What are OKRs anyway? Maybe you heard about it or not, but basically it’s a form of setting and measuring objectives in the company in order to achieve your desired results.
What Are Objectives and Key Results (OKRs)?
OKRs, short for Objectives and Key Results, are a structured approach to setting and tracking goals within a company. Originating from Intel CEO Andrew Grove in the 1970s, the methodology gained further prominence when John Doerr introduced it to Google's founders, Larry Page and Sergey Brin, in 1999. Since then, OKRs have been embraced by various organizations worldwide, from Disney to Samsung and Amazon, as a means to prioritize, align, and achieve objectives effectively.
The essence of OKRs lies in their simplicity and collaborative nature. They provide a clear framework for defining ambitious yet achievable Objectives and the Key Results that measure progress towards those objectives.
Objectives describe specific, impactful goals aligned with strategic objectives, while Key Results serve as measurable outcomes indicating the attainment of those goals.
A typical OKR format comprises an Objective statement followed by three to seven corresponding Key Results, structured as
"We will [Objective] as measured by [Key Results]."
This format ensures clarity and accountability across teams, fostering alignment towards shared goals.
OKRs are not just about setting goals; they serve as a tool for enhancing employee engagement and satisfaction. Whether used for quarterly, biannual, or annual goal setting, OKRs promote efficient workflow, communication, and alignment, particularly beneficial in the context of remote work environments where physical distance can challenge collaboration and cohesion.
While building OKRs you should always think about your mission and vision while staying true to your values.
Benefits of OKRs
In his 2018 interview with Harvard Business Review discussing his book, "Measure What Matters," John Doerr highlighted the pivotal role of OKRs in organizational management. He outlined five key benefits, or "superpowers," of OKRs, encapsulated in the acronym:
FACTS - Focus, Alignment, Commitment, Tracking, Stretching.
Focus:
Doerr emphasized the importance of maintaining a concise set of OKRs, typically no more than seven and ideally three or four. This streamlined approach fosters focus by enabling teams to prioritize tasks, identify critical goals, and adhere to established timelines.
Alignment:
OKRs facilitate organizational alignment, ensuring that all stakeholders are committed to a shared vision and collective outcomes. This alignment mitigates the risk of disjointed efforts or conflicting directions, enhancing the likelihood of success.
Commitment:
Establishing an aligned and focused framework necessitates commitment, beginning from leadership and cascading down through the organization. Accountability and transparency are crucial for enabling team members to monitor progress, achieve key milestones, and meet expectations effectively.
Tracking:
OKRs facilitate straightforward measurement through defined metrics outlined in key results. Regular progress reviews, conducted through consistent meetings, allow teams to track performance and address any emerging issues promptly, therefore sustaining alignment and momentum.
Stretching:
Doerr advocated for setting ambitious objectives and key results, acknowledging that falling short of goals is acceptable. This "stretching" approach encourages continuous improvement over time, as organizations build upon past achievements and progressively push boundaries.
What’s the difference between committed and aspirational OKRs?
The distinction between committed and aspirational OKRs lies in their level of challenge and achievability. Committed OKRs are ambitious yet realistic goals that can be attained within a set timeframe. On the other hand, aspirational OKRs are highly ambitious objectives that may not have been achieved previously and have a lower probability of success, but are intended to push the boundaries and drive innovation.
Are OKRs and KPIs the same thing?
While both OKRs and Key Performance Indicators (KPIs) are used to assess progress, they serve different purposes. KPIs are specific metrics used to evaluate performance, often focusing on quantifiable outcomes such as sales revenue or customer satisfaction. OKRs, however, are a methodology for setting and achieving business objectives, providing a structured approach to goal-setting and alignment across an organization.
Examples of OKRs
Example of a Marketing OKR
Objective: Grow market share and brand awareness in the market
KR1: Increase share of traffic vs competitors from 40% to 50%
KR2: Decrease customer acquisition cost from 10 Euro to 8.5 Euro
KR3: Increase number of influencers campaign from 3 to 10
KR4: Increase following on Instagram from 25k to 50k
KR5: Increase following on TikTok from 5k to 50k
As you can see in this OKR, the company aims to grow its market share and enhance brand awareness to drive more sales. This can be achieved through various strategies, but their primary focus is on achieving a high traffic share while improving customer acquisition. Consequently, they need to increase website traffic and enhance conversion rates. Additionally, they plan to boost brand awareness through social media by launching 10 influencer campaigns and generating more content for Instagram and TikTok to expand their follower base.
Example of a Customer Support OKR
Objective: Make customer support one of our key differentiators vs competitors
KR1: Increase CSAT (customer satisfaction score) of 85% from 70%
KR2: Reduce AHT (average handling time) to 3 Minutes from 5 Minutes
KR3: Reduce FRT (first response time) to 20 Seconds from 45 Seconds
KR4: Implement VIP program for top 10% of customers with an CSAT of 95%
The company wants to focus on the experience the customer receives from their support. They believe that by doing this they can differentiate from their competitors. In order to achieve this, their focus in the next period will be on three key metrics. CSAT needs to be improved to 85% from 70%. To achieve this, they will need to deep dive into the reasons for dissatisfaction and try to solve them one by one. AHT is another key driver of satisfaction, in how fast the customers receive the response to their requests, and also they need to receive the first interaction as fast as possible; in 20 seconds, a company representative should say “Hello”. Starting a VIP program for your top customers is also a method for retaining the most important clients and making sure their inquiries are answered immediately.
Example of a People Department OKR
Objective: Implement a performance system
KR1: Implement an HR system that can support performance (between BambooHR, Gusto, ClickUp, Rippling etc)
KR2: Define and write performance playbook with objectives, process, timeline
KR3: 100% written and presented feedback to employees
In alignment with the company's strategic objectives, the focus is on implementing a robust performance management system to optimize employee performance and drive organizational success. KR1 involves selecting and implementing an HR system capable of supporting performance evaluations, choosing from options such as BambooHR, Gusto, ClickUp, or Rippling. KR2 focuses on developing a comprehensive performance playbook outlining objectives, processes, and timelines to standardize performance evaluation procedures effectively. Finally, KR3 emphasizes the importance of documenting and presenting feedback to employees in a structured manner, aiming for 100% coverage to promote transparency and accountability within the organization's performance management processes.
To wrap up, OKRs provide a structured and team-friendly way to set goals and manage performance, giving organizations the tools they need to succeed in their goals of achiving objectives.
Check out our comprehensive guide for setting the company OKRs.
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