An Introduction to Objectives and Key Results (OKRs)

I often say that my passion is helping teams to get clear on what they’re doing, why they’re doing it, and how they can get better at doing it – while enjoying the journey.

In 2015 I discovered OKRs and they’ve since become an invaluable tool in this work.

Developed by Andy Grove at Intel in the 80s in response to a threat from Motorola’s 68000 microprocessor chip, they’re now used by thousands of organisations around the world in every industry imaginable including Google, Spotify, AirBnB, and LinkedIn and countless others. They drive focus and alignment and provide tremendous clarity around what activities are producing which results.

Overview

In very basic terms, an OKR is simply a big inspiring objective with a few key results (two or three) which will be used to measure the degree to which we’ve achieved the objective. The key results are NOT the means by which we will achieve the objective – an important but subtle distinction!

For example:

Objective This quarter we will create a product that our customers love.

Key Results

We’ll know we’ve done this because we will observe:

1. A net Promoter Score of 70
2. 10k product activations
3. £200k of new referral-based business

This example gives us a clear inspiring objective and three ways to know we’ve hit it (for now). These might not be exactly the right results to prove we’ve created a product people love, but they give us something concrete to go after in this quarter. At the end of the quarter, we’ll see how well we delivered these key results and determine if they’re still the right things to go after. Adjust, and repeat… inspect and adapt.

According to Marissa Mayer, every key result should contain a number. Key results should feel wildly ambitious, audacious, and on the edge of impossibility. Teams should enter the cycle with about 50% confidence of achieving each key result by the end of the cycle. At Google, achieving even 70% of a Key Result is considered a big deal. Consistently hitting 100% means you’re not being bold enough in your ambitions.

Teams should check in regularly on their OKRs, ideally every week for quarterly OKRs. I recommend measuring confidence over progress to create a learning organisation that leverages diversity of backgrounds & experience. Finally, at the end of the cycle – whether annual, quarterly, or something else – teams close their OKRs, assign a score to each key result and capture lessons learned. The learnings are much more important than the scores.

Ideally, everything should be made public throughout the entire organisation at all times.

Low scores provide valuable data with which to refine future activities. Is a thing still valuable? Do we have the resources needed to deliver it in the way described? Take every opportunity to learn and adjust.

Why not traditional goals?

Traditional long-range planning and strategy whether for your business or the former Soviet Union, tends to be highly brittle, relying on several critical assumptions:

1. The problem space is well-understood
2. Every step and dependency can be mapped out in detail in advance
3. External conditions will remain mostly static
4. The plan will be mostly correct requiring only small adjustments

Traditional goals are set in silos, annually, without much data, reviewed in a relatively cursory fashion at the start of the year and not really followed up on or challenged until the end of the year. Too often, it’s a box ticking exercise which, unsurprisingly, doesn’t provide deep alignment or drive strong outcomes.

Why OKRs?

At Genomics England we summed it up this way: outcomes, transparency, & alignment.

OKRs give you a platform for having difficult and productive conversations. If my team has committed to climbing Mount Everest and I’m building a nuclear submarine, we need to talk. OKRs make our goals clear and guarantee that we address mis-alignment.

OKRs give us a way to be extremely ambitious in our goals yet also razor-sharp on how we’ve agreed to measure success and our specific numeric target. OKRs clearly link your day-to-day activities with your top-level strategy by weaving your BHAGs and your KPIs into a single cohesive system with clear causes & effects. If we achieve 100% of each of these outcomes, then we will know that we deserve the prize defined by our objective.

OKRs clarify for everyone what you’re working on and why, as well as giving you an easy platform to declare what you’re NOT working on.

Early pioneers of agile software development measured success by delivering “working software”. They didn’t measure meetings held, lines of code written, requirements drafted, or even number of features released. OKRs take this a step further by reminding us that any output including working software must deliver some positive impact for the organisation.

OKRs focus teams on outcomes over outputs.

Yes, you still have to deliver projects, maintain services, and execute initiatives on-schedule, within budget, and to a high standard, but you now have a new lense to put over your activities to judge whether they’re actually taking you somewhere that you want to be.

OKRs for organisational learning

By anchoring activities in outcomes, we have a direct feedback loop between how we spend our time and what impact we have through our actions. The more regularly and carefully we check in on our OKRs, the more data we get and the more opportunities we have to run safe “experiments” to find out where the leverage is.

Is your organisation ready for OKRs?

It’s easy to get swept up in the excitement of a new framework like OKRs. Not every organisation is ready to benefit from OKRs. Not every organisation or every team needs OKRs. Here are a few questions to ask yourself before jumping in.

Do you have a culture of accountability and risk-ownership in your organisation? If teams are used to being told what to do and how to do it, they will struggle to create meaningful OKRs and find them useful in steering their day to day actions.

Do you have a culture of measurability? OKRs rely on readily observable, measurable outcomes. If you struggle to find accurate, timely data and use it to make clear decisions about delivery, you may not be ready for OKRs. Consider adding instrumentation to your operations and products before diving into OKRs. Existing key performance indicators can be a good starting point for working with OKRs.

Is it safe to fail in your organisation? John Doerr reminds us that OKRs encourage us to “stretch for amazing”. When aim high, we’ll likely come up short but learn a lot and get much further than we would’ve if we’d played it totally safe. Make sure there’s room to grow and experiment and stretch and fail fearlessly before you pick up OKRs.

The four key disciplines of OKRs

There are four key disciplines of working with OKRs that every organisation must practice and understand to get the most from OKRs:

1. Setting OKRs within a team
2. Aligning & Refining OKRs across teams
3. Checking in
4. Closing OKRs

Ready to get started?

If you’re ready to get started but not sure where to begin, check out some of my OKR coaching & training programmes or simply get in touch.