What is OKR? Your ultimate guide with examples

OKR (Objectives and Key Results) is a goal framework used by the world's leading tech companies like Google and Netflix.

OKR communicates what you're trying to achieve with a measurable outcome, rather than a list of to-do. This why OKR is generally considered a framework for empowering teams to solve strategic problems.

Let's face it, most goal setting feels like you're walking through a minefield of conflicting priorities and constant distractions.

Goal setting feels hard and rarely does it actually help you be successful. 

But imagine a goal setting framework which identifies the biggest IMPORTANT problem to solve right now. Everyone in the business focus on solving the same problem and owning the outcome. 

This is where OKR comes in. At its core, OKR sounds simple. In practice, there a few key tips which you need to follow to make it a success. In this simple guide, I'll show how the leading tech companies use OKR, how you can use it too, and give you a head start with some killer templates.

Let's get started with the foundations....

What is the origin of OKR?

Before OKR propelled Google, Facebook, AfterPay, and many others into the stratosphere, Andy Grove created it to help Intel win the chip wars against Motorola.... and we all know how that played out. 

Although OKR 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:

1. OKR was created by Andy Grove, Intel Chairman in 1968. It was a new iteration of the MBO (Management By Objective) Framework.
2. In 1974, John Doerr joins Intel and learns about OKR.
3. John Doerr moves into venture capital in 1980. He’d give the young companies he invested in much-needed focus and structure with OKR.
4. 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!
5. 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.

How does OKR turn strategy into action?

Objectives and Key Results (OKR) is a goal-setting 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 an Objective which is measured by 2-5 Key Results. Let's dive into each starting with the Objective... 

What is an Objective?

A clear and inspiring statement of what problem you'd like to solve as a team or business in the quarter ahead. This is the foundation of your goal. Writing a great objective can be tricky, so I like to use this simple tip. Your objective should read like a newspaper headline. 

The more exciting and inspiring it is, the better. You want to get everyone behind solving the problem and achieving the goal.

You'll also want to keep it time-boxed. Usually, an Objective runs for a quarter, but some teams like to have them go for longer. If you think it will take more than a quarter to solve the problem, then you'll want to narrow the scope. Tweak the objective to focus on just solving a part of the problem.

I often get asked how many to have. Well, you've heard me talk a lot about focus. That means you should have only one. It sounds hard, and it is. As Steve Jobs said, "Focus, means saying no to the hundred other good ideas."

What are Key Results?

Key Results measure progress on and achievement of an Objective. You will typically have 2 to 5 Key Results per Objective. A common mistake is when teams make their Key Results a todo list. For example, "Launch an update to the App". This is called an Output. 

A good key result measures the outcome (the impact your made), rather than the output (the thing you did). So rather than "Launch an update to the App", we might focus on the measurable outcome of "Increase Daily Active Users on the App from 2000 per day to 3000".

You'll notice in that example, we have a metric (Daily Active Users), a baseline for where you are at the start of the quarter (from 2000) and a target for the end of the quarter (to 3000).

You can see the structure is pretty simple, but it's one a lot of people get wrong.

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 benefits 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. Unlock growth 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. Align teams to create laser like focus

Create RADICAL momentum with cross-functional teams aligning on organizational 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. If you're on the wrong path, the data will tell you this early and you can course correct. Your OKR gives you the blueprint to make an impact.

You should use leading indicators to help see the impact of your work early. In order to nail your OKR, you need to break your work into small valuable slices. This allows you to impact the Key Results quickly, and actually make those course corrections. 

4. Outcome mindset

I would say this is the biggest under appreciated benefit of OKR. When people focus their effort on making the biggest impact, you see teams becoming much more successful. This is in part due to them optimizing their work for impact, while also reducing low value overhead and noise.

Now that we know why we should use OKR, let's make it feel a little more real with some OKR Examples...

What are some OKR examples?

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 results:

• 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 your team meets

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 Problems to Solve and Objective ideas for the quarter. 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!).

Oh, and you might want to send them this handy OKR Setting Cheatsheet (or get the PDF Version).

Here’s a high-level breakdown of what you need to do to make OKR really work for you:

1. 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.
2. 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.
3. 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.
4. 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.
5. Share and iterate – Share this with the rest of the business for feedback. Action the feedback and include it in the OKR.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.

What is the ideal timeline for OKR setting?

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 finalized 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.

How to make OKR successful: 7 Tips

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:

1. 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!
2. 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.
3. 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.
4. 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.
5. Foster empowered teams: Make sure the team has enough control over their work to set the OKR and execute it.
6. 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.
7. 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 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?

I'd love to hear your thoughts about and experiences with OKR. Connect with me and say hi on LinkedIn! 

If you'd like to get help exploring OKR, you can book in your OKR Scale Plan with me (Tim).

Continue reading my 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
• OKR Cheat Sheet, Alignment Checklist, and other tools