OKRs, or “objectives and key results,” are a goal setting methodology that can help teams set measurable goals. While most companies set goals, only 16% of knowledge workers say their company is effective at setting and communicating company goals. To increase employee engagement in goal setting and help your teams set and achieve ambitious goals, try setting OKRs.
Components of an OKR
OKRs follow a simple but immensely flexible template that bends and bows to fit nearly every purpose:
- I will [objective] as measured by [key result].
The Objective is the goal you want to achieve—increase brand awareness, create the lowest carbon footprint in your industry, that sort of thing.
The Key Result is the metric by which you’ll measure your progress towards your objective—drive one million web visitors, ensure one-quarter of your product’s material is compostable, and so on.
FAQ: What is the difference between OKRs and KPIs?
KPIs, which stand for Key Performance Indicators, are a way for teams to track performance within projects and initiatives. OKRs, on the other hand, are a framework for setting and achieving goals. Because of the relationship between the objectives and key results, OKRs are a better way to holistically think about your goals and how they relate to your work.
That isn’t to say your team can’t use KPIs. In fact, some KPIs make great KRs. Here’s how they differ, and how your team can benefit from both:
- KRs are the metrics by which you’ll measure the progress of your OKR. KRs can be quantitative (e.g. Increase web traffic to 2M users per month) or qualitative (e.g. Assess and document users’ pain points). In the latter example, “assess and document” can be measured in a number of ways: with polls, NPS surveys, direct feedback, etc.
- KPIs are quantifiable ways to measure your initiative against results. If you have an incredibly quantitative KR (e.g. Increase headcount by 15 people in Q3), you could use the KPI framework to support that initiative, as long as you connected the initiative to your company objectives.
If both of these acronyms are new to you, stick to OKRs. By empowering your team with a holistic goal-setting framework, you can connect your individual work to your company’s big-picture goals to drive employee motivation and deliver better outcomes.
Origins of Objectives and Key Results (OKRs)
When John Doerr joined Kleiner Perkins in 1980, he brought with him a radical new management methodology that would revolutionize Silicon Valley.
He had spent the previous five years at Intel, where, while working under management guru Andy Grove, he learned about Grove’s revolutionary system for goal setting and accountability.
“Andy had created this system for goal setting that was deceptively simple, but also the polar opposite of the conventional management by objectives (MBO) systems, which tend to be top-down, hierarchical, annual, and linked to compensation,” Doerr told Harvard Business Review.
Grove’s new methodology worked on the revolutionary idea that teams perform better by focusing on outcomes—not procedure. Instead of telling Intel’s employees precisely what to do, Grove would set them a goal and let them work out how to achieve them.
He called it Intel Management by Objectives, although he later simplified that to Objectives and Key Results—better known today as OKRs.
How to set good OKRs
Because of how flexible the OKR framework is, you can set and phrase OKRs in a variety of ways. Like any goal, OKRs should be falsifiable and measurable. You should think of OKRs as the pillar of your strategy for the next period of time. However, to set good OKRs, you also need to connect them to your day-to-day work.
Even though most companies set goals, research has shown that only 26% of employees have a clear understanding of how their individual work contributes towards company goals. That’s because most teams set goals at the beginning of a year or quarter, then never revisit them again. But, when employees have clarity on the relationship between their work and their company’s objectives, their motivation doubles. By connecting each individual’s work to your organization’s goals, your employees have the context for why their work matters.
FAQ: How many OKRs should I set?
There’s no set number for how many OKRs you should set, but in practice, aim to set no more than ten objectives. Each objective can have more than one supporting key result, depending on the team. Because your OKRs represent your big-picture goals, you want to set a number that you can reasonably complete in a set period of time, like a quarter or a year.
You should also practice setting OKRs at both the company and team level. For example, if your company’s objective is to be the best-in-class solution in your field, your marketing team’s OKR might be to create a best-in-class product demo and share it with a certain number of people.
Examples of company-wide OKRs
OKRs are effective at guiding large, long-term goals. Check out a couple of company-wide OKR goals.
Objective: Create the lowest carbon footprint in our industry.
- Key Result: Supply chain and shipping infrastructure 100% zero waste.
- Key Result: Pay 100% carbon offset for calculated carbon dioxide emissions.
- Key Result: 25% of material is compostable.
- Key Result: 75% of material is biodegradable.
Objective: Delight customers. Ensure that our customers are so happy with our service and product that they have no choice but to order more pizza and to rave about the experience with their friends.
- Key Result: Net Promoter Score (NPS) of 42 or better.
- Key Result: Order Rating of 4.6/5.0 or better.
- Key Result: 75% of customers prefer Zume to the competitor in a blind taste test.
Examples of team-specific OKRs
When you step down a level, from the C-suite to functional teams, OKRs are equally effective. Just as they can direct our strategic thinking, they can guide our functional work, too. Here are a few team OKR examples.
Objective: Increase brand awareness
- Key Result: Drive 1M web visitors
- Key Result: Increase social media following by 10x
- Key Result: Recruit and onboard 1,000 community members
Objective: Launch major product initiative by end of quarter
- Key Result: Recommendation score of 8 or above
- Key Result: 40% of MAU use new feature
- Key Result: Increase sign-up-to- conversion rate from 15% to 25%
Objective: Drive employee impact and engagement
- Key Result: Increase employee satisfaction by 20%
- Key Result: Achieve 90% employee participation in engagement survey
- Key Result: Double positive manager feedback
Objective: Increase recurring revenue
- Key Result: Reach $2M in MRR
- Key Result: Increase annual renewals by 25%
- Key Result: Reduce churn by 10%
Examples of personal OKRs
OKRs aren’t necessarily limited to the workplace, either. When asked about how he improved his personal life, John Doerr revealed he used his trusty system to maximize the time he spent with his family.
Objective: Have more quality family time as measured by:
- Key Result: Getting home for dinner by 6 pm, 20 nights a month.
- Key Result: Being present by turning off the internet router to eliminate distractions.
The benefits of OKRs
So: should your team use OKRs? While there are various goal-setting methodologies your team can benefit from, OKRs help you align on flexible goals that are falsifiable, time-bound, and easily measurable. One of the biggest advantages to OKRs is you can map multiple KRs to each objective. That helps teams:
Quickly set actionable goals
OKRs have a built-in format that makes it easy for teams to get started on setting and refining their OKRs. If you’re new to OKRs, start with Andy Grove’s distilled methodology:
- I will [objective] as measured by [key result].
Instead of spending a lot of time thinking about how to phrase your goals, your team can now jump right into it.
Easily set stretch goals
To challenge yourself and your team, consider making at least one of your KRs a stretch goal. Stretch goals are deliberately challenging goals that you’re not 100% confident you can hit—and that’s ok! In fact, at Asana, we aim to hit about 70% of our goals. That tells us we’re setting challenging enough goals and helps us calibrate better goals for the next quarter.
Boost cross-functional collaboration
Oftentimes, your objectives will encompass initiatives from more than one department. Take the Allbirds example from earlier. Their objective is to Create the lowest carbon footprint in our industry. To do so, their product, shipping, operations, and design teams need to work together. These teams would likely have individual KRs contributing to that central objective.
Increase employee engagement
Because there can be several KRs to each objective, many companies choose to take a hybrid approach when it comes to setting OKRs: company leadership and executives set the objectives, and then individual teams or employees set the key results that contribute to those objectives.
This hybrid top-down/bottom-up approach helps you include and engage your employees in the goal-setting process. Employees will understand exactly how their KR contributes to the company’s top-level objective, and that makes it easier for that KR to remain top of mind during the OKR cycle.
Connect daily work to team and company objectives
The biggest benefit of OKRs comes when you can connect your daily work to your team’s strategic objectives. OKRs already begin to do that by connecting the objective to the key results that contribute to it. To get the most out of OKRs, take that benefit a step further: use an OKR tool that connects your daily work and regular projects to your company and business goals.
Execution is everything
Thomas Edison once quipped that “vision without execution is hallucination.” It’s an idea that deeply inspired Doerr and the OKR methodology: Good ideas with poor execution will forever remain just that, ideas.
Doerr says the biggest lever in execution is goal setting—and by extension OKRs. It focuses our attention, establishes accountability, and highlights the activities that really drive progress.
“When done right, goal setting is a very powerful tool,” Doerr told Betterworks. “Every team member in the company can link their goals to the corporate goals, knowing that their work is having a direct impact on the success of the company.”