The Ultimate guide to OKR - Everything you wants to know about OKR
OKRs (Objectives and Key Results) are one of the most impressive and commonly used agile methods getting popular day by day because of its simplicity. Originally initiated by Intel and successfully implemented at Google and LinkedIn, more and more companies recognize and take advantage of the benefits OKRs offer. OKRs is now one of the leading tools to boost self-managed, high-performing teams and support an organization's transformation to become (more) responsive.
What is OKRs?
OKRs is the acronym for objective and key results—more specifically, an objective is tied to key results. In a simplest definition, an Objective tells you where to go, and a Key Result will let you know whether you’re there or not at the end of a work. The OKRs provide a reference to evaluate how well you did in executing your objectives.
What is an Objective?
An Objective is a goal to be achieved in the future. An Objective sets a clear direction and provides motivation. An Objective will clearly tell you "Where to go?" or "What is the destination?"
Think of it as a destination on the map where you want to go, for example - To New Cafe! or London! or to your office!.
The objective can be anything. Let's check an example.
Example: Launch new product, Generate more revenue, Increase Traffic on your website, create more articles for the blog, etc..
What is a Key Result?
A Key Result is a metric with an initial value and a target value that measures progress towards an Objective or Goal. A Key Result is like a progress card that shows how close you are to your Objective.
A Key result defined by you along with Goals that contains specific values or numbers that clearly define your goals into measurable units.
Example: Increase development resources assigned to innovation from 15 to 30%, Achieve a market valuation of $500,000,000, Get featured by Apple on the App Store,
What is an Initiative?
An Initiative is simply the work you’ll do to influence a Key Result. If an Objective is your destination and a Key Result shows the distance to go, an Initiative describes "What you’ll do to get there?" or "How you will achieve the Goal?"
Example: Create a new sales team, Hire an app store optimization agency, Collaborate with the third party marketing agency
Although OKR is a mindset and you don't need a template else you can create your own structure as per your use case. To start, you can use these simple templates to define, track, and align your OKRs.
Free templates from SmartSheets Company -
Free excel templates from Workdone
Free word template from Workdone
Company OKR 2:
- Objective: Increase brand recognition and awareness
- Key Result 1: Increase media engagement by 20%
- Key Result 2: Launch customer referral program by Jan 1
- Key Result 3: Extend social media reach and visibility to two new target markets
- Key Result 4: Expand thought leadership program by placing guest articles on four industry-related sites with an Alexa ranking of at least 30,000
Marketing Team OKR:
- Objective: Increase social media engagement by 35%
- Key Result 1: Research and identify three most popular social media sites among two new target audiences and develop engagement strategy by Jan 1
- Key Result 2: Participate in six Twitter chats involving industry leaders
- Key Result 3: Respond to new Facebook comments within three hours
- Key Result 4: Increase number of followers on Facebook and Twitter by 20%
- Objective: Increase number of social media connections by 25%
- Key Result 1: Increase posting frequency on Twitter to 8x daily and Facebook to 3x daily
- Key Result 2: Establish social media presence on two new sites: LinkedIn and Quora
- Key Result 3: Join 5 LinkedIn groups with at least 2,500 members each and leave comments on the 10 most popular discussions in each group
- Key Result 4: Gain 15 followers on Quora by posting three answers and one question every week
Objective – Improve Our Testing Procedure
Key Result 1: Implement test driven development in 3 new development teams
Key Result 2: Increase unit test coverage to 75% of code
Key Result 3: Make sure satisfaction score of product management to testing team is at least 7.5
Key Result 4: Increase time spent on reviewing codes by 20 minutes each day
Objective – Reduce Time Taken To Test New Feature
Key Result 1: Automate 70% of regression tests executed in a feature pull request
Key Result 2: Run regression tests in parallel to reducing execution time to max 0.5 hours
Key Result 3: Maintain records of new automated tests to be implemented before the start of a new project
Launch a blockbuster product by end of FY 2017-18
- 40% increase in pre-bookings for new product by Q3 FY 2017-18
- 70% increase in inquiries about new product, every quarter
- 60% demos given to prospects converted to negotiation stage by Q4 FY 2017-18
OKRs as a communication framework
As you might have guessed by now, effective OKRs are widely shared and meant to be understood by teams and individuals.
In that regard, they can serve as a communication framework for directing groups to solve complex challenges with constraints. As a communication tool, OKRs bring two key things to an organization:
- Easily digestible direction such that every member in the organization understands how they contribute to the mission; aka focus
- Expectations amongst teams and their individual members; aka accountability
Defining measurable results becomes easier as you learn what you should be measuring and what ultimately matters for your business. In my work with founders I find that the quality of OKRs has a good correlation with their understanding of their business. Blindly going for growth without understanding the reasons behind specific metrics (revenue drivers, hypothesis testing) can be damning.
I began to use the OKR framework to help my friends’ startups, which varied in size from 4–100+ people, because of the tool’s practicality and straightforwardness. I found my friends running into two challenges as their companies grew:
- What should we do next — and how do we know if it’s working?
- What is an effective way to align the organization towards a common goal? (aka: better direction setting)
In the first scenario OKRs forces the measurement of any company endeavor. Ideally this optimizes the input efforts because things that are working will be continued (and grow in scope), while the areas that get dropped or do not work well will be reevaluated or canned.
In the second scenario, which is notoriously hard to do well, OKRs provide a framework to explain the company’s goal(s) and provide enough objectives that can be broken down into smaller components for the many teams involved in making it a reality. The better you can state your goals the easier your teams can figure out what needs to happen and how to get there.
This may seem simplistic — too good to be true, but I’ve found just going through the exercise of either defining OKRs, or reworking current company plans into OKRs to be a highly effective evaluation tool.
OKRs aim to align employee performance and efforts to business goals. This helps drive a shared responsibility of the (teams) results. OKRs help to explain the purpose of work and set everyone’s focus on delivering value. When successfully implemented they:
- support employees creativity,
- increase their motivation and commitment,
- enable self-management and improve willingness to take ownership and
- foster innovation.
The OKR method provides a clear concept, various best practices and software supporting tools are available. But frequently, companies struggle to implement this agile method appropriately or even miss-use it actively as a top-down management to-do list tracking tool.
OKR feedback surveys we ran in our client projects showed that the top challenges the teams faced were:
- a lack of trust and handover of responsibility from the management towards the teams,
- transparency of OKR process (definition, monitoring and relation to the company’s goals),
- a disconnect between the defined objectives and the actual work the team needs to do.
On the other hand, the teams confirmed that
- they were confident in understanding the OKR’s concept and procedure,
- and believed generally in the sense of purpose and chance of success (by correct process implementation).
These results led to the question: How to release the full potential of the OKR method?
We believe the first step is to identify areas of improvement. For that, you must start talking to all the people involved.