Setting the right OKRs
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Modern work is full of jargon and acronyms. KPIs, QBRs, ROI, B2B — the list is seemingly endless. While they're irritating to some, these acronyms are a type of internal business language that helps us communicate quickly and effectively with each other.
Enter OKRs, or objectives and key results. Yes, it's yet another acronym to remember, but it's also an incredibly effective management method for aligning teams around shared goals and outcomes.
What are OKRs?
First, a brief history lesson. The OKR framework was first mentioned in a 1983 book by Andy Grove, Intel's third employee and former CEO, and was immediately praised for its simple, democratic, straightforward, and results-driven approach to management.
Later, another Intel employee John Doerr sang the framework's praises in a 2017 book, Measure What Matters, describing his experience implementing the system in close to 100 organizations since 1980. In more recent years, the framework was adopted by companies like Google, Adobe, and Netflix, which accelerated its use among organizations from early-stage startups to multinational corporations.
Now, to its definition. What is an OKR? OKRs are an important part of tracking progress through OKR goal setting. The main goal of OKRs is to connect company, team, and personal objectives to measurable results to all move forward in the same direction.
OKRs are typically set and evaluated each quarter and defined across each level of the organization: company-wide, team-wide, and individual. Let's break down each part of this effective goal-setting method.
Objectives: Essentially, objectives are your vision. They're the desired, qualitative outcomes agreed upon by your larger team or organization.
Smart, results-driven organizations set objectives that are bold, ambitious, and uncomfortable—some argue that it's actually wise to make sure that objectives are groundbreaking and close to unachievable.
Shoot for the moon, right? If your team happens to achieve an objective early, it's recommended to move the goal post, so there is always something to work toward.
Key results: Key results are milestones you pass on the way toward your objectives. They're the quantitative and measurable ways to track progress in achieving those outcomes.
Key results are challenging but achievable. Most importantly, your key results should directly ladder up to your objectives. If a team member has a personal objective they'd like to achieve, it's okay to set a few key results to help them reach that goal. But those key results won't be tied to how you evaluate performance at the end of the quarter.
OKRs are widely adopted for a good reason. Research shows that organizations that set clear OKRs have 3x greater operating margins in any given year. Harvard Business Review also reports that companies with highly-aligned employees are more than 2x likely to be top performers.
How to set the right OKRs
So how do you ensure you're setting OKRs the right way? It can seem like a daunting task, but with a bit of guidance and practice, the process will get easier and more intuitive each quarter and the benefits will show in your business results.
Choose 3-5 objectives
Why three to five? It's an achievable sweet spot. More than five objectives and your teams will lack focus. Fewer than three objectives mean you're not thinking broadly enough. Google recommends setting 3 to 5 key results for each objective, too.
Make your key objectives aspirational, not tactical. Use language that inspires and motivates your teams.
Maybe you launched a new version of a product and want to increase customer adoption. One objective could be to "Inspire clients to become brand advocates." This is a good objective because it's lofty, aspirational, and directly tied to company results.
Also, be sure to set OKRs that require your teams to stretch to achieve them. Goals that are too easy or too difficult have a demotivating effect.
Be specific, and don't fear numbers
Once you've set objectives, it's time to define timelines and quantify metrics for each goal. Don't shy away from numbers. If your objective is to turn clients into brand advocates, a way to achieve that goal might be to "establish a customer advisory board with 10 current customers.”
An executive team might set the company's overall objectives, but it's a good idea to have a quarterly OKR kickoff to align teams around key objectives and allow each team and individual to create their own key results to help achieve those objectives. Allow your teams to be flexible in their vision of reaching objectives. Key results must be measurable, but they don't need to be rigid.
Track progress and celebrate successes
Establish regular check-ins to ensure your teams are making progress on each of their key results. Encourage teams to celebrate small wins along the way rather than focusing on how much further you have to go. Even if your teams don't achieve 100% of their OKRs, any progress toward your company's goals is worth acknowledging and celebrating.
Know when to readjust
As we've discussed, objectives are ambitious, but they are not stubborn. Sometimes business priorities change and you’ll need to adjust your objectives to match a new vision. Other times, a key result becomes unattainable for a reason outside of your control. While it's important to be intentional when you set your OKRs, it's better to be flexible when things go awry rather than to set your teams up for failure or frustration.
Why do companies benefit from setting OKRs?
Not all goal-setting is created equal. In fact, even with the best-laid plans, companies fail to achieve their strategic goals 70% of the time. OKRs are effective because they lend clarity, focus, and collaboration to everyday work.
It's impossible to make progress toward a goal if you haven't set one. Objectives give your teams a clear roadmap they can use to directly align their day-to-day actions with a broader goal.
Working without a clear purpose and alignment to goals can feel a lot like spinning your wheels. Setting OKRs is a great way to improve employee engagement and keep teams working in lockstep together.
When teams are working toward the same key objectives, and success depends on achieving personal key results, teams are incentivized to collaborate cross-functionally. Communicating goals company-wide builds trust in leadership and fosters teamwork.
Establishing OKRs has many benefits, both strategic and cultural, for your company. But it's not just a set-it-and-forget-it framework. Tracking is an essential part of the OKR goal-setting method.
Of course, you'll track progress against your objectives and key results across the timeframes you establish for them, but it's also important to schedule regular check-ins toward your progress. These check-ins allow you to keep tabs on which teams fall behind and where goals might need adjustment.
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