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What is an OKR? Ultimate Guide and Definition of Objectives and Key Results

What is OKR? Ultimate Guide and Definition of Objectives and Key Results

What is an OKRs?

OKR (or) Objectives and Key Results. It is an effective and proven goal-setting framework. OKRs are successfully used by some leading organizations in the world. With the ever-changing business landscape, it is important to have short-term goals that are agile and adapt to business changes.

OKR consists of “Objective” which defines the “what” we need to achieve and “How” we can achieve our what. OKRs framework consists of a few rules and a set of practices that help us to define and track OKRs. OKRs create alignment and focus which enable employees to prioritize. It transforms the culture of an organization from measuring output to outcomes

History of OKRs

history of okr

Though OKR (or) Objectives and Key Results. are a new norm today and much spoken after 2010, its history is traced back to 1954. Peter Drucker, Father of management, invented MBO(Management by objectives)
Later in 1968, Andy Grove while co-founding Intel developed MBO further and called as iMBO, which is the current OKR framework. When John Doerr joined Intel he learned about OKRs and was later introduced to Google around 1999 when the Google team was just 40 and they continue to use it till today.

Grove says: “A successful MBO system needs only to answer two questions:

• Where do I want to go? (The answer provides the Objective)
• How will I pace myself to see if I’m getting there? (this gives milestones / key results)

The second question is the key that made OKRs emerge.

John Doerr joined Intel in 1974, where he practically worked along with Ducker and with OKRs Later he introduced OKR to Google’s founders, Larry Page and Sergey Brin, and they implemented OKRs at Google. Today most organizations follow OKR to ensure strategy execution, OKRs are swiss army knives suited for all-purpose and cultures.

Benefits of OKR

Focus

Keep OKR (or) Objectives and Key Results. simple to make others understand them. Keeping 3 to 5 objectives makes it highly focused and helps prioritize goals. It also saves time and maintains focus on plans and execution. There is no room for procrastination this way, and one achieves goals in an organized and focused manner.

Alignment

The main reason organizations opt for OKR (or) Objectives and Key Results. is alignment, it makes teams travel in a highly aligned way and eliminates silos. Using shared OKRs enhances teamwork and improves collaboration between teams and boosts engagement. Even in is not working in a shared objective it still is possible to get aligned to the bigger overarching objective, more importantly, it makes sure that everybody is on the same journey to achieve the overall goals.

Transparency

OKR (or) Objectives and Key Results. tracks progress and make progress accessible to team members. This enables awareness and ensures consistency. Since alignment is ensured and everyone is traveling in the same direction and with transparency, it helps to share experiences and support team members to travel that extra mile.

Effective Communication

Since there is a give-and-take feedback system, there is always room for development. It encourages to discuss problems and solutions as well. Hence, participation among teams as well as individuals increases along with improved decision-making. Overall, it allows the organization to be built on trust and learning.

Empowerment

Schedules and resources can be adjusted by individuals. They can hand-pick the ways of achieving their OKRs. This motivates employees to achieve their goals both qualitatively and quantitatively.

Stretching

The very important factor of OKR (or) Objectives and Key Results. is “Stretching”. OKRs allow you to stretch and think out of the box. This makes your moon shot objectives achievable. OKRs challenge organizations to create more aspirational objectives and strive further.

When all the previous said points are implemented correctly in an organization, it automatically means that they are functioning well and traveling towards success.

Getting Started with OKR

What are a Moon-shot and Roof-shot OKRs?

The other guideline which was traditionally given out on OKR goal setting is where to aim at. The OKR framework where 60-70% of goal realization is considered a success is called Moon-shot. Which are otherwise called Aspirational objectives. Here the goal is set challenging enough so that even achieving 60% is a success.

Roof-shot also known as committed or Operational OKRs, is the answer to the drawbacks of the OKR goal- a setting framework like Moon-shot Here the goal is set hard but achievable, that only 100% and not anything has accepted the success of an objective. Successful companies like Google use a combination of two.

• Create Objectives that align with Company goals

Create objectives of not more than 5 to achieve the company goals. While writing such objectives ensure that the OKRs align and are key contributors to the company goals

• Define Key Results

Write Key Results, not more than 5 per objective. Define key results that are specific and measurable. Key results has to be aggressive, yet realistic and verifiable. Also, identify the key initiatives that are required to achieve the objective. Once we know the metrics we are going to measure, it becomes a starting point to track and measure progress. Make adjustments as and when required.

• Ongoing Reviews and retrospective

Fortnightly and weekly reviews will provide us with a clear understanding of where we are traveling. OKR Retrospective meetings enable us to analyze the lessons learned and apply them to the upcoming quarter

OKR Framework

OKR frameworks support and help in quicker implementations. Before getting started, it’s very important to set the overall process for smoother and quicker adaptation.

Vision and Mission

Defining the companies The company mission is a brief description of the company’s vision and purpose and clearly defines how and when.

Setting Cadence

starting with a shorter cadence always helps. Setting quarterly or monthly OKRs helps us to constantly iterate to avoid delay or failure.

OKR planning

At OKR Planning has to be done before the beginning of each quarter and along with the retrospective schedules.

OKR retro

During a retrospective, the team gets to understand the gaps and analyze the learnings and plan the upcoming quarter with more focus and finalize the priorities.

OKR champion

It is given that any OKR implementation should have a coach or a champion who can facilitate the entire process. They become the “go-to” person to have the process more robust and increase adaptation

OKR examples

Writing the OKR (or) Objectives and Key Results is an important activity while getting started. We have been working with teams to support them to get started with a few commonly used OKRs. As an industry best practice we recommend teams to keep the OKRs less and simple, Less is More. Read our resources section to know more about OKR Examples for different functions

Before starting it is highly essential to have the company objectives published so the departments and individuals can create and align with the company objectives. Without company objectives, the entire process will become siloed.

With the given examples, one can start the OKR journey seamlessly. Try the OKR Examples for more information.

Objective 1 –  Increase the predictable revenue

KR1 – Monthly Recurring Revenue (MRR)
KR2 – Average Revenue Per Customer (ARPC)
KR3 – Decrease depreciation cost from X% to Y%

Objective 2 – Increase the ROI per customer

KR1 – Increase the customer lifetime value to XX years
KR2 – Decrease customer churn rate from X to Y

Objective 3 – Build a healthy and sustainable Sales pipeline

KR1 – Achieve a monthly pipeline of $XM
KR2 – Achieve X% “Enterprise” deals
KR3 – Increase total enriched leads to X%

Learn more about OKR examples

Common OKR Mistakes

Writing OKRs as business as usual OKRs

If the set objectives change nothing then it is called business as usual OKRs(BAU). OKRs are not collective tasks. They need to bring change and motivation to push the extra mile.

Sandbagging OKRs

Committed Objectives are those where there are resources available to deliver the objectives. When we add aspiration objectives to it, teams will have to stretch to add more resources to it. If a team is meeting both these objectives without adding more resources then these are the teams that need an evaluation on resources and reassign a few if needed.

“Who Cares” objectives

OKRs directly drive organizational performance. If you are hitting 100% progress in all the objectives then there is something wrong with the way we set the objective. If our objective is low value, it will not add any tangible benefit to the progress. The benefit of achieving the Objective should be set.

Eg. delivering products Yuva – has no value attached to it. But rather setting objectives as,

Deliver product Yuva to increase the market share from X to Y

Irrelevant KRs attached to the Objectives

Adding Key Results that may not contribute directly to the objective and the key result progress will not add value to the objective progress at the same time this will communicate a wrong message across as the progress gets updated.

OKR software

Datalligence is a goal-setting platform to track and measure OKR (or) Objectives and Key Results. The platform promotes alignment along with employee engagement. The data visualization provides actionable insights.
We work with organizations and teams to ensure they understand the concepts and benefits of OKR. we provide free consulting content that supports OKR adaptation.

Key Features:

➨ OKR Alignment tree gives a bird’s eye view of company OKR performance and the team and individual objectives that are aligned with the company OKR.

➨ Datalligence helps the team to create Key Results that are both positive and negative.

➨ Weightage can be set to mark priority OKRs

➨ Regular Check-ins provide real-time progress

1:1 Meetings and OKR retrospectives can be done on the platform

➨ Feedback management promotes Upward, downward, and peer-to-peer as well.

Frequently Asked Questions

The OKR goal-setting methodology has gained popularity over the past 2 decades, with tech giants like Google and Intel implementing it to optimize their operations. We have spoken in detail about OKRs in the above sections, now let us understand what KPIs are. Key performance indicators (KPIs) are metrics that shed light on the performance of your business.

KPIs are more targets than goals. There are too many KPIs with no limitation which prevents action against each KPI. They simply measure whether you are successful in achieving your goals. They measure the processes or activities already in place. OKRs and KPIs complement each other and for best results, they should be tracked alongside each other.

  • Whereas KPIs or Key Performance Indicators don’t motivate or encourage you to set ambitious goals. As leaders, most of them would have worked in KPIs but OKRs excite them on a higher level. In KPI every indicator is a priority, and we end up not focusing on something that matters.
  • Reviews on KPIs are retrospective and exhaustive exercises, with no room for course corrections.
  • This is precisely why we advise teams and organizations to limit the OKRs.
  • OKRs are not day-to-day tasks but rather a macro-level objective, whereas Key results help the journey possible but setting Key results with measures.
  • OKRs work on your priority which enables teams and individuals to dedicate the time as per the priority.

While we look closer, we can measure everything we are doing. While writing objectives ask what are the factors that will help me reach my objective, Tada, you have Key Results identified. To know more about objective and key result types contact Datalligence

What are the prerequisites before launching OKRs?

Before we start launching OKRs it is important to have the following in place

Executive buy-in – The executive buy-in must be there before launching the OKRs. That provides psychological safety to the team to set an audacious goal.

OKR Champion – Any organization needs the OKR champions to look after them for their effectiveness. OKR champions like Scrum masters are responsible for the adoption and participation of the OKR framework among your company employees. OKR champions are to moderate sprint review and planning and daily stand-up calls of a team. Town Hall meetings, OKR workshops, and OKR grading are some tools to increase the OKR adoption that can be used by your champions.

OKR implementation will take 3 to 4 quarters to get it right. But the first 90 days are crucial to keep the team together and make them see the common goal and start drafting their OKRs

OKR champion can be anyone in the organization who is passionate about the process and they can be holding any role. When you have OKR champions for your company, they will be responsible for clearing all the in-house doubts of the employees. Even while recruiting new employees and bringing them in, OKR champions are responsible for bringing them up-to-date and also for clearing the doubts of new employees as well. It is right to say the OKR champions are knowledge sources for employees to get clarification about their objectives.

  • OKRs are scored based on percentage. The success varies for commit (Operational) and Aspirational OKRs
  • Achieving 100% is given in commit (Operational) OKRs, whereas achieving 70% is considered a success for aspirational OKRs

Create – Create new processes or methods that help you to achieve the organizational goal

Invent – OKRs that support innovation and intervention needed for the product, process, and people

Stretch – Identify what level of aspirations are required to achieve the goal

Enhance – Improvements that bring in better quality or better output

The best practice is to have a maximum of 3 to 5 Key results for Each Objective.

The main Key Result Characteristics are

  • Specific and time-bound.
  • Aggressive, yet realistic.
  • Measurable and verifiable.

There are three types of Key Results

  •  Input
  • Outputs
  • Outcomes

 Inputs – Input Key results are those we can control, increase or decrease. Right inputs determine the outcome

Output – Output KRs are the result of the input Key Results.

Output Key results provide a clear target and measures.

Outcomes- Outcome Key Results are the next step to the Output Key Result.

Though Outputs gives the result, the outcome will help us to give a clear clarity on how we are progressing (before and after)

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