What are Objectives and Key Results (OKRs)?

Studies reveal that employees are more engaged and productive when they possess a clear understanding of their organization’s goals, as well as the meaningful impact of their day-to-day tasks. However, current management processes often struggle to achieve alignment, accountability, and prioritize critical things that matter the most. This is where Objectives and Key Results (OKRs) come into play — a simple but powerful goal-setting framework that fosters clarity, aligns everyone with shared organizational goals, and ultimately drives improved performance and results.

What are Objectives and Key Results (OKRs)?

Objectives and Key Results (OKRs) are a goal-setting framework used by high-performing organizations to set, track, and achieve ambitious goals. The roots of OKRs trace back to the 1970s, when Intel’s Andy Grove introduced the concept. But it was John Doerr, one of Google’s earliest investors, who popularized OKRs, made them an integral part of the tech giant’s culture, and evangelized it through his book ‘Measure What Matters.’

      The adoption of OKRs has proven to be a game-changer for countless organizations. OKRs serve as the right tool to drive innovation and achieve strategic alignment, irrespective of the size of the organization. By aligning teams with business objectives, optimizing resource allocation, fostering accountability, and promoting transparency, OKRs offer a multifaceted solution to modern business challenges. They enable data-driven decision-making, enhance progress tracking, and empower teams to stay focused on what truly matters.

Components of OKRs

At the heart of OKRs lies a straightforward formula:

  1. set an objective that defines “what I want to accomplish,”
  2. define its measurable key results, which outline “how to get the objective done.”

      An objective is significant, concrete, action-oriented, and aspirational that provides a clear sense of direction and purpose. Key results are specific, time-bound, aggressive yet realistic, and, most importantly, measurable and verifiable. Since key results provide a clear way to measure progress, every team member can remain focused on outcomes and ensure that they understand their role in achieving these results. OKRs are typically established by leadership and never tied to compensation or performance reviews.

      Now, who else can better explain OKRs than their inventor himself? Hear it straight from the horse’s mouth:

An Example OKR

Objective: Create a customer experience that improves engagement and satisfaction.

Key Results:

  1. Achieve a Net Promoter Score (NPS) of 45 or higher
  2. Reduce customer churn rate by 20%
  3. Respond to 95% of customer inquiries within 24 hours

      The above OKR illustrates a clear objective of improving customer success, accompanied by measurable key results that provide a concrete way to track progress and ensure that the objective is met.

Moonshots vs. Roofshots

OKRs should be ambitious enough to challenge everyone, taking them out of their comfort zones, compelling them to reconsider their strategies, pose challenging questions, and engage in conversations they may have been avoiding. Such objectives ignite a sense of curiosity about the limits of their capabilities. In the OKR world, ambitious OKRs are commonly known as moonshots. There’s also another category of OKRs called roofshots, which are hard OKRs, nevertheless achievable. Moonshot OKR’s success score is typically pegged at 70% and roofshot’s, at 100%.

Moonshots vs. Roofshots

      While moonshots are the bedrock of OKRs, they can sometimes have a demotivating effect, especially if the initial achievement is less than 70%, especially early in the journey. This is where roofshots come into play; they should be blended with moonshots. A balanced approach involves setting one moonshot key result per OKR, with the remainder being roofshots. Especially at the outset of your OKR journey, it’s advisable to start with roofshots exclusively. Concentrate on consistently meeting key results to foster a culture centered around delivering results. As the organization becomes more adept at using OKRs, moonshot objectives can be progressively introduced to push the boundaries and discover the full potential of the organization’s capabilities.

OKR Best Practices

A solid OKR framework loses its effectiveness without a well-structured OKR process. To make OKRs truly valuable, they must be actionable. When crafting your OKRs, it’s important that everyone already has some plan of action in mind for achieving them. Some commonly adopted best practices are:

  1. Top-level OKR setting: At the beginning of each year, the executive team establishes the top-level OKRs as guidelines for the rest of the organization. These OKRs can have quarterly or a longer cadence depending on business needs.
  2. Employee feedback: Following the creation of top-level OKRs, the executive team collects feedback from employees throughout the organization so that the OKRs are informed by a broader perspective.
  3. Team-level OKR setting: Teams then collaboratively develop their own OKRs, carefully mapping out interdependencies and ensuring that their OKRs roughly align with other teams and the top-level OKRs. Team-level OKRs do not necessarily have to align completely with the top-level OKRs, as this might be impractical and reduce autonomy.
  4. Tracking: Team members regularly update their progress on the key results and take the necessary actions to achieve their OKRs.
  5. Retrospective: At the end of the OKR cycle, a retrospective is conducted, with each team member identifying what the team should begin doing, stop doing, and continue doing for improvement.

      In essence, a successful OKR process involves collaboration, feedback, alignment, and ongoing tracking. This systematic approach ensures that OKRs are not just lofty goals but actionable plans with a clear path to achievement.

Objectives and Key Results (OKRs) represent a transformative approach to goal-setting, alignment, and performance improvement. This simple yet powerful framework, pioneered by visionaries like John Doerr and embraced by industry giants, has become a cornerstone of success in today’s dynamic business landscape. As you embark on your OKR journey, remember that OKRs are not just about setting goals; they are about achieving meaningful outcomes and driving your organization toward a shared purpose. Here’s a TED talk by John himself summarizing the power of OKRs.

Wondering how to get started with OKRs? Try out our agile goal-setting platform that helps you create and assign OKRs that strategically align with your organization’s purpose. You can also visualize their alignment and progress across the organization using Kanban and tree views. Start your OKR journey with Peptrics today!