A collection of resources to help companies learn, implement and master OKR.
The Ultimate Guide to OKR
Everything you need to know about Objectives & Key Results
What is an OKR?
The acronym OKR stands for Objectives and Key Results, a popular goal management framework that helps companies implement strategy. The benefits of the framework include improved focus, increased transparency, and better alignment. OKR achieves this by organizing employees and the work they do around achieving common objectives. An OKR consists of an Objective, which defines a goal to be achieved, and up to 5 Key Results, which measure progress towards the Objective. Each OKR can also have Initiatives, which describe the work required to drive progress on the Key Results. The framework includes a number of rules which help employees prioritize, align, focus and measure the outcome of the work they do. OKR helps entire companies communicate company strategy to employees in an actionable, measurable way. It also helps companies to move from an output to an outcome-based approach to work.
What is an Objective?
An Objective is a description of a goal to be achieved in the future. An Objective sets a clear direction and provides motivation. An Objective can be thought of like a destination on a map.
What is a Key Result?
A Key Result is a metric with a starting value and a target value that measures progress towards an Objective. A Key Result is like a signpost with a distance that shows how close you are to your Objective.
What is an Initiative?
An Initiative is a description of the work you’ll do to influence a Key Result. If an Objective is your destination and a Key Result shows the distance to go, an Initiative describes what you’ll do to get there, (take a car, row a boat, etc.).
“Where do I want to go?” An Objective describes where you want to go and sets a clear direction. Think of it as a point on a map, a destination like New York.
“How do I know if I’m getting there?” A Key Result shows you how you’re progressing towards your Objective. Think of it as a signpost with a distance marker.
“What will I do to get there?” An Initiative describes what you’ll do to influence your Key Results. Think of it as the description of what you’ll do to get to your destination.
|Within Circle of Influence||✓||✓||✓|
- Pioneer reusable rockets
- Become market leader
- Launch the most popular new iPhone App
- Generate more revenue than last year
- Become internationally recognised as an innovator
Example Key Results
- Engine tests have a 99% success rate
- Achieve a market valuation of $150,000,000
- Get featured by Apple on the App Store
- Close 10 deals over $100,000 each
- Gain 3 national newspaper mentions in 10 countries
- Design and build a new turbopump
- Run interviews with 5 CMO candidates
- Hire an app store optimization agency
- Create new Sales collateral
- Run 5 PR campaigns
A Quick History of OKR
OKR has a long history that can be traced back to 1954, when Peter Drucker invented MBO or Management by Objectives. In 1968 Andy Grove co-founded Intel and while CEO at Intel he developed MBO into the model of OKR which we use today. In 1974 John Doerr joined Intel and learned OKR during his time there. Doerr went on to join Kleiner Perkins Caufield & Byers, one of the first major investors in Google and became an adviser to Google in its very early days. Doer introduced OKR to Google’s founders, Larry Page and Sergey Brin, who implemented OKR at Google, which still uses it today.
The Benefits of OKR
Current research shows that when comparing groups of employees who used OKR against those that don’t, those that used it proved much more effective at their jobs, resulting in better performance and increased sales. In fact, the group who didn’t use OKR actively asked to be involved in the process in future cycles. A full rundown of the ROI of Goal Management can be found here.
The biggest impact of using OKR in most organizations without goal management already in place, or those who focus purely on metrics and KPIs, is a cultural shift from output to outcomes. OKR creates focus, transparency, and alignment for all the work in an organization. These three factors combine and lead to increased employee engagement.
OKR helps managers and employees align the work they do, ensuring everyone in the organization is moving in the same direction.
OKR helps focus only on what’s most important by prioritizing only the work that has the biggest business impact.
People achieve remarkable results when they’re engaged with a purpose. OKR helps communicate and execute strategy in a way everyone understands.
Preparing for OKR
Before you start using OKR it’s important to have a clear understanding of the challenge you want to solve, or to put it another way, the Business Objective you’re hoping OKR will help you achieve. For most organizations, OKR solves the challenge of executing business strategy in a way that’s clear to all employees, transparent and measurable. For it be successful, the implementation and management of OKR should have an owner within the organization. This person is usually called the “Ambassador” and the role is to ensure that everyone who will be using OKR, is trained, engaged and has ongoing help and guidance. OKR is a framework but it’s also a learning process that often involves a fundamental shift in people think about and measure the work they do, moving away from a focus on output and towards a focus on outcomes. The structure of an OKR program can be broken down into 4 levels; 2 which cover strategy and 2 which cover execution.
How to set the right OKR cadence
OKRs are usually created following a cadence of two timeframes, yearly and quarterly. Company Objectives run in yearly cycles which coincide with most companies yearly strategic review cadence. This makes it simple to take organizational strategy and translate it into Company Objectives. Group OKRs owned by teams and departments follow a quarterly cadence. This allows shorter review cycles and makes it easy for organizations to change direction if tactics are not driving progress towards the Company OKRs for the year. More info on how to find the right OKR cadence can be found in here. If you’re working at a fast moving company with shifting goals, this post explains OKR can keep you on track when your business goals are shifting.
Creating an Ultimate OKR
Most organizations have a mission and vision but often these are difficult to understand and can be confused with one and other. We recommend turning your mission and vision into an Ultimate Goal or when using Perdoo, an Ultimate OKR. Your Ultimate Goal defines your organization’s long-term purpose and acts as the north star to which all other OKRs align. An Ultimate Goal should aim for a point at a considerable distance in the future; 10, 15 even 25 years is reasonable. A good example of an Ultimate Goal is when John F Kennedy decided that America should put a man on the moon, and coined the term “Moonshot Goal”. An Ultimate goal helps provide the focus for your entire organization, for example, in 1958 NASA had 8 goals including examples like; “The establishment of long-range studies of the potential benefits to be gained from, the opportunities for, and the problems involved in the utilization of aeronautical and space activities for peaceful and scientific purposes.” By 1961, thanks to Kennedy, NASA had one Ultimate goal; “Before the decade is out, land a man on the moon and return him safely to earth”. This video explains how to turn mission and vision into your Ultimate Goal, or Ultimate OKR.
Example of an Ultimate OKR
- Make humankind interplanetary
- Reduce the cost of launching a rocket by 10x
- Re-use all rockets at least 5x
- Win $10 billion in commercial launch contracts
How to Create Company OKRs
Company level OKRs represent your strategy. These are the 3 or 4 things your organization decides it must achieve in the next 12 months. Most organizations review their strategy yearly and this sets the timeframe for Company OKRs. It’s important when you decide what you want to achieve in the next 12 months that everyone in your organization has the chance to give their input. We recommend starting with an OKR workshop where all key stakeholders responsible for company strategy first ask for and then gather, input from employees on what they think top priorities should be. This input can then be then discussed in relation to existing company strategy and broken down into 3 to 5 OKRs. This can be done using post it notes, collaborative documents or even a whiteboard. The objective of the exercise is to come to an agreement on what the organization should have achieved by the beginning of the following year.
Example Company Objectives
- Build a manned rocket capable of reaching Mars
- Build the simplest search engine in the world
- Become the most popular online bookseller
Example Company Key Results
- Achieve 10 successful test launches
- Reach 1 million searches per day
- Achieve $100 million in global sales this year
Key characteristics of Group Objectives
Group Objectives should always align to the Company Objectives and support your organization’s Ultimate Goal. Group Objectives should always be created once Company OKRs have been agreed upon.
Group Objectives should alway be the things that, if you achieve them, will have a huge positive effect on your entire organization. Achieving Group Objectives, just like Company Objectives, should be cause for a celebration!
Keeping Group Objectives within a short and strict time frame, encourages focus and allows you to review them in cycles. This not only helps you quickly identify what’s working and what isn’t, it also allows you to change course in a new cycle if your Group Objectives are not contributing to your Company OKRs.
Key characteristics of Group Key Results
Group Key Results should reflect a big change, something that, if you achieve 70% to 80% of your target, the rest of your organization will notice. Make them tough. If they’re easy to achieve they’re not challenging enough.
Group Key Results should be focused and have a clearly defined scope. While Company Key Results cover broad metrics, Group Key Results should measure more granular progress, like sales of a specific product.
Group Key Results should always be things you measure that you don’t do, but you can influence. Writing 10 blog posts is a bad Key Result, it’s something you do. Achieving 1000 views on a blog post you wrote is a good Key Result, as it’s something you can’t control but you can influence.
What are Initiatives?
Initiatives describe the work required to influence Key Results. In contrast to Key Results, which clearly measure progress toward an Objective, Initiatives are just hypothesis for what work might deliver the biggest impact. Initiatives are tasks, projects, or similar activities related to an OKR without having a direct connection to the Objective’s progress. Regularly checking in with your Key Results will help you decide whether your Initiatives delivered the desired results or not. If they don’t, you should think about changing your Initiatives. The benefit of setting OKRs AND Initiatives is that there is a clear separation between outcomes (Key Results: what did we achieve?) and outputs (Initiatives: what did we do?). You can commit to the same OKR while staying agile on an operational level by using Initiatives.
Example Group Objectives
- Develop a lighter engine
- Make search more responsive
- Increase sales of non-fiction books
Example Group Key Results
- Reduce fuel pump weight by 10%
- Reduce page load speed to 1 second
- Sell $1 million worth of educational books
- Build fuel pump prototype
- Run a regular performance report
- Add 10,000 books to our online store
Key characteristics of Initiatives
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.
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).
We’ve spent time gathering together some common examples of how OKR can be used for different departments within an organization. These examples represent our experience internally as well as the experience of our customers. These guides can be used by anyone looking to introduce OKR to their teams or even their entire organization. These guides can be found in our resources section.
There are several ways to manage OKRs: you can use a spreadsheet, a dedicated software tool like Perdoo, or even pen and paper. We’ve built a basic template that allows you to create your first OKRs. It’s free, simple to use, and great for small teams with less than 25 employees.
What’s the difference between OKRs and KPI’s?
OKRs and KPI’s are similar but there are small but important differences. OKRs provide the missing link between ambition and reality. They help you break out of the status quo and take you into new, often unknown, territory. If you have a big dream – an inspiring vision – for your company, you need OKRs that take you there. OKRs symbolize ambition. A KPI, on the other hand, measures the success, the output, quantity or quality of an ongoing process or activity. They measure processes or activities already in place. Read more on our blog: OKR vs KPI
Why don’t you recommend setting individual OKR’s?
How do I tell what’s a Strategic OKR and what is a Tactical Objective?
The difference is between a Strategic and Tactical Objective is simple. A strategic Objective is something with a 1-year timescale and is always owned by the entire organization. A strategic Objective is something the organization as a whole has decided to work towards. A tactical Objective has a shorter timescale of usually 1 quarter and is owned by a team or department. Tactical Objective are created after strategic Objective and contribute to them. For example:
Strategic (company level)
O: Reduce company costs
- KR: Marketing spend < $10,000,000
- KR: Operations Spend < $45,000,000
Tactical (team level, marketing)
O: Increase Marketing cost efficiency
- KR: Reduce AdWords Spend < $250,000
- KR: Reduce sponsorship costs by 25%
What do I do if my strategy changes during my OKR cycle?
Don’t worry! This is a common challenge faced by small teams especially. In these cases we’d recommend changing your cadence. Read more on our blog here: How your OKRs Keep you on Track when your Business Goals are Shifting
How do I create OKRs for something that’s not measurable?
Almost anything can be measured. If you’re struggling to find Key Results for an Objective, ask yourself “How will I know when my Objective has been achieved?”. Make sure to choose Key Results that are outcome based, look for metrics you don’t directly own or control, but that you can influence.
What’s the difference between an Objective and a Goal?
The main difference between an Objective and goal is that goal often contain metrics, Objectives never do. For example, “Grow revenue by 15% in 1 year” is a goal. In OKR this would be split into an Objective which answers “why” and a Key Result “Grow revenue by 15% in 1 year” which always contains a metric. Read more about the difference between goals and OKRs here.
What’s the difference between OKR and MBO?
OKR and MBO are both goal setting frameworks. OKR is an extension of MBO with a focus on measuring the outcomes of the Objectives using Key Results. This makes OKR more specific than MBO.
What’s the difference between OKR and SMART goals?
OKR and SMART are both goal setting frameworks that have their roots in MBO. The difference between OKR and SMART lies in the definition of how a goal is constructed. With SMART all goals must be, Specific, Measurable, Achievable, Relevant and Time-Bound. The downside to SMART is that “achievability” is difficult to gauge.
What’s the difference between OKR and Balanced Scorecards?
OKR is a goal setting framework, BSC or Balanced Scorecards is a framework for creating company strategy. While BSC has been adopted by many organizations its complexity and scalability are both areas where many have found OKR to be a better alternative. Read more about the difference between the two here.
How long does it take to implement OKRs?
A typical OKR program can take time to implement and get right. OKR is a continuous learning process and what works for one company might not work for another. Typically the first 3 months are the most difficult as this represents the first cycle for Group OKRs. Once the first three months are over OKRs can be reviewed and the program adjusted.
How many people need to use OKR to see the benefits?
We recommend a minimum of 25 people. OKR works best when a company grows beyond a certain size and the executive team begins to rely on management to ensure the execution of company strategy.
Who should be in charge of my OKR program?
We always recommend that someone on the senior leadership or a Champion team drives the uptake of OKR in an organization. Once an OKR program has been rolled out, this can be handed off to an Ambassador, who then becomes responsible for program management and acts as a single point of contact for all matters related to OKR.
What percentage of completion makes an OKR a success?
70% to 80% is the sweet spot. If you’re consistently reaching 100% on your OKRs, they’re not challenging enough.
How do I tie bonuses to OKRs?
We don’t recommend tying bonuses to OKRs in the same way we don’t recommend individual OKRs. Not achieving OKRs is just as important as achieving them. We see underperformance as an opportunity for discussion and a change of direction rather than a way to penalise individuals for what they failed to achieve.
How many Objectives should my company have?
A company should have one Ultimate OKR, set on a long timescale of 5 to 7 years. 3 to 5 Company Objective should be set yearly that cover strategy. Groups like teams or departments should set 3 to 5 OKRs per quarter, aligned to the company OKRs.
How many Key Results should my company have?
Each OKR, whether Ultimate, Company or Group should have no more than 5 Key Results.
Learn how to write great OKRs!
Download a copy of our eBook and get practical tips on creating awesome Objectives and Key Results.Get the eBook
How to write great OKRs
Everything you need to know when setting Objectives and Key Results
Objectives and Key Results
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:
What's your destination?
The answer is the Objective. It should set a clear direction, like a destination does, such as New York.
a. Beat last quarter’s revenue growth
b. Provide an awesome customer experience
How do you know you're there?
The answers are Key Results. See them as a GPS device. They tell you if you are getting closer to your Objective.
a. Close €1 million in new bookings
b. NPS at 80
How will you get there?
The answers are Initiatives, the key things that you will do to achieve your Objective.
a. Host 3 webinars on OKR
b. Implement in-app live chat
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.
New to OKR?
Everything you need to know
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.
Type of Objectives: Strategic vs. Tactical
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’.
- 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.
Different Levels: Company vs. Team
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.
The Right Objective at the Right Time
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.
Picking the Right Objective
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.
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.
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.
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.
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.
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.
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.
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.
Agreeing on Key Results
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.
Key Result Criteria
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.
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.
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
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.
What Everyone Gets Wrong about Key Results
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.
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.
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).
Roles for Initiatives
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.
What if I can't align my Objective to the company Objectives?
This does not necessarily mean it is a bad team Objective. It means that what you or your team has decided to focus on falls outside of the scope set out by the company. This is worthy of healthy discussion. Why did you come up with this Objective? Why do you believe it is important right now? Talk to the leadership team to see where and how your opinion differs. Considering that you will probably spend the next 3 months working on the Objective, these are exactly the type of discussions you should have beforehand.
What if I come up with Key Results or Initiatives first?
Sometimes you’ll come up with the Objective first, other times with Key Results or Initiatives. For some, it can be easier to come up with the latter. When you have your Key Result or Initiative but not the Objective, simply ask yourself: why is that Key Result or Initiative important? The answer is your Objective.
Key Results and Objectives inform each other, so often you end up refining your Objective once you have the Key Results. Pick an Objective, agree on Key Results, refine the Objective, tweak the Key Results.
Do I need Objectives to reflect day-to-day work?
Not as long as your day-to-day work is business-as-usual. When it becomes not ‘usual’ anymore, you may need OKRs. This is where OKRs and KPIs can perfectly work together. Imagine for instance you’re a support manager, your day-to-day work would consist mainly out of answering incoming support tickets, it’s business-as-usual. To measure performance, you would have KPIs like Average Reply Time and Customer Satisfaction Score (CSAT). As long as these KPIs indicate healthy values, you’re good. But now imagine your CSAT dropped and your Average Reply Time went up. You could create an Objective to improve customer satisfaction.
OKR is not about measuring and tracking all activities in your organization, that’s what KPIs do. OKR is about moving forward and realizing your own, your team’s, and your organization’s ambitions.
What if my work is largely task-based?
If your work is largely task-based, you probably don’t need individual Objectives for yourself. You could do this with Initiatives. Initiatives reflect the things that you will be doing to achieve your OKRs (see Initiatives section).
Can I have Key Results without Objectives?
No. First of all, not everyone is as driven by numbers as you might be. Many people are more motivated by the inspiring language of the Objective. Second, a Key Result without an Objective is even worse than an Objective without a Key Result. Objectives are the focus points that provide everyone with a sense of direction. They help them understand what the priorities for the organization and/or team are at any point in time. They also give a sense of purpose, as the Objective answers the ‘why’ for each Key Result. The power of why is perfectly explained by Simon Sinek in his book and TED talk The Power of Why. Does your Key Result tell you to increase your Net Promoter Score from 70 to 90? Why? Because we want to have the happiest customers in the world.
What is the difference between a KPI and a Key Result?
Key Performance Indicators (KPIs) and Key Results both use certain metrics, hence the difference between the two can be confusing. A metric is Customer Lifetime Value, Support Tickets per Month, Visitor-to-Signup Conversion Rate, and so on. If you consider a certain metric key to the success of your business, you could decide to turn it into a KPI. The KPI will reflect the current value for the metric, and adding it to a KPI dashboard helps you keep track of it.
A Key Result can use the same metric as a KPI, but a Key Result will always contain a target value. Most Key Results are therefore a KPI with a target.
In short: a KPI reflects where you are, a Key Result reflects where you want to be.
What do I do with my Key Result, after I achieved it?
After successfully achieving your Key Results, you have 2 options:
- You can create a new Objective that pushes you even further. This would of course only be helpful if it is in line with other Objectives in the company and helps you realize the mission & vision.
- If the Key Results has pushed the metric to where you want it to be, you can turn it into a KPI and add it to for instance a KPI dashboard so you and your team can easily keep track of it. This helps you ensure the KPI stays where you want it to be. If you see it drop, this could inspire a new OKR to fix it.
Why are ‘ambitious’ Key Results so important?
If you haven’t used OKR yet, you probably don’t know what you, your team or your organization is capable of. Ambitious Key Results stimulate innovative thinking. With only incremental changes people continue to think along the lines of what they’re already doing. If you’re used to selling 1.000 books a month, setting a target of selling 1.100 won’t encourage you to try new approaches. With a stretch target of 2.000 books, you will have to explore new methods and are constantly encouraged to find the limits of what’s possible.
I can’t measure my Key Result, now what?
Measurable also means that you are actually able to monitor progress while working on the Key Result. If you are able to monitor progress, but simply do not have tracking in place yet, you could first create an Initiative first to set up tracking and establish a benchmark. Remember that a Key Result can also be boolean (true or false). If one of your Key Results is Hire a stellar COO (the Objective could be Increase our operational efficiency to best-in-class), this is either true or false, completed or not completed.
What if I can’t come up with a Key Result for my Objective?
In that case, we have a problem. Key Results specify what is meant by the Objective and are feedback mechanisms that will let every contributor know whether they are actually achieving the Objective. How will they be able to figure out how best to contribute to the Objective? How will they know their work has the desired effect?
We acknowledge that it can sometimes be difficult to find appropriate Key Results. But we encourage you to put time and effort into finding one. The benefits definitely make it worth it. Find the answer to the question How will I know I’m getting to my Objective?. If you are achieving your Objective, what would happen in the outside world that you could observe and measure?
When new to OKR, this will often mean measuring things for the first time. That’s a good thing. These measurements will let everyone what really is working and what isn’t. This is highly motivating and dramatically increases your learning curve. When measuring things for the first time, you’re probably guessing where to put the target for your Key Result. That’s fine, while continuing to work with OKR you will quickly learn what your capabilities are.
What’s the difference between Objectives and Initiatives?
It’s easy to mix up Objectives and Initiatives. So let’s zoom in on the differences between the two.
Imagine that you need to secure new funding for your organization to allow for the next phase of growth. Although it seems like this is an Initiative that you will be doing, it actually is not. It’s not specific and, more importantly, it’s not within your control. The things that are specific and within your control, are things like creating an investor overview, crafting a pitch deck, pitching to a number of investors, and so on. Those are the things that you will actually be able to complete, without being dependent on something or someone else. The success of these activities will be measured by the amount of funding that has already been committed, something over which you will not have control and which would probably be your main Key Result.
If you would like to have the happiest customers in the world, then that is again not something that you will be doing. This is clearly directional and something that you would want the entire organization to focus on. Initiatives for your support team could be, for example, to implement an in-app chat functionality such as Intercom so that customers can more easily connect with you.
You could also decide that the first time user experience for your app will have to be dramatically improved, which would be a sub-Objective (i.e. aligned Objective). Why would that be an aligned Objective? For 2 reasons, it is directional, lacks specificity and is not within your control. It is still vague because there are many different things you could do to try and improve your First Time User Experience with each idea representing a valid Initiative. To see whether your Initiatives have had the desired effect or not, you would have to look at the Key Results, which could be for instance increased user engagement.
Can my Initiative also be an Objective or Key Result?
Yes, in different situations (i.e. in different contexts), a certain goal can either be an Initiative, a Key Result or an Objective. But bear in mind that it will have consequences and you will probably have to rewrite it.
Imagine that you decide you need to Publish 12 blog articles on management & leadership. If you are self-employed, this is completely within your control. It’s also measurable, specific and actionable, and therefore qualifies as an Initiative. Why do need to publish 12 blog articles? Because you want to become an authority on management & leadership (which would be your Objective).
Now imagine you work for a big corporate that applies strict rules for articles to be published on the company’s blog. Your personal Objective is about improving your writing skills, getting 12 blog articles published on the company’s blog could all of a sudden be a Key Result. It can be a Key Result in this case because the context is completely different. Due to the strict rules your company applies, getting 12 of your articles published could actually be a way to measure whether you have improved your writing skills or not. You would probably rewrite it to Get 12 blog posts on management & leadership published on the company’s blog.
Now imagine that you want to focus completely on publishing awesome blog articles about management & leadership on the internet. Since you want this to be your focus, it could be an Objective (and it could be aligned with an Objective about strengthening your brand reputation). Would it be a good Objective? This depends on the impact you think it may have. You can only have 4 Objectives so you must be sure you want this to be one of them.
An Objective cannot contain a number, so you would have to move ‘12’ to your Initiatives. In this case, you’d still require an Initiative anyway, to write 12 blog articles and put them online.
How does the Circle of influence relate to Within control?
We all face problems, challenges, and opportunities. The circle of influence encompasses those challenges and opportunities that we can actually do something about. An engineer will have little influence on bringing onboard new customers, whereas a marketeer will have no influence on areas like code quality or accounting. For owners of Objectives, Key Results or Initiatives, it is important that the OKR and Initiatives fall within their circle of influence.
“Within control” really means something different. It means that it is within your full power to complete them. This goes further than the circle of influence and only indicates you have some influence on the topic. Initiatives must always be within your control, Objectives and Key Result don’t. As a result, you can always be held accountable for not completing your Initiatives.
How “big” should my Initiatives be?
An Initiative can be as big as a project and as small as a list of tasks. Most things you are working on can be endlessly split up into smaller tasks. People that have a lot of experience with task management software are probably already familiar with this problem. So to what level of granularity do you split up your Initiatives?
Within Perdoo, Initiatives need to be split up to such an extent that it is still relevant for the owners of the Initiatives, and everyone else looking at it. Initiatives shouldn’t be single tasks, and you should be able to progress through them. Initiatives with productivity software, that’s where you can further split them up and manage your tasks on micro-level.
What if my Initiative becomes business-as-usual?
Sometimes, Initiatives become business-as-usual after you have completed your Initiative. This happens usually when your Initiative is about doing something for the first time, after which it will be done on an ongoing basis. A while ago, we had an Objective that was about investor relations. One of our Initiatives was to send out a quarterly investor update, which we had never done before. After we sent out the first one, it became business-as-usual: we now send out an update each quarter. It became important to put a process in place that ensures our investors would receive timely quarterly updates. In this case, it was fairly simple: I added a recurring event to my calendar that would block the first Wednesday of a new quarter to put together this update.
Learn how to write great OKRs!
Download a copy of our eBook and get practical tips on creating awesome Objectives and Key Results.Get the eBook