Getting started with OKRs – for small businesses
The OKR (Objectives and Key Results) framework is famously used by dozens of Silicon Valley giants and household names. In this context, it’s easy to associate OKRs with large companies rather than startups and small businesses. But, as industry guru John Doerr says in Measure What Matters: “At smaller start-ups, where people absolutely need to be pulling in the same direction, OKRs are a survival tool.” And of course, Google itself started with OKRs when still a growing small company, not the behemoth it is today.
Can OKRs be useful for my small business?
The short answer is yes—implementing OKRs can lead to increased results at your startup or small business. Here are several reasons why:
OKRs promote aspiration and unite team members towards a common goal, because the “Objective” element (of each OKR) presents a high-level and exciting vision of where a team is headed. Ideally, top-level OKRs should align with your company’s mission and reinforce core values.
They establish strong communication & clarity
An important factor in any successful OKR strategy is aligning Objectives throughout your organization. A well-defined strategy keeps different teams on the same page, and opens up channels for both bottom-up and top-down communication. While this may seem simple in an environment where you have just ten, twenty, or fifty team members, maintaining open and rapid communication is often one of the major challenges small businesses face as they grow.
They accelerate growth
Well thought-out OKRs can inspire a team to achieve more than they previously thought possible. From streamlining your existing processes to taking your growth to the next level, OKRs are a powerful catalyst for results.
Google has popularized the idea of setting “moonshot” or “stretch” goals to accelerate growth. The idea of setting difficult goals isn’t simply to push your team members beyond their limits—in fact, it’s generally agreed that 70% is an ideal level of attainment for a moonshot OKR. Setting stretch goals can make sense, especially in smaller organizations, because goals are meant to be inspirational and aspirational.
It can be more powerful to consistently set ambitious OKRs and achieve a 70% success rate than to set mediocre OKRs and attain perfection all the time (although less ambitious “roofshot” goals also have their place in an OKR strategy geared towards growth).
They can head off future problems
As companies expand and hire more team members, decision-making and chains of command quickly become more complex. A great way to avoid the “growing pains” experienced by so many startups is to put systems in place as early as possible, so that you don’t find yourself cobbling together solutions on the fly in the middle of a rapid-growth phase.
Making OKRs a success
It’s important to note that OKRs aren’t a magic bullet for any organization, regardless of size. For OKRs to really make a difference in your company, you’ll have to take an organized approach—this includes making a plan, following it through, and ensuring that everyone is onboard.
Make a plan and communicate it
If you’re thinking of using OKRs, the first thing to do is to make sure all your team members know what OKRs are, why they are important, and what will be expected of them. Emphasize the ways that OKRs will benefit the organization and each individual.
Ideally, you’ll want to create a written game plan to share with your staff. It should cover the following points:
- A timeline for creating OKRs
- Many organizations choose to set OKRs at the beginning of the financial quarter, though some work on half-yearly cadences
- Your organization’s “OKR flow-chart”
- This involves aligning OKRs both vertically and horizontally
- A guide to writing OKRs effectively
- For best results: Objectives should be ambitious and qualitative, while Key Results must be measurable
Take OKRs seriously
After launching your OKR strategy, you’ll need to continue to invest time and devote attention to the process.
This is easier said than done. Here are some tips to help you stay on track:
1) Have a specific person take ownership of the OKRs program. This OKR Champion can be the founder or a designated team member. If you choose to assign the OKR Champion duties to a team member, it’s important that the organization recognizes their authority in regards to the program.
2) Track the progress of your OKRs regularly. A common way of doing this is using the confidence rating system, which is flexible and great for small teams.
Don’t tie OKRs to performance reviews
A final tip for making a success of OKRs at your startup or small business is not to use them as performance reviews, or as part of the review process. Since you may not have a formal review process yet, it can be tempting to link achievement of an OKR directly with performance and compensation decisions. However, there are some good reasons not to do so.
As previously described, “moonshot” goals can be extremely effective as OKRs, because they motivate your team to think outside the box. Remember that full completion of a moonshot goal can be as low as 60%-70%. By rewarding 100% completion of all OKRs or punishing non-completion, you may inadvertently be causing your team to avoid true moonshot goals. Instead, they’re likely to set less ambitious goals in an attempt to gain reward or avoid failure. This is called “sandbagging”, and it defeats the point of using OKRs.
OKR examples for startups and small businesses
Now that we’ve shown why OKRs are useful and described how to implement them, here are a few OKR examples for small and medium sized businesses.
Keep in mind the following points:
- Don’t try to include too much information in one OKR. Keep it simple.
- No more than 3-5 Key Results for each Objective
- In most cases (but not all) KRs should not descend to the task level
- Key Results must be measurable, and should be achieved within the time frame of the OKRs session
Now, on to the examples!
Objective: Crush the capital raise
- Contact 75 potential investors
- Pitch at least 20 investors
- Secure 2 termsheets for $250,000+
Objective: Build the blog
- Lower bounce rate of blog visitors to 30%
- Increase average time on site to 3 minutes from blog visitors
- Generate 25% more leads from blog visitors
Objective: Serve the customer
- Decrease customer complaints by 20%
- Reduce average customer wait time to 15 minutes
- Resolve customer problems in less than 10 chat messages
Hopefully, this has given you some food for thought when it comes to implementing OKRs in your small business.