What is OKR?
OKR stands for Objectives and Key Results. It’s a goal-setting methodology that organizations use to facilitate growth, improvement, and innovation.
As an outcome-driven framework, OKR famously helped Larry Page and Sergey Brin to take Google to new heights, and thousands of companies have learned to leverage the principles of the OKR method ever since.
Leaders use OKRs to communicate improvement priorities across the company and align the teams to move in the right direction. This practical guide will help you learn everything you need to know to successfully implement OKRs in your business.
How to Set Goals with OKRs?
OKR (Objectives and Key Results) is a quarterly goal-setting methodology that requires organizations to think about the improvement in a new way. The goal-setting process starts when the leadership defines overarching Objectives for the company – focus areas that need improvement.
Based on the context provided and explained by leaders, functional teams/departments write their team-specific Objectives and Key Results to contribute to one or several of the overarching Objectives.
Team OKRs should be aligned with the company direction and focused on improvements that a particular team would deliver within a quarter. Having a clear outcome-driven focus for the whole team helps individuals in that team prioritize their day-to-day activities and understand how their work contributes to the bigger picture.
OKR is an improvement-focused approach to goal-setting which means that goals you define on all levels will not be about business-as-usual job responsibilities but pinpointed precisely to what needs to change.
OKR implementation is a learning journey, and so it helps to look at real-life examples to understand how to write improvement goals, stay aligned, and take your business to the next level.
Pro tip: OKR is not a performance management framework, and personal OKRs rarely produce any business value.
What are Team OKRs?
A Team OKR is a collaborative improvement goal with a particular structure.
An Objective is a focus area for a quarter: what problem are you solving or which opportunity you are going to explore as a team?
Key Results define success or failure of that Objective in measurable terms: have you achieved the Objective?
Team OKRs should align with a high-level company overarching Objective and contribute to it. Which means that it’s extremely important for leaders to determine and communicate the improvement direction that the organization will be taking.
The progress on the Key Results should be monitored and discussed on a weekly basis to ensure better prioritization of initiatives and continuous alignment within a team. If a team is writing good outcome-focused OKRs, they would never need (or be able to deliver on) more than 3 Objectives per quarter.
Browse team-specific OKR examples in our database of real-life examples.
What are the Purpose and Benefits of OKRs?
“We want to be more focused and improve alignment in our company” is one of the most popular reasons for implementing the OKR methodology. OKRs bring extreme clarity to the goal-setting process and allow organizations to aim for more ambitious results.
To achieve clarity of priorities and align everyone in the same direction, we need to recognize the importance of two-way communication: top-down (leaders to teams) and bottom-up (teams to leaders). Understanding organization-wide priorities leads to increased buy-in and more proactive company culture. Ownership mentality is shaped when everyone believes that they are doing something important, and knows how their day-to-day work connects to the bigger picture.
Ownership mentality cannot be assigned, it rather comes naturally to the teams who are trusted to do the right thing. That is why, to live up to their potential, teams should be responsible for writing their own Team OKRs and deciding on how to invest their time and energy in the best possible way: i.e. what can they fix, change or improve? The OKR framework encourages teams to think about what kind of role they are playing and what they can do to make their contributions more valuable.
How to Write Good OKRs
How to Write Company Objectives
A Company Objective should be a high-level improvement area that several teams would be working on. It should be broad enough to invite the teams to brainstorm the most impactful Team Objectives, but also specific enough so that it is clear what the direction is.
Before finalizing high-level Objectives, leadership should ask for feedback from the teams, and clarify expectations in case something is not clear enough.
Pro tip: A Company Objective is not a KPI target, it should be phrased as an overarching improvement area. Learn more about the purpose of OKRs and KPIs.
How to Write Team Objectives
Team Objectives are inspirational goals aligned with the overarching company direction. They should give the team purpose, a sense of urgency, and focus. A team as a group of people working towards the same outcomes should be responsible for writing their collaborative OKRs.
To write a good Objective, a Team would need to answer the questions:
- What is our role in driving the Company Objectives forward?
- What can we create (innovate), fix (resolve), or improve (change) in order to be more successful?
- What is stopping us?
Pro tip: Objectives are not projects; they are problems to solve or the most impactful improvement opportunities to pursue within a quarter.
How to Write Key Results to an Objective
While an Objective is a problem to solve or an improvement opportunity to explore, Key Results indicate if that particular problem is solved or if that particular opportunity has succeeded in execution.
Under each Objective, a team would set 2-5 Key Results – measurable outcomes that represent a valuable change in the business. Note that Key Results are not activities you complete. They are the outcomes of those activities. So if you, for example, complete 3 projects, what kind of real-life impact are you expecting to see? That would be the desired outcome.
The best way to think about Key Results is to consider observable changes in your customers’ behavior or the team’s effectiveness.
Take a look at a few examples of outcomes that are focused on business value:
- Customer acquisition outcomes – daily active users, registrations, participants, number of sales meetings, onboarded clients, calls, interviews with partners.
- Interaction outcomes – unique views or reads, website conversion, completion of onboarding steps, number of clients using a new feature, click-through rate, open rate, success rate, bounce rate, new traffic.
- Outgoing communication outcomes – pre-orders, leads, new deals closed, new hires.
- Financial outcomes – ROI, cost efficiency, LTV, deal size, average transaction value.
- Efficiency outcomes – page loading speed, number of bugs-related customer support tickets, average response speed, customer satisfaction score.
Keep in mind that Key Results are not the same as KPIs (Key Performance Indicators – regular business metrics that you monitor to analyze business performance).
Pro tip: a good outcome-focused Key Result doesn’t tell you what to do but what you want to achieve, and coming up with ideas on how to achieve this outcome is a problem-solving exercise that engages the teams and boosts creativity.
Rules of thumb for writing measurable Key Results
- Always start by defining an Objective for a quarter
- Write at least 2 and no more (!) than 5 Key Results per Objective
- Make them ambitious but not impossible
- a KR is not an activity, it is the desired outcome of a series of activities
- Make sure it is achievable within a quarter and you have ideas on how to drive it
- Make sure you can impact this KR on an ongoing basis
- KR is not any regular business-as-usual KPI (business metric), it should define the success of an improvement-focused Objective
- A team’s actions should have a clear impact on Key Results during the quarter
- If you look at a Key Result and have no initiatives or action plans for driving it, it’s a bad Key Result
Pro tip: if you are having trouble defining Key Results, make a list of activities that you are thinking of doing to achieve the Objective. Look at those activities and continuously ask: “what will this help me achieve?”.
Once you understand the reason behind the activities, try to pinpoint the kind of change you want to achieve. Those would be your Key Results.
Annual versus Quarterly OKRs
If the global pandemic has taught us anything, it’s that scrupulous long term planning may end up as a lot of wasted effort. This is not to say that long term goals are not useful. As an organization, you should definitely have a vision – an ultimate destination – so that all of your ongoing effort ties together with the bigger picture. And this vision may also translate into long term yearly goals.
Sometimes it makes sense to have annual Objectives on the company level but it is also important to break them down into smaller focus areas – quarterly Objectives. Quarterly Objectives on the company level should be broad enough so that several functional teams can approach them from their different angles, but also specific enough so that there is a common direction.
Three months is enough time for a team to deliver valuable outcomes. During this time they will learn what works best and adjust their focus areas for the next quarterly cycle. By reviewing their Objectives and Key Results every 3 months, teams have 4 chances per year to respond to the changes in the real world. As opposed to having an annual review and realizing that they have been on the wrong path for a year.
Alignment and Dependencies
Alignment is communication. It is not enough to write down a company’s goals and teams’ OKRs in a shared digital workspace and expect everyone to be on the same page. Proper alignment requires two-way communication: top-down and bottom-up. First, the leadership should explain and clarify the company level direction so that the teams have enough input to write their OKRs for a quarter. Once the OKR drafts are ready, each team should present them to the rest of the company and answer the questions that might come up.
Before finalizing the OKRs for a quarter, teams should also figure out dependencies with each other. If team A needs help or resources from team B, then team B should know about that and consider the time needed to deliver that help, and realistically assess what is achievable within a quarter.
Once everyone is clear on what the priorities are, teams can move on to execution.
OKRs are improvement goals, and obviously, achieving some of them would require effort from people in different functional areas. These people would work towards the same outcomes as a group, and get together on a weekly basis for a quick OKR check-in meeting to make sure the OKR stays on track. In most cases, one of the teams would still have full ownership of a particular OKR, and contributors from other areas would work on completing related initiatives. So, there could be one OKR and tens or hundreds of contributing initiatives.
Small businesses and startups that don’t have defined boundaries between functional teams normally use only one level for their OKR process and write “shared” OKRs as company-wide improvement goals that should be achieved in collaboration
How to track OKR progress
Team initiatives and OKR check-ins
Team initiatives are the activities (action plans) that a team would work on in order to produce the outcomes defined in the Key Results. When discussing the initiatives, teams should consider whether they need help from other functional areas and prioritize their plans based on the available resources.
Weekly OKR Check-ins are regular meetings attended by the people who are working on the same OKR. Apart from the regular progress update and staying in sync, the point of these meetings is to ensure regular exchange of information that will improve mutual understanding, and build trust.
Pro tip: Weekly OKR check-ins should have a clear agenda and should not last longer than half an hour. Normally, a check-in takes around 15 minutes and it could be a part of your regular team meeting.
Weekly, Monthly, and Quarterly retrospective reviews
Reviewing your progress in a retrospective meeting helps you adjust focus areas for the next execution cycle. As a Japanese saying goes, a person who climbed Mount Fuji once is a wise man, a person who did it twice is a fool. So learning from experience and exchanging those learnings lays the groundwork for accelerated growth and valuable breakthroughs. There would be no need to go through the same mistakes over and over again if you learn how to avoid them and improve over time.
OKR Implementation Guide
While the structure of an OKR is clear and simple, the process leading up to defining and aligning them will present quite a few challenges. But the good news is that you will be moving away from the land of micromanagement into the world of regular feedback and outcome-focused communication.
With OKRs you are choosing results-oriented and data-driven management instead of an output-focused command-and-control approach. So, instead of cascading tasks and assigning deadlines, you would be discussing the most important improvement areas, and have the teams engage in problem solving exercises and decide on the outcomes they can and will deliver.
Our customers have a dedicated OKR coach and OKR workshops included in the subscription. That is because implementing OKRs requires a systematic approach and step-by-step guidance. Without a proper process, OKR implementation fails in 80% of cases. It also takes 2-3 quarters to learn how to write and align good OKRs that truly transform the way that a company thinks about improvement.
Pro tip: Organizational culture and management style will pre-determine how fast and how successful OKR implementation would be. A company might need to appoint a person (or several people) to be responsible for the OKR process in the organization (aka the OKR champion).
This book provides a quick, efficient read on how to get started with OKRs. It is completely free and available for download in PDF and ePub format.
OKR templates and OKR quiz
There is a huge psychological gap between the OKR theory and real-life practice. Moreover, there are many bad OKR examples on the internet. That is why we are documenting our knowledge and experience to share the best practices with you.
- Interactive OKR examples – more than 180 examples from various industries
- OKR Ideas Draft Template – learn how to come up with OKR ideas
- OKR Report Spreadsheet Template
- OKR Report Document Template
Check these free templates if you are starting out with the OKRs or try Weekdone for free.
Very often we don’t know what we don’t know, especially when it comes to such a big topic as organizational goal-setting. To make sure that you have all of the information you need, try this educational exercise and test your OKR knowledge. This exercise will lead you to a better understanding of what you need to know to successfully roll out OKRs.
If you have an OKR or Weekdone related question, feel free to email us at firstname.lastname@example.org