Article

The OKR Cycle: A Step-by-Step Guide

13 min read

Time plays an important role in goal setting and achievement. Goals, unlike dreams, have deadlines. This means deciding on realistic, yet ambitious timelines are part of successful goal setting.  

Time also matters when it comes to how we execute toward a goal. It’s no good simply deciding on a date for goal achievement. You need to think about the different phases of achieving that goal, in addition to considering intervals where you monitor and optimize performance.  

What is an OKR cycle?

In the context of objectives and key results (OKRs), the concept of time is represented through the OKR cycle — the period in which OKRs are set, communicated, executed, monitored, and optimized. The OKR cycle may also be referred to as the OKR timeline or OKR cadence, and the terms are often used interchangeably. We will dive into an example OKR cycle in more depth later, but at a high level it looks like this: 

  • Pre-quarter: Preparing the OKR rollout  
  • Start of the quarter: Developing OKRs, communicating them, and cultivating alignment  
  • During the quarter: Reviews, monitoring, confidence assessments, adjustments, optimization 
  • End of the quarter: Reviewing OKRs, learnings and crafting next quarter OKRs 

The above example refers to an OKR cycle which runs on a quarterly basis, but there are also annual and alternative OKR cycles too. For instance, some companies may opt for six weeks or something more tailored to their workflows.  

The OKR cycle is a core component of the OKR method. Without it, you lose the benefits of proper planning, ongoing optimization, and the performance-enhancing pressure that deadlines create.  

How to choose an OKR cycle?

The best practice that most companies adopt is a dual cadence strategy. This means they use a combination of quarterly and annual OKR cycles, which allows them to unlock the benefits of both. 

As you might imagine, quarterly OKR cycles are created in-line with each business quarter. This OKR cycle can be used in conjunction with an annual OKR cycle to break down a bigger goal into more measurable milestones. In addition, quarterly OKR cycles can also be used for more ad-hoc goals such as fundraising or a hiring push.  

The benefits of quarterly OKRs include: 

  • Increased agility through a less committed timeframe 
  • More efficiency and creativity due to time constraints  
  • Quicker feedback loops to create faster learning 
  • Reduced opportunities for “set it and forget syndrome”  

Unlike quarterly OKRs, annual OKR cycles function on a yearly basis. This type of OKR cycle is better for bigger goals and goals that could be seen as a core, consistent part of the business. For instance, it’s a common practice to build annual OKR cycles around growth objectives.  

 

The benefits of annual OKRs include: 

  • Ability to set more ambitious OKRs 
  • More flexibility to optimize toward the goal 
  • Less pressure due to more time  
  • Less overhead in terms of managing the OKR process 

In addition to quarterly and annual OKRS, you also have the option to set an alternative OKR cycle. This could run on a monthly or six-week basis for instance. Alternative OKR cycles offer benefits such as being more customizable to specific departments, industry and ways of working – sprint or project-based workflows for instance.  

As part of the OKR planning process, you will need to determine which goals fit into which cycles. In some cases, certain goals that are recurring will have both annual and quarterly cycles (e.g., revenue targets). 

When deciding on your OKR cycles, the first thing you need to do is fully flesh out your goals. Here are a few things to think about: 

  • What are your goals and how many do you have? 
  • Why did you choose these goals? 
  • Do you have the capabilities to reach your goals? 
  • How long will it take to reach them? 
  • What factors could inhibit reaching them? 
  • What factors could accelerate the process?  
  • What data and evidence do you have that you can achieve your goals in this cycle? 
  • Are the goals you are setting ambitious yet achievable? 

Having a rigorous understanding of your goals will give you the first indicator of what type of OKR timeline you should adopt. You will likely find some goals will lead themselves into a shorter timeframe, whereas others will be longer. There isn’t a strict need to choose one cycle completely over another as a mixed or dual cadence strategy can be useful in some instances. 

Once you understand your goals, you should consider other factors such as: 

Industry and departments: Industries will vary in terms of operations and sales cycles. This means that setting goals and OKRs around certain business functions will consequently involve varied timelines.

 

  • Company size and nature: Startups, scale-ups, and enterprise companies operate in different ways and have different needs. Due to the uncertainty in a startup for instance, cycles would be much shorter. An enterprise company on the other hand may lean towards longer cycles as goals are much bigger and the ship steers slower. 
  • Macro influences: Although macro factors such as the economy and geopolitics can’t be easily predicted, it’s worth assessing potential changes in the broader business environment that could affect your timelines. If for instance we are just coming out of a recession, you could set more aggressive growth goals. 
  • Micro influences: At the local business level, other factors can affect your timeline like competitive disruption, supply chain risks (e.g., shipping delays), and unaddressed internal issues that could affect execution (for instance, a flailing company culture or a lack of processes to bridge the strategy execution gap). 

OKR cycle example

To better understand how an OKR cycle works, it’s useful to walk through an example. As quarterly OKR cycles are the most common, we will use it in this case.

Before you get started

To set your company up for success, the first thing you need to do is learn the OKR method and organize your capabilities regarding OKR execution. This involves a few things: 

  • Have key stakeholders (executives, managers, etc.) undergo OKR training. Learn the best practices, key terminology, common mistakes, and look through OKR examples to get a good sense of how they work in action. 
  • If it’s your first rollout or a previous rollout didn’t go smoothly, consider using an OKR consultant or coach.  
  • If your organization is complex (size, priorities, interdependencies) or you want to power the OKR process with data, investigate OKR software solutions .  

Then, you will need to determine your OKR framework:  

   

 

When deciding on your OKR framework, you will need to consider factors such as: 

  • Which goals would you like to prioritize? 
  • What are your organization's capabilities? If you have greater bandwidth and past evidence of performance, you can set more numerous and difficult OKRs.  
  • What challenges will you encounter regarding each variable? For instance, if you decide on aspirational OKRs, would the potential of failure demoralize or energize your team?

4-6 weeks before the quarter

To make the most out of a quarterly OKR cycle, you need to do some preparation before the beginning of the quarter. There are many nuances to the OKR method that need to be thought through carefully to minimize mistakes and gain the most value 

Once you have an OKR framework, you will need to plan how you will implement OKRs across the organization.  

As per best practice, you will want to start as high up as you can. This involves getting the senior leadership team together to build those top level OKRs. These OKRs will then be used to set the overall direction of the organization, in addition to being used by lower levels of the organization to align their own OKRs.  

It’s also recommended that you identify possible OKR champions in your organization. These are the people who have fully bought into the OKR method and have more knowledge about it than others. These OKR champions can be useful to make the case to more sceptical team members, in addition to ensuring consistency and optimization of the rollout process.

 

Common mistakes before the quarter: 

Underestimating OKRs: There are nuances to the OKR method and implementation. You need to set the right goals, generate alignment, and optimize the process using data. 

Overcomplicating OKRs: Some organizations may delay OKR roll out and bloat the process with extra check-ins and bureaucracy. Know that the process will be messy initially, but the goal is to improve it as you move forward. 

Not making the case for OKRs: All levels of the organization need to buy into the OKR method for there to be real alignment.  

2 weeks before the quarter

Just before the quarter begins, you will need to share your top level OKRs with your company. There are two important reasons for this: 

The OKR method works best when there is transparency. All members of the organization should be able to view each other's OKRs. This is important because teams and individuals need to align their OKRs across all directions of the organization. 

You need to solicit feedback from the operational level of your organization. Specifically, the individual contributors who will be responsible for the day-to-day execution toward your goals. Their feedback will help ensure the top level OKRs you set are realistic.  

Based on the timeline of the OKR roll out, the next phase will be departments, teams, and individuals creating their own OKRs. This is where you need your entire organization to start thinking about alignment. Things that should be top of mind during this process include: 

  • What interdependencies exist? For instance, if the sales team has an OKR for pipeline generated, how much of that is dependent on the marketing team? The two departments would need to collaborate to find out what’s realistic. This is commonly known as horizontal alignment. 
  • How do OKRs set by teams and individuals align with strategic OKRs? This is referred to as vertical alignment. Although this is best practice, there may be cases where not all OKRs need to align perfectly from the bottom up. For instance, intrapreneurs, spin off companies, and corporate accelerators may have their own OKRs.

Once your entire organization has set OKRs and there is alignment, you’re ready to move into the execution phase of the quarter.  

 

Common mistakes just before the start of the quarter: 

  • Setting tasks as key results: Your key results should be an outcome that is measured quantitatively, for instance, onboard 50 new enterprise accounts. Tasks are the actions you take to achieve key results such as creating sales collateral. In some cases, like with larger projects, using tasks as key results may make sense if the completion of the task is significant and will lead to results later (e.g., the publishing of a book as part of a thought leadership objective). 
  • Not knowing baseline metrics for KRs: It’s necessary to have a realistic idea of what numbers you can achieve for each key result, and this should ideally be based on historic data.  
  • Lack of transparency on “Why OKRs”: The benefits of the OKR method need to be communicated to increase engagement and alignment. 

During the quarter

Once OKRs have been set, there is an ongoing OKR management process that you and your team need to engage in. Unlike more traditional goal-setting methods, the OKR method has mechanisms that overcome the common “set and forget” syndrome or creating goals and completely forgetting about them.  

Throughout the quarter, your team members should be measuring their progress. In addition, they will be checking in with managers and other team members to boost accountability and solve problems. Some OKR practices that occur throughout the quarter include:  

  • Weekly check-ins: Each week, teams will come together to discuss progress towards key results. This should foster a culture of feedback and learning. These meetings also serve to amplify small wins to keep positive momentum toward the objective. 
  • Confidence assessments: OKR owners will provide a score in relation to how likely they think they are on track to meeting key results. 
  • Recalibration: Depending on confidence levels and group analysis, teams and OKR owners may adjust their strategy and execution to increase likelihood of meeting key results. 

 

Common mistakes during the quarter: 

  • Changing OKRs: Generally, OKRs should remain the same throughout the quarter, but there are a few exceptions like sudden changes to the market or strategy or a loss of key personnel where it might make sense to change OKRs.  
  • Shifting focus: Roadblocks and challenges can be used as excuses to not “do OKRs”, when OKRs are in actuality the solution to better execution.  
  • Not leveraging data: The OKR process needs to be data-driven in order to track progress and make more informed decisions about adjustments.  

1-3 weeks before the end of the quarter

As you approach the end of the quarter, you will have three things to complete: 

  • Analyze OKR achievement for the current quarter  
  • Reflect on the key learnings from the cycle  
  • Set the next quarter OKRs  

To do this, you will need to conduct what is known as the OKR retrospective.  

 

The OKR retrospective 

At the end of each quarter, you will need to assemble your entire team and conduct a review regarding what was accomplished, what was learned, and where you go from here. This is known as the OKR retrospective and occurs at the individual, team, and company level. 

The purpose of this is to zoom out and look at the bigger picture of the OKR process. You want to see if what you’re doing is working or if there are things that need to be changed. These retrospectives are part of the continuous OKR planning process and serve as valuable tools to collaboratively problem solve and solicit feedback from the organization. 

Through this, you can improve your OKR implementation in addition to setting more effective goals for the next quarter. Retrospectives also help to maintain alignment across the organization and maintain focus on the crucial priorities.  

During the retrospective meeting, your team should be considering questions such as: 

  • What were the overall scores for each OKR? 
  • What were the causes of underperformance? 
  • What problems did we focus on? 
  • What did we learn?  
  • What went well? 
  • Does it make sense to carry on the same OKRs to next quarter? 
  • Are there any ways to improve the OKR process? 

Fundamentally, the end of the quarter period should be used to synthesize your learnings and adjust for the next quarter. This will include what you need to do to better achieve your OKRs next quarter, in addition to improvements to the OKR process.  

Once you have completed this analysis, you can then set more informed OKRs and create a better OKR implementation plan.  

 

Common mistakes at the end of the quarter: 

  • Trying to “boil the ocean”: OKRs are meant to optimize overtime, so you shouldn’t be disheartened if initial roll outs don’t go smoothly. Setting the foundation, creating the habit, and finding rhythm takes time. Setting and following a realistic implementation plan tailored to your organization is key. 
  • Not adjusting for next quarter: Evolution through learning and adapting is a core part of the OKR process. As business conditions are constantly changing, both your OKRs and OKR process will need constant work.  

How to optimize your OKR cycle

As outlined, there are different phases of the OKR cycle, each with many different variables that you need to optimize. As such, many companies fall for the common pitfalls of the OKR cycle and fail to realize the complete benefits of OKRs.  

To get the nuances of the OKR cycle correct, consider expert counsel in the form of OKR consultants who can help create an OKR roll out plan, tailored to your organization. If you need better ways to leverage data to improve your decision-making and execution, or if you operate in larger, more complex organizations, OKR software can also be a potential solution.


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