- What are OKRs?
- Benefits of OKRs
- Personal Fitness
- Semiconductor Manufacturing
- Mobile App
- Crafting Your Own OKRs
- Defining Your Why
- Defining Inspiring Objectives
- Defining Measurable Key Results
- Tracking and Measuring OKRs
- Mid-Cycle Key Result Measurement
- End-of-Cycle OKR Review
- References & Further Reading
If you’re like me, you have a number of ambitious ideas about where you want to be in life. It’s one thing to be directionally correct, but a lack of clarity and wasted effort can be prevented with a framework known as Objectives and Key Results (OKRs).
OKRs are a widely-used goal-setting system that can be used both personally and professionally. By setting and tracking OKRs, organizations and individuals can ensure they are working on the right things and quickly identify areas for improvement.
The OKR system involves:
- Setting clear, ambitious outcomes (objectives)
- Defining specific, measurable milestones (key results)
- Applying regular review cadences mid-cycle to measure progress (usually weekly)
- Running planning and post-mortem sessions at the beginning and end of each cycle (usually quarterly)
Key proponents of OKRs include leaders at Intel, Google, and ONE, an organization founded by U2’s Bono to end poverty and preventable disease. I propose that OKRs are also actionable on a personal level to make new years’ resolutions measurable and achievable.
In this article, we’ll explore the specifics, benefits, and examples of OKRs. We’ll use a free Notion template to create our own OKRs, and we’ll discuss when and how to review them to maximize results.
What are OKRs?
OKRs were developed by Andy Grove at Intel and evangelized by his mentee John Doerr in Measure What Matters. The framework is widely used by tech companies today, and adoption is expanding to other industries.
The ideas behind OKRs are to set ambitious goals that are aligned with the overall mission and vision of the organization and to measure progress through a set of specific and measurable key results.
OKRs consist of two parts:
- Objectives: These are the high-level goals that the organization wants to achieve. They should be challenging and inspiring, but also realistic and achievable.
- Key Results: These are the specific, measurable targets that the organization needs to hit in order to achieve its objectives. Key results should be quantifiable and objective, so that progress can be tracked and measured accurately.
Benefits of OKRs
Thousands of organizations have adopted OKRs because they enable visibility and accountability. OKRs should be reviewed in recurring meetings and displayed on metrics dashboards. By broadcasting progress in a public setting, teams can hold each other accountable for hitting their targets.
For managers, OKRs enable four types of leverage:
- Leadership Buy-In: Initiatives are officially aligned to key organizational priorities.
- Focus: OKRs help teams stay focused on high-impact activities because the most impactful tradeoffs have been considered upfront.
- Empowerment: Teams and individual contributors can make tradeoffs without involving management in every decision.
- Intuition: By constantly measuring progress throughout the cycle, teams accelerate their learning loops. At the end of each cycle, post-mortems identify issues in planning or execution, helping them scope future OKRs more precisely.
Of course, the true test of OKRs lies in whether outcomes are successful. Here are just a few examples of the power of OKRs:
- Google used aggressive monthly active user (MAU) key results to achieve their objective of building the best web browser. Google Chrome surpassed 100 million users within 3 years. Today, it is the most popular browser by a wide margin.
- Allbirds, the footwear and apparel company, has an ongoing objective for all products to remain carbon-neutral. As they develop new product lines (and associated supply chains), key results enable innovation while tracking carbon emissions, ensuring the core objective is upheld.
- The city of Syracuse, New York set OKRs related to fiscal sustainability, economic investment, and delivery of city services. In an act of vulnerability, the city put the objectives and up-to-date metrics on a publicly-accessible web dashboard. As a result, the city made drastic improvements in most of the objectives, including reducing their budget variance from 11% to 2%.
In addition to the limited examples here, you can find many more on whatmatters.com.
- Objective: Qualify for and successfully complete the Boston Marathon in spring 2024
- Key Results for Q2 2023:
- Attend F45 strength classes twice per week throughout the quarter
- Practice outdoor 10K runs 2 times per week throughout the quarter
- Find and join a local performance running group by April 30
- Finish a 10K race in 50 minutes by June 30
- Objective: Scale the 3nm process to become the leading chip technology in flagship phones
- Key Results for Q1 2023:
- Win a contract with a tier 1 smartphone manufacturer for the autumn 2024 release
- Reduce production downtime from 20% to 10% by March 10
- Reduce defects from 2% to 0.05% by March 20
- Objective: Reduce screen time and addiction concerns without sacrificing profitability
- Key Results for Q2 2023:
- A/B test the “time’s up” feature with 20,000 users by April 15
- Measure the NPS scores of 1,000 users who received the new feature by May 31
- Measure the impact on the LTV/CAC ratio for users who received the new feature by May 31
Crafting Your Own OKRs
In this section, you’ll create your own OKRs.
For personal goals, this exercise is fine to do individually, although you can display your completed OKRs publicly for accountability.
For organizations, it’s best to do this as a group exercise. OKRs shouldn’t just be handed down from management—get the frontline team involved in brainstorming, as they’ll be more bought in when it comes to execution. Be sure to get buy-in or align your OKRs with goals set by the company leadership and any cross-functional teams.
Ideally, OKR creation should happen in the weeks leading up to a new cycle. However, if the cycle has already started, it’s not too late to apply the OKR framework to get more specific about your goals. Just be sure to establish a more consistent review cadence going forward.
Defining Your Why
Most OKR guides skip a crucial step: defining your main values or north star. It’s too easy to dive into specific financial or user acquisition goals without starting with why. Understanding and communicating your purpose first leads to team alignment, achievement of key results, and ultimately success in meeting your objectives.
Worse, you can hit your OKRs but ultimately fail as a business if you are focused on the wrong strategy, such as misunderstanding your target market. When you are entering a new market or launching a new product, setting OKRs purely positioned around output is a recipe for disaster. Instead, you should be realistic about where you are as a company, focusing your efforts on proving or disproving critical hypotheses before scaling.
Consider a few of the following prompts, and brainstorm some ideas for Why you do what you do:
- What is a major problem you’d like to solve?
- Think about what you’re passionate about. What are the challenges with the current state, and how can you make it better?
- What unproven hypotheses do we have about the target market?
- What is the most important thing we can be doing in the next 90 days?
- Why is this a priority?
- What are recent learnings relevant to this value?
- Are there any initiatives set by your organization you need to align to?
- What is our strategy? Is there a roadmap?
- Have we defined any North Star metrics?
To give you some examples, here is a personal Why along with two Whys for my company, Restful:
- To teach others to develop, launch, and scale physical and digital products
- To give people a better night of sleep without drugs
- To increase people’s healthspan through quality sleep technologies
Defining Inspiring Objectives
Once you’ve defined your Why, it’s time to think about What you want to accomplish. Whether it’s personal or professional, most people decide to go forward with 2 to 4 objectives.
Strong objectives are:
- aggressive yet realistic (NOT incremental)
- action-oriented and inspiring
- concrete and unambiguous (a vaccine against fuzzy thinking)
- concise and tangible
- Establish [brand x] as the market leader in [specific industry area y]
- Position myself as an expert in [specific subject area x]
- Introduce and scale [x product line] designed to increase customer lifetime value
- Prove that customers are willing to pay a premium for [x product or service]
- Understand buyer personas, pain points, and goals in [x market segment]
You can find more examples at whatmatters.com.
Again, if you are part of an organization, you should brainstorm with your direct team and align with leadership and cross-functional stakeholders.
Objectives may last more than one cycle. For example, you might have an objective that will take a whole year (or even longer) to accomplish. But for each objective you should define key results that you expect to meet in one cycle.
Defining Measurable Key Results
Now that you’ve formalized your objectives, it’s time to get specific about your How. Typically, key results are numerical expressions of success or progress. Most people define 2-4 key results per objective.
Strong key results are:
- measurable milestones that advance the objective
- specific and time-bound
- outcomes, not activities
You should set the key results so that they are ambitious but achievable within the cycle (such as quarterly). This is a good time to decide which key results are committed and which are aspirational:
- Committed: those that are realistic and achievable within the given cycle, i.e. those that you expect will be achieved with 100% completion.
- Aspirational: those that are ambitious and stretch the team. They may or may not be achievable depending on the resources available. You can expect to achieve less than 100% and still be very satisfied with a lower number, such as 70%.
A litmus test for a good key result is the question, “Did I achieve that?” The answer should be a simple yes or no.
Examples of key results include:
- Increase user engagement (MAU) to 30% by August 20
- Publish 1 YouTube video per week
- Launch [x product] by September 29
- Increase average customer lifetime value to $150 by March 20
- Increase conversion of free to paid customers by 8% by April 30
- Interview 20 users in [market segment x] about their daily activities, pain points, and goals by February 29
If you include an output key result, such as “launch [x feature],” be sure to add additional outcome key results to quantify success, such as sales or engagement metrics.
Tracking and Measuring OKRs
Now that you’ve defined your OKRs, you’ll want to understand best practices around measurement. Success in achieving objectives is often qualitative, while measuring key results is quantitative.
Traditionally, key results are graded on a scale of 0.0 to 1.0:
- 0.0 means the key result was not achieved at all
- 1.0 means the key result was fully achieved
As an example, let’s say we have a key result to increase MAUs from 10,000 users (baseline) to 20,000 users (target). During a review, if we are currently at 15,000 users, the key result score should be 0.5.
There are two time intervals relevant to OKR reviews: mid-cycle (usually weekly) and end-of-cycle (usually quarterly). During weekly reviews, key result metrics are updated so everyone can feel progress or lack thereof. During quarterly reviews, the success of each OKR is evaluated and new or updated OKRs are planned for the next quarter.
Mid-Cycle Key Result Measurement
A key component of ensuring success is making OKRs highly visible. At minimum, teams should display and update key results during weekly review meetings. Many companies choose to keep OKR dashboards visible at all times, review OKRs during biweekly sprint post-mortems, and discuss OKR progress in 1:1 check-ins with managers.
Key result metrics can either be updated manually or via automated means, such as with an analytics tool. All key results for the team should be centralized into a single dashboard, and time should be allotted to discuss progress toward each key result at each meeting.
If new information emerges during the quarter that did not exist during the drafting progress, it’s acceptable to reprioritize and modify the key results. OKRs should be revised and socialized in a similar manner to the original planning process.
End-of-Cycle OKR Review
At the end of each cycle, teams should conduct a full review of the OKRs. This can be broken down into three major parts: post-mortem, existing OKR update, and next quarter planning.
During the post-mortem meeting, the scores for each key result are evaluated. Some companies use a traffic light system, with different scores for committed and aspirational key results:
0.7 - 0.99
0.4 - 0.69
For each initiative, teams evaluate what worked and what didn’t. Lessons from the quarter are identified and recorded.
Based on the insights gained from the post-mortem meeting, the team reviews objectives that are ongoing and key results that have not been fully achieved. New and updated key results are established in a similar manner to the original planning process.
Because it’s hard to plan for the next quarter before you’ve run a post-mortem from the previous quarter, companies may elect to run the post-mortem process in the weeks leading up to the quarter end, effectively making the deadline a bit before the quarter end. Perhaps more commonly, the full post-mortem and planning process may occur at the beginning of a new quarter, especially at the start of a new year.
Throughout this article, I’ve attempted to demonstrate the power of OKRs to get clear and specific about your goals then constantly review them. I use OKRs personally and professionally, and I believe other ambitious people and companies should consider adopting them.
In follow-up posts, I hope to dive deeper into a few related areas, including OKR best practices for early-stage ventures.
References & Further Reading
- OKRs for Building a Culture of Innovation: How Allbirds sets ambitious metrics for R&D on whatmatters.com
- Connecting Dots Across City Services With OKRs: OKRs in Syracuse on whatmatters.com
- Measure What Matters by John Doerr (Affiliate link*)
- Google OKR Playbook (PDF)
- OKR Examples on whatmatters.com
- Using OKRs to Scale: A Cautionary Tale on whatmatters.com
- Learning OKRs on whatmatters.com
- What is an OKR? Andy Grove, OKR inventor, explains (video)
- Why the secret to success is setting the right goals (video)
- Reforge: Mastering Product Management Course
- Reforge: Set High-Leverage OKRs With Our 6-Step Framework
- Reforge: Trouble Hitting Your Goals? Here’s Why, and How to Make a Shift
- Reforge OKR Template
- Coda on Twitter: Bad OKRs sink your business
- Coda OKR Starter Kit
- Notion Template: Buffer’s OKRs
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