OKR has become one of the most effective and most popular goal management methodologies. The beauty of OKR lies in its simplicity; it’s a set of best practices from over 75 years, bundled together and radically simplified.

The modern workplace is complex, often resulting in low employee engagement, strategies disconnected from execution and organizations struggling to unify teams behind bold missions & visions. Problems that stifle innovation, harm growth and prevent people from living meaningful lives.

OKR is well-equipped to fix these problems. This guide will help you pick the right OKRs and set them up in a way that will lead to success.

Before we dive into how to write great OKRs, let’s first have a quick look at the different components (Objectives, Key Results, and Initiatives) and how they work together. Objectives, Key Results, and Initiatives answer three straightforward questions:

To get a better understanding, consider this metaphor: 

• Imagine you’re in London (UK). You need to go to New York (USA). “New York” is your Objective.
• To reach your Objective, you’ve decided to buy a yacht and sail west for 8 days. That is likely to get you closer to your Objective. “Buy a yacht” and “Sail west for 8 days” are your Initiatives.
• Without a navigation system, like GPS, it will be impossible for you to know whether you are getting closer to your destination. Your Key Results are your GPS device, which tells you if you’re heading in the right direction.

Buying a yacht and starting to sail west isn’t the smartest thing to do if you don’t have a destination (Objective) yet. A famous quote from Lewis Carroll (Alice in Wonderland) reads: “If you don’t know where you’re going, any road will take you there”. It’s, therefore, best to always start with an Objective.

Key Results can be difficult to create, but they are necessary to get feedback on whether your Initiatives have the desired effect.

If you’re new to OKR, it’s important to understand that OKR is about your company and what teams and individuals can do to move your company forward. OKR, in other words, is a framework that boosts company success. This is quite different than employee goals that some organizations are already familiar with. These goals usually put the employee first, as they start with what the employee should do and where he or she wants to be in the future. These goals include personal development goals. You can manage these in a dedicated OKR solution or an HR tool, but they are not what OKR really is about.

Let’s now have a look at the different type of Objectives there are.

Whether an Objective is strategic or tactical depends on the length of the Objective (its horizon) and the cadence it is set on.

Objective Horizon: knowing when your Objective is strategic or tactical

Objectives fall into different categories, based on their start and end date. The length of the Objective is what we call the ‘Objective Horizon’.

For instance:

• An Objective with a horizon of 5-10 years is usually called a vision
• An Objective with a horizon of 1 year is often called a strategic Objective
• An Objective with a horizon of 1 quarter is called a tactical Objective

If we plot this on a timeline, this is how that would look like:

These categories can vary from company to company. For instance: for an early stage startup company, Objectives with a horizon of 6 months could be considered strategic to account for rapid growth. However, most established organizations use 1 year for their strategic Objectives and 1 quarter for their tactical Objectives. For the sake of simplicity, we will use these category definitions throughout this book.

Are Objective horizons really that strict?

No. It’s ok to have Objectives with horizons between tactical (1 quarter) and strategic (1 year). At Perdoo, for instance, when we were raising a funding round, we gave ourselves 6 months to complete it. The Objective started on October 1, 2015, and its due date was March 31, 2016. For our expansion to the USA, we also had 6-month Objectives in place. OKR is above all a practical framework.

OKR Cadence: when to define strategic & tactical Objectives

Your OKR cadence is the frequency with which you, your team and your organization set their OKRs. When you define your vision, for instance, you should set one that will last at least 5-10 years. Similarly, your strategy shouldn’t change too often. Hence most organizations define their strategic Objectives only once a year. Execution (tactics and Initiatives) drive strategy, they should be reviewed at least once a quarter. Ideally, your Objectives’ horizons and cadences fall perfectly together.

Are cadences really that strict? 

Yes. The reality in almost every organization is many cross-functional dependencies. As organizations grow, it becomes increasingly difficult to coordinate all the activities. Yet, when efforts are aligned, it dramatically improves the clout of your organization and team. To understand this, just imagine a rowing boat. When strokes are aligned, they’ll move forward much, much faster.

Applying strict cadences makes sure everyone drafts their OKRs at the same time. This makes coordinating activities much easier and ensures others will be able to deliver on their promises, despite cross-functional dependencies. The right strategic and tactical cadence for your organization should fall together with your horizons (see above). I.e. if Objectives with horizons of 6 months are strategic for you, your strategic cadence should also be 6 months.

Objectives can be set on different levels. The level defines the type of owner of the OKR. A level is, for instance, the company-, team-, or individual level. So when we’re talking about a company-level Objective, we are talking about an Objective that is owned by the company.

Group Objectives over Individual Objectives

Perdoo will adapt to your preferred approach, whether you want Objectives to be exclusively owned by individuals or groups (such as teams or departments), or both. We believe it is better, where possible, to add the company or a group as an owner, instead of an individual. One of the reasons is that most employees do not enjoy checking their manager’s todo list, which is the feeling they may get when their manager is the owner of the Objectives they are contributing to. By adding a team as an owner, you emphasize that every team member carries responsibility to bring this Objective to a good end (you can still add a lead in case you want a specific person, such as the team leader, to carry end responsibility). The other reason is that group OKRs help people understand focus and execute with this focus in mind.

Ownership defines focus

Objectives set out clear destinations, are directional, and provide focus. Focus automatically means that the number of Objectives you can have must be limited. This rule applies to company, team, as well as individual Objectives. Too many Objectives suggests an inability to focus, something that we see often. Saying no to things in order to focus is a challenge.

Individual or team ownership of Objectives ensures that everyone is clear about what they need to focus on. This makes it easy to identify areas that fall outside the scope of the Objective, keeping team members focused on Initiatives that really matter.

As a result, if an Objective is owned by the company, it should be something that you want the entire organization to focus on. If the Marketing team is the owner, it should be something that you want every Marketing team member to focus on. Individual Objectives come into play when you just want one individual to focus on a specific Objective.

Leaving out individual Objectives helps you keep things simple. It forces individual to think what they could do to move the needle. It ensures OKRs are backed by action. When multiple people are responsible for metrics, we recommend to assign the OKR on group-level and stop there. Different individual Objectives within a team could mean that the team members don’t work together towards the same purpose.

Putting horizons, cadences & ownership together

In most cases, horizons, cadences, and ownership will all be connected. Look again at the ‘Organizational Heartbeat’ (image 2) where we’ve indicated ownership on the far right, under the Objective length.

Smaller organizations can also do with strategic Objectives only on a company level. Large enterprises that have subsidiaries or departments might want to consider strategic Objectives for each subsidiary or department, too. Tactical Objectives are mostly for teams and individuals.

Objectives are destinations that you set out for your organization or team. They need to inspire everyone working on them, and your teams and employees also need to buy into them. Together you’ll have to agree that these are indeed the right things to focus on at this moment. You have to believe they provide business value and that management is committed to them.

Imagine, for instance, a company with an Objective for Q4 to become a great place to work, a Key Result could be to get certified by greatplacetowork.com. Even though it would be a great Objective, it’s probably hard to buy into for employees if employee turnover is skyrocketing. A better idea would be to fix the turnover problem first: create an Objective for Q4 to Fix the employee turnover problem (an ambitious key result would be to reduce it by 50%). Once this problem is fixed, you can focus on becoming a great place to work.

The most important thing to do when crafting Objectives is orientate. With the proper operational context, you know where to focus your efforts. The more you understand for example your company’s structure and strategic Objectives, the better relations you can form between them and your own. That way, you’ll ensure that your Objectives perfectly support those of the organization.

Where best to orientate, depends on the level for which you’re crafting Objectives. Below are some tips to help you get started.

Look at your mission & vision

Objectives must drive the organization forward. They should get you closer to your vision and/or help you realize your mission. If this connection is clear, it’s easy for everyone to see the bigger picture—which automatically improves their understanding of the Objective’s importance. Think about the areas that you can influence, and focus your Objectives on these areas.

Browse existing Objectives

When setting team-level or individual-level Objectives, make sure to check the existing Objectives for your organization and/or your team. The people who created these Objectives have defined a clear focus, and it’s best to make sure your team or individual Objectives fall within this scope. Again, think about the areas that you can influence and focus your Objectives on these areas.

Check-in with reality

When picking Objectives, it’s easy to get over-enthusiastic. Objectives should be inspirational, but they should also have an impact and be attainable within the timeframe you’ve set them for.

Back to the example above: a company that has severe cultural problems and high employee turnover should not expect to be able to turn the company around and become an awesome place to work within one quarter. Instead, the company should be focusing on tackling the most pressing of these problems first. If people don’t believe that your Objectives are realistic, they won’t be committed to their success.

Look at your KPIs

Your KPIs tell you how key areas of your business are performing. Are your KPIs revealing certain problems that need to be solved? If so, what could you do to positively influence those KPIs?

Check the purpose of your role

Why have you been hired? What’s the purpose of your role and position? Are you living up to these expectations? The Objectives that you’ve set for yourself, are they in-line with what is expected of you? In other words: should you/your team, or someone else be the owner for that Objective?

Crowdsource the knowledge of your people

In the Industrial Age, the manager was often seen as the person who knew everything and was best equipped to make decisions. Those days are over. It’s the people closer to the ball who have unique insights into what’s going on, either within the business or in the market. Use this knowledge! With modern tools, it’s easy to collect input. Ask your team to suggest 1 or 2 Objectives for the upcoming period. Discuss the most popular suggestions with management and try to make at least one of them a company or team-level Objective.

Review Objectives from a previous Timeframe

Always review your OKRs when the timeframe is about to end. This task will tell you whether you need to port over any OKRs to the following timeframe, significantly impacting your available bandwidth for the future.

To make working with OKR more practical, we split up the criteria for Objectives by must-haves and nice-to-haves. An Objective must meet the must-have criteria for it to qualify as an Objective. The nice-to-haves further improve the Objective.

Must-have criteria:

Directional

Objectives tell you where to go, so make sure the Objective gives direction. Having a direction also helps you to focus your efforts. Things that fall outside of the scope of the Objectives, should be said no to. Directional can result in the Objective being a bit vague, that’s ok. Remember: the Key Results will specify it.

Being directional, also means that the Objective must help move the company out of the status quo. Consequently, there is no need to reflect business-as-usual in your OKRs. As an example, Achieve an incredible revenue growth is directional, Sell our product to customers isn’t.

Aligned

Once your Objective sets a clear direction, it is important to align it. This ensures you are moving in the right direction. It’s a great and easy way to ensure your Objective provides business value and supports the overall organization’s strategy. Ultimately, you want all the efforts in your organization to be aligned with the mission & vision.

Alignment kills two birds with one stone as it will also boost employee engagement and lets everyone working on the Objective see the bigger picture. That is crucial to bring the Objective to a good end.

Impact

Once your Objective is directional and strategically aligned, you can be sure you are moving in the right direction with that Objective. You must now make sure it will be a substantial step in that direction. As you should only have 3 or 4 Objectives, each one of them must have a real impact. Fast forward to the end date of the Objective. Imagine you’ve accomplished it, would it have made a difference?

Within circle of influence

The Objective must be inside the circle of influence for the owner. That means that the owner is actually able to influence the area of the Objective. Making an engineer the owner of an Objective that’s about bringing on board new customers makes no sense since it’s outside their circle of influence.

Time-bound

Every Objective should be limited in time and therefore needs a horizon. If you set OKRs on a quarterly cadence, the deadline is usually the end of a quarter. Objectives can, however, be due before or after the end of the quarter.

No numbers

An Objective cannot contain any numbers. Leave the numbers for the Key Results.

Not too many

There is so much you can do in a year or quarter, OKR forces you to pick the 3 or 4 Objectives that matter the most. Setting too many Objectives usually reveals an inability to focus on what’s most important, but it could also mean the impact of each Objective is too small. Many Objectives with small impacts don’t provide a clear focus and are probably not inspiring. Less is more.

The following criteria are listed as nice-to-haves. At Perdoo, we consider these must-haves for Objectives on a company-level, but nice-to-haves on a team-level.

Nice-to-have criteria:

Inspirational

Some people in your company are motivated by numbers. Others need a more inspiring goal. Use inspiring language for your Objective and leave the numbers for the Key Results. Some of our customers use internal rules that state an Objective should be so inspiring that everyone working on it should want to put it on their resume. An easy way to make Objectives more inspiring is to include adverbs and adjectives such as successful, awesome, best, strongest, steepest, etc.

Understandable

Objectives drive your day-to-day work and should be present every time you make a decision. Simple information is more easy to remember, so Objectives should be written down in the language of the organization. Try to avoid jargon specific to your position or team and keep descriptions as short as possible, without diminishing the quality of the Objective. Simple, short language allows for others to connect with it and keep it top of mind.

Now that your Objectives are set, it is important to agree—with your manager, team and everyone working on each Objective—what the appropriate Key Results should be. Key Results are feedback mechanisms telling you whether you’re getting closer to your Objective or not. A Result—as you probably know—is an outcome of something. If a result is a real result (i.e. outcome), you can change your Initiatives until you move the needle. Initiatives like projects, tasks, and todos, drive results. If you only had Initiatives as Key Results, you would find yourself locked into achieving them, even if you find out it’s the wrong approach.

The Objective is directional and often contains adverbs and adjectives, which can be vague or ambiguous. If you have for instance words like successful or awesome in your Objective, different people will have different interpretations of those. At Perdoo, we’ve seen this first hand with some of our customers. One of our customers had a company-level Objective to Become the no. 1 startup in the UK. When others started to create their own OKRs based on this, it became clear that HR and the leadership team (who created the Objective) had completely different interpretations of this: leadership was thinking about becoming the fastest-growing startup, HR about becoming the best place to work.

Make sure directional and inspiring language is specific and that’s exactly where Key Results come into play. Only by looking at the Key Results can someone know exactly what is meant with the Objective. If your Objective is about achieving ridiculously steep growth, then that could still mean many different things. If the Key Result indicates a quarter-over-quarter growth of 50%, you could easily conclude that is quite ambitious. We often say that only by looking at the Key Results one can see how ambitious an Objective was intended to be.

Make the Objective achievable

Imagine you have achieved all your Key Results, have you then also achieved the Objective? Remember: an Objective tells you where to go, Key Results tell you how to get there. When creating Key Results for an Objective, you’re answering the question How will I know I am getting to my Objective?. We are talking about Key Results: those results that are key to getting closer to the Objective.

Ambitious

Your Key Results reflect your ambition, so how ambitious are you? A Key Result that doesn’t make you feel a little uncomfortable, is not ambitious enough. Yet, they should not discourage you, so keep them realistic. A good rule of thumb is to forecast 30% to 40% above what you would deem possible. That way you should be able to get to at least 70% of your target. Remember that it must be achievable before the Objective is due. Working with OKR creates an environment in which every individual, every team, and the company are challenging themselves and each other. Ambitious Key Results unlock creative thinking and challenge people to try new things to achieve those results.

Measurable

Being measurable means that a Key Result is either boolean or has a number. If it has a number, you will be able to track progress. It’s boolean when it’s either done or not done, completed or not completed, true or false. Since Key Results must be measurable, they help you quantify the Objective. This will allow you to objectively define progress. Marissa Mayer famously said: “It’s not a Key Result unless it has a number”. If you have a Key Result that says Sell books, it will be impossible for you and others to see how you are progressing. If you have a Key Result that says ‘Sell 1.000 books’ and you’ve sold 700 so far, you are at 70% of your target. A Key Result is therefore also called a KPI with a target

Highest denominator

It is important to always go for the highest possible denominator when setting Key Results. This is especially important when setting Key Results for company-level Objectives. If you don’t do this, you often end up setting Key Results for specific teams (something that should be avoided when possible). Instead, you should choose the highest possible denominator and let the teams decide themselves how much they think they can contribute to this Key Result.

Imagine that you have created a revenue-related Objective for the company and you are about to create Key Results for it. Your sales team is responsible for bringing on board new customers, and your account management team for extracting more revenue from existing customers. It would be tempting to set specific Key Results for sales and account management. Yet we recommend you to focus on the highest denominator and create a Key Result for general revenue. The sales and account management teams can then each decide how and how much they can contribute.

When it comes to Key Results, there is one mistake almost everyone does when getting started with OKR: all too often, people add Initiatives as Key Results. Initiatives are the things that you will be doing, and the owners of the Initiatives must have full control over completing them. The Key Results are the results you expect to achieve by working on your Initiatives.

Let’s use a non-business example for once:

• Objective: Get back in shape after holidays
• Key Result: Decrease body fat by 5%
• Initiative:Run 5 miles every week

In a business context, Run 5 miles every week could be something like Publish 10 blog posts. This is not a Key Result, even though you might find a lot of examples similar to this one if you look at your company’s OKRs. A Key Result needs to be an outcome of the Initiative to publish 10 blog posts, like Have 50.000 unique users on our blog. If your Objective is to Become the most popular source of content in our industry, the number of blog posts published doesn’t actually tell you whether you’re getting closer to it, but the traffic on your blog clearly does.

It is important to not mix up Initiatives and OKRs. Your Objective tells you where to go, the Key Results are the metrics that have to move for you to achieve your Objective, Initiatives are the actual work you’re planning to do. Initiatives are your hypothesis on how to make it happen. You can be very successful completing your Initiatives, but if they don’t move the needle for your OKRs, you’re not getting what you were aiming for. OKR puts effectivity over efficiency. If your Initiatives don’t have the desired effect, change them.

When you have no idea what Initiatives could drive your OKRs, do the smallest possible thing first. Similarly, in a constantly changing environment, you should constantly try new things. Measure its effect and — if successful — multiply your efforts.

Specific

An Initiative must always be specific. Its scope must be clearly defined, and the owner of the Initiative must know what to do. It cannot be vague like an Objective can be. An Initiative must, therefore, contain verbs which are unambiguous, such as establish, write, launch, visit, release, etc. Objectives can contain less specific verbs, such as improve, increase, and so on.

Within control

You should have full control over your Initiatives, which means that it will be in your power to complete them. This means there should be no dependencies on something or someone else. It also means that you can be held accountable for not completing your Initiatives, it will be more difficult to hold someone accountable for not achieving his or her OKRs (as they will not have full control over the latter).

Initiatives have only 1 role attached to them:

The Owner is responsible for achievement of the Initiative. These are the individuals with whom you will be working on the Initiative. This can be 1 or multiple individuals.