Table of Contents
What is OKR?
OKR is a prominent goal-setting methodology that helps businesses establish and execute strategies. It has several advantages, including a stronger focus on essential goals, increased transparency, and improved (strategic) alignment. OKR accomplishes this by aligning employees and their efforts with the company’s goals.
OKR comprises an Objective that informs you where you want to go and many Key Results that are the outcomes you need to attain to get there. All of the programs and tasks that will assist you in reaching your Key Results are referred to as initiatives.
The framework includes a set of guidelines that employees can use to prioritize, align, and track the results of their activities. OKR assists firms in bridging the gap between strategy and execution, allowing them to shift from an output-based to an outcome-based work style.
Understanding Objective, Key Result, Initiative
Objective
An objective is a framed goal that displays the end destination where an organization needs to be after a specific time period. Objectives are essential, concrete, and action-oriented.
Precise and appropriate implementation of Objectives eliminates all irrelevant thoughts and ineffective execution.
Key Results
A key result is an assessable set of outcomes needed to the Objective. It includes a metric with a start and end goal value. Key results assess the progress towards the Objective and act like signposts that indicate how close you are to your Objective.
Key results are detailed, time-bound, and aggressive while being realistic. They are, above all, measurable and verifiable. There is no grey area, no space for question when it comes to meeting the requirements of a crucial result. We do a periodical check after the defined period, usually a quarter, and grade the significant findings as fulfilled or not.
Initiatives
Initiatives are all the projects and tasks that will help you achieve a Key Result. Imagine your organization is a car. If the Objective is your startup’s destination and the Key Results are signposts that tell you if you’re heading in the right direction, then the Initiatives are all the things that you’ll do to get your car moving towards your destination, ie. the Objective.
Key characteristics of Objective, Key Result, Initiative
Key Characteristics of Objective
Aligned
Objectives are all about alignment. Team objectives should always be aligned with company objectives. The team objectives should always be finalized after the Company OKRs have been agreed upon.
Time-Bound
Maintaining a limited and stringent time range for Objectives drives focus and allows you to evaluate them in cycles. This not only allows you to evaluate what’s working and what isn’t immediately, but it also allows you to start over if they aren’t contributing to your Company’s overall success.
High Impact
Group objectives should always be items that, if accomplished, will have a significant beneficial impact on the entire Company. Achieving Group Goals, like achieving Company Goals, should be a cause for celebration!
Key Characteristics of the Key Results
Greater Impact
Group Key Results should represent a significant difference, something that the rest of your organization will notice if you achieve 70% to 80% of your target. Make them as challenging as possible. If they’re too simple to accomplish, they’re not tricky enough.
Particular
Key results should be focused and have a well-defined scope. At the same time, company key results should include broad measures. Group key results should track more technological developments, such as product sales.
Within an influence group
Key Results should always be items that you measure but can impact. It’s not a poor key Result to write 20 blog articles; it’s something you do. A decent key Result is getting 2000 views on a blog article you created.
Key Characteristics of the Initiatives
Specific
A different initiative is required at all times. Its scope must be well-specified, and the Initiative’s owner must understand what has to be done. It can’t be as ambiguous as an Objective. As a result, specific verbs such as establish, write, launch, visit, release, and so on must be included in an Initiative. Less specific verbs, such as improve, increase, and so on, might be used in objectives.
Within Control
You should have complete control over your Initiatives, which means you should be able to finish them on your own. This implies that there should be no reliance on anything or anyone else.
What is OKR used for?
According to Ben Brubaker-Zehr, founder of Meddo, OKRs are “simple and flexible,” which can be helpful or harmful depending on how they are implemented inside your firm. OKRs should be aligned with business goals and enterprise initiatives, with regular check-ins to gauge progress throughout the quarter to avoid a “set it and forget it” mindset.
That’s never a good idea to have more than five OKRs at a time, even in the largest corporations. You’ll want to keep it to three for smaller teams and businesses. Following the establishment of your objectives, you’ll track the progress of each significant result separately and refer to them frequently during the quarter.
OKRs are used to develop our business objectives throughout the year, and then individual tasks and projects are built out across each team using these high-level goals. It allows us to approach each project with an awareness of how it ties to the Company’s overall objectives.
General Examples of Objective, Key Result, Initiative
Example Objectives
Using acquisitions, crush the competition.
Become one of the best places to work in the United States.
- Increase the number of deals closed in less time by optimizing the sales funnel
- Create a culture that is more goal-oriented
- Assist our support staff in becoming more self-sufficient
Example Key Results
Invest in three small businesses in our field.
- Rank in the top ten of Fortune’s finest places to work
- Increase the chance of winning an opportunity from 12% to 20%
- Every employee contributes an OKR
- Reducing ticket escalation by 15%
Initiative
- Obtain shareholder approval for the budget
- Engage the services of a People & Culture Manager
- Introduce a new discounting strategy
- Please invite all of our staff to join our Perdoo account
- Create a Q&A document for the top 20 issues that have been escalated
Difference between OKR and KPIs
One of the most significant differences between OKRs and KPIs is the motive behind the goal setting. Typically, KPI targets are achievable and represent the output of existing strategies and plans whereas OKR goals are more intact and result-oriented.
OKR goals should be clear and well-marked, but at the same time, they should be achievable. The main motive behind setting an aggressive OKRs strategy is to encourage and push your team to give their best to reach the goal.
It’s entirely up to you and what you want to measure when deciding whether to employ OKRs or KPIs.
KPIs, for example, may be a better alternative if you’re attempting to grow or improve on an already completed plan or project. They’re simple to use and allow you to incorporate a measurement system into existing projects and processes.
OKRs, on the other hand, may be a better option if you have a more comprehensive vision or want to shift your general path. They have more depth, allowing you to extend your goals even further and be a little more inventive in how you plan to achieve them.
How OKR and KPI work together
KPIs and OKRs complement one another effectively. If a KPI result suggests that something has to be done differently, it could be used as the “key result” of a new or existing OKR. For example, if sales are trailing due to KPIs, a corporation might devise a bold OKR aimed at increasing overall profits, marketing, or customer service, all of which could include crucial results dependent on satisfying the present KPI. Meeting an OKR goal may also suggest the need for new KPIs to measure the Company’s new reality.
Checklist to understand if OKR is for your organization
Checklists of the OKR are the essential prerequisites & criteria that your startup must meet before opting for this revolutionary idea.
More and more startup companies are adopting OKRs to reach their goals, but there are higher possibilities of failure on the first attempt. This usually occurs when the approach is top-down. There are certain factors why this happens.
So let’s discuss
Before implementing OKR, you need to keep in mind that it is going to change the entire working approach of your organization.
Mission, Vision, and Values
It is vital to define the organizational macros, particularly vision and purpose (the ‘Why’). This will aid in getting everyone on the same page and confirming where you want to go and, more importantly, how you want to go there (business strategy & values).
Define Organizational Objectives
Also known as BHAGs (big hairy audacious goals), these goals should be ambitious and focused on how you want to move the organization forward in the coming years.
Determine the Planning Cadence
The planning cadence is the frequency with which pre-defined OKRs are graded, and new ones are created. The best technique is to start with annual goals and then break them down into smaller quarterly goals. We’ve seen the cadence increase to 3 years and above with quite a few progressive organizations — we recommend maxing it out at 3; anything beyond that will primarily function as a terrific wall object.
Establish mid-term goals and periods
Once the planned cadence cycles have been finalized, it’s time to decide which periods or “OKR Cycles” will be included in the planning process. The organization’s mission, organizational OKRs, and employees’ OKRs will all be linked by these mid-term goals.
Set the Rhythm
Getting into the appropriate rhythm is crucial since it determines how often and thoroughly OKRs are reviewed and updated. Rhythms can range from daily, weekly, monthly, and quarterly snapshots that keep all employees, teams, and the entire business up to date on how things are doing.
We propose having a Weekly rhythm in high-growth firms because things move at a faster pace in these contexts – setting the rhythm beyond a fortnight is something we typically avoid because the momentum of joint accomplishment with the team fades.
A great planned process
The objectives of an organization are developed, disseminated, and reviewed with leadership during the planning process. Following the creation of high-level OKRs, they are dispersed and cascaded among functions, teams, and departments.
Following the cascades, managers, leads, and supervisors work with their departments to develop team-specific and individual-based targets that will contribute to and generate broader outcomes.
Analyzing the OKRs in planning duration
Once the team and other members draft their objectives and key results, it is essential to review them with the whole team. The reason is to include the cross-functional teams with the MECE approach (Mutually Exclusive, Collectively Exhaustive) to drive transparency, alignment, and collaboration.
Make weekly/fortnightly check-ins and meetings a habit:
Building a regular rhythm (& cadence) of weekly check-ins & meetings will guarantee that focus and deliberate purpose are reinforced and integrated into all employees’ day-to-day processes. Weekly meetings are used to reflect on the previous week’s progress and to set priorities for the following week.
Schedule monthly OKR reviews
Rather than weekly meetings, monthly OKR reviews should be used to delve further into each OKR’s performance and progress. The essential takeaway here is that organizations move in the direction that they choose to focus on – if it decides to stay fixated on OKR misses / gaps, it will continue to move backward; on the other hand, if it chooses to focus on root causes & non-repeat causes, it will continue to move forward.
Thus Monthly reviews allow teams to analyze how the OKR is progressing against defined goals and what they can do to improve in the coming weeks and months. Make good use of the CFR toolset by alternating weekly/fortnightly meetings and monthly evaluations.
OKR Reflection and Scoring/Grading at the End of the Cycle: The highest scoring or grading of how well an objective was accomplished is the end-of-cycle evaluation and scoring of OKRs.
It usually has three sections: objective grading of crucial results, subjective self-evaluation, and reflections. If the KRs are Committed Key Results, then the objectives must be completed to be considered complete; however, if the KRs are Uncommitted Key Results, then the goals must be met in their entirety to be considered complete.
Review OKRs during the planning process.
Basically, one starts working with teams to determine the priorities for the next cycle. Following the determination of top-level priorities, the OKR drafting process, as detailed above from Step 7 onwards, begins.
Also, keep in mind that some objectives will not be fulfilled or will not get traction. If the goal is still important, it’s better to carry it over to the next cycle rather than abandon it.
FAQ
- What does a good objective look like in an OKR?
It’s vital to remember that the Objective is your primary aim, whilst the key results are indicators of how successfully you achieved it.
- What are the main advantages of OKR?
The following are the key advantages of OKR:
- Discipline, focus, and prioritization are all important.
- Within your team or firm, there should be clear communication and alignment.
- Keeping track of your progress
- How Do I Create OKRs?
- Set goals for the coming quarter or year.
- Set SMART key results that are measurable.
- Weekly, check in on your OKR progress.
- Analyze the outcomes.
- Provide feedback
- What should you avoid when setting OKRs for the first time?
- There are too many goals listed.
- Keeping metrics out of objectives is a bad idea.
- Failure to involve your entire team in the OKR process.
- What companies already use OKRs?
- Yahoo
- Intel
- Netflix
- Amazon
- Adobe
- Samsung
- At what point should I begin employing OKRs?
It’s a good idea to utilize quarterly after you’ve implemented the OKR framework. If necessary, it can also be utilized on a yearly or monthly basis.
- Can I still use OKRs if I use KPIs?
If you’ve worked with KPIs before and want to switch to OKRs, it’ll be a lot easier than if you’ve never worked with KPIs before.