OKRs – an introduction
OKRs is an acronym for Objectives and Key Results. OKRs are a goal setting system used to measure and track progress that help organisations define and achieve their strategic objectives, turning mission and purpose into action. This system uses a combination of measurable objectives and results (key results) to help teams work together to reach ambitious goals.
An OKR has two parts; an Objective and a set of Key Results. An Objective is ‘the what’ - the thing you and your team are setting out to do and your intention behind it as a rallying point for your team. The Key Results are ‘the how’ of the method team achieves that objective. They are the measurable benchmarks and milestones that demonstrate progress and offer a way to articulate for the team how to achieve the desired outcome.
OKR’s breaks up goals into measurable, accomplishable outcomes by asking the right questions and adding a layer of measurement and accountability to develop ongoing dialogue with your team.
The primary difference between key performance indicators (KPIs) and OKRs is that OKRs convey intention not just measurement and results.
What are OKRs?
OKRs were first developed by Intel in the 1970s and have been popular ever since as a way to measure goals and keep teams organised. They’ve grown in popularity due to the ability to track progress, create a culture of accountability and transparency which helps teams stay motivated. OKRs have become a popular goal-setting tool among many businesses and organisations due to their simplicity, flexibility and ability to track progress.
OKRs work by setting measurable objectives that are specific, attainable and relevant. Each objective is then accompanied by a set of key results which measure the progress against that objective. This system helps employees stay motivated, focused and accountable in reaching their goals. Additionally, it provides a framework for teams to collaborate effectively and work towards common goals.
OKRs are designed to help organisations reach their long-term goals by breaking them down into measurable objectives and key results. Objectives are broad and strategic, while key results are specific and trackable. OKRs are typically set on a quarterly or annual basis and they provide a clear structure for setting, tracking and evaluating progress. They can also be used to measure individual and team success. OKRs allow organisations to stay organised, focused, and accountable for achieving success.
What does OKR mean?
OKRs (Objectives and Key Results) is a goal-setting framework used by fast-growth companies to set clear, measurable goals and track progress towards achieving them. The framework consists of two parts:
- Objectives: These are high-level, aspirational goals that an organisation or team wants to achieve. They should be challenging, but achievable, and should be aligned with the overall vision and strategy of the organisation.
- Key Results: These are specific, measurable tasks and outcomes that will help track progress towards achieving the objectives.
How do you create effective OKRs in business?
There are a few key principles to follow when creating effective OKRs:
- Make them measurable: Key results should be quantifiable, so that progress towards achieving the objectives can be tracked. This helps to be sure that the OKRs are actionable and that progress can be measured.
- Make them challenging: OKRs should be ambitious, but achievable. They should stretch the organisation or team, but not be so difficult that they are impossible to achieve.
- Make them aligned: OKRs should be aligned with the overall vision, mission and strategy of the organisation. This helps to be sure that the OKRs contribute to the long-term goals of the organisation.
- Make them transparent: OKRs should be shared with the entire organisation or team, so that everyone is aware of what is being worked on and can contribute to the process.
- Make them time-bound: OKRs should have a specific time frame, such as a quarter or a year, to help focus efforts and create a sense of urgency.
By following these principles, you can create effective OKRs that help to focus efforts, align goals, and track progress towards achieving long-term objectives.
OKR best practice
- Keep the number of OKRs small. It is better to have a few well-defined OKRs than a large number of vague ones. This will help to be sure that the OKRs are focused and actionable.
- Make sure the OKRs are measurable. Key results should be quantifiable, so that progress towards achieving the objectives can be tracked.
- Communicate the OKRs to the entire organisation or team. This offers not only accountability but also inclusivity and hopefully inspiration for those involved to feel as though they are part of the process.
- Regularly review and update the OKRs. The OKR framework should be a living process, with OKRs being regularly reviewed and updated to be certain that they remain relevant and achievable.
How to measure OKRs
OKRs are measured using key results, which are specific, measurable outcomes that help track progress towards achieving the objectives. To measure OKRs, you should:
- Identify the key results for each objective.
- Set targets for each key result. These should be challenging, but achievable. In doing so, you’re making them measurable which is a key function of setting them in the first place.
- Track progress towards achieving the key results. This can be done using a variety of tools and techniques, such as dashboards, scorecards, and progress reports.
- Regularly review the key results and adjust the OKRs as needed. The OKR framework should be a living process, with OKRs being regularly reviewed and updated to be sure that they remain relevant and achievable.
By following these steps, you can effectively measure progress towards achieving your OKRs and make any necessary adjustments to stay on track.
How to score OKRs
There are a few different ways to score OKRs:
- Yes/No: This is a simple method where OKRs are scored as either "Yes" if they are achieved, or "No" if they are not achieved.
- 0-1: This method involves scoring OKRs on a scale from 0 to 1, where 0 indicates that the OKR was not achieved and 1 indicates that it was fully achieved.
- 0-100: This method involves scoring OKRs on a scale from 0 to 100, where 0 indicates that the OKR was not achieved and 100 indicates that it was fully achieved. The score can be based on the degree to which the key results were achieved.
- Lagging Indicators: This method involves using lagging indicators, such as financial metrics, to score OKRs. For example, an OKR to increase revenue might be scored based on the actual increase in revenue.
- Leading Indicators: This method involves using leading indicators, such as customer satisfaction or employee engagement, to score OKRs. For example, an OKR to improve customer satisfaction might be scored based on the improvement in customer satisfaction scores.
Which method you use to score OKRs will depend on the nature of the OKRs and the metrics that are most relevant to your organisation.
OKR framework
The following framework is a good reminder of how Objectives, Key Results and Initiatives relate to each other:
OKR metric worked example
Let’s bring this to life through a worked example. Take an early-stage SaaS company, that’s looking for some seed funding.
Objective: Raise Seed capital for 18 months growth
- Key result 1: Reach out to VCs and get at least 20 initial meetings.
- Key result 2: Get at least 5 follow on meetings.
- Key result 3: Receive at least 3 term sheets with required terms.
- Key result 4: Close investment round within £1.5m investment.
We would break each of the above key results into clear tasks. If we take key result 1 as an example:
Key result 1: Reach out to VCs and get at least 20 initial meetings.
Task: Prepare a long list of active seed VCs in London.
Task: Research each of them and prepare a shortlist based on our criteria and they’re criteria i.e. size of round, experience etc.
Task: Identify any existing relationships within the team, connections and the VCs.
Task: Research each of the VCs and develop specific intro emails to each.
Task: Send intro emails to each target VC (and record on CRM tracker).
In this example, it’s likely a scale would be used to measure success. Taking key result 4 as an example, if you were to raise £1.2m rather than the desired £1.5m, you’ve still broadly met the objective.
An assessment could be as follows:
The overall objective score would be 0.9 or 90%, which would mean you’ve delivered on the overall objective.
Conclusion
Setting measurable OKRs allows you to lead your organisation’s vision and purpose by setting aspirational yet attainable goals while offering clear, accomplishable tasks in order to achieve them. OKRs offer transparency to your team with trackable, time-bound tasks meaning that you can introduce big innovations and changes to your business with a definable path to making those goals a reality.
