A guide to start and advance with OKRs

OKR is a popular framework that helps clarify priorities and improve goal management. OKR allows for a business strategy to be translated for all employees in a measurable and action-oriented way.

Our OKR-bible offers all the tips and tricks you need to know to implement OKRs in your own organization. This guide has been written in collaboration with OKR expert Melanie Wessels - speaker and co-host of the Computer Futures OKR Forum.

Objectives and Key Results?

OKRs are ambitious stretch goals that offer an organization the opportunity to prioritise the most important work. The model involves attaching one or more Key Results to an Objective, which allows for measurable progress towards the associated goal.

An Objective is descriptive in nature, inspirational and qualitative. It therefore never contains a number or percentage.

As such, a Key Result is always a measurable outcome. It contains a metric of some kind, whether that is a KPI, a health metric, a growth percentage or anything along those lines.

OKRs are traditionally drafted every quarter.

Here is what an OKR may look like:

Objective:
O: Consolidate the position of market leader

Key Results
KR1: 15% revenue increase

It is possible to attach more than 1 Key Result to an Objective. An excess of Key Results, however, broadens the much needed focus and essentially eliminates the prioritization. In order to keep your focus and priorities clear, it is highly recommended not to add more than max 2-3 Key Results to a single Objective. For the example above, other potential Key Results could be:

KR2: 10% sales increase
KR3: Expansion of sales locations from 100 to 105
KR4: 10% reduction in distribution costs

The emergence of OKRs

Contrary to popular belief, Google was not the first company to use the OKR framework. OKRs were first proposed in the early seventies by Andy Groves – co-founder of Intel. He built on MBO (Management by Objectives), a model that involves regular employee performance assessments in order to improve productivity. Years later, a former Intel employee – John Doerr –joined one of Google’s first major investors. Doerr became an influential advisor and introduced OKRs to the founders. That is when the framework gained popularity and today it is found in all kinds of organizations and teams, large or small. Including Google, where it is still being used to this day.

FAT –OKRs’ added value for organizations

OKRs are popular for good reason; over the past years, the added value of the framework has been acknowledged by companies all over the world. Correct implementation in all layers of the organization has three direct consequences; Focus, Alignment and Transparency, FAT for short.

Focus

OKRs force all employees within the organization to think about their objectives purposefully as well as how they are contributing to the process of achieving these goals. Priorities are defined more clearly, which improves both efficiency and productivity.

Alignment

OKRs allow for the organizational goals to be translated into concrete team objectives, making it an excellent tool for ensuring that everyone is on the same page.

Transparency

Translating the business strategy into concrete objectives helps provide employees with a helicopter view of where the organization wants to go.

2.1 Preparing the organization for OKRs

Firstly, the organization must be prepared for working with OKRs, which primarily refers to the strategic determination of priorities, focus areas and the company culture.

2.1.1 Create a company culture that allows for failure

An important feature of OKRs is that they are stretch goals and ambitious, and therefore aren’t always achieved. This may seem contradictory for a framework that helps organizations achieve predetermined objectives within certain focus areas. Nothing could be further from the truth. OKRs are not meant to be achieved all the time, but by being challenging they require out-of-the box thinking, innovation and new ways of thinking. Their purpose should be to challenge the organisation to do something new, do something different or to deliver a significant improvement over previous results.

Psychological Safety

That is exactly why OKR’s success is predicated upon a company culture where people are not afraid to fail. When confronted with a negative reaction to one of our own actions, it is natural for us to have a ‘fight-or-flight response’, but this does not contribute to the creative space required in order to achieve the Key Results. Playing it safe all the time fixes an organization in the same pattern that caused the need for prioritizing the objective in the first place. People must feel free to provide input without being afraid of suffering negative consequences or measures on an individual level. This is also referred to as Psychological Safety – a concept that has been used in psychology for many years before it found its way into other fields such as management. Psychological safety creates an environment where (calculated) risks are allowed, a strong team spirit is felt, honest feedback is the norm and assertiveness is embraced.

Creating a safe environment

It takes a concerted effort to change corporate culture. Creating a safe environment starts all the way at the top. Setting collective goals for the entire organization in terms of a mission and vision increases the employees’ confidence in the organization and in one another.

In the layers underneath, the difference is made by the managers. They are tasked with getting their team members on the same page and improving mutual confidence to be able to aim for the best possible result. Here are five concrete tips to help managers create a safe work environment:

• Ask a lot of questions: By asking a lot of questions yourself, you will show that there is a lot of room for curiosity and that it’s okay not to know everything.
• Discuss your own mistakes: Admit to your own mistakes and discuss them. Demonstrate that it is okay to fail sometimes. This will strengthen the team spirit, increase a sense of freedom to take risks, and reduce the likelihood of team members hiding their mistakes because they fear negative consequences.
• Do not avoid difficult topics: Discussing difficult topics will reduce a sense of taboo within your team. A safe environment will help your team members discuss potential roadblocks by making them feel comfortable enough to do so.
• Map and communicate the skills of each team member: This will ensure that your team members know what every other team member can contribute, which lowers the barrier of asking one another for help. In addition, a skill matrix provides a sense of security at the individual level.
• Ask for feedback with respect to communication: Make sure you ask your team members for feedback on a regular basis with respect to your communication in order to find out whether your communication style is a good fit for your team.

2.1.2 Formulate a clear mission and vision (and values)

The vision and mission of an organization lie at the heart of the OKRs. Business objectives are based on the mission and vision and good OKRs can always be traced back to the business objectives. A good mission and vision are similar to OKRs: they communicate what (mission) the organization wants to achieve and how (vision) it intends to do so. The vision and mission also play an important role in creating a safe work environment.

Values

The values of an organization create a boundary to keep the OKRs aligned with the corporate culture. Goals should not be achieved at all costs without any consideration for internal values. Clear corporate values keep the OKRs and their associated activities in check.

2.1.3 Make sure the added value of OKRs is understood

When employees are not convinced of the added value of a project, it is essentially doomed to fail. Implementation of the OKR framework demands a great deal of dedication from team members who may need to change how they work. This is why it is vital to persuade your team members of the added value of OKRs without them perceiving the transition as a threat to their daily operations.

Individual contribution to the whole

Not everyone is equally well-equipped to handle change. It is not surprising that an entire field of study – change management – exists that focuses on the process of accepting and embracing change by an individual, team, or even an entire organization.

An important first step is to generate an understanding of the added value at the individual level. OKRs help employees by increasing transparency in terms of their contribution to the whole; what gears they put in motion. A greater sense of responsibility is key in increasing intrinsic motivation.

2.2 Setting up an OKR framework

Working with OKRs requires that the Objectives and Key Results are drafted and formulated in the right way. How to do so will be explained below:

2.2.1 Create Objectives

A vision, mission, and values have been formulated at an earlier stage. The business objectives are aligned to them and must be challenging enough to ensure that employees are motivated to work towards them.

2.2.2 Formulate Metrics

Though the terms are not interchangeable, OKRs and KPIs are often combined. Major differences exist between the two though – OKRs are used to rearrange priorities, break patterns and assess whether you are on the right track. KPIs inform you about the health of your organization and whether your most important targets are being met. If the latter is not the case, the course must be changed and it will be useful to integrate the KPI as a metric into an OKR’s Key Result to get it back to a healthy state.

2.2.3 Determine the Key Results

Key Results determine the focus areas for the quarter and allow for an Objective to be quantified. The most important rule of thumb for drafting Key Results is that a Key Result always contains a number.

Key Results are delineated by asking what needs to improve this quarter and attaching a value to the answer. Finding various ways of measuring success is key in order to avoid getting stuck in a single perspective with respect to how the Key Results can be achieved.

2.2.4 Attach tasks to the Key Results

The framework is almost complete. You know what you want to achieve (the Objective) and how you will measure success (the Key Results). The final step is to translate the Key Results to concrete tasks so you know what type of work to focus on. Tasks are not part of the OKR framework and are kept out of Key Results at all times as the focus in the OKR is not on ‘doing’ but on ‘reaching.’ This does not mean you should not make a plan of action with tasks and initiatives to support you in achieving your desired goals. This ‘plan of action’ is just not shown within the OKR itself.

3.1 Self-management and OKR

Organisation that start using OKRs usually benefit from a top-down implementation so that the leadership team can set the tone and role model the OKR setting and processes to the rest of the corporation.

An OKR-mature organization, who has been using OKRs successfully for at least 1 year, may not draft its OKRs anymore according to the initial top-down process. Instead, teams can be granted a lot of freedom to determine their own OKRs, which in turn can start influencing the OKRs of the department and company. O fcourse it is still important that each team receives input from the business, division, or department to ensure that they know what their focus needs to be while employing their freedom in crafting their OKRs.

3.2 OKRs and Agile

OKRs and the agile methodology go very well hand in hand. Where agile focuses on team work, the customer and an iterative work cycle that implements as much feedback as possible, OKRs focus on the priorities and the business needs. As such, they complement each other really well.

Common mistakes

Tasks or activities are not Key Results

One very common mistake is to formulate Key Results as activities or tasks. This is going to create potential problems, as finishing tasks or initiatives doesn’t always lead to the desired outcome. You can be extremely busy, but still not move the needle. For that reason, the OKR’s Key Results focus on the outcome first and always contain a number.

Incorrect communication with respect to OKRs

There are two distinct ways in which incorrect communication can contribute to an OKR-ineffective corporate culture. When communication focuses on failed OKRs only, employees may develop a fear of failing to achieve OKRs. This will lead to an environment where fewer risks are taken and creative freedom is limited. On the other hand, focusing communication only on achieved OKRs will give rise to the idea that achieving OKRs is the standard, even though maintaining a corporate culture that leaves room for mistakes is a vital element of a successful OKR implementation.

No longer seeing the forest for the trees

A frequent mistake is to formulate such a large number of OKRs that no real focus can be discerned. OKRs are intended to define and set priorities, so it’s best to keep them short, sweet and simple.

Similarly, a surplus of Objectives can damage focus as well. Weigh your decisions in order to avoid formulating too many goals when drafting your quarterly OKRs.

Reformulating current results into Key Results

This frequently occurring mistake is a disaster when it comes to achieving objectives. Key Results are formulated in order to work towards an ambitious objective – one that was derived from disappointing results. When Y is always accomplished in order to achieve goal X, Y cannot be used as a Key Result for Objective X.

Consider a baker who is looking to increase profits. If he has been selling 100,000 loaves of bread in an average quarter, earning him €200,000, then ‘sell 100,000 loaves of bread’ cannot be a Key Result for the ‘increase profit’ Objective. The exact same sales figures will not lead to an increased profit unless other actions – such as cost savings – will lead to the desired result instead. These other actions are the Key Results in this example, selling 100,000 loaves of bread is not.

This OKR Bible was composed in collaboration with:

OKR expert Melanie Wessels. Melanie is a motivational coach and a star at creating work environments where personal development and performance are cherished. She implemented OKRs at Booking.com and acted as a co-host at the first OKR meetup in 2017. She was also highly involved in organizing Computer Future’s OKR forum in 2018 and 2019.

OKR specialists There Be Giants. There Be Giants work with organisations around the globe to help them successfully implement the OKR framework. Working with organisations such as ITV, TalkTalk and Frontiers to help them achieve business growth through OKRs.