Learn about OKR and how to implement it at your company
Keeping all parts of your organization aligned as it grows can be a struggle without a strong goal-setting methodology. Using the objectives and key results (OKR) methodology is an easy way to maintain engagement from everyone around central goals.
OKRs have been a staple of the business world for more than two decades, helping organizational leaders tackle one of their biggest challenges — goal setting. These strategies allow companies to align their teams toward common objectives and measure key results.
Executives or business owners who want to revamp their goal-setting process and are interested in using OKRs need to understand the basics and how the methodology functions.
In this guide, you’ll learn:
- What OKR is
- Components of an OKR
- History of OKR
- Benefits of using OKRs
- OKR examples
- Common OKR mistakes
- How to write a good OKR
- How to implement OKRs in your business
- How to get started with OKRs
What is OKR?
The objectives and key results methodology is a framework used by individuals, teams, departments, and organizational leaders focused on setting ambitious and measurable objectives clearly and collaboratively.
As the name suggests, every OKR should include a clear objective and one or more key result metrics. This way, OKRs help align goals and provide a way to quantifiably track progress toward them. They are a powerful tool for individuals, corporations, and businesses of all sizes.
It is important to distinguish between OKRs and KPIs (key performance indicators). A KPI is a specific metric that tracks progress toward an established aim. Conversely, OKRs are a framework for goal setting that involves selecting objectives and identifying relevant performance metrics associated with the chosen ideal.
The components of an OKR
Generally speaking, OKRs contain three specific components.
1. The OKR formula
The following statement perfectly captures the spirit of OKRs: “I will accomplish (objective) as measured by (key results).”
When using the OKR formula, you state what objective it is you plan to achieve specifically. You then determine how you will measure your progress toward achieving it. Typically, an OKR objective is paired with three to five key result metrics.
In the OKR framework, the objective is the goal that you want to achieve. It should be simple and easy to act on. Establishing a clear objective avoids confusion among team members and allows everyone to be aligned toward a common goal.
3. Key results
The key results are the metrics you will use to determine whether you’re reaching your objective. Key results must be concrete and measurable, or you won’t be able to accurately determine the amount of progress made toward your goal.
For example, let’s say you want to grow your business. Key results could include increasing your revenue to $2 million, releasing a new product, or generating 25,000 new leads within a year. This is just one of many examples of objectives and accompanying key results that can measure your progress.
OKRs have been a staple of the business world for more than two decades, helping organizational leaders tackle one of their biggest challenges — goal setting.
A brief history of OKR
OKR traces its roots to none other than the father of management science, Andy Grove. Grove created the OKR methodology while working at Intel. He passed it on to John Doerr, who introduced the OKR approach to Google in 1999.
OKR is loosely based on the “Management by Objectives” procedures created and used by Peter Drucker in the 1950s. Grove expanded on the principles of this method, believing that teams should focus more on work outcomes, not the process.
Grove’s OKR framework encourages teams to waste less time appearing busy and instead devote their energy toward achieving results.
The benefits of using OKRs
OKRs offer many advantages to organizations, teams, and individuals. Some of the most notable of these benefits are outlined below.
Establishing a list of clear, high-level objectives that need to be achieved gets everyone on the same page throughout the organization. When teams and departments are aligned, they can more effectively work together to accomplish established aims.
Easily trackable goals
The OKR framework requires organizations to simultaneously set their intentions and select associated key results. As a result, businesses can more easily track their chosen pursuits and measure the efficacy of growth efforts.
Attainable stretch goals
When selecting OKR key results, organizations can choose one or two metrics that will act as stretch goals — those that may not be mission-critical but still remain on the company’s radar. However, these key results should be attainable and relevant to the company’s overall mission.
Increased employee commitment
If everyone understands the company’s ultimate aspiration and their role in achieving it, they will be more engaged and committed to their work responsibilities. Conversely, a lack of clearly defined objectives can diminish employee engagement and morale.
When a company sets simple goals that demand results, employees have a clear point of focus. Instead of wondering what the purpose of their efforts is, employees know precisely how they contribute to the organization’s mission.
OKRs differ from other goal-setting methodologies in that they are not set in stone. Since OKRs typically focus on short-term target windows and broad objectives, they can evolve more nimbly based on the needs of the business.
Teams, businesses, CEOs, and individuals can set OKRs, though the same formula applies regardless of who is setting them.
An example of a company-wide OKR is the release of a new product. Key results may include obtaining a certain number of orders for the product, winning a notable industry award, or hitting an established sales threshold.
A team-specific OKR could be geared toward your sales staff. They could establish an intent to boost conversion rates during Q4 of the fiscal year. Key results for this OKR may include achieving a 5% increase in conversion rates, acquiring 5,000 new leads, and exceeding sales revenue expectations by 10%.
Common OKR mistakes
While the OKR framework is straightforward, you should be wary of some common mistakes when using this methodology. Let’s cover some frequent OKR pitfalls that undermine businesses’ ability to accomplish their plans.
OKRs are meant to fuel positive organizational change, not maintain the status quo. Therefore, objectives must be ambitious enough to bring out the best in your staff. If teams can easily achieve your OKR milestones, the established ideals are not properly testing their skills and abilities.
Being too ambitious
On the other hand, when setting OKRs it’s also critical that objectives be achievable. A few stretch goals are okay, but most of your objectives should be tough yet attainable. When your team racks up some wins by tackling challenging goals, morale will skyrocket and your business will experience positive change. However, consistently falling short can crush morale and productivity.
Using your OKRs as a task list
OKRs are not lists of tasks that need to be completed. They are sets of goals and key results used to measure progress toward your objectives. When creating OKRs, make sure to plan out an accompanying list of tasks that will help your team accomplish your objectives.
Including vague language
OKRs — and key results, in particular — must be specific and measurable. If you use language that is too vague, it will be difficult to determine whether you are actually succeeding.
Implementing too many OKRs
OKRs are meant to help your team focus on a few unified goals. If you implement too many, the methodology will have the opposite effect. Don’t create too many OKRs, or all of them will suffer.
How to write a good OKR
Before you attempt to write an OKR for your business, you must decide which type you want to create. Generally speaking, there are three broad styles of OKRs.
After you’ve chosen which type of OKR you intend to create, you can shift your focus to writing good objectives and key results.
When establishing objectives, keep them simple, short, and concise. They should be measurable and achievable and align with your overall company culture.
Objectives need to energize and excite people. You should create OKRs for entire teams and departments. Departmental OKR objectives can be broader, whereas team goals must be more focused and specific.
Quantifiability is the most integral attribute of key results. Remember, each objective should be assigned multiple measurable key results.
Each result must also be clearly linked to an initiative so that team members understand the connection between their work and accomplishing the objective.
Implementing OKR in your business
If your company is ready to implement OKRs, there are a few steps you should take.
Start and adapt
The only way to start using OKRs is to just do it. There is no practical way to prepare for the use of this methodology. Instead, identify your company’s needs and begin to implement OKRs slowly into the business model. Remember that using OKRs is a big shift for your staff, so don’t rush things.
Set an ultimate goal
To optimize organizational alignment, create an ultimate goal your company will try to achieve. This goal should be a reflection of both your company vision and mission statement. It should be a distance goal, not something you can achieve in the short term.
Once you have established this goal, you can use OKRs to systematically achieve smaller milestones on your way toward accomplishing that highest ideal.
Establish a cadence
Establishing the proper cadence is critical to successfully implementing the OKR framework. Determine whether you want to set annual, quarterly, or monthly OKRs. If you select an annual cadence, ensure that your teams have monthly updates so that your OKRs do not get lost in the sea of day-to-day business responsibilities.
Set both company and team OKRs
Finally, you’re ready to start setting company-wide OKRs. After establishing these broad OKRs, begin creating team and personal ones. When creating company and team OKRs, you must make sure that the latter aligns with the former. This ensures that everyone is on the same page and knows precisely what they are trying to achieve.
Measure and iterate
Continuously track your OKRs and provide your team with updates. Over time, the process of setting, measuring, and achieving OKRs will become second nature for your organization. Figure out what is working best for your team and iterate accordingly.
Getting started with OKRs
OKRs are the perfect framework for streamlining your goal setting, optimizing team alignment, and achieving both short- and long-term business objectives. They provide easily trackable goals and enhance collaboration across the entire company.
When you’re ready to start leveraging this powerful methodology, adapt OKRs to best fit your needs. If you want to maximize the efficacy of OKR, pair the framework with the leading enterprise work management platform on the market, Adobe Workfront, which gives you the power to track all key results precisely, measure your progress toward objectives, and facilitate superior collaboration.
Workfront is enterprise work management software that connects work to strategy and drives better collaboration to deliver measurable business outcomes. It integrates people, data, processes, and technology across an organization, so you can manage the entire lifecycle of projects from start to finish.
To learn more about Adobe Workfront, take a product tour or watch the overview video.