, an Objective for a company might be to "break company revenue record this fiscal year."
Now that we have an Objective, we need at least one Key Result to go along with it (but hopefully more than one).
Key Results are the specific metrics, KPIs, or milestones that will help you track progress toward an Objective. Key Results should be quantifiable, and they should be aligned with the Objective they are supporting.
For example, some possible Key Results for the above Objective might be:
- Increase sales by $200,000
- Improve customer retention by 15%
- Increase upsells to existing customers by 33%
- Launch new product in XYZ market
You can have as few or as many Key Results for an Objective, but 3-5 Key Results seems to work well in most situations. More than 5 starts to feel a little overwhelming. At the end of the day, you're the judge, and you should include as few or as many as you feel is appropriate to measure the success of your Objective.
OKRs can be used at the individual, team, and/or organizational level. They are a flexible framework that can be adapted to any organization, team or individual.
How I like to think of OKRs in a business setting is this:
The Objective is essentially a SMART goal.
The Key Results are the KPIs (Key Performance Indicators) that you need to improve upon, change, or impact in order to achieve said Objective.
How do OKRs work?
The key to making OKRs work is to keep them simple. Objectives should be clear and concise, and Key Results should be specific and measurable.
It's also important to involve the right people in the process. When setting Objectives, get input from all levels of the organization. And when tracking progress, make sure everyone has visibility into the data.
OKRs should be reviewed and updated on a regular basis. The frequency will depend on the organization, but most companies update their progress weekly or monthly, then review/assess & set new OKRs quarterly.
How to get started with OKRs
If you're interested in using OKRs in your organization, there are a few things you need to do to get started:
- Define the company's Objective(s). This should be a broad, overarching goal that everyone in the organization can get behind. You don't have to limit yourself to just 1, but adding too many will start to dilute that sense of direction. Keeping it at 3 or less is a good place to start, but regardless of how many there are, they should work together to illustrate the company's direction.
- Set Key Results for each Objective. Key Results should be specific and measurable, and each Key Result should be aligned with an Objective.
- Set responsibility. Assign each Objective to the person/people that will be responsible for the overall outcome of the Objective. The Key Results can then be delegated to the teams or individuals who are responsible for executing against those specific Key Results. Individuals should be responsible for a small handful of Key Results, so they can stay focused and make progress.
- Track progress regularly and make updates visible to all involved. Progress should be tracked and reported on a regular basis, so everyone knows how the company is doing. Honesty and transparency is key to any high-functioning team.
OKRs can be a great way to keep everyone aligned and focused on the most important things. By following the steps above, you can get started using OKRs in your own organization.
What Makes OKRs So Great?
The two biggest values behind using OKRs are alignment and focus.
By using this format to plan your goals, you're able to align high-level strategy with tactical execution. This approach to planning helps transform any leadership team's plans into action, cascading broad strategies from the executive level down to actionable tasks and duties at the team/individual level.
By reviewing the success of each OKR before writing the next batch of OKRs, you're easily able to determine what works and what doesn't, which can teach you what you should focus on next.
For example, if you write an OKR, then at the end of the quarter you've exceeded all of your Key Results, but you've failed to achieve the Objective, then perhaps you were focused on the wrong things. You can use this information to understand what activities actually drive success. Eliminate the work that doesn't drive your goals forward and focus on the things that actually matter.
Are OKRs right for me?
If you feel like your team is not aligned,
If your team lacks direction,
If you feel like your team is not focused on the right things,
Yes, yes, and yes, OKRs are right for you.
If you feel like you (or your team) is always busy, but always seem to miss your targets,
If you feel like you're constantly working, but spinning your tires,
If you feel like you could be spending your time on more valuable activities,