Objectives and key results (OKRs) are a goal-setting framework that helps you set and track measurable goals – or objectives.
OKR was created by Andy Grove in the 1970s, but has become very popular over the past decade or so.
If you’re not already familiar with OKRs, you might be more familiar with KPIs (key performance indicators). On the surface they might seem like the same thing, but I find OKRs simpler and much more powerful.
The main purpose of OKRs is to set clear goals for the organisation, and connect them directly to the teams and people in the organisation. They’re focused on defining improvement areas and driving change rather than tracking business performance metrics.
This helps with clarity on what we’re working towards – even if we’re working solo – and it improves collaboration and communication based on transparency and accountability. The intent is to connect these strategic goals with our daily work.
John Doerr, who learnt the OKR framework from Andy Grove at Intel, and is credited with popularising the method, distils OKRs to this simple sentence in his book Measure What Matters.
“I will [objective] as measured by [key result].”
John Doerr, Measure What Matters
Simple but powerful.
Let’s cover the basics.
What Time Period?
The first thing to think about when setting OKRs is the time period you’re setting them for. We’ll talk about setting one-year and 90-day OKRs in a moment. Generally, you start with the longer time period, set the OKRs, and then set shorter-term OKRs that contribute to the longer-term OKRs.
Be Ambitious
OKRs are intended to be used as a stretch goal. They need to be ambitious and slightly out of reach. This might feel a bit uncomfortable. We’ll talk about that in a moment, but when grading OKRs to see how we’ve progressed and performed, the sweet spot is getting to 60-70% achieved.
Set Your Objectives
The first part of OKRs is the objective. This is a simple, clear sentence stating the outcome or goal that you want to achieve. They provide direction. It is qualitative and states what you want to improve. You don’t want any ambiguity with what the objective is.
Objectives answer the question “what are we doing?”
An example: “Increase the use of solution X”.
It’s generally recommended that you have up to five objectives for the time period you’re setting the OKRs for.
I strongly recommend that at least one of these five be specifically focused on impact. With an embedded impact model, all of the OKRs will be actively contributing to your impact.
These are important lead indicators that let you know if you’re on the right track and making progress towards delivering on the social and environmental impact you’ve described in your theory of change and your triple bottom line. More on that in a future post…
Set Your Key Results
The second part of OKRs is the key results. They’re quantitative and help you know how you’ve progressed toward achieving the objective.
Key results answer the question “how do we know when we’ve achieved our objective?”
An example: “100 new active users”. This would make the full example OKR statement “I will increase the use of solution X as measured by 100 new active users”.
It’s generally recommended that each objective has up to four key results. Each key result is very specific and measurable. The purpose is to be able to measure how much progress you’ve made and if you’ve achieved the key result and the objective. Key results aren’t tasks or initiatives.
Map Your Initiatives
Initiatives are an important part of the OKR framework, and are often overlooked or conflated with key results. Initiatives are the specific work you’ll do to make progress towards achieving a key result. This is how you map your daily work to reach your objectives.
Initiatives answer the question “what will I do to achieve our key results?”
An initiative for our example OKR statement might be a marketing campaign to increase awareness and onboard new users.
Initiatives are your action plan. Each OKR needs to be mapped to at least one initiative. This might be a task, a set of activities, or even a project.
Grade Your OKRs
Reviewing progress against our OKRs and grading them is a key part of the framework. This is one of the reasons I find OKRs much more useful than other goal-setting frameworks. OKRs help us move beyond a binary pass or fail mentality.
OKR grading is simple. The original is a scale from 0.0 to 1.0. Rather than dealing in fractions, I find it easier to think of it as a percentage, which is how I’ll talk about it here. So 1.0 equals 100% achieved.
Remember, our OKRs are ambitious stretch goals. If you’re regularly hitting 100%, you probably need to be a bit more ambitious with your key results. A grade of 70% is actually a really good score. A common use of the range is:
- 0-39%: we didn’t make any meaningful progress on this key result
- 40-69%: we made real progress but didn’t quite get there
- 70-100%: we achieved our key result
Grading our example OKR statement is simple. Let’s say we managed to get 60 new active users. Our ambitious target was 100 – so we got 60 of the 100 users we were aiming for. That gives us a grade of 60%. We made real progress, but didn’t quite get there. It’s not a failure though – we got 60 new active users, and that’s something to celebrate!
To get the overall grade for the objective, you can average the key results. This generally works, but sometimes one key result is more important than the others and deserves a higher weighting. This is when I’ll adjust the overall grade for the objective, so it makes sense.
The power of “yet”
I recommend approaching the grading with the “power of yet” thinking. The important thing is to reflect regularly on how you’re progressing. Celebrate the wins as they happen. Anything in the 40-100% range means you’ve definitely got something to celebrate.
Where things haven’t progressed as you’d planned, understand why. Sometimes this is for a good reason, like a shift in priorities.
OKRs aren’t intended to be static. Don’t hold yourself hostage to them. Refine them as you learn, and as priorities change. Don’t beat yourself up when you don’t make the progress you planned. Understand the reasons and adjust.
From this description, I hope you can see how these pieces flow and fit together. Our purpose, vision, and theory of change drive our objectives. We measure progress toward our objectives with key results. The OKRs we’ve set determine the work we’ll do (initiatives) to make it a reality.
Our OKRs drive the prioritisation of the work we’ll do… and the momentum we’ll build.
Let’s start putting this into action now.
Take Action to Build Momentum
A key thing I focus on is helping you build momentum to make it happen.
In my See Your Future… Make It Happen post we covered seeing the future over the next three and 10 years. Now we’ll use OKRs as a tool to start making the big picture more tangible.
Let’s start getting down to a clear action plan to build momentum over the next year, and then we’ll zoom in on the next 90 days.
We’re going to use OKRs as the goal-setting framework for the one-year time horizon as well as 90 days. Generally, OKRs are used for 90-day periods with other frameworks for longer periods. To avoid that complexity, we’ll use OKRs for both.
The key is that OKRs are reviewed and graded regularly – and necessary refinements made. Over time you might want to experiment with other frameworks for longer-term planning.
Your 1-Year Plan with OKRs
If you haven’t already, I recommend visualising the future you’re working towards with your 10-Year Vision and 3-Year Picture. This bigger picture is critical to have a vision state to be working towards.
To achieve that desired future, what do you need to do over the next year?
The one-year time period is mostly arbitrary, and you might find it makes sense to anchor it to a date like the calendar year, the end of the financial year, or another date that means something to you. These temporal landmarks – or key events – are actually psychologically powerful.
Take Action: Your 1-Year Plan
Let’s start your one-year plan. Start with what comes to you and come back to iterate it as you think about it more. Don’t expect that you’ll be able to put together a complete plan in one session. Depending on where you’re at in your journey, you won’t know the answer to some of these questions yet – and that’s ok.
What’s the end date of this plan? Be specific.
What does your organisation look like?
- How are you spending your time?
- How many people are in your team, and what are their roles?
- What’s the culture of your organisation like? What does it feel like to work there?
- What social and environmental value are you creating, and how do you know?
- What do your customers say about you?
- How many people are using your solution?
- How many paying customers do you have?
- How much revenue are you making each month?
- How much does it cost to operate the organisation each month?
- What’s the financial surplus or deficit of the organisation each month?
- What’s the total financial surplus or deficit of the organisation for the year?
This list isn’t exhaustive, but it will help you think about your goals – even when you don’t know the answer yet. Getting the answer might be one of your goals. Add other questions that are on your mind.
Take Action: Your 1-Year OKRs
What are your goals for the next year? We’re going to use OKRs to capture your thinking. Repeat this format for each of your OKRs – no more than five objectives.
Objective 1: Clear, simple, and compelling objective statement
Key Result 1: What is the quantifiable measure that will help you know how you’ve progressed toward achieving the objective? Add up to four key results for each objective.
Initiative: What is the initiative that will progress this key result? Each key result might have multiple initiatives, and each initiative might contribute to multiple key results.
Your 90-Day OKRs
Your OKRs for the next 90 days need to align with and help you progress towards the one-year plan and OKRs you set. A key part of this is building your sustainable rhythm so you can continue moving forward with confidence.
Take Action: 90-Day OKRs
Let’s start your 90-day OKRs. This set of OKRs needs to align with and help you progress toward your annual OKRs. Start with what comes to you and loop back to iterate it as you think about it more. Don’t expect that you’ll be able to put together a complete plan in one session.
What’s the end date of this plan? Be specific. Add this date after you’ve done the next action on your 90-day approach.
What are your goals for the 90 days? What questions do you want to answer?
Repeat this format for each of your OKRs – no more than five objectives.
Objective 1: Clear, simple, and compelling objective statement
Key Result 1: What is the quantifiable measure that will help you know how you’ve progressed toward achieving the objective? Add up to four key results for each objective.
Initiative: What is the initiative that will progress this key result? Each key result might have multiple initiatives, and each initiative might contribute to multiple key results.
You now have 90-day OKRs that will help you have clarity to build momentum and track your progress toward your 1-year OKRs… that flow into your 3-year picture and 10-year vision.
I’ll share the detailed process I use for reviewing and planning your 90-day cycle in a future post.
Solve Problems That Matter
This is an excerpt from my book Solve Problems That Matter, where I go into a lot more detail on all of the things I’ve covered in this post… and plenty more.
It’s a playbook with actions and worksheets to help you take a human-centred design and living systems approach to design, build, and launch your idea. Ideas that customers love, make money, and do great things for people and our planet… all while increasing wellbeing.
Let’s Collaborate
We specialise in coaching, training, and working alongside leaders.
A key way we do this is by designing and delivering action learning experiences with masterclasses, workshops, innovation sprints, and leadership, design thinking & innovation programs.
These sessions build personal, team, and organisational capability to solve problems that matter with more:
- 🌿 Confidence to navigate complexity and solve problems that matter for your teams, customers, shareholders – and build momentum with more certainty and less risk while increasing your wellbeing
- ❤️ Clarity to empathically engage your stakeholders, make better decisions, and collaborate to create solutions that your teams and customers love, make money, and do great things for people and our planet
- 🎯 Purpose that drives progress on your goals and creates meaningful value that you’re proud of for all stakeholders – and build the relationships, workflows, rhythms, and habits for success
Ready to have fun collaborating to solve problems that matter?
