As a business, where are you heading? What do you want to achieve? And, once you’ve figured that out, how do you measure your progress towards these goals on a day-to-day basis? Welcome to OKR Goal Setting (Objectives and Key Results). No matter your industry, your success in today’s business landscape depends on a systematic approach to setting goals and achieving them.
What is an OKR Goal Setting System?
“OKR” stands for Objectives and Key Results, and “OKR Goal Setting“ is a framework used by business teams and individuals to clearly define their goals and then track their progress towards them.
Why Do Businesses Need an OKR Goal Setting System?
What’s the difference between typical business goal-setting and an OKR goal-setting program? With typical goal-setting, a lot of emphasis is placed on defining the initial objectives and goals, but the follow-up drops away quickly after the initial enthusiasm fades. With OKR-based goal-setting, the Key Results section makes the biggest difference. OKR breaks down each objective into smaller steps. When these are clearly defined (see our OKR Template, and you’ll get the idea), it makes them easier to implement and track - right down to the lowest levels of your organisation.
Business OKR Goal Setting System and Framework
How do you implement OKR in your business? One successful way to begin setting OKR goals is to have top management set one important objective the company wants to achieve in the next 12 months. And you should make these goals ambitious but achievable. Next, you need to break these annual objectives down into measurable key results in terms of:
Outcome-Based Metrics - These are quantitative measures that allow you to track progress and identify problem areas that need to be fixed. They also show how well you are progressing with solving these problem areas.
Time Period - What do you want to achieve each quarter, each month, and weekly?
Teams and Individuals - Break down the company’s overall key results into measurable tasks and results for the teams and individuals. By providing them with clear direction and inspiration, each employee will better understand how their team contributes to the entire organisation.
Examples of OKR Goal Setting System for Business
When it comes to OKRs and goal setting, you can easily scale it from a multinational company right down to a small business. Here are some OKR goal-setting examples:
Example 1 - Company
Objective: Make customers our biggest advocates
- Key Result 1: Create a better product experience increasing the trial to paid conversion rate from 5% to 7%
- Key Result 2: Become a customer problem solving machine by increasing first call resolution from 75% to 90% maintaining our per customer case rate
- Key Result 3: Improve referral engine to increase referral rate from 2% to 30%
Example 2 - Sales
Objective: Crush our launch in Melbourne Australia
- Key Result 1: Generate $200K in Sales Qualified Leads in Australia
- Key Result 2: Progress leads from Marketing Qualified Leads to Sales Qualified Leads within 2 days
- Key Result 3: Maintain a Sales Qualified Leads to Close conversion ratio of above 20%
- Key Result 4: Maintain a profit margin ratio of 45%
Benefits of a Business OKR Goal Setting System
What are the advantages of OKR goal setting? Here are the key benefits:
You can set both internal and external objectives. Besides external goals such as growing your customer base and increasing sales and delivery, you can set internal objectives to help you achieve and maintain that external growth. This would include such targets as improving how your team works together and developing your individual staff.
With OKRs, objectives can be broken down into smaller targets, which can be implemented at the lower levels. This increases team engagement and makes it easier to track progress at all levels.
It enables the team at all levels to focus on what is truly important. Each team member can allocate their time and efforts accordingly and increase efficiency.
How to Create a Business OKR Goal Setting System
What is OKR goal setting at its most optimum? For starters, it should bring your most audacious goals to life! The quickest and easiest way to learn how to set OKR goals is by following our OKR Template. It will get you and your team started fast! To set an OKR that your team will love, run an OKR Workshop with them using our template:
Before you hold the workshop, review your business goals and objectives.
Draft an objective for the coming quarter. Focus on what you believe is most important.
At the workshop, discuss your strategic priorities and immediate objectives and identify the key results (by following our OKR Template).
Identify Key Objectives
What are your most important objectives? These should be high-level strategic goals that you want to achieve within the next time frame. Following this strategic discussion in the workshop, everyone can write down their objective ideas. Ideally, these ideas should be narrowed to just a few key things. The objectives should be inspirational, have manageable outcomes, be action-oriented and should change rather than maintain.
Define Key Objectives
Once you’ve landed on an objective theme, or ideally a single objective, the next step is to write down your key result ideas. Key results are measures of progress and a measure of ultimate success. These measures should be going from a current measure to a target measure. For example, if you’ve got 10 leads coming in each month, then maybe your new target should be to get the leads up to 30 per month.
Integrate into Business Strategy
The next thing is to align your OKR goal setting with your current operations and activities. You can’t have various parts of the company pulling in different directions! For example, if one section or department of the business is making its own OKR, it needs to consult the broad company strategy. Then, as needed, the OKR can be modified so that everything runs like a well-oiled machine.
Review and Refine
After the workshop, you should refine your OKR further to make sure it’s meaningful, inspiring and relevant. You must also ensure that each key result relates to the objective and indicates progress. Check in on the progress of your OKR each week, do a confidence score on each OKR and discuss progress with your team.
Common Business Mistakes to Avoid in OKR Goal Setting Systems
Here are some common mistakes to look out for when setting up, implementing, or actioning an OKR-based goal-setting system:
An inability to track your progress because the key results are not measurable.
Setting too many objectives. This can really disperse your team into trying to do “too much with too few.” If you are just setting out with your first OKR goal-setting program, it’s usually best to have a single objective which will focus your team and get everybody winning.
Access Our OKR Goal Setting Templates and Enrol In OKR Programs
At OKR Quickstart, we’ve introduced Objectives and Key Results to some of the World's leading businesses, so we've learnt exactly what it takes to make OKR goal setting work for you! Our expertise with services, solutions, templates, and courses will help your business establish game-changing OKR goal-setting programs. We have a team of OKR Consultants and Coaches who are dedicated to implementing OKR quickly for Australian and American businesses.