Overview

  • Objectives and Key Results (OKRs) are a popular goal-setting framework used by organizations, teams, and individuals to define measurable goals and track their outcomes. Combining both qualitative and quantitative elements, OKRs create a structured approach to achieving ambitious goals. The framework ensures alignment across the organization, helping everyone focus on the same priorities and work toward shared objectives.
  • When well-written, OKRs challenge individuals and teams to stretch their capabilities, providing a clear roadmap to success. Regularly reviewing progress and making adjustments fosters a cycle of continuous improvement and accountability, driving measurable results.

What are OKRs?

  • Objective (O): A clearly defined goal that answers “What do we want to achieve?” Objectives should be significant, concrete, action-oriented, and inspirational. They are meant to drive the organization or team in a specific direction.

  • Key Results (KRs): Specific, measurable outcomes that answer “How will we know if we’re making progress?” or “How will we know we’ve achieved the objective?” or “How do you define success?” Key Results should be quantitative and define success. KRs should stretch the team but still be realistic enough to achieve.

  • OKRs typically follow a quarterly cycle, although some organizations prefer an annual cadence for more strategic goals.

The Components of OKRs

Objectives

  • Short, inspirational statements.
  • Should be time-bound (often quarterly).
  • Non-technical and easy to understand.
  • Ambitious, but achievable.

Examples of well-crafted objectives

  • “Increase customer satisfaction.”
  • “Launch a game-changing product.”
  • “Expand into new markets in Asia.”

Key Results

  • A set of measurable outcomes that indicate the achievement of the Objective.
  • Quantifiable, with a clear numeric target.
  • Usually 3-5 KRs per Objective (fewer than 3 might be insufficient, more than 5 might indicate scope creep).
  • Should focus on outputs (impact) rather than tasks (inputs).

Examples of well-crafted Key Results

  • “Increase Net Promoter Score (NPS) from 40 to 60.”
  • “Launch version 2.0 with 3 new core features.”
  • “Achieve $5 million in new revenue from Asian markets.”

Goal Planning with OKRs

  • The OKR framework is highly effective for planning and achieving strategic goals. The framework allows organizations, teams, and individuals to set ambitious objectives and define measurable key results to track progress.

    • Clarity and Focus: OKRs bring clarity by defining specific objectives and desired outcomes. This focus ensures that efforts are channeled toward meaningful, impactful goals.

    • Alignment: OKRs are typically aligned across organizational levels, from top-level business/strategic objectives down to individual tasks, ensuring that everyone is working toward the same priorities. For example, OKRs set at the organizational level cascade down to team and individual levels, creating a unified focus across the company.

    • Measurability: Each KR is quantitative, making progress measurable and allowing for continuous tracking. This data-driven approach enables regular reviews and adjustments to stay aligned with changing priorities and keep projects on track.

  • Example of OKR for Goal Planning:
    • O: Improve customer satisfaction with product support.
    • KR 1: Reduce average response time to customer queries by 30%.
    • KR 2: Increase customer satisfaction scores by 20% over the next quarter.
    • KR 3: Resolve 90% of customer issues within the first interaction.
  • Using OKRs, organizations can set and achieve both short- and long-term goals with a clear path for success, fostering alignment, accountability, and a results-oriented culture. This structured approach enables individuals and teams to contribute directly to overall business objectives, driving measurable growth and improvement.

The OKR Process

  1. Setting OKRs: At the beginning of each cycle (typically a quarter), individuals, teams, and the organization as a whole define their OKRs.

  2. Alignment: OKRs are typically cascaded from top to bottom. Organizational OKRs are set first, and team and individual OKRs align with those broader goals.

  3. Tracking Progress: OKRs should be reviewed regularly (weekly or bi-weekly check-ins) to track progress and course-correct if needed. Key Results can be graded on a 0-1.0 scale (often self-assessed).

  4. Review: At the end of the OKR cycle, performance is evaluated based on how well the Key Results were achieved. A score of 0.7 to 1.0 is considered successful; less than that indicates areas for improvement.

Benefits of OKRs

  • Clarity and Focus: OKRs help clarify what is important and focus resources on those priorities.
  • Alignment: OKRs align team and individual efforts with the company’s goals.
  • Transparency: OKRs are often made public within an organization, fostering transparency and collaboration.
  • Engagement and Motivation: Clear, ambitious goals can inspire employees and give them a sense of purpose.
  • Accountability: OKRs help hold individuals and teams accountable for delivering results.

Writing Effective OKRs

  • Here are some best practices for writing OKRs:

    • Keep Objectives Inspirational: Objectives should be bold and aspirational, motivating people to strive for significant achievements. Avoid overly technical language.

    • Quantify Key Results: Each Key Result must be measurable. Use numbers, percentages, or other metrics. For example, instead of saying “Improve product quality,” use “Reduce customer-reported bugs by 30%.”

    • Balance Ambition with Achievability: OKRs are meant to stretch, but not to be impossible. A healthy target is one that the team can achieve about 70% of the time.

    • Limit the Number of OKRs: Focus on 3-5 Objectives per cycle, with 3-5 Key Results per Objective to prevent spreading efforts too thin.

Common Mistakes to Avoid

  • Setting Too Many OKRs: If you have too many OKRs, the team can lose focus. It’s better to focus on fewer, higher-priority goals.
  • Confusing Activities with Results: Key Results should not be tasks, but rather measurable outcomes. For instance, “launch a marketing campaign” is a task, but “increase inbound leads by 20%” is a result.
  • Making OKRs Too Easy or Too Hard: OKRs should stretch the team but still be realistic. Setting unachievable OKRs can be demoralizing.
  • Lack of Regular Check-ins: If OKRs are only revisited at the end of the quarter, there’s no room for adjustments. Regular check-ins are crucial for course-correcting.

OKR Examples

Organizational OKRs

  • O: Become the market leader in the cloud computing industry.
    • KR 1: Increase market share from 15% to 25%.
    • KR 2: Achieve a Net Promoter Score (NPS) of 70 or higher.
    • KR 3: Onboard 100 enterprise customers by the end of Q4.
    • KR 4: Generate $10 million in new sales revenue from cloud solutions.
  • O: Improve customer satisfaction and reduce churn.
    • KR 1: Decrease customer churn from 5% to 2%.
    • KR 2: Increase average customer satisfaction rating from 3.8 to 4.5.
    • KR 3: Reduce customer support ticket response time from 24 hours to 12 hours.
    • KR 4: Achieve a renewal rate of 85% for enterprise customers.

Marketing Team OKRs

  • O: Drive brand awareness and increase lead generation.
    • KR 1: Increase website traffic from 50,000 to 100,000 visitors per month.
    • KR 2: Generate 500 qualified inbound leads per month.
    • KR 3: Increase social media engagement rate by 25%.
    • KR 4: Secure 3 media placements in top-tier publications.
  • O: Launch a new product to market successfully.
    • KR 1: Generate 5,000 product demo requests within 30 days of launch.
    • KR 2: Achieve 20,000 product landing page visits within 30 days.
    • KR 3: Secure 10 positive reviews from industry influencers.
    • KR 4: Attain a social media reach of 500,000 impressions during launch month.

Sales Team OKRs

  • O: Increase sales revenue for Q3.
    • KR 1: Achieve $3 million in total sales revenue.
    • KR 2: Close 50 new deals with an average contract value of $60,000.
    • KR 3: Increase the win rate from 25% to 35%.
    • KR 4: Shorten the average sales cycle from 90 days to 75 days.
  • O: Expand into new vertical markets.
    • KR 1: Secure 10 new enterprise customers in the healthcare sector.
    • KR 2: Generate $1 million in new revenue from the finance industry.
    • KR 3: Increase cross-sell revenue by 15% in the retail sector.
    • KR 4: Launch 3 case studies showcasing success in the new vertical markets.

Engineering Team OKRs

  • O: Improve system performance and reliability.
    • KR 1: Reduce average server response time by 30%.
    • KR 2: Achieve 99.9% uptime for all production systems.
    • KR 3: Resolve 90% of critical system bugs within 48 hours of identification.
    • KR 4: Conduct 3 successful load tests simulating 10,000 concurrent users.
  • O: Launch the new product feature set by the end of Q2.
    • KR 1: Complete feature development and testing by May 15.
    • KR 2: Achieve zero high-severity bugs in the final release.
    • KR 3: Increase active user adoption of the new feature set by 20%.
    • KR 4: Obtain feedback from at least 50 beta testers and address 80% of actionable feedback.

Individual OKRs (Product Manager)

  • O: Drive user growth for the mobile app.
    • KR 1: Increase monthly active users (MAUs) from 100,000 to 150,000.
    • KR 2: Achieve a user retention rate of 40% within 30 days of signup.
    • KR 3: Grow app store ratings from 4.2 to 4.5 stars.
    • KR 4: Conduct 3 user research studies to improve user experience.
  • O: Successfully launch new subscription service.
    • KR 1: Generate $500,000 in new monthly recurring revenue (MRR).
    • KR 2: Achieve a subscription conversion rate of 8% from free to paid users.
    • KR 3: Reach 10,000 active subscribers by the end of Q3.
    • KR 4: Reduce churn rate of new subscribers from 10% to 5% within 90 days.

Summary

  • Definition: OKRs stand for Objectives and Key Results. This framework is often used to align day-to-day activities with the company’s strategic goals. An Objective is a high-level, qualitative goal that the company wants to achieve, while Key Results are specific, measurable outcomes that show how close the team or organization is to achieving that objective.

  • Example:
    • Objective: Increase customer satisfaction with the e-commerce platform.
    • Key Results:
      1. Reduce cart abandonment rate by 10%.
      2. Decrease customer support tickets related to checkout issues by 15%.
      3. Increase average time spent on the site by 5 minutes.

  • Connection to Milestones: OKRs serve as the overarching strategic goals. Milestones act as key results within the OKR framework, showing how progress on user stories and sprints translates into real business outcomes. Put simply, milestones track significant deliverables or checkpoints that help achieve the key results. For example, the milestone “Complete checkout process implementation” directly contributes to the key result of reducing cart abandonment.

  • Connection to User Stories, Sprints, and Epics:
    • User stories, delivered within sprints, contribute to achieving milestones. By successfully delivering stories in sprints, teams make incremental progress toward larger milestones, which in turn drive progress toward the OKRs. For example, completing the user stories for the checkout process improves the overall customer experience, aligning with the key results of reducing abandonment and increasing satisfaction.
    • OKRs also connect to “epics,” which are larger bodies of work that span multiple sprints. An epic typically aligns with one or more OKRs, acting as a bridge between high-level goals and the actionable tasks needed to achieve them. Breaking an epic into smaller user stories helps ensure that the work remains focused, measurable, and directly tied to the organization’s strategic priorities.

Citation

If you found our work useful, please cite it as:

@article{Chadha2020DistilledOKRs,
  title   = {Objectives and Key Results (OKRs)},
  author  = {Chadha, Aman and Jain, Vinija},
  journal = {Distilled AI},
  year    = {2020},
  note    = {\url{https://vinija.ai}}
}