OKRs is a management and strategy execution methodology that consists of three pillars/main components: the Objectives (O), the Key Results (KR), and the OKR Cycle.
The Objective is a memorable, short, qualitative, and inspirational description that answers the question What do we want to achieve? A good Objective must inspire and motivate all stakeholders and employees within the organization. Therefore, there is a strong emphasis on choosing the right wording as statements such as ‘become profitable’ might not spark the same enthusiasm across the hierarchy of an organization, even though it appeals greatly to senior stakeholders. Instead, formulating an action-oriented Objective that relates to the company’s mission or vision is much more motivational and inspiring. Thus, an Objective should be a challenging one that directly impacts a critical business metric and represents where a company wants to go.
Accordingly, the Key Results are determined by the answer to the question How do we measure if we get there? More specifically, KRs are a set of – aspirational but not impossible – metrics that measure the organization’s progress towards the set Objective and whether the latter is achieved. It is important to note that since KRs describe how a company is going to fulfill a certain Objective, they should focus on the business outcome, rather than the specific actions that need to be done (the output). Without Key Results, Objectives have no use – they are merely aspirations.
With this management structure, many highly successful companies and their top-leaders that use OKRs have achieved their company strategy to continuously innovate and grow.
Let’s look at an example of a complete OKR now. Consider a team that wants customers to choose them over their main competitor. This sounds great, but how will they know that? As it was mentioned, there is no goal without measurement, which is why the following Key Results were formulated (den Haak 2021):
Objective: Customers choose us over [competitor]
Increase the percentage of customers that prefer our product to the competitor’s in a blind test from 30 to 75 percent
Increase the average order rating from 3.1 to 5.0
Now that you know how to write a good OKR and you’ve seen an example of a company-wide OKR, we can look at some more indicative examples break down per company function.
Let’s say the Marketing team wants to raise awareness for a new product launch. Their OKR could be:
Objective: Drive launch awareness through PR activities
Publish 12 online press pieces with min. 400K views & 2.5K shares
Reach 500K views on Instagram by hiring top-5 industry influencers
Accordingly, one of the HR team’s OKRs might look something like this:
Objective: Build a culture of employee engagement
Achieve grade 9 on the engagement index
Reduce our employees’ attrition rate by 3 units
Lastly, an OKR example written by an Engineering & Tech team could be the following:
Objective: We ensure that releases are delivered on-time
Engineering team contributes 100 story points
90% of code is reviewed within 48 hrs
Identified min. 5 front end improvements by adding 100 automated tests
"Companies who set their goals quarterly are more likely to be top performers in their industry"
Finally, the OKR cycle is the system for achieving the organization’s OKRs. The OKR cycle may vary from business to business and the version to be adopted (e.g., a quarterly cycle) highly depends on the organization’s structure, culture, and specific needs. Interestingly, it has been reported that companies who set their goals quarterly are more likely to be top performers in their industry. In summary, one OKR cycle consists of two parts. The first is the monthly check-ins with the team to self-assess, discuss possible obstacles, give status updates (confidence level), make quick readjustments, and increase the team's commitment. The second part is the reflect & reset sessions at the end of each quarter which allows teams to reset their OKRs in the pursuit of their yearly OKR while reflecting on and reviewing their performance.
OKRs usage provides companies with a holistic oversight of all goals and processes, leading to a high growth rate, cost reduction, enhanced cross-team alignment, as well as a high degree of both employee satisfaction and engagement in the company's vision.
Want to learn more about who created the OKR methodology and why companies such as Google, Amazon, Facebook, and Nike use it? Read all about it here!
den Haak B. (2021). Moving the Needle with Lean OKRs: Setting Objectives and Key Results to Reach Your Most Ambitious Goal. Business Expert Press.