Objectives & Key Results and How to Use Them
Are you tired of setting goals that never seem to go anywhere? Are you looking for a fresh and effective way to inspire your team to aim higher and achieve more? Look no further than OKRs.
This widely-used goal-setting technique has helped some of the world’s most successful companies, like Google and Amazon, achieve their ambitious objectives. With its focus on setting significant, concrete, and measurable objectives, OKRs can help you and your team focus on what truly matters and make a real difference.
In this guide, you’ll discover what OKRs are, how they work, and how you can use them to achieve your goals. You’ll also find examples of OKRs in different industries to help you get started. Don’t settle for mediocre goals any longer. Embrace the power of OKRs and unlock your team’s full potential.
What Is an OKR?
OKR is an acronym meaning objectives and key results. It’s a goal-setting framework to encourage people to think big and set aggressive, inspirational goals. The act of setting OKRs and regularly measuring their progress encourages people to tackle huge problems and focus on more than just their day-to-day tasks.
The OKR framework is built around three building blocks:
- Key Results
- Initiatives (optional)
Objectives are goals that are significant, concrete, and clearly defined. More importantly, they should be inspirational for the person, team, or organization that is using them.
Every objective should have a few key results. These quantitative metrics are the KRs in OKRs. They’re the things that you measure to determine your progress towards each objective. Key results are real numbers that are objectively measured, not vague ideas or feelings.
Objectives can also be supported by initiatives, which are the big things you are actually doing to reach your goals. Tracking large initiatives often falls into the realm of project management, because these initiatives can be broken down into tasks and milestones along the way.
Where did OKRs come from?
OKRs have a rich legacy, starting in silicon valley tech companies. The concept of objectives and key results was officially created by Andy Grove at Intel in the 70s, but his work was heavily influenced by the writings of Peter Drucker and his concept of Management by Objectives (MBO). John Doerr was at Intel at the time, and later took those ideas to Google. Larry Page publicly credits OKRs with Google’s early success. From there, the concept spread all over tech startup culture to Amazon, LinkedIn, and more. More recently in 2017, Doerr chronicled the growth of the OKR methodology in his seminal book on the subject, Measure What Matters.
Benefits of OKRs
There are many advantages to using OKRs, including inspiration, more effective communication, enhanced transparency, and a better understanding of goals. OKRs help companies, teams, and individuals with goal-setting, often with inspirational moonshot targets.
To describe the key benefits of the OKR methodology, John Doerr created another acronym — FACTS. Each letter stands for the following:
- Focus: OKRs enable companies to concentrate on several priorities, typically no more than five per team or department.
- Alignment: OKRs offer clarity on how each goal aligns with the broader purpose of the strategy.
- Commitment: OKRs inspire dedication from the participating teams to complete tasks within an established period.
- Tracking: OKR metrics allow businesses to track progress with an objective and provide insight on whether or not they need to modify their approach.
- Stretching: OKRs often encourage teams to reach beyond set objectives and fully realize their potential to make a more significant difference.
OKR vs. KPI: What’s the Difference?
Since they share similarities, OKRs are sometimes confused with key performance indicators ( KPIs ). It’s true; KPIs do measure performance, but there are still significant differences with OKRs.
One of the biggest differences between KPIs and OKRs is that OKRs are temporary. For example, a team may set an OKR at their quarterly meeting to improve customer retention by 10% by their next quarterly meeting. These time-bound goals set OKRs apart from KPIs, which are often measured regularly for years. OKRs are built to change. KPIs are not.
Another huge difference is that OKRs are more about setting ambitious goals. One of the big concepts behind OKRs is to be inspirational and shoot for the moon. A team can rally behind aspirational stretch goals that may be a little out of reach. Key performance indicators, on the other hand, have realistic goals. It’s expected for OKRs to fall short, where a KPI that’s under its goal is a problem.
How are OKRs used at different organizational levels?
The OKR cycle is most commonly on a quarterly time frame. It starts with a meeting where people review and modify their existing OKRs, create new OKRs, and archive OKRs that are no longer needed. Once these goal management sessions are done, OKR owners then measure progress until the next quarterly meeting.
Some parts of the OKR process are top-down, and other parts are bottom-up.
Top-down cascading OKRs take an entire company’s high-level objectives, and drive that strategy down to department OKRs. Key results at a higher level become objectives at a lower level. This encourages everyone to contribute towards the same big-picture company goals.
For example, let’s say a company objective is “Become the leading consumer solar provider in the region.”
The company level key results could be:
- Sell 60% of consumer solar panel sales in the region
- Exceed 90% customer satisfaction for new installations
- Increase brand visibility by 25%
- Open a retail showroom by next year
Then, in a top-down approach, these company key results become departmental objectives. The sales department starts with “Sell 60% of consumer solar panel sales in the region” as an objective, and they might decide to measure these key results:
- Hire ten new sales associates
- Increase the number of solar panels by 35% over the last year
- Implement monthly sales promotions
- Implement quarterly internal training sessions
By taking a top-down approach, organizations can take company OKRs and make them applicable to the entire organization.
OKRs also work in a bottom-up approach. For many companies, individual OKRs are part of employee performance reviews. Employees set OKRs with their managers, and then review their OKR progress in quarterly check-ins. This process of employees setting individual OKRs for themselves drives employee engagement and encourages personal stretch goals.
These individual OKRs can then roll up to the team level. Since teams set their own team goals with their team leader, team members can share their own personal OKRs and suggest how the team can incorporate them into team OKRs.
How to Write Great OKRs
Since good OKRs are highly specific, developing them precisely may be challenging at first. If your business needs assistance formulating OKRs, there are plenty of educational resources available like recorded webinars and instructional videos to navigate the process. You’ll also want to consider the following tips for crafting meaningful OKRs:
- Align your OKRs with your company’s overall goals: You should design OKRs to support your company’s vision and mission. Make sure that your objectives are aligned with your organization’s strategic goals.
- Be specific: Your objectives should be clear and concise. Define what you want to achieve and why it is important. Use measurable goals to track progress and gauge success.
- Be realistic: Your objectives should be challenging but achievable. Set targets that are within your team’s reach, but also require a little bit of a stretch to achieve.
- Collaborate with your team: Involve your team members in the OKR development process. Encourage their feedback to ensure that everyone is committed to your goals.
- Keep it simple: Avoid creating too many objectives or including too many key results. This can make the OKR process overwhelming and difficult to manage. Focus on just your most critical objectives and KRs.
- Review and update regularly: Regularly review progress against your objectives and adjust as necessary. OKRs are not set in stone and should be adjusted as circumstances change.
- Celebrate successes: When you achieve your objectives, take time to celebrate your success. This helps to motivate your team and reinforces the importance of setting and achieving goals. Most importantly, don’t get discouraged if things don’t go smoothly, especially if your organization is attempting OKRs for the first time. Companies with the best track records using the OKR methodology were once beginners, too, and their success represents years of practice integrating the methodology into their culture. Many of them have shared their stories online or in books, and you can learn from their experience.
While no two organizations are exactly alike — even those within the same industry — OKRs have the same structure across all sectors. To get a better idea of what an OKR may look like for your organization, here are a few OKR templates for common industries.
Objective: Increase user engagement
- Increase monthly active users by 18% by the end of the quarter
- Increase number of daily logins by 5%
- Increase user comments and shares by 12%
Objective: Improve customer experience
- Achieve a customer satisfaction score of 90% by the end of the quarter
- Reduce call center hold times by 30%
- Reduce customer complaints by 20%
Objective: Improve patient outcomes
- Reduce the average hospital stay length by 10%
- Increase patient satisfaction scores to 85%
- Reduce readmission rates by 5%
Objective: Increase revenue
- Increase revenue by 10% by the end of the year
- Reduce customer churn rate by 2%
- Increase customer lifetime value by 10%
Objective: Increase production efficiency
- Reduce defect rate by 5% by the end of the quarter
- Increase production output by 5%
- Reduce production costs by 8%
Bring your OKRs to life
Ready to take your goal-setting game to the next level? Strategy execution software like Spider Impact helps incorporate OKRs into your overall business strategy. With data integrations that make tracking progress towards your goals a breeze, OKR tools like Spider Impact can help you and your team stay focused on what really matters. Whether you’re just starting with OKRs or looking to take your goal-setting to the next level, Spider Impact can help. Book a demo today and see the difference it can make for your organization. Or, sign up for a free test drive . With the power of OKRs and the right tools at your disposal, there’s no limit to what you and your team can achieve.
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