The Objectives and Key Results (OKR) system is a flexible management tool that can be tailored to any organization’s needs. The setup for an OKR is simple: An Objective describes what you want to accomplish, and Key Results provide parameters for how you will achieve the desired Objective.
In addition to simplicity, OKRs are incredibly versatile. Broadly, we see two kinds of OKRs that drive success. There are committed OKRs that help you track activities that must get done. And then there are aspirational OKRs that help you stretch your goals.
We are going to focus on two different functions of KRs: inputs and outputs. We receive many emails on this topic, and readers usually want to know which type of KR is better. As they both have distinct purposes, we believe they work best together. The key is to know which one to use when.
What are input KRs?
Input KRs are the specific task and activities that need to be done to reach your Objective. If your Objective is to become the world’s top shoe brand, an input KR could be to open 50 new stores by the end of the year, introduce 10 new shoe styles, or redesign the company’s website.
Inputs are things companies and their employees have direct control over. Amazon CEO Jeff Bezos is a huge proponent of focusing on inputs.
“We believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time,” wrote Bezos in a 2009 letter to shareholders. Ultimately, he believes that the right set of inputs should translate into the desired results.
Since employees have direct control over inputs, bottom-up OKRs will typically have more input KRs.
What are output KRs?
Output KRs are the outcomes you and your team identified as benchmarks that need to be met to reach your Objective. For example, if your Objective is to become the world’s top shoe brand, output KRs could include increasing sales by 30 percent by the end of the quarter, increasing social media followers by 50 percent, or increasing market share by 40 percent.
Andy Grove, the father of OKRs and former Intel CEO, viewed desired outputs as the measuring stick of an OKR. You either reached them or you didn’t.
“Stressing output is the key to increasing productivity,” wrote Grove.
By providing an endpoint to work towards, outputs let employees explicitly know what results their work should produce. Because of the guiding nature of output KRs, most top-level OKRs will be output heavy.
Why you should use both
Outputs let you know where you want to go, but they’re ultimately out of your control. And while inputs are controllable, they alone don’t always lead to results. Inputs need something to work toward.
Higher education is one example of how outputs and inputs can work well together. Educators don’t have direct control of how their students will do after graduation. But there are things they can do to increase the odds of positive career outcomes.
For example, the Student Experience team at the Minerva Schools at KGI knows from research that students will have higher workplace engagement if they had a mentor or worked on an internship or project in college that applied what they learned in class. By knowing what outputs to strive for, the Experience team has been able to create experiences that ensure students are finding these vital mentors and internships.
By understanding how each type of KR works and motivates employees, you are able to write more powerful OKRs. The key is to be more thoughtful about the type of KRs you employ for specific Objectives.
When crafting OKRs, ask yourself this question: What is a great combination of inputs and outputs that we can track that will get us closer to our Objective?
Inspirational author Alan Cohen said this about the virtue of work and rest, which also applies to outputs and inputs: “Use both and overlook neither.”
Where can I get more information?
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