“OKR” stands for “Objectives and Key Results.” OKRs are an effective goal-setting and leadership tool for communicating what you want to accomplish and what milestones you’ll need to meet in order to accomplish it. OKRs are used by some of the world’s leading organizations to set and enact their strategies. In this article we’ll define an OKR, look at how they’re used and provide some examples of OKRs.
What is an OKR? Definition and Examples
OKRs stand for “Objectives and Key Results.” It is a collaborative goal-setting methodology used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals.
Whether talking about office operations, software engineering, nonprofits or more, OKRs work the same for setting goals throughout many company levels. They can also work for personal goals and can even be used by individuals to get things done at places where senior leadership doesn’t use them.
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What are the components of an OKR? Objectives and Key Results
The OKR Formula
OKRs are typically written with an Objective at the top and 3 to 5 supporting Key Results below it. They can also be written as a statement:
I will (Objective) as measured by (Key Results).
For example, “I will fix the website for the vast majority of people as measured by 7 out of 10 people being able to get through, a 1 second response time, and a 1% error rate.”
An Objective is simply what is to be achieved, no more and no less. By definition, Objectives are significant, concrete, action-oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking and ineffective execution.
Key Results benchmark and monitor how we get to the Objective. Effective KRs are specific and time-bound and aggressive yet realistic. Most of all, they are measurable and verifiable. You either meet a key result’s requirements or you don’t; there is no gray area, no room for doubt. At the end of the designated period, typically a quarter, we do a regular check and grade the key results as fulfilled or not.
Where an Objective can be long-lived, rolled over for a year or longer, Key Results evolve as the work progresses. Once they are all completed, the Objective is achieved.
Who created the OKR methodology?
The OKR methodology was created by Andy Grove at Intel and taught to John Doerr by him. Since then, many companies have adopted them, including Google, Allbirds, Apartment Therapy, Netflix, and inspiring nonprofits like Code for America.
In the book “Measure What Matters”, John Doerr writes about “MBOs,” or “Management by Objectives.” MBOs were the brainchild of Peter Drucker and provided Andy Grove a basis for his eventual theory of OKRs. In fact, Grove’s name for them originally was “iMBOs,” for Intel Management by Objectives. Despite the original name, Grove created some key differences between the two which he passed along to Doerr.
Grove rarely mentioned Objectives without tying them to “Key Results,” a term he seems to have coined himself. Other key differences between MBOs and OKRs are that the latter are quarterly, not annual, and they are divorced from compensation.
Doerr was the one who crafted the name “OKRs.” He introduced the philosophy to Google’s founders in 1999. Gathered around a ping-pong table which doubled as a boardroom table, Doerr presented a PowerPoint to the young founding team, which included Larry Page, Sergey Brin, Marissa Mayer, Susan Wojcicki, and Salar Kamangar.
Doerr’s Objective and Key Results for the PowerPoint presentation were this:
Google then set its company strategy with this management framework and the rest is history.
What are some other high-level OKR examples?
The city of Syracuse, New York recently set this objective: to “achieve fiscal sustainability.” Fiscal sustainability is a great goal, but it has to be measurable. That’s why Syracuse is uses Objectives and Key Results.
When written out, Syracuse’s OKR looks like this:
Let’s look at another example of OKRs.
Allbirds is a popular clothing company known for their sustainable footwear. They have a mission to “make better things in a better way.” As a part of their commitment to sustainability they decided they wanted their shoes to be carbon neutral. So they wrote this OKR:
OKRs can work throughout an entire organization and don’t need to be top-level. Let’s look at an example of a team-specific, departmental OKR.
Say that the development team at a museum is looking to grow its membership base. They’ve realized that the ways they have been approaching membership are outdated and don’t appeal to a new generation of museum-goers. They could use this OKR:
Some people have even found success setting personal OKRs. Here’s an example written by someone who wants to run a 10K:
Learn more about setting personal OKRs.
What are the types of OKRs?
OKRs can be three things: Committed, Aspirational, or Learning OKRs.
Committed OKRs are like their name suggests — commitments. When graded at the end of a cycle, a Committed OKR is expected to have a passing grade.
Aspirational OKRs are sometimes called stretch goals or “moonshots.” The pathway to an Aspirational OKR is expected to be forged since no one else has gotten there before. They also may be long-term and live beyond an OKR cycle or even be transferred between team members to stretch employee engagement.
Learning OKRs are for when learning something new is the most valuable outcome for the cycle. If a team isn’t sure how to proceed, they could set a Learning OKR that answers, “What is the most important thing we’re trying to learn in the next 90 days?” The results can then inform a related Committed or Aspirational OKR in the next cycle.
Learn more about Committed and Aspirational OKRs.
The Benefits of OKRs
OKRs provide many benefits, including clarity, enhanced communication and a coherent, transparent organization-wide strategy. John Doerr always talks about the F.A.C.T.S. when describing the benefits of OKRs. F.A.C.T.S. stands for:
- Focus: OKRs allow a team to rally behind a small set of carefully chosen priorities.
- Alignment: OKRs provide a method for an entire organization to align its goals at every layer with its top-level priorities and with its ultimate purpose.
- Commitment: OKRs demand a level of collective commitment from the parties involved to choose and stick to agreed-upon priorities.
- Tracking: OKRs allow a team or organization to track their progress toward a goal and know earlier when to change tactics.
- Stretching: OKRs empower teams to set goals that stretch beyond BAU - or “business as usual” - and make significant, meaningful change.
Learn more about the benefits of OKRs and each one of the F.A.C.T.S.
Common OKR Mistakes
Writing OKRs is a skill that takes practice and time to develop. Every set of OKRs should incorporate feedback from within the organization and undergo multiple checks and drafts.
There are a few common mistakes to avoid when writing OKRs:
- Avoid Business as Usual: OKRs should aim for change above maintaining the status quo.
- OKR vs. KPI: OKRs are more than just KPIs (Key Performance Indicators). They’re measures for change, whereas KPIs are measures of health.
- Sandbagging: OKRs are meant to stretch a team and their success shouldn’t be a given.
Learn more about the most common OKR mistakes.
What OKR tools are available?
Some of the best OKR tools are free, such as Google Docs and Google Sheets, or even good, old-fashioned pen and paper. If you’re looking for some OKR tools to help you set ambitious goals, look at these OKR-tracking tools for personal goals and smaller teams and these tools for larger enterprises.
How do you grade OKRs?
OKRs are meant to be tracked regularly and graded at the end of a cycle. There are multiple methods for grading (or “scoring”) OKRs.
The Andy Grove method of grading OKRs is a simple “yes” or “no” approach. Did you meet it? Or did you not? Most organizations prefer a bit more detail in their grading, so they’ll use a “Red, Yellow, Green” system where red means “we failed,” yellow means “we made progress,” and green means “we met our goal.”
Google’s grading method provides the most detail, using a percentage scale (0.0 - 1.0) to give each Key Result a number score at the end of the cycle. They average the scores of the Key Results to determine that Objective’s overall score.
Learn more about how to grade OKRs.
Where can I get more information?
This system is deceptively simple, but when used properly, good OKRs will equip your organization with superpowers to create high output management in all your business goals. Learn more by reading [“Measure What Matters”](https://www.whatmatters.com/the-book/ “Buy “Measure What Matters””) or exploring more FAQs, Resources, and Stories right here on WhatMatters.com.
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