OKR Guide

What is OKR?

Objective and Key Results (OKR) is a framework for setting and tracking goals and outcomes in organizations. It aligns company, team, and individual objectives to measurable results, ensuring everyone is moving in the same direction with clear priorities.

An OKR consists of two parts:

Objectives

These are significant, concrete, action-oriented, and (ideally) inspirational. They are what you want to achieve. Typically qualitative, objectives should be short, engaging, and easy to remember.

Key Results

They benchmark and monitor how we achieve the Objectives. Key results are often quantitative, making them measurable and limited in number (usually 2-5 per objective). They should be challenging yet achievable.

The OKR methodology recommends having 3-5 Key Results for each Objective. For example:

What is the difference between OKRs and KPIs ?

Both OKRs and KPIs are product management frameworks. However, they pursue different goals by different methods.

OKRs are a goal-setting framework that defines ambitious Objectives and methods of their approach. OKRs are about changes you want to bring to the company and do not need to be achieved fully as long as sufficient change is enforced.

KPIs are metrics that gauge performance in crucial business areas. They are about day-to-day routine and indicate current and past performance. KPIs reinforce the existing performance targets instead of setting out to achieve high-ambitious change.

KPIs and OKRs can be used together to build a system that is both ambitious and reliably performant. With the Oboard KPI dashboard, you can see how KPIs connect with OKRs, making it easier to track performance against strategic goals.

OKR History

OKRs didn’t just appear out of the blue. They are the product of years of evolution in the art and science of goal-setting and performance management. Let’s trace this journey back through its key milestones.

• 1950. From MBO to OKR

  Peter Drucker’s 1950s concept of Management by Objectives (MBO) set the stage. Drucker emphasized aligning individual goals with organizational objectives, laying the foundation for more structured goal-setting.

• 1970. Key Results: The Intel Factor

  Intel CEO Andy Grove refined Drucker’s ideas by adding Key Results, making goals both actionable and measurable. Grove’s approach shifted the focus towards a quantifiable path to success.

• 1999. Google’s Game-Changing Adoption

  John Doerr introduced OKRs to a then-young Google in 1999. Founders Larry Page and Sergey Brin implemented it across their small team, catalyzing Google’s meteoric rise and cementing the importance of OKRs.

• 2000s. OKRs Go Mainstream

  Post Google, companies like Spotify, LinkedIn and Twitter embraced OKRs, making them a universal tool for goal-setting and performance management across industries.

As an example of Google’s OKRs, consider these ones, developed by Sundar Pichai’s when leading Chrome.

OKR methodology

The OKR framework determines your company’s strategy, but it can do more than that. Using Initiatives, you can connect your OKRs to your daily routine tasks and align them into a single unified company strategy.

The OKR methodology offers many ways of categorizing Key Results. The most popular one separates them into Input-based, Output-based, and Outcome based.

Vision, Mission, Strategy

Before you can start developing your Objectives, however, you need to develop your overall long-term strategy. And the best way to do so, is to start with Vision and Mission.

An organization’s vision and mission provide direction and purpose, while its strategy outlines a plan of action to achieve its long-term goals.

OKRs help to translate the strategy into specific goals, which then drive tactical plans. Tactics are the actions taken to implement the strategy and achieve the objectives.

Objectives

The Objective is the aspirational goal that you’re aiming to achieve. It’s the beacon that guide you, giving you direction and focus.

An example of an Objective:
Become the industry leader in customer satisfaction.

Here’s how to craft a compelling Objective:

1. Important. Will achieving this make a significant impact?
2. Specific. Is the goal clear and unambiguous?
3. Inspiring. Does it motivate you and your team?
4. Action-Oriented. Does it dictate a course of action?

Think of your Objectives like the headlines in a newspaper celebrating your future success. They should be compelling enough to make anyone want to read the rest of your story, told through your Key Results and Initiatives.

To learn more about the оbjectives and how to properly write them, check out how to write OKRs that will help you succeed on the Oboard blog.

Key Results

Key Results are the metrics that measure your progress towards the Objective.

They are:

1. Specific and Time-Bound. It’s clear what you have to achieve and when.
2. Aggressive but Realistic. Set the bar high, but not so high that it’s unattainable.
3. Measurable and Verifiable. At the end of the period, it should be clear whether you’ve achieved the key result or not.
4. Limited. Aim for no more than 5 Key Resuts per Objective; 3 is often ideal.

An example of an Objective:
Become the industry leader in customer satisfaction.

Examples of Key Results:

1. Increase the Net Promoter Score (NPS) from 70 to 85 by the end of Q4.
2. Reduce customer support ticket response time to under 2 hours.
3. Achieve a 98% customer retention rate by the end of the year.
4. Increase customer satisfaction ratings by 25% in the next 6 months.
5. Obtain a #1 ranking in industry customer satisfaction surveys.

Initiatives

Initiatives are the specific actions or projects that help you achieve your Key Results and, ultimately, your Objective.

These can be tasks, features, user stories, or projects.

Initiatives are dynamic and adjustable, allowing you to refine your strategy in real-time as you progress toward your Key Results.

Objective:
Increase Company Revenue

Examples of Key Result:
Achieve a 20% increase in sales by Q2

Examples of Initiatives:

1. Analyze current sales data to understand trends
2. Conduct market research to identify potential new customers or markets
3. Develop or refine the sales strategy, focusing on areas with the highest growth potential.
4. Provide training and resources to the sales team to improve their skills.

Different Types of OKR Goals

Not all OKRs are created equal – in fact, some of them may be goals you know you won’t achieve but want to try anyway. This is why we separate them into Educational, Aspirational, and Committed.

OKR scoring

OKR scoring is the process of assessing the Objectives and Key Results. There are multiple methods of OKR scoring, depending on the style or type of OKRs.

• Percentage OKRs. The traditional scoring method, where the scale goes from 0% to 100%. The scale may be color-coded, from red (at risk) to green (on target).
• Binary OKRs. Also known as “Andy Grove’s OKR method”. These OKRs range between “not done” and “done,” with no space in between.
• Weighted OKRs. Some Key Results are more important and should be given more prominent spots. Weighted OKRs allow you to adjust the ratio of how much each KR affects the final score of the Objective.

Oboard supports all of those scoring types and introduces its own! For example, in Oboard you can automatically calculate the OKR score using linked Jira Issues or Epics.

OKR Examples

A good vs. bad OKR

The problems with the second set are:

• Vague Objective:“Be the Best in the Market” is too ambiguous and subjective. Objectives should be clear and specific to provide direction and focus.
• Non-Measurable Key Result:“Get lots of positive feedback on services” lacks quantifiable metrics. Key Results should be measurable and time-bound to track progress effectively
• Generic Initiatives:“Make customers happy” and “Work harder and increase advertising” are overly broad and don’t provide specific actions or strategies. Initiatives should be actionable steps that directly contribute to achieving the Key Results.
• Lack of Specificity and Realism:The OKRs and initiatives lack specificity and may not be realistically achievable. They do not provide a clear roadmap for how the goal will be accomplished.