Complete Guide on OKRs

What are OKRs and how to implement OKRs at your company?

Introduction

Objectives and Key Results or OKRs is a framework of goal setting invented by Andy Grove, legendary CEO of Intel. OKRs were later popularized by John Doerr, a legendary Silicon Valley venture capitalist who helped implement the OKR framework at Google during its early days.

OKR is a framework of qualitative and quantitative goal setting to drive the organization forward in a desired direction. Objectives are qualitative statements that answer the broad question, What do we want to do? and Key Results are the quantitative statements that address the question, How will we know if we met success in achieving the objectives?

Objectives and Key Results are of two types, committed and aspirational. OKRs are different from MBOs where MBOs are set top-down and cascaded and OKRs are setup both top-down and bottom-up with vertical (cascading) and horizontal alignment. OKRs are different from KPIs where OKRs are akin to a GPS that guides us how to navigate to reach your destination (Objective) and KPIs tell us if various parts of our car like engine, tyres etc. (processes) are okay or healthy.

As a robust methodology to improve the attainment of organizational objectives and building performance culture, OKRs are something any forward-looking business cannot miss today. You can expect to have an organization-wide transformation, highly engaged teams, and benefits in the long run for your business.

Implementing OKRs is also about bringing cultural change across the organization, which can be difficult. It is essential to treat OKRs as a marathon and not a quick sprint. When you begin gaining momentum, make sure you capitalize on it.

This e-book regarding OKRs provides you with an in-depth guide on how organizations can use them to ace their goal-setting game. There are clear and actionable steps and tips on how management can use OKRs to improve their business outcomes.

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Origins of OKRs

Objectives and Key Results or OKRs is a framework of goal setting invented by Andy Grove, legendary CEO of Intel. OKRs were later popularized by John Doerr, a legendary Silicon Valley venture capitalist who helped implement the OKR framework at Google during its early days.

OKR is a framework of qualitative and quantitative goal setting to drive the organization forward in a desired direction. John Doerr, in his popular book, Measure What Matters says Objectives and Key Results are the yin and yang of goal setting - principle and practice, vision and execution.

OKRs are different from the concept of Management by Objectives (or MBOs), popularised by Peter Drucker. Unlike MBOs, which are set annually, OKRs are set quarterly, and the latter are not linked to the compensation. Also, MBOs are set top-down and cascaded whereas OKRs are setup both top-down and bottom-up with vertical (cascading) and horizontal alignment.

As a back story, John Doerr introduced OKRs to Google in 1999 when he made a presentation near a ping-pong-cum-boardroom table attended by Larry Page, Marissa Mayer and others prominent leaders.

What are OKRs?

Objectives are qualitative statements that answer the broad question, What do we want to do? and Key Results are the quantitative statements that address the question, How will we know if we met success in achieving the objectives?

John Doerr, in his popular book, Measure What Matters says, Objectives and Key Results are the yin and yang of goal setting - principle and practice, vision and execution.

OKRs are typically set at 3 levels

  • Company
  • Team
  • Individual with alignment from bottom to top and sideways

As a back story, John Doerr introduced OKRs to Google in 1999 when he made a presentation near a ping-pong-cum-boardroom table attended by Larry Page, Marissa Mayer and others prominent leaders.

Objectives should:

  • Be managed by the team
  • Be Achievable in 3 to 6 months i.e. within the performance summary cycle
  • Provide business value
  • Inspire and engage the team
  • Key results should:

  • Specific
  • Measurable for progress
  • Provide business value
  • Driving right behaviors
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    OKRs must be aligned with strategy.

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    Committed OKRs

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    Aspirational OKRs

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    Team OKRs

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    Individual OKRs

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    Company OKRs

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    Committed vs Aspirational OKRs

    Committed goals are clear and specific. The team understands how to achieve them and remains committed to attaining them 100%.

    Aspirational OKRs are different from committed OKRs. The former are experimental and visionary and the latter are business-as-usual.

    Aspirational OKRs target new opportunities or are used to prove or disprove a hypothesis. Aspirational OKRs are moon shots that expected to fail or not reach 100%.

  • Committed OKRs mean that individuals should achieve them 100%.
  • Achieving 70-80% of Aspirational OKRs is still acceptable.
  • Committed OKRs have an element of certainty about them.
  • Organizations that want to succeed with aspirational OKRs should have a strong company culture and tolerance for failures by employees.
  • Aspirational OKRs are moon shots that are expected to fail or not reach 100%.
  • Committed OKRs are a good representation of unrestricted priorities and critical focus areas.
  • Committed OKRs should be written with the same rigour as aspirational OKRs.
  • Choice between Committed and Aspirational OKRs

    It is advisable to write committed key results if you are starting with OKRs. When everyone achieves goals, it can motivate them to think big and adopt OKRs comprehensively. Committed OKRs can also help employees develop a habit of achieving the set objectives. Making a team that shows discipline and gets results can take time. Similarly, it can also take time for the management to re-orient their thinking to the OKR approach.

    Too many aspirational OKRs upfront can overwhelm everyone. When your team gets used to the OKR methodology, it will be the best time to create aspirational OKRs.

    Remember that the entire OKR or a key result of an objective can be aspirational. That implies you have goals with all outcomes reaching skyward. Alternatively, you have objectives where a few results remain simpler to accomplish and some difficult. The specific number of aspirational OKRs you need will depend on your organization' resources.

    But you should not have many OKRs as there are possibilities of not achieving any. It is likewise significant to have OKR follow-ups and audits to gather input and lessons that can be helpful to set objectives the next time.

    Your success with aspirational OKRs relies upon your resources and how strong the teamwork in your organization.

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    Annual OKRs should have a mix of both Committed and Aspirational

    Alignment of OKRs

    According to Harvard Business Review, businesses with highly-aligned employees have twice the likelihood of having top performers.

    Another poll related to global CEOs says that a lack of alignment remains the top obstacle to execute a growth strategy. Let us take a look at the two types of alignment.

    Vertical Alignment

    Organizations with a command-and-control structure have goals set at the top. They then flow downwards, with a focus on goal cascade. However, when you practice cascading, creativity and flexibility can take a hit.

    Organizations that are agile and modern have a good balance between autonomy and alignment, creative latitude, and common purpose.

    Horizontal or Cross-functional Alignment

    One of the primary causes of project slippages in organizations remain unacknowledged dependencies.

    These arise because of large and intricate projects whose execution is often complex and cooperation of multiple teams is the norm. OKRs help identify cross-functional dependencies in a transparent and visible manner.

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    70-30 is a good mix of both aligned OKRs.

    CRAFTing of OKRs

    Paul Liven and Ben Lemorte have listed an acronym CRAFT in their book based on Objectives and Key Results.

    CRAFT is an acronym for

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    Create

    Draft one to two aspirational OKRs and two to three committed OKRs.

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    Refine

    Share the draft OKRs with the entire team and discuss key results. Furthermore, you should also discuss how you will be measuring key results.

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    Align

    Identify dependencies, especially the cross-functional ones. You can then assign owners to each key result.

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    Finalize

    Present OKRs to the reporting manager and get their approval.

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    Transmit

    Communicate OKRs during team meetings and make them visible to all team members. You can also reinforce them during the 1:1s.

    Tracking of OKRs

    You can track OKRs several times during a cycle. It is possible through regular check-ins and avoid any surprises later.

    Tracking of OKRs involves measuring their percentage completion and qualitative inputs on Initiatives, which businesses take to overcome constraints in the completion of OKRs.

    It is essential to keep in mind you never score or grade objectives. Instead, you can calculate them automatically through the average of the key results of each objective. Let us consider the example of an objective with three key results and their completion percentages as 50%, 70% and 90%. The objective completion rate will be 70%, which is an average of all the three results.

    You can have a color coding scheme that helps monitor the progress effectively on a dashboard.

    Here is how a common scale for color coding looks like

  • 0 to 30%: Red, meaning failure to achieve OKRs
  • 31% to 70%: Amber or Yellow, meaning significant progress is achieved but not completion.
  • 70% to 100%: Green, meaning achievement of OKRs. Please note that 70% is for Aspirational OKRs and does not apply for Committed OKRs that you must achieve 100%.
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    Typical OKR Cycle

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    OKR Setup

    1 to 2 weeks window to discuss, create and approve OKRs.

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    OKR Alignment

    1 week window to align OKRs vertically and or horizontally.

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    OKR Check-ins

    10 to 12 weeks window to update progress in terms of percentage completion, initiatives and blockers.

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    1:1 Conversations

    10 to 12 weeks window to have weekly or fortnightly conversations with the team members.

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    Feedbacks

    10 to 12 week window where managers can share feedback on check-ins, peers can share feedback on OKRs and team members can share feedback to their managers.

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    Feedbacks

    10 to 12 week window where managers can share feedback on check-ins, peers can share feedback on OKRs and team members can share feedback to their managers.

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    Recognitions

    10 to 12 weeks window to recognize and celebrate achievements or progress against OKRs and company values or behaviors demonstrated by the team members.

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    Reflections

    1-2 week window for reflection by individual team members and managers on the OKRs, impact, strengths, growth areas and future experiences.

    Tests for Good OKRs

    Writing effective OKRs requires practice and can take time. Here are some checks you need to keep in mind to understand if your OKRs are good enough.

  • If you write OKRs within five minutes, they probably will not be effective. Writing good OKRs takes time, so ensure you spend time doing this activity.
  • Your objectives should always be crisp statements. Make sure you write a short sentence of not more than a line.
  • Key results should have fixed dates. It is best to not leave them open-ended as your teams may not take them seriously.
  • Key results should remain measurable and have tangible metrics you can use to grade them.
  • Make sure that the metrics are not ambiguous. If you mention leads, it could be either MQLs or SQLs.
  • Can OKRs be dropped midway?

    OKRs give businesses a chance to remain innovative, creative, and focussed. These qualities help in achieving breakthroughs that are ideal for the growth of a business.

    As OKRs remain trackable throughout the year, the chances of surprises at the end are minimal. When you evaluate OKRs, there are good chances some OKRs may get outlived. However, that applies more to KRs than Objectives.

    When you set objectives thoughtfully, there will be very less chances of dropping OKRs midway. But if your OKRs are consistently in the red zone, you can drop them. However, before dropping any OKRs, teams should understand why they could not foresee their failure at the time of planning.

    The learning from this experience will help craft better OKRs for the future. Teams should also have discussions that make everyone understand how their performance will affect the overall objectives of the organization.

    OKR Writing Traps

    #1

    Striking the right balance to make objectives challenging

    If your team reaches 100% of the goals, it could also be that the goals you set are easy to accomplish. They should challenge your team members but not remain out of reach. Even if your team achieves 75-80% of the objectives, it can be good progress. If they get less, it is probably the time for introspection.

    #2

    Not tracking your OKRs

    Tracking and updating the progress of key results is critical. You can do it once every one or two weeks. Ensure that you keep around 30 minutes and discuss with your team the challenges and opportunities related to OKRs. If you skip this, things might go off track and leave you in a quandary by the end of the quarter.

    #3

    Having too many OKRs

    It is easy to lose focus if you have too many objectives and key results. It is best to have around three objectives for the quarter. Similarly, you can have three to five key results for each objective. It will be much easier to manage them and get the desired results.

    #4

    Not having measurable key results

    The best way to keep your key results measurable is by making them numeric. Remember that objectives are ambitious goals, and key results help you measure them. Your roadmap, including weekly targets, help you reach the goals.

    #5

    Not supporting organizational goals

    It is a common problem where objectives do not align with the company goals. Organizations should make team leaders aware of the role each employee plays in achieving organizational goals. Managers should engage with their team holistically when writing the objectives.

    #6

    Marking Committed OKRs as Aspirational

    There are good chances of OKR failure if you mark committed OKRs as aspirational. When you do this, your team may not take it seriously. The team may also assume that it is okay to not achieve objectives 100%.

    #7

    Marking Aspirational OKRs as Committed

    When you mark aspirational OKRs as committed, it leads to the inversion of priority. The team will likely become defensive and concentrate more aspirational OKRs. The resource allocation will also be more towards aspirational OKRs.

    #8

    Having Low Value Objectives (LVOs)

    These objectives do not lead to a visible impact even if your team achieves them fully. So, there is no point in having them in the first place. For example, you may have an OKR to reduce the TAT by two hours. However, there is no related economic benefit explained clearly here. A better objective would have an additional element of saving one FTE that you can use for another project.

    #9

    Writing Business As Usual (BAU) OKRs

    Business as usual (BAU) leads to a situation of status quo. Your team may execute tasks and finish their work, but it will not have any tangible impact on your business. These OKRs so not reflect real business priorities your team should focus on.

    6 Tips for Seamless Implementation of OKRs

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    Engage your team

    Engaging your team is essential to take them into confidence for achieving the desired objectives. Challenges that you create should motivate your team to achieve them comprehensively.

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    Have realistic expectations

    Nobody would want an OKR program that is too unrealistic to achieve. Yes, it is essential to make it challenging but ensure that it is not out of reach for everyone. If it is becoming unachievable, it will be time to sit down with your time and bring revisions based on collective feedback. If you skip this, you will be setting up the OKR implementation for failure by design.

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    Keep things clear

    There should be no scope for any ambiguity regarding the goals and objectives. Your team should clearly understand them and what it would take to achieve them.

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    Show transparency

    OKRs help bring transparency across the organization, so ensure there are no diversions. Make sure you follow up on the progress of OKRs at fixed intervals through well-defined systems and processes.

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    Customize OKRs

    What works for one team may not necessarily work for others. There will be certain factors that influence the growth and progress of a team. So, it is essential to keep them in mind when writing the OKRs for a specific department. Remember that well-defined objectives are necessary for the successful implementation of your OKR program.

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    Keep everyone involved

    Without the support of everyone, it might be cumbersome to achieve the objectives successfully. Ensure that you involve each member of your team strategically and get their best inputs on the project.

    7 Steps to Introduce OKRs

    1) OKR familiarization for self

    Before implementing OKRs, you must understand the framework well. You can get to know how OKRs will help your business achieve its goals. There is also a possibility that you might introduce your team to the OKR framework. Hence understanding its finer aspects will make it easier for you to make others aware of it.

    You can have a few sample tasks, to begin with. Create some objectives, key results, and related action items to implement them. Ensure that all of your teams remain aligned and have the same understanding of OKRs. When you are aware of how exactly the OKR system works, it will help you introduce it to the entire organization.

    2) OKR familiarization for others

    Just like any other technology, there can be some naysayers for OKRs as well. It is critical to ensure that you clearly explain the benefits of OKRs for the organization when engaging with those who oppose them. Make them aware of how OKRs can help the business reach the desired goals. It is also beneficial for you to explain the personal benefits for employees.

    Creating quality OKRs can be done in several ways. You can also organize workshops and seminars for seamless implementation across the organization. Training sessions can educate employees on how to set, track, and achieve objectives. You can also have related software like myOKR that helps with the implementation of OKRs.

    3) Define the company vision

    One of the objectives of OKR implementation is to drive performance culture across the organization. As businesses expand in team size, they can often lose track of the things that really matter. When you have a clearly defined company vision, it will help in the better implementation of OKRs.

    4) List the KPIs

    The correct implementation of OKRs is about defining and using the right KPIs. They help businesses look for current and previous results to identify their status in the business cycle. It will also help organizations become aware of their strengths and weaknesses.

    Organizations need to remain wary of business trends and KPIs that can affect them. They should track KPIs and increase or decrease their priority based on the business outcomes. Identifying KPIs that drive results will help you improve the business outcomes.

    5) Create OKRs

    Identifying and creating an objective structure for the OKR program can look cumbersome. OKRs help businesses lay a solid foundation for achieving organizational objectives. It is thus essential to communicate expectations about OKRs to your teams. If there are any concerns, you can iron them out.

    6) Evaluation

    When you launch OKRs in your organization, they will soon spread across teams and departments. However, it is essential to understand that writing quality OKRs can take time. There will be a lot of learning initially, based on which you can make adjustments for improvement.

    It is also best to remain patient with teams as they understand and start using the system. The evaluation stage assists you to identify things that worked. It helps for not repeating the same mistakes in the future.

    7) Iteration

    Iteration is the last step, which is about ambitions and achieving higher growth. It helps you innovate and improve your OKRs. The flexibility to modify objectives helps in improving the implementation of OKRs and achieving the desired results. When you make your OKR program flexible, it will help get the necessary adjustments for better results

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