It’s that time of the year: you're capping off a successful 2017 and reflecting on everything you've accomplished in the past twelve months. But it’s not only a time to look back; it’s a time to look ahead. What do you want to accomplish in the coming year, and what’s the best way to go about it?
Many leading companies tout OKRs for successful annual and quarterly planning; in fact Google credits the process with fueling their exponential growth and success. Even if you’ve heard of OKRs, you may be curious about the details. This overview explains the basics of the method, shows you how to set OKRs, and covers the details you need to start putting it into practice.
“What are OKRs, anyway?”
OKR, which stands for Objectives and Key Results, is a planning and goal setting technique made famous by Intel and Google. OKRs represent aggressive goals and define the measurable steps you’ll take towards achieving those goals. They're typically used to set quarterly goals, but can also be used for annual planning.
OKRs are set at the company, team, and individual level. Here’s a set of OKR examples:
Company OKR 1:
Objective: Become the #1 most-downloaded iOS Productivity App
Conduct survey to identify 10 most-requested featuresaunch 5 of the top most-requested features by Nov 15
Conduct 10 user tests to identify UX issues
Show at least 50% improvement in satisfaction with UX (via customer survey)
Earn 200 5-star ratings by Dec 31
Company OKR 2:
Objective: Increase brand recognition and awareness
— Key esultIncrease media engagement by 20%
Launch customer referral program by September 1
Extend social media reach and visibility to 2 new target markets
Expand thought leadership program by placing guest articles on 4 industry-related sites with an Alexa ranking of at least 30,000
Marketing Team OKR:Objective: Increase social media engagement by 35%
— Key Research and identify 3 most popular social media sites among 2 new target audiences and develop engagement strategy by September 1.
Participate in 6 Twitter chats involving industry leaders
Respond to new Facebook comments within 3 hours
Increase number of followers on Facebook and Twitter by 20%
Objective: Increase number of social media connections by 25%
Increase posting frequency on Twitter to 8x daily and Facebook to 3x daily
Establish social media presence on 2 new sites: LinkedIn and Quora
Join 5 LinkedIn groups with at least 2,500 members each and leave comments on the 10 most popular discussions in each group
Gain 15 followers on Quora by posting 3 answers and 1 question every week
As you can see in these marketing OKR examples, company OKRs focus on big-picture goals, team OKRs define priorities for each department, and personal OKRs pinpoint what an individual will be working on. You’ll have multiple OKRs at each level, but no more than 5 objectives with 4 key results each. Otherwise you’ll stretch yourself too thin and won’t be able to make much of an impact on any of them.
Although OKRs are created at these three different levels, they all should connect and support each other: the individual’s goals should reflect team goals, team goals should reflect department goals, and department goals should reflect company goals. That way every individual effort furthers a collective vision and contributes to what will yield the most significant results for the company.
It’s important to note that OKRs are not meant for annual review purposes or for evaluating employee performance. They’re ambitious targets meant to push employees and the company as a whole forward. If you set an aggressive goal and don't meet it, you aren't punished for it, nor are bonuses given out for meeting or exceeding OKRs. Build a culture where people can be bold and take risks without fearing the consequences, and aren't tempted to play it safe for short-term rewards.
OKRs can be useful as references for employees, since they'll always have a concise summary of exactly what they’ve accomplished in the last quarter/year, backed up with hard data, to quantify their contributions to the company.
OKRs must be:
1. Ambitious. If you’re always meeting or exceeding your high-level team or company goals, you’re not reaching far enough. Your OKRs should make you a little uneasy in that you’re not entirely confident you’ll be able to meet them. Remember, these aren’t goals that you’ll be held to for evaluation or promotion purposes, they’re goals that are meant to stretch you and grow the company. So think big. Personal OKRs can be more conservative, so that you include a few lofty goals to push yourself to excel, but most are achievable.
2. Measurable. “Increase the number of registered users by 25%,” not, “Get more users.” Every ey esult needs to have a number attached to it, whether that's a percentage, a dollar amount, or a due date.
3. Public. The entire company should be able to see your OKRs, not just managers or executives. Visibility and accountability promotes collaboration between individuals and departments, since everyone knows what everyone else is working on and towards.
4. Graded. At the end of the quarter (or year), give yourself a grade for each key result, where 0 is “Didn’t even come close” and 1 is “met or exceeded every aspect.” (Because OKRs are meant to be aggressive goals, a 0.6 or 0.7 is an admirable score. More on grading a bit later.)
“Why should I bother with OKRs?”
What are the benefits of OKRs? Why choose this technique over other planning methods?
For one, OKRs promote disciplined, focused thinking. Every business decision is made with this question in mind: will this get us closer to our objective, yes or no?
Second, OKRs establish clear standards for progress. Since everything is based on numbers and quantified data, you can accurately measure how far you’ve come towards reaching your goals and how far you have to go in a tangible and exact way.
In addition, the fact that OKRs are public brings improved transparency and more accurate communication because everyone understands the specifics of what others are working on instead of relying on an assumed or incomplete knowledge of another team’s goals.
Finally, efforts are more centralized and collaborative. Everyone knows what the top priorities are, how their work contributes, and they can align with other teams for powerful joint efforts.
“How Do I Grade Myself?”
This is important, so first things first: grades don’t matter except to indicate whether you should keep pursuing your objectives or need to redirect your efforts. Focus on working towards your OKRs, not on your grades.
When it comes to your OKR performance evaluation, stick to the numbers. If your OKR is to “Increase the number of users logging in at least 3x a week by 30%” and you managed to increase it 15%, give yourself a score of 0.5. You can average your key results grades into a total Objective score, and if you like, you can average all of your Objective scores to see your overall grade for the quarter/year.
According to Google, failing to meet your OKR goals is better than overshooting them by a wide margin. If your company or team is always scoring "1"s across the board, your high-level OKRs aren't ambitious enough. It's better to set a challenging goal than play it safe! Shoot for the moon, and be satisfied with hitting at least 60-70% of your goal.
A low score isn’t a failure. It’s a sign you need to re-evaluate whether the objective is still worth pursuing, or rethink your approach. Should you focus your efforts elsewhere? What have you learned? Can you figure out a different way of doing things? Scores benefit everyone by showing you what not to do, what to do differently, and what to continue doing more of.
“What does the OKR process look like?”
One quality that sets OKRs apart from most other planning strategies is the fact that goals aren’t simply dictated from the executive level down. The OKR process should reflect circular discussions among employees and managers, where at least 60% of the company’s goals are bottom-up.
To reflect this ideal, each employee is asked to submit OKRs they think the department should prioritize. A staff meeting is held to collectively develop team objectives and align them with company goals.
Employees then set individual OKRs that reflect and support larger company and team goals, and meet with their managers to discuss what they want to work on in the upcoming quarter and what they believe is the best use of their time. During this discussion, the employee and manager develop and negotiate the specifics of each OKR.
Teams, managers, and employees often hold a mid-quarter check-up meeting to share progress and make any adjustments. Annual OKRs in particular needn’t be set in stone: if you’ve discovered that the assumptions you made last year aren’t accurate, there's no need to stubbornly stick to them.
At the end of the quarter, hold a wrap-up meeting where everyone shares their grades, explains their results, and outlines the adjustments they’re going to make for the next quarter.
After reflecting on this quarter’s performance, start setting OKRs for next quarter
For a comprehensive look at how Google uses OKRs, check out this explanatory video (1:21:49):
Ready to start?
With OKRs, you’re essentially creating a shortlist of what you need to focus on in order to excel at your job. Nebulous responsibilities and performance goals are gone, and instead you have crystal clear objectives, a specific, agreed-upon roadmap, and measurable progress.