You’re probably familiar with OKRs — Objectives and Key Results.
OKRs are a wonderful tool and process that can drive alignment across an organization, enabling teams to set targets on what they want to achieve and monitoring whether or not they’re on track to achieve those targets.
Despite their ubiquity, a lot of early stage startups still fail to grasp the true potential of how OKRs can help unleash growth, and fail to understand how to effectively use OKRs. Here, I outline how to effectively use OKRs based on my experience working with startups and scaleups.
What OKRs are — and what they are not
First, we need to define OKRs.
OKRs were invented by John Doerr as a framework to marry your objectives (what you want to achieve) with the key results you’ll use to measure progress. Doerr is a Silicon Valley pioneer who was searching for a way to bring innovation and strategic thinking in alignment with execution and tactical tasks that must be achieved on a day-to-day basis.
The idea is to tie your team’s day-to-day work to your mission & vision, and give you tangible ways of knowing whether you’re on track. In the simplest terms, OKRs boil down to a statement:
We will achieve [objective] as measured by [key result(s)].
For this reason, OKRs need to be visible and shared. Ideally, the whole organization will be involved in crafting your OKRs.
But OKRs are not a silver bullet and they should not be used to manage the small things or be confused with to-do lists. They’re not something you set and forget and they are certainly not your New Year’s resolutions. OKRs are intended to bring different levels of the organization together around the things that matter most.
Having OKRs is not what is going to make you successful. But the meaningful discussion and high-value conversations you will have around alignment and collaboration will give everyone in your organization a line of sight on what you are trying to achieve, and how you plan to get there. That alone can result in meaningful outcomes.
Creating effective OKRs for your organization
The most important thing in setting and implementing your OKRs is that they work for your organization, your culture and your people. There are countless articles and YouTube videos on effective OKRs, but none of that advice matters if your OKRs and the way you execute against them are not a fit for your team.
You also need to be prepared for setbacks and pitfalls. From my perspective as a certified OKR professional, it is more important that you commit to the process and go through that evolution than it is that you do it absolutely perfectly. This kind of thing can be tough to execute flawlessly the first time out. Be prepared to test, iterate and circle back for a second approach. You are trying to find what works for your business, and that can take time.
It is also important to bear in mind that OKRs are not intended to be everything that your business must do, or even all the KPIs you’re aiming for in that quarter or that year. OKRs should only encompass the three to five most important things you absolutely need to be on track to achieve.
Differentiating between effective objectives and key results
Theoretically, the objectives can be anything: increased brand awareness, lower carbon footprint, better customer retention. But to be effective objectives, they should be aspirational in nature and framed positively as milestones you can work towards achieving.
For each objective, you should identify three to five key results. These are the ways you expect to measure your achievements on the path to a particular objective.
The key results should always include a metric, or at least be binary; they need to be measurable and you need to know when you set them how you will go about doing that measurement.
Not only do key results need to be measurable, these measurements need to truly be indicative of progress on the path to your “objective”. Just being measurable isn’t enough to make something a great key result.
Crucially, key results are not the list of initiatives you’re going to take to achieve your objective. Those [initiatives?] should be tracked separately. A list of initiatives is not a part of your OKRs, but should, no doubt, feed into fulfilling them.
This ability to differentiate between key results that are measurement tools and not implementation strategies is a major stumbling block for startups when it comes to OKRs.
Let’s say your objective is that you want to be a market leader. The question you need to ask yourself for your key results is: how do you know you’re a market leader? Maybe it’s market share, or a level of recognition in industry press. Those can become key results, but are not the steps you are going to take to achieve your objective.
Common OKR mistakes
One of the biggest mistakes firms make in writing OKRs is trying to go too far, too fast. When I work with companies on their OKRs, I recommend they begin with a focus on the company level and the team level, but no lower. That’s because it does take a while to figure out what works for your company. If you’re spending too much time trying to identify measurable results at the individual level, then the process can start to control you, rather than you controlling the process.
Take baby steps. Master aligning the team-level workflow with the strategic vision. And then roll it out at that granular level.
Another common mistake is what I call cascading, rather than aligning. Many of us have had the experience of being in a company where we know our manager’s goals and we try to figure out how to support those goals. This cascading type of leadership misses the point of OKRs—and the opportunity. Yes, there is an element of starting with a company level view, but in developing OKRs you want to bring the teams into the process.
OKRs should be iterative in nature and they should involve teams by inviting them to look at the ways they can impact that set of objectives and key results for the company. Ideally, you want your teams to share their thoughts and help shape the company’s OKRs.
This is why I refer to OKRs as both a tool and process. The conversations that it drives help integrate each layer of an organization and its unique perspective into those overall goals. You want to build an understanding of how each team will impact the groups around them, and pull towards that objective.
Getting teams onboard with OKRs
Organizations that are successful with OKRs are those that use it as a tool to inspire the conversation, and a process to drive collaboration around the things that need to be achieved by the organization and its teams.
Saying, “Oh, it’s December. We need to set the OKRs for the year and then we’ll push them down into the organization” does not work. Similarly, setting OKRs and then checking in quarterly or annually is a waste of time. But when OKRs are created in a collaborative manner, with regular accountability and circling back with the team, that is when the team really buys in and drives results.
Critically, you don’t want your team to view OKRs as steadfast hard rules. They are aspirations—things that we’re all trying to achieve together, and that we are going to collaborate on. When firms approach OKRs in this manner, that is when I see the most success.