If the global pandemic has taught us anything, it’s that scrupulous long-term planning may end up as a lot of wasted effort. This is not to say that long-term goals are not useful. As a company, you should definitely have a vision – an ultimate destination – so that all of your ongoing effort ties together with the bigger picture.
Having annual goals on the company level is important, but breaking the goals down into smaller focus areas helps to keep them agile. Such a shift towards agile goals might sometimes be challenging and time-consuming as it requires changes in culture and performance management, as 59% of professionals have reported.
To ensure agile goal setting and empower your team to work towards the right business metrics, try using the OKR goal-setting framework.
This ultimate guide will help you learn everything you need to know about OKR methodology and how OKRs could set you up for success.
Without further ado, let’s dive in.
What is OKR used for?
OKR stands for Objectives and Key Results. It’s a goal-setting methodology that businesses use to facilitate growth, improvement, and team engagement.
OKRs didn’t appear all of a sudden and other goal management tools had been used before such as MBOs, SMART goals, and KPIs:
Things changed in the 1970s when Andy Grove, CEO at Intel, took the idea of Objectives and merged them with Key Results to create what we now know as OKRs. Within the next few years, John Doerr learned the methodology from Grove and introduced OKRs to Google.
As an outcome-driven framework, OKR famously helped Larry Page and Sergey Brin to take Google to new heights, and thousands of companies have learned to leverage the principles of the OKR method ever since. Larry Page, a co-founder of Google, credited OKRs:
OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.
Today, leaders in LinkedIn, Twitter, Slack, Spotify, Uber, and Microsoft use OKRs to communicate improvement priorities across the company and align the teams to move in the right direction.
What are OKRs?
OKR (Objectives and Key Results) is a quarterly goal-setting technique that consists of the two basic parts:
- The Objective is qualitative and tells you what you want to improve,
- The Key Results are quantitative and define how you’ll know if you have achieved the Objective.
Two other crucial components of the OKR process are Initiatives and Weekly Check-ins — the ways to actually drive those OKRs and analyze the progress:
- The Initiatives include all the projects and plans that will help you achieve your Objectives,
- The Weekly Check-ins help you track accomplishments and upcoming Plans.
The goal-setting process starts when the leadership defines overarching Objectives for the company – focus areas that need improvement. Based on the context provided and explained by leaders, functional teams/departments write their team-specific Objectives and Key Results to contribute to one or several of the overarching Objectives.
Team OKRs should be aligned with the company direction and focused on improvements that a particular team would deliver within a quarter. Having a clear outcome-driven focus for the whole team helps individuals in that team prioritize their day-to-day activities and understand how their work contributes to the bigger picture:
The progress on the Key Results should be monitored and discussed weekly to ensure better prioritization of initiatives and continuous alignment within a team. If a team is writing good outcome-focused OKRs, they would never need (or be able to deliver on) more than 3 Objectives per quarter.
👉 Browse team-specific OKR examples in the Weekdone database.
What are the benefits of OKR?
The main benefit of OKRs is making your management results-oriented and data-driven instead of using an output-focused, command-and-control approach.
So, instead of cascading tasks and assigning deadlines, you would be discussing the most important improvement areas, and have the teams engaged in problem-solving exercises. Such a discussion helps teams decide on the outcomes they can and will deliver.
OKRs help teams to:
Stay focused on what’s important
The key element of OKRs is using connections between Company and Team Objectives and connecting them to your daily work. Aligning your daily activities to the team Objectives helps you understand the quarterly focus of your team and company and let others know what your priorities are.
All the team members will understand exactly how their Key Results contribute to the company’s top-level Objective, and that makes it easier for that Key Result to remain top of mind during the OKR quarter. To get the most out of OKRs, take this benefit a step further: use an OKR tool that connects your regular business tasks to your company and team goals.
Using Weekdone OKR software you can easily set up connections between Company and Team Objectives and populate them with Key Results that indicate if you’ve achieved your goals.
Get your teams aligned and connected
Goal alignment is communication. It is not enough to write down a company’s goals and teams’ OKRs in a shared digital workspace and expect everyone to be on the same page. Proper alignment requires two-way communication: top-down and bottom-up.
First, the leadership should explain and clarify the company-level direction so that the teams have enough input to write their OKRs for a quarter. Once the OKR drafts are ready, each team should present them to the rest of the company and answer the questions that might come up.
Before finalizing the OKRs for a quarter, teams should also figure out dependencies with each other. If team A needs help or resources from team B, then team B should know about that and consider the time needed to deliver that help, and realistically assess what is achievable within a quarter. Once everyone is clear on what the priorities are, teams can move on to execution.
Prioritize your weekly plans
Weekly Check-ins should serve as a starting point to come up with the plans for each week and move them further to the progress when done or to the problems when stuck. Once teams get clear Objectives and the Key Results figured out, team members are free to choose how to achieve their OKRs.
Weekly plans could be also linked to the Team’s Objectives that allows seeing clearly how these plans will drive the Objective and if it’s necessary to keep or skip these plans for the sake of moving forward to the Objective.
Link your weekly plans with your Team OKRs from the Weekly Check-ins page to make sure that what you do each week is relevant to your long-term success.
Track for accountability and transparency
Company OKRs are improvement goals, and obviously, achieving some of them would require collaboration from teams in different functional areas. Each team would work towards their own OKRs as a group, and get together on a weekly basis for a quick team OKR check-in meeting to make sure their OKRs stay on track.
Weekly Team OKRs Check-ins are regular meetings attended by the team members who are working on the same OKRs. Apart from the regular progress update and staying in sync, the point of these meetings is to ensure regular exchange of information that will improve mutual understanding, and build trust.
Weekly OKR check-ins should have a clear agenda and should not last longer than half an hour. Normally, a check-in takes around 15 minutes and it could be a part of your regular team meeting.
Set goals to drive improvement
OKRs are all about continuous improvement and growth.
You can choose how bold your goals would be: committed goals or aspirational ones. Committed goals are the ones that your team knows how to achieve so they fully commit to attaining 100% on the progress bar. Whereas aspirational goals might not get achieved 100% but they are important for growth and ongoing improvement.
👉 Read more about OKR goals and how to motivate your team on achieving them.
The way how OKR goals work starts from the company level. Quarterly Objectives on the company level should be broad enough so that several functional teams can approach them from their different angles, but also specific enough so that there is a common direction.
Three months is enough time for a team to deliver valuable outcomes. During this time they will learn what works best and adjust their focus areas for the next quarterly cycle. By reviewing their Objectives and Key Results every 3 months, teams have 4 chances per year to respond to the changes in the real world. As opposed to having an annual review and realizing that they have been on the wrong path for a year.
What is the difference between OKRs and KPIs?
KPIs stand for Key Performance Indicators and are used to track business metrics that reflect performance. OKRs, on the other hand, are a methodology for defining improvement areas and driving changes.
KPIs don’t tell you what needs to be changed or improved to drive the growth of your business metrics whereas OKRs help you clearly see how your business metrics relate to your daily work.
That isn’t to say your company can’t use KPIs. In fact, some KPIs are great for showing what level of performance you want to achieve and what OKRs to set to get there.
Here’s how KPIs and OKRs differ, and how your team can use them both:
A Company Objective is not a KPI target, it should be phrased as an overarching improvement area.
Here’s how KPIs and OKRs coexist in Weekdone OKR Software:
👉 Learn more about the purpose of OKRs and KPIs and how to apply them both in your business.
How to Write Good OKRs?
How to Write Company Objectives
A Company Objective should be a high-level improvement area that several teams would be working on. It should be broad enough to invite the teams to brainstorm the most impactful Team Objectives, but also specific enough so that it is clear what the direction is.
Before finalizing high-level Objectives, leadership should ask for feedback from the teams and clarify expectations in case something is not clear enough.
How to Write Team Objectives
Team Objectives are inspirational goals aligned with the overarching company direction. They should give the team purpose, a sense of urgency, and focus. Team Objectives are not projects, they are problems to solve or the most impactful improvement opportunities to pursue within a quarter.
A team as a group of people working towards the same outcomes should be responsible for writing their collaborative OKRs. To write a good Objective, a Team would need to answer the questions:
- What is our role in driving the Company Objectives forward?
- What can we create (innovate), fix (resolve), or improve (change) in order to be more successful?
- What is stopping us?
How to Write Key Results to an Objective
While an Objective is a problem to solve or an improvement opportunity to explore, Key Results indicate if that particular problem is solved or if that particular opportunity has succeeded in execution.
Under each Objective, a team would set 2-5 Key Results – measurable outcomes that represent a valuable change in the business. Note that Key Results are not activities you complete. They are the outcomes of those activities. So if you, for example, complete 3 projects, what kind of real-life impact are you expecting to see? That would be the desired outcome.
Take a look at a few examples of outcomes that are focused on business value:
- Customer acquisition outcomes – daily active users, registrations, participants, number of sales meetings, onboarded clients, calls, interviews with partners.
- Interaction outcomes – unique views or reads, website conversion, completion of onboarding steps, number of clients using a new feature, click-through rate, open rate, success rate, bounce rate, new traffic.
- Outgoing communication outcomes – pre-orders, leads, new deals closed, new hires.
- Financial outcomes – ROI, cost efficiency, LTV, deal size, average transaction value.
- Efficiency outcomes – page loading speed, number of bugs-related customer support tickets, average response speed, customer satisfaction score.
Common mistakes to avoid when writing OKRs:
- Always start by defining an Objective for a quarter
- Write at least 2 and no more (!) than 5 Key Results per Objective
- Make them ambitious but not impossible
- a KR is not an activity, it is the desired outcome of a series of activities
- Make sure it is achievable within a quarter and you have ideas on how to drive it
- Make sure you can impact this KR on an ongoing basis
- KR is not any regular business-as-usual KPI (business metric), it should define the success of an improvement-focused Objective
- A team’s actions should have a clear impact on Key Results during the quarter
- If you look at a Key Result and have no initiatives or action plans for driving it, it’s a bad Key Result
👉 Read more: OKR best practices and tips
While working with ambitious companies around the world for around 10 years now, we at Weekdone have been gathering together some common examples of how OKRs can be used for different teams.
According to our best practices at Weekdone, we recommend setting only Objectives on the company level and both Objectives and Key Results on the team level. The reason behind this is that usually Company Key Results start reminding KPI targets and, therefore, no team can own and contribute to the company Objective. And if no one owns it, then it’s not an OKR.
These examples below are shaped for the teams to start off with OKRs right away. It doesn’t matter if the entire company uses OKRS or not, every team can try these OKR examples themselves:
Marketing Team Objective
Improve promotional channels to generate more Marketing Qualified Leads
Marketing Team Key Results
KR1: Increase email marketing MQLs from 100 to 150
KR2: Increase AdWords MQLs from 70 to 100
KR3: Increase organic search MQLs from 45 to 50
Product Team Objective
Research and map signups’ first product entry expectations and needs to improve areas that actually matter
Product Team Key Results
KR1: Analyze learnings from at least 100 Inspectlet recordings
KR2: Analyze learnings from at least 30 interviews with early-stage customers
KR3: Analyze signup funnel and figure out at least 5 main reasons for the drop-off
Sales Team Objective
Personalize sales approach and nurture new potential customers better
Sales Team Key Results
KR1: Improve conversion % from “trial” to “paid” from 20% to 35%
KR2: Increase follow up email open rate from 14% to 45%
KR3: Reach 8/10 average score on customer satisfaction survey with at least 100 responses
What is the best OKR software?
The best OKR software is the one that lets you clearly set up and manage Objectives and Key Results, and create alignment around those: weekly check-ins functionality, weekly planning, and peer feedback. The best OKR software should also suit your needs the most:
- Ease of use
- Progress tracking
- Reporting & analytics
- Teamwork capabilities
- Pricing and free trial options
- OKR coaching and support, etc.
And there are a lot of different OKR software tools to choose from. Below you’ll find the most popular ones and are free to start with:
Free OKR Software Options:
Best for setting quarterly OKRs and alignment
Weekdone is OKR software for goal-setting, tracking progress, weekly planning, and team engagement. It’s also great for status reporting, aligning team OKRs with company-level Objectives, and visualizing your weekly and quarterly progress.
- OKR hierarchy view lets you and your team visualize your company’s OKRs and their alignment across the entire organization;
- Weekly Check-ins help you connect your weekly plans with team Objectives to make sure that what you do each week is relevant to team quarterly improvements;
- Integrations with Asana, Jira and Google Tasks to keep the entire company updated about your biggest priorities and progress while using your favourite project management tool;
- TV dashboard feature that offers a bird’s eye view of your organization’s OKRs in addition to regular reports that you can export in a PDF or Excel format.
Bonus feature: Weekdone subscribers can receive company-tailored unlimited OKR Coaching to speed up the OKR learning curve and gain helpful tips.
Best for 360-degree feedback and employee engagement
Koan’s free OKR software helps companies of all sizes achieve goals through simple, positive habits embraced from the bottom up. Koan allows easy setting of OKRs and their owners, and the weekly reflections feature is great for keeping the team engaged and aware of their progress.
- Negative feedback management to let team members fill up quick, weekly reflections and share their accomplishments, top priorities and potential concerns;
- Progress Tracking gives visibility across your teams, trackable progress and viewable insights
Best for connecting KPIs and OKRs
Perdoo’s software offers OKR-related views and focuses on the Objectives and Key Results only. It’s easy and intuitive to set up and update OKRs.
- Groups feature to create teams and assign responsibilities and enable clearer execution and exercise accountability;
- KPI Monitoring for tracking each team’s OKRs and KPIs alongside each other and 360-degree transparency across the business.
OKR helps businesses bridge the gap between goal setting and execution and switch from an output- to an outcome-based approach to work.
The OKR framework helps leaders and their teams prioritize, align, and measure the outcome of their efforts. Linking Company and Team Objectives to the Key Results help team members understand how their daily work contributes to the bigger picture and what to focus on to drive improvements.
The right OKR software makes the OKR adoption process easier and serves as a shared environment where teams get aligned and goals get achieved.
Weekdone’s customers have a dedicated OKR coach and OKR workshops included in the subscription. That is because implementing OKRs requires a systematic approach and step-by-step guidance. It also takes 2-3 quarters to learn how to write and align good OKRs that truly transform the way that a company thinks about improvement.