What is an OKR? Definition and Examples - What Matters

OKRs stand for “Objectives and Key Results.” It is a collaborative goal-setting methodology used by teams and individuals to set challenging, ambitious goals ... WhatMatters OKRs101 Stories Examples Feedback About EditorialTeam TheBook Contact Author: RyanPanchadsaram Share: WhatisanOKR?DefinitionandExamplesWhatarethecomponentsofanOKR?ObjectivesandKeyResultsWhocreatedtheOKRmethodology?OKRExamplesWhatarethetypesofOKRs?TheBenefitsofOKRsCommonOKRMistakesWhatOKRtoolsareavailable?HowdoyougradeOKRs?WherecanIgetmoreinformation? Summary “OKR”standsfor“ObjectivesandKeyResults.”OKRsareaneffectivegoal-settingandleadershiptoolforcommunicatingwhatyouwanttoaccomplishandwhatmilestonesyou’llneedtomeetinordertoaccomplishit.OKRsareusedbysomeoftheworld’sleadingorganizationstosetandenacttheirstrategies.Inthisarticlewe’lldefineanOKR,lookathowthey’reusedandprovidesomeexamplesofOKRs. WhatisanOKR?DefinitionandExamples OKRsstandfor“ObjectivesandKeyResults.”Itisacollaborativegoal-settingmethodologyusedbyteamsandindividualstosetchallenging,ambitiousgoalswithmeasurableresults.OKRsarehowyoutrackprogress,createalignment,andencourageengagementaroundmeasurablegoals. Whethertalkingaboutofficeoperations,softwareengineering,nonprofitsormore,OKRsworkthesameforsettinggoalsthroughoutmanycompanylevels.Theycanalsoworkforpersonalgoalsandcanevenbeusedbyindividualstogetthingsdoneatplaceswhereseniorleadershipdoesn’tusethem. WanttogetstartedoncreatingOKRsforyourselforyourorganization?TakeourOKRs101course! WhatarethecomponentsofanOKR?ObjectivesandKeyResults TheOKRFormula OKRsaretypicallywrittenwithanObjectiveatthetopand3to5supportingKeyResultsbelowit.Theycanalsobewrittenasastatement: Iwill(Objective)asmeasuredby(KeyResults). Forexample,“Iwillfixthewebsiteforthevastmajorityofpeopleasmeasuredby7outof10peoplebeingabletogetthrough,a1secondresponsetime,anda1%errorrate.” Objectives AnObjectiveissimplywhatistobeachieved,nomoreandnoless.Bydefinition,Objectivesaresignificant,concrete,action-oriented,and(ideally)inspirational.Whenproperlydesignedanddeployed,they’reavaccineagainstfuzzythinkingandineffectiveexecution. KeyResults KeyResultsbenchmarkandmonitorhowwegettotheObjective.EffectiveKRsarespecificandtime-boundandaggressiveyetrealistic.Mostofall,theyaremeasurableandverifiable.Youeithermeetakeyresult’srequirementsoryoudon’t;thereisnograyarea,noroomfordoubt.Attheendofthedesignatedperiod,typicallyaquarter,wedoaregularcheckandgradethekeyresultsasfulfilledornot. WhereanObjectivecanbelong-lived,rolledoverforayearorlonger,KeyResultsevolveastheworkprogresses.Oncetheyareallcompleted,theObjectiveisachieved. WhocreatedtheOKRmethodology? TheOKRmethodologywascreatedbyAndyGroveatIntelandtaughttoJohnDoerrbyhim.Sincethen,manycompanieshaveadoptedthem,includingGoogle,Allbirds,ApartmentTherapy,Netflix,andinspiringnonprofitslikeCodeforAmerica. Inthebook“MeasureWhatMatters”,JohnDoerrwritesabout“MBOs,”or“ManagementbyObjectives.”MBOswerethebrainchildofPeterDruckerandprovidedAndyGroveabasisforhiseventualtheoryofOKRs.Infact,Grove’snameforthemoriginallywas“iMBOs,”forIntelManagementbyObjectives.Despitetheoriginalname,GrovecreatedsomekeydifferencesbetweenthetwowhichhepassedalongtoDoerr. GroverarelymentionedObjectiveswithouttyingthemto“KeyResults,”atermheseemstohavecoinedhimself.OtherkeydifferencesbetweenMBOsandOKRsarethatthelatterarequarterly,notannual,andtheyaredivorcedfromcompensation. Doerrwastheonewhocraftedthename“OKRs.”HeintroducedthephilosophytoGoogle’sfoundersin1999.Gatheredaroundaping-pongtablewhichdoubledasaboardroomtable,DoerrpresentedaPowerPointtotheyoungfoundingteam,whichincludedLarryPage,SergeyBrin,MarissaMayer,SusanWojcicki,andSalarKamangar. Doerr’sObjectiveandKeyResultsforthePowerPointpresentationwerethis: o Buildaplanningmodelfortheircompany,asmeasuredbythreekeyresults: kr1 Iwouldfinishmypresentationontime. kr2 We’dcreateasamplesetofquarterlyGoogleOKRs. kr3 I’dgainmanagementagreementforathree-monthOKRtrial. Source:“MeasureWhatMatters” Googlethensetitscompanystrategywiththismanagementframeworkandtherestishistory. OKRExamples Whataresomeotherhigh-levelOKRexamples? ThecityofSyracuse,NewYorkrecentlysetthisobjective:to“achievefiscalsustainability.”Fiscalsustainabilityisagreatgoal,butithastobemeasurable.That’swhySyracuseisusesObjectivesandKeyResults. Whenwrittenout,Syracuse’sOKRlookslikethis: o Achievefiscalsustainability. kr1 Reducethegeneralfundbudgetvariancefrom11%to5%. kr2 Spend95%ofauthorizedcapitalprojectdollarsbytheendofthefiscalyear. kr3 Spend95%ofgrantdollarsforgrantsfrompriorfiscalyears. Let’slookatanotherexampleofOKRs. Allbirdsisapopularclothingcompanyknownfortheirsustainablefootwear.Theyhaveamissionto“makebetterthingsinabetterway.”Asapartoftheircommitmenttosustainabilitytheydecidedtheywantedtheirshoestobecarbonneutral.SotheywrotethisOKR: o Createthelowestcarbonfootprintinourindustry. kr1 Supplychainandshippinginfrastructure100%zerowaste. kr2 Pay100%carbonoffsetforcalculatedcarbondioxideemissions. kr3 25%ofmaterialiscompostable. kr4 75%ofmaterialisbiodegradable. OKRscanworkthroughoutanentireorganizationanddon’tneedtobetop-level.Let’slookatanexampleofateam-specific,departmentalOKR. Saythatthedevelopmentteamatamuseumislookingtogrowitsmembershipbase.They’verealizedthatthewaystheyhavebeenapproachingmembershipareoutdatedanddon’tappealtoanewgenerationofmuseum-goers.TheycouldusethisOKR: o Attractyounger,morediverseseasonticketholders. kr1 Increaseour“$30-under-30”membershipenrollmentby100% kr2 Landmentionsontheaccountsof5localInstagraminfluencers kr3 Get25%responseratefromadirectmailcampaigntodiverseZIPcodes kr4 Attract75non-memberspermonthtoliveartisttalks SomepeoplehaveevenfoundsuccesssettingpersonalOKRs.Here’sanexamplewrittenbysomeonewhowantstoruna10K: o Runa10Kinunder50minutesbyJune. kr1 Goforarun3x/weekforatleast30minutes. kr2 Increasedistanceofrunby1mileeveryweek. kr3 Increasemilespeedby5secondseveryweek. LearnmoreaboutsettingpersonalOKRs. WhatarethetypesofOKRs? OKRscanbethreethings:Committed,Aspirational,orLearningOKRs. CommittedOKRsareliketheirnamesuggests—commitments.Whengradedattheendofacycle,aCommittedOKRisexpectedtohaveapassinggrade. AspirationalOKRsaresometimescalledstretchgoalsor“moonshots.”ThepathwaytoanAspirationalOKRisexpectedtobeforgedsincenooneelsehasgottentherebefore.Theyalsomaybelong-termandlivebeyondanOKRcycleorevenbetransferredbetweenteammemberstostretchemployeeengagement. LearningOKRsareforwhenlearningsomethingnewisthemostvaluableoutcomeforthecycle.Ifateamisn’tsurehowtoproceed,theycouldsetaLearningOKRthatanswers,“Whatisthemostimportantthingwe’retryingtolearninthenext90days?”TheresultscantheninformarelatedCommittedorAspirationalOKRinthenextcycle. LearnmoreaboutCommittedandAspirationalOKRs. TheBenefitsofOKRs OKRsprovidemanybenefits,includingclarity,enhancedcommunicationandacoherent,transparentorganization-widestrategy.JohnDoerralwaystalksabouttheF.A.C.T.S.whendescribingthebenefitsofOKRs.F.A.C.T.S.standsfor: Focus:OKRsallowateamtorallybehindasmallsetofcarefullychosenpriorities. Alignment:OKRsprovideamethodforanentireorganizationtoalignitsgoalsateverylayerwithitstop-levelprioritiesandwithitsultimatepurpose. Commitment:OKRsdemandalevelofcollectivecommitmentfromthepartiesinvolvedtochooseandsticktoagreed-uponpriorities. Tracking:OKRsallowateamororganizationtotracktheirprogresstowardagoalandknowearlierwhentochangetactics. Stretching:OKRsempowerteamstosetgoalsthatstretchbeyondBAU-or“businessasusual”-andmakesignificant,meaningfulchange. LearnmoreaboutthebenefitsofOKRsandeachoneoftheF.A.C.T.S. CommonOKRMistakes WritingOKRsisaskillthattakespracticeandtimetodevelop.EverysetofOKRsshouldincorporatefeedbackfromwithintheorganizationandundergomultiplechecksanddrafts. ThereareafewcommonmistakestoavoidwhenwritingOKRs: AvoidBusinessasUsual:OKRsshouldaimforchangeabovemaintainingthestatusquo. OKRvs.KPI:OKRsaremorethanjustKPIs(KeyPerformanceIndicators).They’remeasuresforchange,whereasKPIsaremeasuresofhealth. Sandbagging:OKRsaremeanttostretchateamandtheirsuccessshouldn’tbeagiven. LearnmoreaboutthemostcommonOKRmistakes. WhatOKRtoolsareavailable? SomeofthebestOKRtoolsarefree,suchasGoogleDocsandGoogleSheets,orevengood,old-fashionedpenandpaper.Ifyou’relookingforsomeOKRtoolstohelpyousetambitiousgoals,lookattheseOKR-trackingtoolsforpersonalgoalsandsmallerteamsandthesetoolsforlargerenterprises. HowdoyougradeOKRs? OKRsaremeanttobetrackedregularlyandgradedattheendofacycle.Therearemultiplemethodsforgrading(or“scoring”)OKRs. TheAndyGrovemethodofgradingOKRsisasimple“yes”or“no”approach.Didyoumeetit?Ordidyounot?Mostorganizationspreferabitmoredetailintheirgrading,sothey’llusea“Red,Yellow,Green”systemwhereredmeans“wefailed,”yellowmeans“wemadeprogress,”andgreenmeans“wemetourgoal.” Google’sgradingmethodprovidesthemostdetail,usingapercentagescale(0.0-1.0)togiveeachKeyResultanumberscoreattheendofthecycle.TheyaveragethescoresoftheKeyResultstodeterminethatObjective’soverallscore. LearnmoreabouthowtogradeOKRs. WherecanIgetmoreinformation? Thissystemisdeceptivelysimple,butwhenusedproperly,goodOKRswillequipyourorganizationwithsuperpowerstocreatehighoutputmanagementinallyourbusinessgoals.LearnmorebyreadingMeasureWhatMattersorexploringmoreFAQs,Resources,andStoriesrighthereonWhatMatters.com. ReadytogetstartedwithOKRs?LearnthebasicsofOKRsinourfreeOKRcourseforbeginners. AlreadyusingOKRs?TensofthousandsofpeoplehavefoundourOKRemailnewsletterusefulandinspiring.We’llsendregularrealworldstoriesaboutOKRsandleadership,aswellasOKRcyclereminders! RyanPanchadsaram(@rypan)istheco-founderofWhatMatters.comandisthetechnicaladvisortoJohnDoerratKleinerPerkins. RelatedQuestionsSeeall Committedvs.AspirationalOKRs:What’sthedifference? WhatarethebenefitsofOKRs? close GetexclusiveguidancefromJohn,Ryan,andtheWhatMattersteambysigningupforourweeklynewsletter,Audacious. Submit