What is OKR ?

What exactly is OKR?

OKR is a popular goal setting and management framework that stands for Objectives and Key Results. It helps businesses to succeed in their long term goals, by keeping all their employees on the same page. It brings overall alignment, transparency of vision and increased efficiency that allows all departments to accomplish common objectives together.

The OKR framework consists of 3 parts:

Objectives -  An objective defines a goal to be achieved

Key Results - A key result measures the progress towards a particular objective
Note: Every Objective can have 3 - 5 key results

Initiatives - An initiative describes the steps taken to ensure progress on the objective

Objective

An objective is a goal that you aim to accomplish. It provides directionality and clarity of vision; like GPS on a car that tells you where to go.

What do I want to achieve?

Increase overall company revenue

Key Result

Initiative

A key result is a measurable or quantifiable metric which helps you track and measure progress towards an Objective; like the odometer that tells you how far you have travelled or the speedometer that helps gauge your speed.

Invest more in organic content
Run customer satisfaction surveys
Form a customer success department

Reduce CAC by 20%
Reduce churn by 2%
Improve customer LTV by 50%

What will I do to achieve it?

How do I know if I will achieve it?

An initiative is the sequence of actions that you do to accomplish your Objective; In this case, it would be buying a car, filling it with gas etc.

Definition

Indicator

Examples

Objective

Definition
An objective is a goal that you aim to accomplish. It provides directionality and clarity of vision; like GPS on a car that tells you where to go.
Indicator
What do I want to achieve?
Examples
Increase overall company revenue

Key Result

Definition
A key result is a measurable or quantifiable metric which helps you track and measure progress towards an Objective; like the odometer that tells you how far you have travelled or the speedometer that helps gauge your speed.
Indicator
How do I know if I will achieve it?
Examples
Reduce CAC by 20%
Reduce churn by 2%
Improve customer LTV by 50%

Initiative

Definition
An initiative is the sequence of actions that you do to accomplish your Objective; In this case, it would be buying a car, filling it with gas etc.
Indicator
What will I do to achieve it?
Examples
Invest more in organic content
Run customer satisfaction surveys
Form a customer success department

How it all started?

Evolution of OKRs

In 1968, there was a man named Andrew Grover who served as the CEO of Intel. He pioneered the management framework called OKRs, which contributed to the tremendous growth of Intel in that period. Later in 1974, Intel had a new employee by the name of John Doerr, who witnessed OKRs for the first time and went on to become a bigtime proponent of OKRs with his book “Measure What Matters”. Doerr also introduced this framework to Google in 1999 which has become the secret sauce for the company’s fast-paced growth even today.

Why use OKRs?

Collaboration

OKRs turn everyone in the company from internal competitors into mutual collaborators.

Culture

OKRs turn the work-culture of a company from output based work into outcome-based work, leading to increased employee performance and engagement.

Alignment

OKRs help the leadership and the workforce within a company to be on the same page at all times.

Focus

OKRs enable your department s to prioritize their time and resources better, leading to higher productivity.

Employee Engagement

OKRs bring a clear picture of how individual contribution impacts the overall business, leading to greater workforce accountability and engagement.

Warming up to OKRs

Have a clear problem to solve.
Think strategy in terms of overall transparency and alignment.
Nominate an internal champion who foresees the adoption of the framework.
OKRs have a 3-6 month learning curve and hence be patient until your workforce comfortably adapts to an OKR culture.

Set company goals

Set an overall company objective that is responsible for company growth. Define a fixed period of time between 3 months to an year, within which the company can achieve the overall objective. Come up with 3 -5 key results required to accomplish the overall objective.

Align all teams toward company goals

Divide each of these key-results  into smaller ones and let each team derive their individual objectives from each smaller key-result.  Let each team define 3 -5 key-results for their objective and take collective responsibility in achieving them.

Align workforce towards team goals

Optionally, employees can also derive 3 - 5 personal key results to achieve from their team’s specific objective, tie it to a metric and track their progress continually.

Fine tune

The entire workforce meets up weekly or bi monthly within the defined period of time, and gets their key-results evaluated to see if their progress in the current pace will enable them to achieve their objectives. This meeting can also address any roadblocks, or hassles that stop the employees from completing their key-results.

Strive for better

At the end of the defined period (3 months to an year) , the key-results of every employee, team and company as a whole get scored on a scale between 0 to 1.0 based on their progress, output and quality of work. Anything between 0.7 - 0.8 denotes good progress. However If the scores are between 0.5 - 0.6, the company has failed to meet the goals due to some roadblock and these roadblocks weren’t addressed. If it is anything below that, the company has aimed too high for the defined time period. If the scoring is anything above 0.8, then the company has aimed for something too easy and all these mistakes can be corrected for next iteration of 3 months to an year to ensure maximum performance efficiency.

How to structure OKRs?

The OKR structure consists of four parts:

North Star Objective

The long term vision of the entire organization

The steps taken towards achieving the objective by every corresponding individual

Individual contributors

Founding team

Set for a 5+ year time period

Company OKRs

Department OKRs

The short term vision of the entire organization that cascades from the north star objective

Set and reviewed quarterly

Set and accomplished daily

Set for 1 year and reviewed quarterly

Department leaders and Middle-managers

Leadership

Department-level objectives that cascade from the overall company objective

Definition

Ownership

Time period

Initiatives

North Star Objective

Definition
The long term vision of the entire organization
Ownership
Founding team
Time period
Set for a 5+ year time period

Company OKRs

Definition
The short term vision of the entire organization that cascades from the north star objective
Ownership
Leadership
Time period
Set for 1 year and reviewed quarterly

Department OKRs

Definition
Department-level objectives that cascade from the overall company objective
Ownership
Department leaders and Middle-managers
Time period
Set and reviewed quarterly

Initiative

Definition
The steps taken towards achieving the objective by every corresponding individual
Ownership
Individual contributors
Time period
Set and accomplished daily

North Star Objective

Your North Star Objective is typically your organization’s long-term purpose and serves as one common objective to which all other OKRs align.

Example Objective

Become the industry leader in the mid-range mobile phone segment

Example Key Result

  • Undercut all your competitor's price by 40%
  • Reduce product cost by 30%
  • Capture 70% of the market share

Company OKRs

Company OKRs are the immediate overall strategy that cascade from your north star metric. Nominate 3 top priority objectives that your organization should have achieved by the beginning of the following year based on your long term objective.

Example Objective

  • Build a highly cost-efficient supply chain operations
  • Build the cheapest product in the world without compromising quality
  • Become the most affordable brand of mid-range mobile phones

Example Key Result

  • Reduce supply chain operation cost by 30%
  • Bring down the cost of production by 40%
  • Sell 25 million units this year

Department OKRs

Objectives should be in line with the overall company objective and should aid the organization in achieving its north-star metric.

Example Objective

  • Improve existing logistics and distribution
  • Substitute costly parts with cheaper alternatives
  • Increase online sales

Example Key Result

  • Reduce battery weight by 10%
  • Remove bezels on the screen
  • Tie up with 150 more local distributors

Initiatives

Initiatives are tasks or activities that we do to accomplish an Objective and will take us closer towards the required key-results. They may or may not be directly related to the Objectives.

Example Initiative

  • Build a cost-efficient mobile prototype
  • Run a regular performance testing
  • Run ads on e-commerce stores

Frequently Asked Questions

What’s the difference between OKRs and KPI’s?

OKRs and KPIs are similar, save a few differences. OKRs help you navigate uncharted territory with a clear vision. OKRs help you achieve your overall organizational success.  However, KPIs are more focused on the end result and help you gauge the quality of the outcomes from activities that are already in place. If you are already using KPIs, you’d be glad to know, OKRs work best when tied to your existing KPIs!

How to write OKRs for something that cannot be quantified?

If you come across an Objective that cannot be quantified, the success or failure of the outcome can be set as binary and you can associate quantifiable Key-Results to it.

For Example: If your objective is to increase brand awareness, your Key-Results can be:

  • Generate 100K likes on facebook page
  • Generate 1 viral video with at least 5000 shares
  • Get a positive response of 70% in 200 periodic brand-awareness surveys across target customers

In the end, based on the surveys, you can say either your brand awareness has grown or not grown.

How many people need to use OKR to see the results?

OKRs are about the clarity of vision and being on the same page. It is a compass that serves any number of people from 5 - 500 and above.

How often should I set OKRs?

Though it is not restricted how often you set OKRs, it is recommended you set Objectives for a quarterly or a yearly cycle, and review it on a weekly or bi-weekly period.

How many Key Results should an Objective have?

An Objective usually has anything between 3 - 5 Key Results.

How long does OKR take to show results?

OKRs are a long drawn process and the improvement is incremental. Most modern teams take anywhere between 3 months to 6 months to adapt to the OKR cycle.

Who should take charge of my OKR program?

OKRs requires the involvement of the entire organization to be successful.

What is a good OKR score?

If your team continually achieves 70-80% of their listed objectives, you are on the right track; If it is higher, you are not aiming high enough.

Bring out better performance
from everyone, everyday.