Designing OKRs: Tips from the field
No matter the stage, clear OKRs are the key to clarity and alignment within your organization.
And yet, as with any tool, OKRs can create internal challenges.
Here are some lessons from my experience, using OKRs for marketing teams from companies like Google or startups with just a hundred people.
Background.
OKRs stand for Objectives & Key Results and are a goal-setting framework that was started by Andy Grove at Intel in the 1970s.
The goal of OKRs is to drive execution, alignment and focus across the organization.
Today, OKRs are considered an industry standard and are used by many companies including Google, LinkedIn, Uber & Netflix but also numerous startups.
“OKRs... helped lead to 10x growth, many times over. They’ve helped make [Google’s] crazily bold mission of ‘organizing the world’s information’ perhaps even achievable... and kept me and the rest of the company on time and on track when it mattered the most.”
Prioritization Tool.
OKRs identify the most crucial goals for a year or quarter. They're not the only tasks, but they're what matters most. Shared OKRs ensure alignment, while differing ones may signal a lack of it.
OKRs are not necessarily the only things we’re working on (not all tasks in a given role can make it to the level of OKRs) but we should know when our time is not going towards our OKRs and be mindful of how and where we spend our time.
Top-Down & Bottom-Up.
Shared OKRs between departments ensure alignment while having vastly different ones may suggest a lack of alignment or risk to the organization.
When designing org-level OKRS, we want to make sure that they all ladder up to the company’s.
OKRs contribute to motivation (understanding how your work impacts the big picture, sense of purpose) and efficiency (focus, ability to push back on distractions, cross-functional alignment).
Sharing OKRs and OKRs ratings enable more transparency and accountability.
Before starting OKRs
It is helpful to get each division’s Strategy Statement aka a 2-3 year statement of what are you trying to do, and how is your org or team going to succeed (not individuals).
How to set objectives
Definition: Objectives are the desired outcome.
They are intended to be qualitative and inspirational but can include a measurable outcome where you can find a meaningful number.
Best practices suggest limiting to 3-5 Objectives per OKR.
Objectives may last multiple quarters.
Objective examples
How to set Key Results
Key Results indicate how you will measure success and directionally how you will address the objective.
They should be written in a SMART goal format (Specific, Measurable, Achievable, Realistic and Time-Bound), and it should be clear at the end of the quarter whether or not it was achieved.
Limit to 3-5 KRs per Objective.
Avoid vanity metrics.
Focus KRs on a single period (typically one quarter) and may remain only if incomplete and still deemed a priority.
Dependencies should be identified and discussed with stakeholders.
Best practices to define OKRs
OKRs should be agreed upon between individuals, managers and teams and are meant to be the basis of important prioritization & progress conversations throughout the quarter.
Challenge the first round of ideas. Ask yourself: “What might not be on this list that is of the highest importance and has the highest impact towards achieving the objective?”
Prioritize and maintain focus: Ask “Of all of these things, what will have the greatest universal impact on the division/company to achieve the objective?”
Keep the discussion from going down a “feasibility rabbit hole”. Focus on importance first, not feasibility… then we can talk about feasibility after importance. For companies with limited resources, scope quarterly objectives based on the current team’s resources (not future hires).
Format: Keep OKRs on one slide
OKRs template
When doing quarterly evaluation, add KPI rating and measure the overall achievement of objectives.
Grades can be specific to companies, but generally accepted scores are organized around 3 tiers:
Green > 0.80
Yellow 0.60 - 0.80
Red < 0.60
Most companies also include stretch goals in OKRs, meaning employees are not expected to complete 100% of OKRs in each period, but cover 80% or 90%. We want these goals to be ambitious yet achievable.
This is where the connection between OKRs and performance evolution (and therefore compensation) needs to be clarified at the company level.
They can influence performance evaluation but not be tied 1:1.
Note that performance is also often influenced by the company’s culture (the how, the values) which is often not detailed in OKRs.
Quarterly rating of OKRs example
How are OKRs usually used?
For the Leadership team:
The basis of QBRs, Ops Reviews and regular team meetings.
Participation should be tracked and reinforced by team leads.
For Managers:
OKRs get reviewed monthly with the leadership team, and reviewed bi-weekly with individuals.
Achievement against the company’s OKRs may be a component of executive compensation.
For individuals:
OKRs can be used 1x/month in 1:1s to review progress (across all teams) and discuss ongoing priorities & any changes.
OKRs achievement can be included as one input in formal performance reviews.
You will find below inspiration from real-life OKRs.
Good luck and good alignment!
