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OKRs: The Goal Setting System You Need To Be Using

The thing that I saw at Google that I definitely have applied at Twitter are OKRs – Objectives and Key Results. Those are a great way to help everyone in the company understand what’s important and how you’re going to measure what’s important. It’s essentially a great way to communicate strategy and how you’re going to measure strategy. And that’s how we try to use them. As you grow a company, the single hardest thing to scale is communication. It’s remarkably difficult. OKRs are a great way to make sure everyone understands how you’re going to measure success and strategy.Dick Costolo

OKRs are the best thing that you have to hold your team accountable, align everyone around a shared vision, and get your team working towards something amazing (and not just do busy work).

OKRs have become popular in the last few years because it’s how most big companies set goals and align their teams.

Companies like Google, Facebook, Linkedin, Zynga, Intel, and tons of other big names use OKRs to set their goals.

But the OKR system existed long before companies like Google made them famous. John Doerr, a partner at investment firm KPCB, first learned about the OKR system in the 1970s while he was at Intel, with Andy Grove as the CEO.

Andy Grove’s book High Output Management is one of the most important books that every leader should read.

At the time, Intel was going through an organizational change and moving from a memory company to microprocessor company. For a change as big as this in a company as big as this, you need a way to get everyone to focus on the same things.

In High Output Management, Grove explains how if you want to set up a system of shared objectives, there are two questions you need to answer:

  1. Where do I want to go? (This is your objective)
  2. How will I measure to see if I am getting there? (These are your key results)

In early 2000, John Doerr (also an early Google investor) introduced the idea of OKRs to Google’s leaders.

Free Bonus: Download this helpful guide to set meaningful goals for your team.

What Exactly Is An OKR

OKR stands for Objectives and Key Results.

Your objective is a qualitative, time-bound goal that you want to hit. Your key results are the measurable, specific things that will get you to hit that goal.

Objective

An objective is a single sentence that gets you excited about what you’re working on.

It’s supposed to be relatively vague, but doable within a time frame (usually a quarter). If your objective is going to take you five years to complete, you’re doing something wrong.

A few examples of Objectives:

  • Become a thought leader in the HR industry
  • Launch our MVP
  • Get cashflow positive
  • Get in the press

Key Results

Key results take all of that vagueness out and lets you quantify your objective.

It’s the way to know if you’re actually hitting your goal or not.

If you’re objective is something like “have the best blog in the industry”, then how do you know if you have the best blog? Your definition of “best” might be different from my definition.

Key results make sure everyone has the same definition.

A few examples of Key Results:

  • 20% more email subscribers from the blog
  • NPS score of at least 7
  • 15% signup from the website
  • 30,000 visits to the homepage

Notice with all of these numbers, it’s very easy to see at the end if we hit our goals or not.

Important Tips For OKRs

  • Pick 1-2 objectives, and 2-3 key results max. Too much will just confuse you.
  • Set ambitious goals. You’re only supposed to hit 70% of your goals, you want to shoot for the moon.
  • Set goals every quarter, that’s a good cadence to have.
  • Monitor the progress and update the progress for others to see each week.

This video, by Rick Clau, partner at Google Ventures describes what OKRs are, how they can help companies stay focused, and things to look out for when using OKRs.

Benefits Of OKRs

The biggest benefit by far is that the OKR system is what’s called a cascading goal-system. The goals cascade down through the entire organization.

The organization sets their OKRs, then each department and team sets their OKRs that are aligned with the OKRs of the organization.

As a system, it gets everyone in the company moving towards the same goals, and helps everyone on every team understand what kind of a role they play in achieving the goals.

This is one of the hardest things to do as a company grows. It’s common for departments to become siloed and for groups to move in different directions.

This problem is avoided under the OKR system.

Here are a few other key benefits of the OKR system:

  1. Increased Transparency

    One of the key parts of the OKR system is making everyone’s (including yours) OKRs public and accessible by anyone.

    This organizational-wide transparency is amazing for new employees who want to understand what everyone does in the company.

    It’s also nice to be able to see what the VP or CEO is currently focused on and working on in the current quarter.

  2. Accountability

    One of the beauties of the Key Results is how specific they are.

    When each person knows exactly what’s expected of them and exactly what numbers they have to hit, it helps them focus on their work.

    Employees know what others on their team are expecting of them, which is important for their engagement levels and staying accountable.

  3. Empowerment

    Employees are often empowered to develop their own OKRs, which gives them a sense of responsibility that helps with engagement.

    Having employees create goals themselves that they know are aligned with the mission of the company help them align themselves with the company.

  4. Simple To Set Up

    One thing that so many people like about OKRs is that they’re incredibly easy to set up. Once you pick your objective, you pick a few key results to help you measure your success, and then you go.

    It might take two or three quarters to get the real hang of it, but it’s very easy to get started.

  5. Focuses The Team

    Without any goals, employees might find themselves working on things that you find unimportant.

    OKRs get everyone on the team working on the right things, and focuses the entire team on the same mission.

Mistakes To Watch Out For

In an interview with John Doerr, he talks about some of the most common mistakes that companies make when it comes to OKRs.

  • Goals must be supported by the entire organization. Every team and working group should agree on their goals and priorities.
  • Goals must be measurable or have quantifiable targets. Maybe it’s shipping a certain number of products or hitting a release schedule, but in any case, we have to be able to track and measure the goals.
  • Goals should be aggressive yet realistic. We want to stretch ourselves and stretch our teams, but not to the point of breaking.
  • Don’t tie the OKR goals to bonus payments, except for sales quotas. We want to build a bold, risk-taking culture.

Two of the biggest key learnings we had at Officevibe about the OKR system were:

  1. Keep it simple
  2. Do it at the team level

One mistake that I personally made was that I was too ambitious. I had set 3 objectives with 4 key results in each of them. It became way too hard for me to manage.

The next quarter, I had 2 objectives with 2 key results per objective. It was much easier for me to focus on what mattered.

Originally, when we started doing OKRs we did them at the individual level, but we found that for a few different reasons, it worked better on a team level.

Doing OKRs in a small team of 4-5 people makes us all share the goal and responsibility of our OKR.

I’m not saying that it won’t work at the individual level at your company, but we found that it worked better for us at the team level.

Free Bonus: Download this helpful guide to set meaningful goals for your team.

Do You Use OKRs?

Share your thoughts with us in the comments!

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