This is your step by step guide for leaders on the OKR framework. We cover what is OKR, how to implement it (the easy way) and how to set your first OKR.
If your team is on a mission to make an impact, you need everyone aligned on your biggest priority. If you want to make this impact fast, then you need a proven framework to get you there.
So what is OKR? OKR stands for Objectives and Key Results. It's a lightweight goal setting framework used by teams and organizations to set, align and track measurable goals. OKR empowers your teams to achieve their biggest goals with focus.
OKR is used by industry giants like Google, Amazon and LinkedIn to inspire their teams and drive growth. They've been using it since they were small start ups. Here's why...
It's been proven time and time again to drive growth for highly competitive business. In fact, this is why it was created. Andy Grove invented OKR at Intel in the late 60's during the chip wars with Motorola. It was the secret sauce for Intel winning the chip war, and that's why so many tech firms have embraced it to drive their success.
In this guide, you'll learn how you can use it too. We'll cover:
- Where did OKR come from?
- What is OKR
- How to get your team started with OKR fast
- Tips to make it a success
- How it is different to other frameworks like KPI
By the end of this article, you'll now why and how these companies use OKR to drive insane results....
Where did OKR come from?
Before OKR propelled Google, Facebook, AfterPay, and many others into the stratosphere, Andy Grove created it to help Intel win the chip market. Although this may sound like a brand new idea for a lot of people, they’ve actually been around since the 1960s! Here’s how they rose to popularity:
- OKR was created by Andy Grove, Intel Chairman in 1968. It was a new iteration of the MBO (Management By Objective) Framework.
- In 1974, John Doerr joins Intel and learns about OKR.
- John Doerr moves into venture capital in 1980. He’d give the young companies he invested in much-needed focus and structure with OKR.
- In 1999, John Doer advised Google during an early-stage investment round. He proposed the OKR framework which propelled Google’s growth. They still use the framework to this day!
- In 2017, John Doerr wrote the book “Measure what matters” and presented a TED talk on OKR. This created a surge in awareness and adoption.
Today we see businesses all over the world embedding OKR within their business. Its popularity has only increased thanks to the rapid value it creates. In fact, in our State of OKR Report, we found that 100% of businesses using OKR were satisfied with how they help create valuable outcomes.
What is OKR?
Objectives and Key Results (OKR) is a management framework that focuses a company’s efforts on their greatest priority using a measurable and aligned structure. It takes a valuable slice out of the strategy and connects teams to their purpose.
They connect teams with their purpose and the “why” behind their work. It draws them into a bigger picture.
Let’s say our purpose and mission is to get to Mars. Our flight plan there is going to be our strategy. The very first step (getting into the stratosphere), that’s our OKR. It’s the very first outcome we need to achieve on our way to Mars.
An OKR is broken into the following 2 elements:
- Objective – A simple and inspiring statement of what we need to achieve to create a valuable business outcome. What’s important to note, is that the outcome is not what’s created or delivered, it’s the value that is derived by way of a happier customer or a better business.
- Key Results – Having 2-5 measures indicating how we know we’re making progress on delivering the Objective. We know we’re making valuable progress as they are results-based, rather than activity-based.
You can see the structure is pretty simple. Now you have that down pat, it's important to remember they are distinct from KPIs. That's because OKRs are solely about creating change and outcomes. By design, they focus teams on critical priorities and cut the noise that might not be most pressing right now. More on that later!
What are the benefit of OKR?
OKR is your unfair advantage. The pace of change is an ever-increasing reality of business. Continuous changes in customer needs and shifts in the regulatory environment mean it’s more important than ever to adapt to these challenges in an aligned and focused manner.
OKR is so powerful as it enables every team member to:
- Think like the CEO, focusing only on critical priorities
- Understanding the impact of their work with measurable outcomes
- Align their efforts in achieving common goals.
When we apply this across the business, it delivers some incredible results...
1. Grow By Turning Your Strategy Into Action
Create the structure and focus for teams to link their current priorities to business strategy. Teams are empowered to change the game through directional autonomy and a clear measure of progress.
2. Create Outcomes With Laser-like Focus & Alignment
Create RADICAL momentum with cross-functional teams aligning on organisational priorities. OKR brings transparency and collaboration which enables teams to collectively focus. This is how you create an unstoppable wave of outcomes.
3. See progress with good leading indicators
OKR enables you to see how you’re progressing and validate your decisions as you go. They act as a north star that directs you down the right path. Even better is they tell you when you’re off course. Your OKR gives you the blueprint to make an impact.
We use leading indicators to help us see the impact of the work as we progress through the quarter. This also means we need to break our work down into small valuable slices.
What’s an example of an OKR?
In short, OKRs can be framed as I will achieve this (objective) as measured by (this set of key results). Here’s an example of what a good OKR might look like, we have loads more in our best OKR examples article.
Objective: Create high impact leaders across the business
- Key Result 1: Leaders believe they have the tools and practices needed to effectively lead from 50% to 100%
- Key Result 2: Team members believe managers help set performance goals from a median of 2 to 4
- Key Result 3: Team members believe their leaders communicates an inspiring vision from 52% currently to 75%
Most important of all, Key Results are measurable and verifiable, therefore we aspire for them to be a metric we’re moving the needle on, rather than an activity or plan. Where we are today, this may not always be possible, but it’s where we need to be. Key Results which show the current measure and the desired target create clarity. It helps the team understand where we currently are, and moves doubt around what the measure actually is.
What's the difference between OKR vs KPI?
The biggest question is how do OKRs differ from other goal-setting methods?
At its core, OKR is about the focus on change. We like to ask the question, “If nothing were to change except one thing, what would it be?” This is the essence of OKR.
Going a little deeper, we aim to have an objective that links to our purpose. However, it must be time-bound and generally achievable within the OKR cycle. The measures reflected by the Key Results are leading indicators.
With a clear connection to purpose with leading indicators, we now have a powerful tool for focus across the business. It connects and aligns everyone on what matters most.
This is the closest thing you can get to a crystal ball. Leading indicators predict a given outcome or result. This is where a lot of thought goes into understanding what we’re focusing on, and how this will act as a measure of success throughout the OKR cycle.
KPIs on the other hand generally focus on maintaining the business. As long as our indicator stays within a certain range, then we are happy. While some businesses use KPIs to measure strategic execution, the measure tends to get lost in the noise. It fails to align and connect teams, meaning it’s a weak strategic execution tool.
That's why it's best to use KPIs as health metrics. They tell you that your BAU (Business as Usual) activities are functioning well. Presuming all is well, you don't want to do anything to change them. Common examples include call centre response times, available cash flow, website availability / uptime. You can read more about the differences in our blog and video exploring OKRs vs KPIs.
Remember, KPIs complement OKRs. It ensures that while we are executing our strategic activities, we are not compromising the underlying business. Don't throw the baby out with the bath water!
How to set your first OKR
Let's talk about how you introduce Objectives and Key Results to your team! You'll want to start with a 6-week OKR experiment. Don’t overthink it. The best thing to do is just get started with your team!
Since you're doing a short experiment, give yourself plenty of time. You therefore want to allow 3 hours for rich discussion to flow. If you’re looking for something more in-depth, check out our guide on running an OKR workshop.
My advice is only to create one objective, to begin with. You’ll read a lot out there about OKRs with 5 Objectives each with 5 Key Results. That’s insanity! It’s 25 different data points! Keep it simple.
Perform the following activities with your team. Remember, OKR is a team sport so do not do it in isolation.
1. Before the session
You'll want to make sure your team has done the right preparation before meeting to set your OKR. Ask your teammates come in with Objective ideas for the next 6 weeks. This objective must answer the question of “If nothing were to be achieved this quarter except for one thing, what would that need to be?”.
Another way of thinking about it is one of the key problems we need to solve as a team this quarter. This may be a problem for customers or how we work (yes - it is ok to have OKRs for process improvement!).
2. Write down the objective
- Have an open discussion of what would be different if we have a successful quarter.
- Ask the team “If we were to move the needle on nothing this quarter except one thing, what would it be?” Hopefully the objectives they prepared earlier will make this activity snappy.
- Discuss until you can frame it as an objective: What we will achieve?
3. Write down the Key Results
- Ask the team for Key Result ideas (stress less about the actual measures)
- Vote on the best candidates which will measure progress.
- For any output / activity-based Key Results, ask questions to get to the outcome.
4. Write down the Initiatives and Task
Before wrapping up, ask the team to write down the work we think we’ll need to do to deliver on the work. These may be small activities or major projects. Whatever it is, write it down.
Leave the word smithing to one person after the meeting.
5. Make it happen!
Now that you have your OKR, it’s time to get to work! Remember to move fast and think about what experiments you can run to prove the work you have planned will help you achieve your OKR. You need to embed this within your weekly operating rhythm to keep that focus. Ensure every week you’re tracking your progress on each Key Result, and setting mini-goals for the week ahead.
OKR Operating rhythm: How to do it across an entire business
OKR has another huge advantage over other goal-setting frameworks. It’s quarterly. This ensures it’s never too far out of focus. Want to really make it stick? Embed it into your team’s operating rhythm.
Here’s a high-level breakdown of what you need to do to make OKR really work for you:
- Create clarity on your Mission and Purpose – Make sure it connects with and helps you achieve your company’s purpose. The big picture is so often forgotten when we get busy, so OKR can enable your team to live it. If it’s not clear for your team, it’s unlikely you’ll make meaningful progress.
- Set a clear strategy – Ensure your OKR takes a valuable slice out of your strategy one quarter at a time. Your strategy is your unique path to solve customer problems while outmanoeuvring your competitors. In simple terms, you do this by building capabilities to solve these problems with products and services. To do this, you need to be clear on the market you play in, the customers you serve, the problem you solve, and the unique advantage which will allow you to win. Without this anchor point, your OKRs feel inconsistent over time.
- Survey the business on priorities – We want to gain inputs from everyone in the business on what the goals should be for the cycle ahead. Engage all relevant stakeholders to take their view on what the OKR should be. This includes employees, board members, and even customers.
- Draft the OKR as an Executive Team – Consider what is absolutely most critical this quarter and draft an OKR for it. Aim to limit yourself to one OKR.
- Share and iterate – Share this with the rest of the business for feedback. Action the feedback and include it in the OKR.
- Teams set their OKR to align – By this stage, teams have a company-wide OKR to align to. Each team considers how they can best contribute by setting their own OKR. This will include anything they see as critical for the quarter.
- Teams share and align – Each team shares their OKR with the other teams, actively reaching out for support where they have a dependency. Teams may even share a Key Result when they’re working on the same outcome.
- Execute the OKR! – Get to work and start making progress on your OKR! The art is keeping it front of mind with the weekly check-in.
- Weekly OKR check-in (this will supercharge your OKR!) – Every week, get together with your team to discuss your OKR. Have each team member give a confidence score on how likely they think we are to achieve each Key Result. Discuss what is needed to be done to lift the score. For some, you’ll only need 15 minutes. For executives, you’ll want more time. We call this the Weekly Impact Meeting, it’s a real game-changer to maintaining focus on your goals.
- Mid-quarter review – This is optional, but I’ve seen a lot of teams benefit from this. Midway through, run a deep pressure test on how we are actually going. Back it up with loads of data. Discuss in the session what’s needed to be done to course correct.
- Score and retrospective – A key benefit of OKR is its ability to create a learning feedback loop. At the end of the quarter, firstly score each Key Result on a scale of 0 to 1. The sweet spot is .7 as it means we’ve had to push ourselves but not set the bar too low. We also run a Continuous Improvement activity called a retrospective. This is where we reflect on what went well and what didn’t go so well. In this session, we capture actions for how we want to work better next time.
Timeline for setting OKR
Some of the vision and strategy activities in the breakdown above only happen as needed. Of course, goal-setting happens on a regular basis. Quarterly for most. Follow a timeline that works for you, setting aiming to draft the OKRs about two weeks before the end of the quarter. Everyone’s OKR should be relatively finalised within two weeks of starting the quarter.
The following timeline gives you an idea of what activities you should be doing when. As you can see, you really should start talking about OKRs about half way through the quarter starting with your mid-cycle review.
7 Tips to make your OKR journey a success
I'm proud to say that we've introduced OKR to hundreds of businesses and thousands of people. It's a framework that has changed my life and the products I've worked on. This means we've gotten it down to a system that works. But...
We made had to make every painful mistake in the book to get it right. Please save your suffering and learn for our mistakes. Here's the top things we’ve learnt about introducing OKR:
- Limit your focus with one OKR: This is out number one tip! OKR does not represent all of your work. It should answer the question of "If we achieve nothing except this one outcome, then we have been successful. Now for the hard part, aim to have only one OKR!
- Nail the change management: As we spoke about last time, be clear on why OKR and why now. Understand what problem are you hoping it will solve.
- OKR Advocacy: If you're introducing OKRs to multiple teams, ensure they all have an OKR Champion to support the journey and facilitate OKR workshops.
- Understand priorities from the team: Talk and survey team members to understand their views on priorities before the OKR workshop. This may be framed as problems to solve, outcomes to create or priorities to chase.
- Foster empowered teams: Make sure the team has enough control over their work to set the OKR and execute it.
- Fail and learn: Aim to achieve about 70% to 80% of your Key Results. This is critical as it helps you learn how far you can push yourself and allows you to succeed even if you don’t nail everything. It’s all down to improving and learning.
- Keep it in focus: Run a weekly OKR check-in and confidence score.
This may sound like OKR is forcing you to make hard decisions about what you are and what you're not going to do. Well that's the point!
Our top tip: Limit your focus with one OKR
Yes I've already said this, but it's so important I'm saying it again!
You can choose between making a little bit of progress on a lot of things, or a lot of progress on one thing. The companies who are wildly successful are those which focus on a painfully limited set of outcomes. This is exactly what propelled Apple, and it's the same the advice that Steve Jobs gave to Mark Zuckerberg.
If you have more than one OKR, you're probably using projects, initiatives or tactics as Key Results. You need to pull it up a level to focus on the outcome and the core measures of success.
With this said, annually, you may have more than one. But until you've been at this for a while, limit your quarterlies to ONE!
End of rant. Now, it's over to you to continue masting your OKR skills to become a business growth wizard 🧙♀️
Where can I learn more about OKR?
The best place to start may not be so obvious. A lot of people start by introducing OKRs to their team. This usually involves education and influence which comes with experience. This can be challenging when you’re new to it
If you’d like to start a little slower, why not try experimenting with OKRs yourself? It could be your personal goals for the quarter or could be simple as creating an OKR for an upcoming birthday party.
Keen to go all in and get started with your team? We have some training which will help:
- Free Introduction to Facilitating OKR for Teams – Basic training to get you started on your OKR journey.
- Leading OKR for Teams – In-depth training with a live support community for introducing OKR and leading the change journey.
There is also have a heap of free research, templates, and quick guides to get you started on our Resources page. Check it out and let us know what you think!
Where can I find out more?
We’re incredibly passionate about OKR and the benefits can bring. We want to make this as accessible as possible! If you have any questions relating to OKR, simply reach out:
Our most popular OKR Resources
- KPIs vs OKRs: What are they and how do they create business growth?
- Are individual OKRs a good idea?
- Building alignment with an OKR marketplace
- OKR alignment: Winning is easy when you’re aligned
- Complement your OKRs with Powerful Health Metrics
- State of OKR 2020 Report
- Training: Leading OKR for Teams
- OKR Cheat Sheet, Alignment Checklist, and other tools
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