Objective and Key Results

Abstract

As the popularity of OKRs took off in 2013, my clients started asking me to recommend a book outlining how to successfully deploy OKRs. Since I could find no such book, I’m writing a series of white papers to share best practices, templates, and steps for implementing OKRs. Drawing from experience coaching hundreds of managers, this first white paper is an introduction to OKRs and summarizes steps to follow when first deploying OKRs.

In my experience, there is no single “right” way to implement OKRs that works best for all organizations. Clients tell me that the OKRs process is one of the most important, creative, and rewarding projects in their business career. Hopefully, these OKRs articles guide you to measurable progress on your most important goals!

Introduction to Objectives and Key Results (OKRs)

Employees who can measure their own progress or contribution are going to develop a greater sense of personal responsibility and satisfaction than those who cannot.
-Patrick Lencioni, Three Signs of a Miserable Job

OKRs Defined

OKRs is a critical thinking framework and ongoing discipline that seeks to make employees work together, focusing efforts to make measurable contributions to drive an organization forward.

OKRs consist of:

Objectives

A statement of a broad goal, usually qualitative in nature.

Key Result

A quantifiable statement that demonstrates achievement of an objective.

It’s easy to come up with objectives. It’s hard to define key results. A Marketing VP can easily state the objective “Increase demand in our solution.” Key results describe how we will know if we achieved this objective. Taking the time to define key results is one of the most impactful things anyone can do at work. In ready, aim, fire, objective is ready, aim is key results, fire is successful attainment of key results and, thus, meeting your objective.

Why OKRs Took off in 2013?

OKRs is not a new management buzzword. Intel and Andy Grove are credited with introducing OKRs to the business world in the 1980s. Key executives coming out of Intel spread the word on OKRs. Gary Kennedy left Intel and introduced OKRs to Oracle in the 1980s, John Doerr left Intel and went on to introduce OKRs at Google. Recently, dozens of successful companies including LinkedIn , Sears, and Twitter rolled out OKRs as a goals and performance management platform. So, if OKRs have been around over 30 years, why the sudden explosion of interest in OKRs? The short answer: Google.

In early 2013, Google Ventures partner Rick Klau delivered a presentation on how Google uses OKRs. Klau’s tweet reflects his surprise that his OKRs workshop video was going viral: @klau tweet:

“My OKRs video just passed 150,000 views. That’s about 149k more than I thought it’d get”

Benefits of Using OKRs

OKRs improves communications, focus and alignment to drive better business results. It does so by clearly defining goals, making it clear what’s important across the organization and focusing effort on key results that deliver on an objective.

John Doerr, a prominent venture capitalist and leading voice in the OKRs community, described the four general benefits of OKRs in the 1990s:

7 COMMON PROBLEMS OKRS JUST MIGHT FIX

If you feel like any of these statements apply to you, it may be time to explore OKRs.

  1. My team members cannot state the company’s business strategy and what’s expected of them to help achieve company goals.
  2. I need a way to know my direct reports are focusing on activities that meet my objectives.
  3. We need alignment on objectives throughout the company and especially across teams.
  4. Our performance management system does not help me do my job better.
  5. I can’t see how my contributions help the company meet its objectives.
  6. I need visibility into what “those people in department X” really do.
  7. My contributions at work are neither measurable nor celebrated.

Disciplines thinking

(The major goals will surface)

Communicates accurately

(Lets everyone know what’s important)

Establishes indicators

for measuring progress (Shows how far along we are)

Focuses effort

(Keeps organizations in step with each other)



Here are three specific benefits my clients realize from OKRs:

1) “Focus is a constant team-meeting theme. We begin with objecdtives and focus on key results to zero in on measuring and making progress on our most importnt goals.”
2) “Teamwork is way better! Everyone on the team and even on other teams now work toward the same goals (e.g. customer retention), which is encouraging for everyone. We all celebrate other team’s results, not just accomplishments within our own department.”
3) “Learning each quarter works and is palpable when you focus and explicitly reflect on what you’re learning. To be better at what you’re doing, you need to look back. Defining and reviewing OKRs creates a continuous learning environment.

The basic message is clear. Having teams define their most important goals and focus their work on achieving these goals sets the stage for better business results.

Ten Characteristics of Effective OKRs

1) Results, not tasks Key Results are results, not tasks. Tasks appear on a “to-do list” and can typically be completed in a day. Key Results reflect measurable progress by a target date and cannot get done in a day. Tasks look like: “email a prospect” or “meet with the new VP of Sales.” No concrete result is expected. KRs are not tasks. They look like: “X% increase in key business metric Y” or “Meet weekly with the VP of Sales and produce task lists” or “10 qualified opportunities added to pipeline by end of quarter.” Key Results focus everyone on bottom-line-relevant results, not tasks!
2) SMART Effective Key Results are Specific, Measurable, Achievable, Relevant, and Time-bound. Key Results that you cannot .measure are meaningless.
3) Focused Each set of OKRs should include at most 5 Objectives focusing on 1-3 Key Results for each objective. With OKRs, less is more. Focusing on the two or three most critical objectives is generally better than managing to a list of five.
4) Owned Your Objectives should originate from you, the OKR owner, and not corporate mandate. Instead of copying a corporate mandate or your bosses Objectives, you should consider an objective that is within the control of you or your organization and phrase it accordingly. You achieve more when you design and own your OKRs.
5) Aligned for Success Effective OKRs measure success. While drafting OKRs reflects the owner’s definition of success, OKRs should be refined based on input from a more senior team member and any “dependent teams” to ensure alignment and agreement on what counts as success. Reviewing company-level OKRs first provides context and can help with alignment.
6) Frequently Updated When setting your personal OKRs for the quarter, consider how frequently you plan to update progress on each key result. Breaking a key result into “baby steps” makes it easier to make progress, provide updates on progress, and reflect on how to refine your OKRs for the next quarter.
7) Clear Effective communication can be one of the key benefits of using OKRs. Effective OKRs are written clearly and concisely and only include standard acronyms that an average high school student would understand.
8) Positive Create metrics where “bigger is better” where possible. OKRs are typically self-reported, and we want everyone on the team to look forward to making positive progress rather than logging “bad” events.
9) Graded Effective Key Results include grades that clearly communicate targets and manage expectations.
10) Aspirational According to research on goal science, workers achieve more when setting the bar high. Set your highest grade to reflect a highly ambitious level of achievement that still feels possible.

Examples & Types of OKRs

Before rolling out OKRs, it’s useful to see some examples of OKRs that follow best practices and distinguish between the types of key results.

Example of OKRs: People Operations

Objective: Measure and improve employee satisfaction with People Operations while meeting budget constraints.

Key Result: 80 percent of 2015 People Operations initiatives completed on time and within budget by end of Q4.

Key Result: Obtain a baseline with 200 valid responses to quantify employee satisfaction with People Operations.


The first Key Result reflecting percent of “initiatives completed on time and within budget” was easily created without assistance from an OKRs coach. The second Key Result started out as “Develop a survey to measure satisfaction with People Operations.” This second Key Result evolved into its final form with assistance from an OKRs coach.

OKRs coaching tip: Grade your KRs

Get coaching feedback to ensure your OKRs are effective

An OKRs coach can facilitate the process of adding grades to each Key Result. Your organization should define the standards for grading. Here’s the grading scheme my clients use based on a 0-1 scale:

1

stretch target that feels nearly impossible to achieve

.7

what we hope to achieve; difficult but attainable

.5

almost what we hope to achieve, but not quite

.3

what we know we can achieve with minimal effort

.0

no progress; an unacceptable result that requires explanation

Example of OKRs with Coaching: Engineering Team

Let’s look at an excerpt from a real OKRs coaching session to illustrate how coaching can dramatically improve the quality and effectiveness of OKRs. Here’s an OKR that emerged after a coaching session for the engineering team at a large software company.

Objective: Measure and improve engineering’s support of Sales

Key Result: Document all engineering engagements with $100k+ prospects Grade 1= all documented, .7=all but 1, .5=all but 2, .3= 1 documented, 0

Key Result: Obtain a baseline on the technical pass rate metric by end of Q2 Grade: 1=baseline reported, 0

Key Result: 60% of account managers in 1 region trained and certified on product X selling technique by end of Q2 Grade: 1=60%+, .7=50-59%, .3=3 or more trained, 0

Notice how the conversation below begins with a fuzzy objective that evolves into three well-defined, effective Key Results to reflect how Engineering can support Sales. The OKRs coach keeps asking questions that are designed to get the Engineering VP to create an effective Key Result.

Engineering VP: My key objective is to help our sales team achieve their targets.

OKRs Coach: At the end of the quarter, how would we know if Engineering helped Sales achieve their targets?

Engineering VP: Hmm, that’s a good question. (Pause)

OKRs Coach: OK, can you name a particular customer who purchased within the last year where Engineering clearly contributed to the sales process?

Engineering VP: Actually, no. But that would be very good data to have. It’s not so much that we help sales close deals, it’s more like we keep the prospect in the mix.

The Engineering VP went on to propose the following KRs:

  • “Provide sales support for 5 major prospects in Q2”
  • “Develop training for sales team by end of Q2”

While these 2 statements are directional, they are not measurable. Let’s look at how the OKRs coach helped the VP translate these two statements into measurable KRs.

Engineering VP: One Key Result would be to provide sales support for 5 major prospects in Q2.

OKRs Coach: Is there a distinction between a major prospect and a minor prospect? (Make this clear by addressing ambiguity)

Engineering VP: Not really

OKRs Coach: Do you and the VP Sales agree on the definition of a “major prospect” (Ensures alignment across departments is jointly defined)

Engineering VP: Let’s replace “major prospect” with “prospect with $100k+ year 1 revenue potential.” Then we can run this definition by the VP Sales.

OKRs Coach: Have you measured the number of these sales support events in the past? (Confirm metric history so we know the Key Result is measurable)

Engineering VP: No.

OKRs Coach: What is the intended outcome of Engineering providing sales support? (Probes intended outcome of achieving the goal to focus on results not tasks)

Engineering VP: It results in either a continuing sales process or kills the deal.

OKRs Coach: What if all 5 sales support calls result in dead deals? Will we have achieved this goal? (Boundary condition question to ensure alignment)

Engineering VP: No. The meeting is really not considered a success when we lose the deal for technical reasons. Maybe we should define this as, “provide sales support with no more than three $100k+ prospects deciding to not evaluate our product for technical reasons.”

OKRs Coach: While this is heading in the right direction, the key result is now framed negatively. I recommend the following positively framed version of this goal: Obtain a baseline on “technical pass rate.” For example, if we have meetings with ten $100k+ prospects and eight of them advance without technical objection, the technical pass rate is 80%. (Ensure Key Result is positive)

The Engineering VP liked the idea of tracking technical pass rate. As a result of this OKRs coaching session, the Engineering VP agreed to confirm with VP Sales that technical pass rate is a useful metric to quantify the extent to which Engineering contributes to sales.

Types of Key Results

Key results tend to take three distinct forms: 1) baseline metric, 2) target metric, and 3) milestone. Here are examples of each type of Key Result drawing from my experiences with actual organizations.

1. Baseline Metric Key Result:

A Key Result that seeks to obtain an initial value for a metric that will be used to track progress.

Example: An Accounts Payable department in the early stages of deploying OKRs realizes that the number of invoices received is a key indicator that can be used for measuring the company’s efficiency and scalability objective to reduce G&A as a percent of revenue. However, no one is currently tracking the number of invoices processed. So, a Key Result takes the form:

Key Result: Count and report the number of invoices received each month

This is a Baseline Metric Key Result, because it is considered to be a very important metric to track, but there’s no historical data available. In this case, setting a target value for the Key Result is generally not required; it doesn’t make sense to set targets until a baseline has been established.

2. Target Metric Key Result:

A Key Result that seeks to obtain a certain level of change from the baseline. Let’s look at the three types of Target Metric Key Results: positive, negative, and threshold.

2.1 Positive Target Metric:
A Target Metric Key Result where more is better.

Key Result: 40 blogs posted by end of June

This is a Target Metric Key Result since it specifies a numerical target. It is a positive target metric since it is good to go in a positive direction. That is, 39 is better than 1.

2.2 Negative Target Metric:
A Target Metric Key Result where less is better.

Example: The VP of Accounting produces financial statements each quarter with a total of just 12 material errors over the last 10 quarters for an average of 1.2 material errors per quarter. The CFO feels 1 is a good target and 2 errors is acceptable, but 3 or more material errors in one quarter is not acceptable. The VP wants to ensure reports meets accurate standards, so a key result takes the form:

Key Result: No more than 2 material errors in quarterly financial statements.
This is a target metric since it specifies a numerical value target. It is a Negative Target Metric Key Result since it is good to go in a negative direction. That is, 0 is better than 2.

OKRs coaching tip: Keep it Positive

Where possible, frame Target Metric Key Results positively. Remember, you get what you measure. This is your opportunity to create a more positive culture where we’re trying to get more of a good thing rather than trying to avoid bad things.

2.3 Threshold Target Metric:
A Target Metric Key Result with a range defined by a minimum and maximum acceptable value.

Example: The VP of a consulting team provides services billed on an hourly basis. In order to be cost effective, the VP wants her team to be billing at least 60% of their time each month. She calls this metric “consulting utilization rate.” She knows that her team needs time for internal meetings and non-billable activities. Once a utilization rate surpasses 90%, it negatively impacts job satisfaction and can even negatively impact the quality of services. So the key result takes the form:

Key Result: Maintain a monthly consultant utilization rate between 60% and 90%.”
This is a Threshold Target Metric Key Result since it specifies an acceptable low numerical value and an acceptable high numerical value that serve as thresholds to specify the metric’s target range.

3. Milestone Key Result

A key result that cannot be expressed as a Metric Key Result.

Example: The VP of Sales is responsible for establishing a market presence in Australia by opening a new office in order to establish a presence in the region. The VP is not responsible for opening multiple offices, only one. The Key Result takes the form:

Key Result: Open a branch office in Australia with a full-time staff member at the office during business hours to support our first customer in the region.
This is a Milestone Key Result since it cannot be set up a metric. Milestone Key Results can and should be broken down into smaller steps such as:

Sign lease to secure office space

Hire full time staff member to manage Australia office

Translate product pricing to Australian currency

Sign first customer in Australia

OKRs coaching tip:

balancing tasks with Goals

Setting up Key Results that look more like tasks rather than goals is quite common with Milestone Key Results. Use OKRs coaching in the early stages of your OKRs rollout to help your team define Milestone Key Results that reflect real progress.

Optimizing Goal Resolution

The team at BetterWorks recently launched a Goal Science White Paper that analyzes best practices for defining Milestone Key Results: “Goal science best practices include updating goals frequently so small wins are continually captured. They also include creating goals with appropriate goal resolution, for example, approximately one milestone every one-to-two weeks”

Steps for getting started with OKRs

Getting the workers in your organization to use OKRs may involve a fundamental change to how they approach work. If you’re planning to lead a cultural change at your organization, it’s critical that you begin with a deep understanding of the new system. You’ll also want to obtain a baseline so you know where you are before proposing any improvements.

Here’s a summary of the 5 key steps all organizations should take when rolling out OKRs.

Step 1: Draft YOUR OKRs

I often get questions like, “How can we get going with OKRs?” or “How do we know if our organization can really benefit by rolling out OKRs?” or “Our engineering team has Jira and already does weekly sprints, so they won’t want to do OKRs, and since engineers are a large part of our organization, I don’t think we’re a good cultural fit.”

All of these statements are excuses for delaying the inevitable: figuring out what you should actually be doing and making real progress at work.

Here are 5 questions to motivate you to draft your OKRs:

  1. Are you focusing on the most important activities at work each day?
  2. If you had $200k more budget to launch a new project, do you know what it would be?
  3. Can you name the 3 things you did last quarter that made the most impact?
  4. Can you describe an example of a project that you started on but were able to quickly stop working on once you realized it was no longer a priority?
  5. Do you track at least one metric and update it at least once per quarter so that you see a bar go up consistently to reflect your team’s progress?

Exercise: Draft YOUR OKRs

  1. If you’re a CEO, write down the company-level OKRs.
  2. If you’re a people leader, write down your team’s OKRs.
  3. If you’re an individual contributor, write down your own OKRs.

Defining a decent set of measurable results can be very difficult. If you can do it on your own, great, but for most of us, getting feedback from a peer or experienced OKRs coach can be invaluable when getting started with OKRs.

OKRs coaching tip: try working with an OKRs coachI’ve helped over 100 professionals from dozens of organizations draft their OKRs. In an effort to remove the barriers to getting started with OKRs, I am offering one free 30-minute OKRs drafting session to anyone new to OKRs.

Step 2: Reflect on existing performance management processes

Remember, OKRs are not the same as annual performance reviews. Nor do OKRs replace an existing corporate performance dashboard application or project management system.

During my presentations on performance management, I often ask these questions in a group exercise:

GROUP EXERCISE: How effective is your current performance management system?

A

Not effective

B

Seems effective to someone, but not me

C

Effective for me

Performance management solution providers seek to expand usage and adoption of their products across departments and to individual contributors. However, after surveying 100s of attendees at conferences, only a few have responded with C – Effective for me. The first C responder happened to use OKRs while working at Zynga. He claimed that even though his experience with OKRs was not all positive, it was the only time he felt that a performance management system was actually designed to help him do his job better rather than simply to create dashboards and reports that looked good in management meetings and board presentations.

It’s quite ironic that many OKRs projects fail due to a lack of agreement about the goals of the OKRs project itself! It is critically important to define what would have to happen for your performance management system to be a success AND to determine whether you want performance management to focuson reporting and compliance or improve decision making and document positive impact as reported by employees and customers.

Step 3: Define success criteria for your OKRs deployment

Begin with a critique of your existing system by identifying what’s working and not working. Then define what a successful system looks like at your organization.

How would you define success of a goals and performance management platform? I highly recommend taking Stephen Covey’s advice to “begin with the end in mind.” Putting in just a little time upfront to agree and confirm what you want to see happen as a result of deploying OKRs will increase your chances of a successful OKRs implementation.

Here are five examples that cover some success criteria themes I’ve heard over the last 10 years. Would you consider any of the following results a success?

  1. Define company metrics: monitor, and publish top 5 company-level Key Performance Indicators
  2. More visibility into performance and metrics at all management levels
  3. Metrics-driven culture where team meetings begin with review of metrics
  4. More alignment/employee engagement: workers can more clearly quantify contributions to company level goals
  5. More focused management: Managers can document their direct reports are focusing effort on Key Results that drive the company forward

Brainstorm and document your OKRs project success criteria with key leaders. As your refine and focus this list of criteria, consider using Key Results to define the achievement of your OKRs project objective. Then, present and confirm your success criteria frequently with everyone involved.

OKRs COaching Tip: Use OKRs to do OKRs!In addition to some generic material on OKRs, consider using OKRs to communicate success criteria for your OKRs project at your kickoff presentation. Using OKRs to define the purpose of the project gives everyone a firsthand experience of listening to someone speak about their business in the language of OKRs.

Step 4: Scope your OKRs project

Here are some questions designed to serve as inspiration to help you develop your project scoping document. An OKRs coach can quickly help you scope your project and define a phased implementation plan.

1. What is the scope of your initial OKRs deployment?
  • Entire company
  • Single business unit
  • Single department
  • Few individual contributors
2. How deep into the organization will we use OKRs?
  • Executives only
  • All people Leaders
  • Individual Contributors
3. OKRs sequencing
  • Top-down: start at C-level, cascade down to direct reports
  • Bottoms-up: start with team leaders, get C-level approval
4. Who will drive OKRs at your company?
  • COO / VP Operations
  • CEO
  • CFO / VP FP&A
  • Head of Human Resources
  • Other
5. OKRs cadence
  • Most organizations set OKRs quarterly. Does that work for you?
  • Will OKRs be used to begin team meetings?
6. What additional resources will support OKRs?
  • OKRs software?
  • OKRs coaching/training?

Step 5: Launch your initial OKRs rollout

Once you’ve scoped your project, most successful deployments begin with a phased rollout plan. Here are some key tips to making your initial rollout a success:

1. Timing and Phases: Agree on a defined time period in the 3-6 month range for the initial phase. Begin with company and team-level OKRs. Explore OKRs for individuals at a later phase.
2. Be open to a no-go decision: Unless the project sponsor is the CEO, you’ll want to allow for the possibility that OKRs are not a fit for your organization or may be best used within a subset of your organization’s teams and/or business units. Consider naming phase 1 the “pilot program” to reflect that you’re testing out the approach.
3. Document success: Your internal OKRs project lead or your OKRs coach should document key takeaways that emerge directly from the OKRs process in a single location.
4. Project Launch: Include all participants at a project launch that may include 1) a presentation of company level OKRs if available and 2) drafting of objectives with at least one Key Result for each participant. Provide some context to define and validate success criteria for the OKRs pilot phase.
5. Use coaching to get it right the first time: Work with an OKRs coach for two 1:1 sessions to draft and refine OKRs. Ask your OKRs coach to facilitate alignment meetings and finalize OKRs with a supervisor. In cases where OKRs cross departments, ask your OKRs coach to facilitate a session to jointly define OKRs that cross teams.

Once you’ve completed these 5 steps for getting started with OKRs, you will want to explore how best to sustain and improve your company’s use of OKRs going forward. Future white papers will include best practices for sustaining your OKRs project, as well as more examples of OKRs by function, case studies from organizations willing to share tips for rolling out OKRs successfully, and an analysis of the emerging OKRs software vendor landscape.

Additional Resources

Books

  1. High Output Management by Andy Grove introduces OKRs
  2. How Google Works by Eric Schmidt & Jonathan Rosenberg, with Alan Eagle, details Google’s use of OKRs

Articles & Slide Decks

  1. How to Make OKRs Actually Work at Your Startup, Learn how Swipely implemented OKRs using Work.com to grow from 80 employess to a $1B company
  2. Dr Gail Matthews Dominican University Research: “People who wrote down their goals, shared this information with a friend, and sent weekly updates to that friend were on average 33% more successful…”
  3. Never Before Disclosed Oracle Planning Techniques by Jeff Walker, Oracle CFO, describes Oracle’s use of MOKRs (Mission Objective Key Results)
  4. Sears Holding Company Study Concludes OKRs Impact the Bottom Line, Research concluding OKRs increased revenue by 8.5% and increased odds of getting promoted

Videos

  1. Google Ventures Video featuring Rick Klau on OKRs, 80-minute workshop detailing how Google uses OKRs
  2. Small Wins (authors of the Progress Principle), Harvard research analzying the importance of making progress at work
  3. Simon Sinek – Biological explanation of why OKRs work
  4. Executioner’s Tale: 20 minute video by Christina Wodtke, Fable of how OKRs saved a small startup

Social Media

  1. OKRs LinkedIn Group Network with OKRs users, vendors, and analysts
  2. Quora OKRs Topic Get the latest questions and answers from OKRs experts
  3. The OKRs Blog Get my latest tips for implementing OKRs

About Ben Lamorte and OKRs.com

Ben Lamorte coaches business leaders to define and make measurable progress on their most important goals. Building off his success helping hundreds of managers draft and refine their team’s OKRs, he founded OKRs.com.

Ben holds a graduate degree in Management Science and Engineering from Stanford University and has 15 years of experience as a management consultant, sales and marketing executive, financial modeler, and OKRs coach. Recent engagements include 1) applying the OKRs methodology to identify company and team-level performance metrics for a mid-sized government contracting organization, 2) coaching 50 team leaders to draft and refine their OKRs at a leading education software company ,and 3) designing and implementing a coaching program for F100 organization to improve the quality and impact of OKRs. Email: Ben@OKRs.com.

2 thoughts on “Objective and Key Results”

    1. Hi Heike, Great question! Check out this video: https://www.youtube.com/watch?v=iiOVUZxhhPM — In the interview, you’ll find my “updated answer” to how SMART and OKRs compare. As for the “STRETCH” piece, SMART is an acronym that has many possible choices. Some say “A” is for attainable. Others say “A” is for apspirational. Either way, the specific/measurable part of SMART are the two that most apply to Key Results. Google does not make all KRs stretch – the KRs that are set as stretch are referred to as “moonshot” but many other KRs are not so “strechy” – you need to figure out to make the benefits of “stretch” work at your organization if you’re using OKRs. My main advice is to define the scoring levels of KRs so you specify the stretch outcome and the “target” as well as the “commit” levels of progress for each KR.

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