OKR

The anatomy of a Key Result

20th October 2017 · 4 min read

Key Results

When you get started with OKR, you’ll quickly learn that selecting the right priorities for your OKRs can be as challenging as structuring and phrasing them correctly. That’s why it’s so important not to rush the process of creating OKRs for the upcoming period. If your team is going to spend a full quarter working on them, they better be good.

Once you’ve carefully selected your Objectives, it’s time to create Key Results—and Key Results need targets. This is an art in itself.

The components of a Key Result

A Key Result consists of the following elements:

  • Metric
  • Start value
  • Target value
  • Title

Metric

The metric is what makes the Key Result “measurable.” Popular metrics for product and customer success teams are Net Promoter Score (NPS) and Monthly Active Users (MAU). Software-as-a-Service companies often look at Monthly Recurring Revenue (MRR) and Churn Rate, the rate at which a subscription-based company is losing customers. In contrast, factories and producers use a lot of operational metrics.

The metric for a Key Result is the ingredient some teams struggle with. Some are simply lacking inspiration (in which case our Example OKR Guides can help), others don’t yet track the metrics they want to use in their Key Results.

It’s important that you are already able to track the metric you want to use before you include it in a Key Result. If it isn’t you run the risk of  becoming too busy to put tracking in place meaning that you won’t be able to see how you progress.

Start value & target value

The start value and target value require little explanation. The former is simply the value that your metric has at the start of the quarter or year, and the latter is the value that you want that metric to have at the end of that timeframe.

Setting the right target value can be difficult if you don’t have a benchmark yet. If that’s the case, you could use the first two weeks of the quarter to collect that benchmark. Of course, you’ll risk that these few weeks of data will not be significant, but that shouldn’t stop you from setting a target value.

Title

You may think that just by looking at the metric, start and target value, you pretty much have all the info you need. However, much of the benefits that OKR offers to organizations, such as increased transparency and improved alignment, require that the OKRs themselves are easily understandable and not ambiguous. That’s where the title comes into play: the Key Result title bundles up and communicates in a clear and direct way the result you’re looking to achieve.

The title also helps put the values in perspective and make the Key Result more exciting to work on. For instance, your Key Result could be “Double our NPS,” where you metric would be “NPS,” your start value could be “20” and your target value “40.” Of course, your title could also be “Increase our NPS from 20 to 40,” this really depends on the personal preference of the people that will be working on it.

2 mistakes you should avoid

It’s crucial that you set up your Key Results in a way that they are challenging, and that everyone working on it will be able to progress toward the target. This may sound obvious, yet this is where it often goes wrong.

Mistake 1: Never say “at least” or “above”

As most people know, Key Results should be challenging. If you use phrases like “at least” or “above” in your Key Result title, you’re basically saying you expect people to reach at least the target value. That is either not setting a challenging target for yourself, or risking to demotivate your team by setting a challenging target and labeling that the bare minimum.

Let’s say your “at least”-target value is not really challenging. We can then assume that that target will be hit before the quarter is out. What will happen next? Progress will already be at 100%. Do you expect people to stretch themselves further? It’s probably not going to happen. The whole idea behind the 70% rule is that you deem it feasible to get to 70% progress, and 100% is a stretch. So remove phrases like “at least” from your Key Result title, and increase your target value instead.

Mistake 2: Never say “have less than”  or “have maximum”

Sounds simple? I’ve seen it all too often that people set up a Key Result like “Have less than 4 customers cancel their subscription this quarter” or “Have a maximum 10% unsubscribe rate for our newsletter.” Imagine what this does. For the cancellation example, progress at the start of the quarter will be 100%. You may lose  1, 2, or 3 customers through the entire quarter, and progress would still show 100%. Just by looking at progress, everyone would think you are doing fine on that Key Result. Then in the last week of that quarter, a fourth customer cancels. Now all of a sudden progress drops to 0%. That’s bad, and what’s even worse is that there is no way for you to fix that progress. You should avoid this at all times.

Are you a Perdoo user?

Now that you’re familiar with the anatomy of a Key Result, here’s a guide on how you can add Key Results to your company and team OKRs in Perdoo.

2 Comments

  • Gang says:

    Good article and learning from it (and other blogs from you).
    Question about “Mistake 2: Never say “have less than” or “have maximum””, I agree that this kind of KR is hard to be tracked (can drop from 100% to 0% suddenly), then do you have suggestion if we must control some failure, i.e. less than 4 customers cancel their subscription this quarter?

    • Henrik-Jan van der Pol says:

      Hi Gang,

      I assume that if you want to have less than 4 customers cancel their subscription this quarter, that you consider churn to be an issue right now (if churn is not issue, then why would it be part of your OKRs)?

      If churn is an issue, then you would be better off having a Key Result that says something like “Reduce customer churn from 5% to 2%”.

      Does that answer your question?

      Best,
      Henrik-Jan

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