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Okr the ultimate guide to objectives and key results
- 1. The Ultimate Guide toOKR Everything you need to know about Objectives and Key Results by Perdoo INTRODUCTION What is an OKR? What is an Objective? An Objective is a description of a goal to be achieved in the future. An Objective sets a clear direction and provides motivation. An Objective can be thought of like a destination on a map. What is a Key Result? A Key Result is a metric with a starting value and a target value that measures progress towards an Objective. A Key Result is like a signpost with a distance that shows how close you are to your Objective. What is an Initiative? An Initiative is a description of the work you’ll do to in uence a Key Result. If an Objective is your destination and a Key Result shows the distance to go, an Initiative describes what you’ll do to get there, (take a car, row a boat, etc.). Objective “Where do I want to go?” An Objective describes where you want to go and sets a clear direction. Think of it as a point on a map, a destination like New York. Key Result “How do I know if I’m getting there?” A Key Result shows you how you’re progressing towards your Objective. Think of it as a signpost with a distance marker. Initiative “What will I do to get there?” An Initiative describes what you’ll do to in uence your Key Results. Think of it as the description of what you’ll do to get to your destination. OBJECTIVE KEY RESULT INITIATIVES Directional ✓ Aligned ✓ High Impact ✓ ✓ Ambitious ✓ Measurable ✓ ✓ Inspirational ✓ Understandable ✓ Speci c ✓ ✓ Within Control ✓ Within Circle of In uence ✓ ✓ ✓ Time Bound ✓ ✓ ✓ Amount 1-4 1-5 min. 1 Example Objectives Pioneer reusable rockets Become market leader Launch the most popular new iPhone App Generate more revenue than last year Become internationally recognised as an innovator Example Key Results Engine tests have a 99% success rate Achieve a market valuation of $150,000,000 Get featured by Apple on the App Store Close 10 deals over $100,000 each Gain 3 national newspaper mentions in 10 countries Example Initiatives Design and build a new turbopump Run interviews with 5 CMO candidates Hire an app store optimization agency Create new Sales collateral Run 5 PR campaigns HISTORY A Quick History of OKR BENEFITS The Bene ts of OKR Business Impact Current research shows that when comparing groups of employees who used OKR against those that don’t, those that used it proved much more e ective at their jobs, resulting in better performance and increased sales. In fact, the group who didn’t use OKR actively asked to be involved in the process in future cycles. A full rundown of the ROI of Goal Management can be found here. Cultural Bene ts The biggest impact of using OKR in most organizations without goal management already in place, or those who focus purely on metrics and KPIs, is a cultural shift from output to outcomes. OKR creates focus, transparency, and alignment for all the work in an organization. These three factors combine and lead to increased employee engagement. Strategic Alignment OKR helps managers and employees align the work they do, ensuring everyone in the organization is moving in the same direction. Focused Execution OKR helps focus only on what’s most important by prioritizing only the work that has the biggest business impact. Engaged employees People achieve remarkable results when they’re engaged with a purpose. OKR helps communicate and execute strategy in a way everyone understands. Learn OKR from the Experts Get the latest news and insights with OKR Insider, our monthly newsletter. Your email address Subscribe GETTING STARTED Preparing for OKR How to set the right OKR cadence Creating an Ultimate OKR Example of an Ultimate OKR Objective Make humankind interplanetary Key Results Reduce the cost of launching a rocket by 10x Re-use all rockets at least 5x Win $10 billion in commercial launch contracts How to Create Company OKRs Example Company Objectives Build a manned rocket capable of reaching Mars Build the simplest search engine in the world Become the most popular online bookseller Example Company Key Results Achieve 10 successful test launches Reach 1 million searches per day Achieve $100 million in global sales this year Key characteristics of Group Objectives Aligned Group Objectives should always align to the Company Objectives and support your organization’s Ultimate Goal. Group Objectives should always be created once Company OKRs have been agreed upon. High Impact Group Objectives should alway be the things that, if you achieve them, will have a huge positive e ect on your entire organization. Achieving Group Objectives, just like Company Objectives, should be cause for a celebration! Time Bound Keeping Group Objectives within a short and strict time frame, encourages focus and allows you to review them in cycles. This not only helps you quickly identify what’s working and what isn’t, it also allows you to change course in a new cycle if your Group Objectives are not contributing to your Company OKRs. Key characteristics of Group Key Results High Impact Group Key Results should re ect a big change, something that, if you achieve 70% to 80% of your target, the rest of your organization will notice. Make them tough. If they’re easy to achieve they’re not challenging enough. Speci c Group Key Results should be focused and have a clearly de ned scope. While Company Key Results cover broad metrics, Group Key Results should measure more granular progress, like sales of a speci c product. Within In uence Group Key Results should always be things you measure that you don’t do, but you can in uence. Writing 10 blog posts is a bad Key Result, it’s something you do. Achieving 1000 views on a blog post you wrote is a good Key Result, as it’s something you can’t control but you can in uence. INITIATIVES What are Initiatives? Example Group Objectives Develop a lighter engine Make search more responsive Increase sales of non- ction books Example Group Key Results Reduce fuel pump weight by 10% Reduce page load speed to 1 second Sell $1 million worth of educational books Example Initiatives Build fuel pump prototype Run a regular performance report Add 10,000 books to our online store Key characteristics of Initiatives Speci c An Initiative must always be speci c. Its scope must be clearly de ned, and the owner of the Initiative must know what to do. It cannot be vague like an Objective can be. An Initiative must, therefore, contain verbs which are unambiguous, such as establish, write, launch, visit, release, etc. Objectives can contain less speci c verbs, such as improve, increase, and so on. Within control You should have full control over your Initiatives, which means that it will be in your power to complete them. This means there should be no dependencies on something or someone else. It also means that you can be held accountable for not completing your Initiatives; it will be more di cult to hold someone accountable for not achieving his or her OKRs (as they will not have full control over the latter). EXAMPLES OKR Examples SPREADSHEET OKR Spreadsheet Get the spreadsheet VIDEOS OKR Videos What is OKR? Will OKR work for my company? What are Objectives? What are Key Results? How often should I set OKRs? How does mission and vision work with OKR? How does OKR improve employee engagement? How does OKR improve transparency? FAQ OKR FAQ Learn how to write great OKRs! Download a copy of our eBook and get practical tips on creating awesome Objectives and Key Results. Get the eBook The anacronym OKR stands for Objectives and Key Results, a popular goal management framework that helps companies implement strategy. The bene ts of the framework include improved focus, increased transparency, and better alignment. OKR achieves this by organizing employees and the work they do around achieving common objectives. An OKR consists of an Objective, which de nes a goal to be achieved, and up to 5 Key Results, which measure progress towards the Objective. Each OKR can also have Initiatives, which describe the work required to drive progress on the Key Results. The framework includes a number of rules which help employees prioritize, align, focus and measure the outcome of the work they do. OKR helps entire companies communicate company strategy to employees in an actionable, measurable way. It also helps companies to move from an output to an outcome-based approach to work. OKR has a long history that can be traced back to 1954, when Peter Drucker invented MBO or Management by Objectives. In 1968 Andy Grove co-founded Intel and while CEO at Intel he developed MBO into the model of OKR which we use today. In 1974 John Doerr joined Intel and learned OKR during his time there. Doerr went on to join Kleiner Perkins Cau eld & Byers, one of the rst major investors in Google and became an adviser to Google in its very early days. Doer introduced OKR to Google’s founders, Larry Page and Sergey Brin, who implemented OKR at Google, which still uses it today. Before you start using OKR it’s important to have a clear understanding of the challenge you want to solve, or to put it another way, the Business Objective you’re hoping OKR will help you achieve. For most organizations, OKR solves the challenge of executing business strategy in a way that’s clear to all employees, transparent and measurable. For it be successful, the implementation and management of OKR should have an owner within the organization. This person is usually called the “Ambassador” and the role is to ensure that everyone who will be using OKR, is trained, engaged and has ongoing help and guidance. OKR is a framework but it’s also a learning process that often involves a fundamental shift in people think about and measure the work they do, moving away from a focus on output and towards a focus on outcomes. The structure of an OKR program can be broken down into 4 levels; 2 which cover strategy and 2 which cover execution. OKRs are usually created following a cadence of two timeframes, yearly and quarterly. Company Objectives run in yearly cycles which coincide with most companies yearly strategic review cadence. This makes it simple to take organizational strategy and translate it into Company Objectives. Group OKRs owned by teams and departments follow a quarterly cadence. This allows shorter review cycles and makes it easy for organizations to change direction if tactics are not driving progress towards the Company OKRs for the year. More info on how to nd the right OKR cadence can be found in here. If you’re working at a fast moving company with shifting goals, this post explains OKR can keep you on track when your business goals are shifting. Most organizations have a mission and vision but often these are di cult to understand and can be confused with one and other. We recommend turning your mission and vision into an Ultimate Goal or when using Perdoo, an Ultimate OKR. Your Ultimate Goal de nes your organization’s long-term purpose and acts as the north star to which all other OKRs align. An Ultimate Goal should aim for a point at a considerable distance in the future; 10, 15 even 25 years is reasonable. A good example of an Ultimate Goal is when John F Kennedy decided that America should put a man on the moon, and coined the term “Moonshot Goal”. An Ultimate goal helps provide the focus for your entire organization, for example, in 1958 NASA had 8 goals including examples like; “The establishment of long-range studies of the potential bene ts to be gained from, the opportunities for, and the problems involved in the utilization of aeronautical and space activities for peaceful and scienti c purposes.” By 1961, thanks to Kennedy, NASA had one Ultimate goal; “Before the decade is out, land a man on the moon and return him safely to earth”. This video explains how to turn mission and vision into your Ultimate Goal, or Ultimate OKR. Company level OKRs represent your strategy. These are the 3 or 4 things your organization decides it must achieve in the next 12 months. Most organizations review their strategy yearly and this sets the timeframe for Company OKRs. It’s important when you decide what you want to achieve in the next 12 months that everyone in your organization has the chance to give their input. We recommend starting with an OKR workshop where all key stakeholders responsible for company strategy rst ask for and then gather, input from employees on what they think top priorities should be. This input can then be then discussed in relation to existing company strategy and broken down into 3 to 5 OKRs. This can be done using post it notes, collaborative documents or even a whiteboard. The objective of the exercise is to come to an agreement on what the organization should have achieved by the beginning of the following year. Initiatives describe the work required to in uence Key Results. In contrast to Key Results, which clearly measure progress toward an Objective, Initiatives are just hypothesis for what work might deliver the biggest impact. Initiatives are tasks, projects, or similar activities related to an OKR without having a direct connection to the Objective’s progress. Regularly checking in with your Key Results will help you decide whether your Initiatives delivered the desired results or not. If they don’t, you should think about changing your Initiatives. The bene t of setting OKRs AND Initiatives is that there is a clear separation between outcomes (Key Results: what did we achieve?) and outputs (Initiatives: what did we do?). You can commit to the same OKR while staying agile on an operational level by using Initiatives. We’ve spent time gathering together some common examples of how OKR can be used for di erent departments within an organization. These examples represent our experience internally as well as the experience of our customers. These guides can be used by anyone looking to introduce OKR to their teams or even their entire organization. These guides can be found in our resources section. There are several ways to manage OKRs: you can use a spreadsheet, a dedicated software tool like Perdoo, or even pen and paper. We’ve built a basic template that allows you to create your rst OKRs. It’s free, simple to use, and great for small teams with less than 25 employees. What is an OKR? A Quick History of OKR Bene ts of OKR Getting started What are Initiatives? OKR Examples OKR Spreadsheet OKR Videos OKR FAQ OKR Ebook What’s the di erence between OKRs and KPI’s? Why don’t you recommend setting individual OKR’s? How do I tell what’s a Strategic OKR and what is a Tactical Objective? What do I do if my strategy changes during my OKR cycle? How do I create OKRs for something that’s not measurable? What’s the di erence between an Objective and a Goal? What’s the di erence between OKR and MBO? What’s the di erence between OKR and SMART goals? What’s the di erence between OKR and Balanced Scorecards? How long does it take to implement OKRs? How many people need to use OKR to see the bene ts? Who should be in charge of my OKR program? What percentage of completion makes an OKR a success? How do I tie bonuses to OKRs? How many Objectives should my company have? How many Key Results should my company have? Ready to get started? Get a guided demo with an OKR expert. Request a Demo Helping companies and teams realize their ambitions EU: +49 30 9700 5110 US: +1-415-800-4497 hello@perdoo.com © 2018 Perdoo GmbH. All rights reserved PRODUCT Features Pricing SUPPORT Knowledge Base Videos Blog COMPANY About Careers Media Center Contact LEGAL Terms of Service Security Policy Privacy Policy Imprint OKR Features Pricing Blog Resources Company Get a Demo