What is an OKR?
Objectives and Key Results (OKRs) is a goal framework created by Intel’s Andy Grove and then popularized by venture capitalist John Doerr in his New York Times best-selling book Measure What Matters. Companies from Google to Adobe have rolled out OKRs to accelerate growth and drive innovation by helping teams see how their work fits into the overall company’s objectives.
The OKR methodology is a collaborative, goal-setting framework that helps teams and organizations reach their goals through identifiable and measurable results. By design, the OKR framework works across teams to create a standard the whole company can adopt and gives purpose to teams and organizations.
The benefits of OKRs
The OKRs framework can be a superpower for creating an environment where employees are able to work with purpose. Many companies have achieved amazing results with OKRs, but what is less often discussed is the fact that deploying a goal framework in the right way can create a vastly better working environment.
Focus: Doing the most important work
In the OKR methodology, deciding what NOT to do is as important as deciding what to do. Setting OKRs forces the conversation of what’s most important and makes it easier to let go of all the things that aren’t. With a limited number of items to focus on, critical thinking must be applied to create priorities.
With a better focus through OKRs, team efficiency improves because strategic priorities are established. Everyone is contributing work that actually moves the needle, rather than wasting effort on busy work. The organization receives better value from its employees, and employees feel that their work is impactful.
Accountability: Ownership and commitment
Disconnection undermines even the most productive organizations. Accountability through OKRs creates a sense of ownership within teams. When there is mutual trust and transparency in teams, job satisfaction, worker confidence, and organizational commitment increase.
Because of the transparency in OKRs, they are a built-in proofing tool for the organization that helps you regularly measure progress and uncover problems earlier. You can ensure your work or others’ is aligned to the team’s, department’s, or company’s objectives, and vice versa. Accountability connects individuals to the greater mission of the organization, fostering further trust, empowerment, and commitment.
Alignment: Everyone pushing in the same direction
Aligning contributors with the overall strategy requires clarity of top-level objectives. When employees know the company’s mission and current objectives, less time is wasted, and resources are better optimized.
OKRs are the framework for displaying the organization’s direction and showing what everyone is working towards. With the friction of this knowledge removed, teams can push in the same direction and create alignment for bottom, middle, and top-level objectives.
Committing to transparent OKRs across the entire organization means everyone knows the priorities and can self-organize to achieve the goals
Transparency: Know what others are working on
OKRs are as much about information access as they are strategy, which is why transparency is a big component of the OKR framework. You know why your leaders make decisions, you know what the company is trying to accomplish, and you know what your teammates are working on.
Transparency in OKRs also helps maintain focus and alignment. When you understand the top-level objectives (because you can see them), your initiatives are more likely to drive impact. Setting and then achieving or failing at hard OKRs will let you accomplish more than you ever thought possible.
The components of OKRs
By definition, OKRs have two components:
- The Objective: what you’re trying to accomplish
- Key Results: how you’ll measure whether you achieve the objective
Objectives are qualitative goals and should be inspiring and ambitious. An objective can be long-lived or can have a firmer deadline like the end of the year, the next quarter, or even the next month. The objective should be hard; the point is to push yourselves as a team or organization.
A key result is measurable and verifiable; there’s always a black and white answer whether it’s achieved. When possible, use a metric with a number, e.g. “Grow to 1,000 active users in our private beta”. Setting around three KRs for an objective is a reasonable place to start, and you’ll want to assign a specific person to lead the KR and be accountable to its’ success. Completion of all the key results means you’ve achieved the objective.
"The objective is the direction and the key results are the milestones." — Andy Grove, OKR Inventor
OKRs are a statement of intent by any team in your organization. It’s a public way of announcing what the team is going to work on and who will be accountable for its success or failure. At the company level, OKRs act as a north star for your business. Setting company OKRs allows individual teams to set goals that help drive those overarching objectives while preserving their autonomy and enabling their own development and growth.
Objective: Accelerate our global growth
Key result 1: Hire 50 new employees at our EMEA offices
Key result 2: Achieve $500M in total global sales
Key result 3: Produce localized marketing materials in our top 6 geographical markets
How to write OKRs
When it comes to creating and writing incredible OKRs consider the following formula:
Objectives need to be clear, inspiring, and easy to rally around. The golden rule of writing objectives is that any reasonable person should be able to understand the objective’s aim and motivation at a glance. When writing your objectives, make sure they are actionable, time-bound, and ambitious.
You can ask yourself several questions to help maximize the impact of your objectives.
- Are there too many or too few? Ideally, the entire set of any single employee’s team, department, and company objectives should fit easily on the back of a napkin — typically 3-5 objectives per level.
- Are they actionable? Whoever’s accountable for an objective also needs the resources to deliver it. While a sales team can commit to filling the order for a product, they probably shouldn’t be on the hook for actually shipping the goods. Likewise, even company-wide OKRs need someone who is driving them and can answer questions about how things are going. Without accountability for those resources, goals are meaningless.
Why should anyone care?
The best litmus test for whether you should keep something as a company level OKR is to ask yourself “Why would anyone care about this?” OKRs should be high value and their results should be easy enough for anyone to understand. If your objective’s value isn’t easily apparent, it’s best to rethink it.
Key results determine whether an objective has succeeded or failed. The golden rule of writing KRs is that any reasonable person would agree that completing all of the key results would guarantee completion of the objective. Be very clear when defining key results. Make sure they are quantifiable and whenever possible, use metrics instead of a binary result. When key results are measurable, it's effortless for the team to see their progress and whether or not the objective has been achieved.
“It’s not a KR unless it has a number.” — Marissa Mayer, former CEO of Yahoo!
Just like with objectives, asking a few questions about your key results will help make sure they’re describing the outcome you want:
- Are there too many or too few? Just like with objectives, you don’t want to overwhelm your team with too many competing measures. If you do, you can run into the paradox of having so many priorities that you end up with no priorities. With key results, you should keep it to 5 or fewer.
- Are your key results tasks rather than outcomes? Key results describe the optimal outcome that needs to be accomplished in order to complete the objective, but doesn’t constrain how it might be achieved. The metrics in a key result should be quantifiable outcomes and not individual tasks.
- Are they ambitious enough? Key results should extend past the status quo, pushing your team or company to do more than they did the quarter before. Otherwise, you’re sticking to business as usual.
- Are the targets realistic? When a key result vastly exceeds reality, you’re setting your team up for failure. The goal is to push for more, not to overextend.
Is a single lead accountable to each key result?
Do they have the agency and the resources they need to deliver it?
When it comes to setting OKRs, it's a good idea to conduct a team brainstorm. Brainstorming gives your team a level of ownership and drives accountability for those results. Brainstorming engages your team and inspires them to care as much about the OKRs as you do.
When crafting Key Results for each Objective/goal, get out the sticky notes. Have each team member jot down suggestions and take turns sharing and debating their metrics until you find the right level of difficulty to push the team.
During the brainstorming, give your team the freedom to contribute and to incorporate their perspective into the OKRs. This helps team members to stay aligned and inspired while working on the tough challenges tied to the objectives and key results.
OKRs vs. KPIs
A common question with OKRs is, “Do I need them if I’m tracking KPIs?” OKRs are the framework used for strategy, while KPIs are the metrics used to set goals. KPIs overlap within the OKR framework and share similarities, but each have different intentions.
Similarities between OKRs and KPIs
KPIs share a lot of similarities with the KR (key results) part of OKRs. Both KRs and KPIs should be quantitative, and follow the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-Bound). However, there is a small difference in the “achievable” part. OKRs are designed to be very aspirational – hitting 100% should be practical or the goal.
Typically, both OKRs and KPIs will have an owner, and both OKRs and KPIs usually have a target.
Differences between OKRs and KPIs
Although OKRs and KPIs may work together, there are ten core differences between each.
- Linking: OKRs are linked to strategic goals while KPIs are linked to processes
- Strategic timing: OKRs reflect real-time while KPIs are static or even lagging indicators
- Cross-functionality: OKRs can indicate cross-functionality while KPIs tend not to
- Flexibility: OKRs change as strategy evolves while KPIs mostly remain constant
- Nature of design: OKRs are inherently focus-driven while KPIs cover the entire organization
- Visibility: OKRs are transparent by default while KPIs usually constrain to the line of business
- Longevity: OKRs typically change each quarter while KPIs tend to stay for longer periods of time
- Incentivization: OKRs follow more constraints while KPIs can be gamified
- Hierarchy: OKRs support one another while KPIs are flat and of equal importance
- Scale: OKRs are a management methodology while KPIs are used within a methodology
For a deeper explanation of their relationship, check out our article: OKRs vs. KPIs .
Common pitfalls when writing OKRs
Setting great OKRs takes practice, and early in the transformation towards a more dynamic, outcome-based culture, it’s easy to go off the rails. Some frequent mistakes when planning with OKRs include:
- Focusing on tasks rather than outcomes. There’s a tendency to skip from an outcome to the specific steps you expect will be needed to achieve it. Don’t overspecify. If your plan is too specific, it can negatively impact creativity and innovation as new information becomes available down the line.
- Not sharing OKRs publicly. OKRs are all about transparency and hiding them away makes it impossible to build accountability or alignment.
- Waiting on “cascading” OKRs. The most effective OKR rollouts start with executive buy-in, but once high-level company objectives are set and clearly communicated, teams shouldn’t have to wait for departments (or anyone else up the org chart) before setting their own.
- Having too many OKRs. Planning allocates resources where they’re needed most. Organizations, teams, and people that split time between too many objectives are necessarily less focused on the ones that really matter.
- Setting easy and/or unrealistic OKRs. Objectives should always stretch the organization, and if they’re achievable through “business as usual” they probably aren’t hard enough. Nor should they feel impossible. Employees know absurdity when they see it, and goals set too far over the horizon won’t fool (or motivate) anyone.
Learn how to avoid the top 20 OKR mistakes in our article.
As we’ve discussed, the formula for writing OKRs is simple: objectives are goals and intents, while key results are time-bound and measurable milestones under the objective. Well-written OKRs give you a sense of direction and enable you to focus on what matters most while poorly written OKRs can disconnect and demotivate teams, costing time and effort in the long run.
So how do you write good OKRs? Let’s break down the anatomy of an OKR.
The next step is ensuring you set the right number of objectives and key results. Depending on the planning period (quarterly vs. annual) and level in the organization (company, department, team, individual), the number of objectives or key results may differ. An individual, for example, may own one key result in a team OKR, and a team may own one key result in a company OKR.
A good rule of thumb per OKR is 1 objective and 3-5 key results.
Writing great objectives
Your objective should be inspiring, easy to remember, and qualitative. It’s all about what you want to achieve, expressed clearly enough that everyone can understand and concise enough that everyone can remember. Keeping the title under 70 characters is a good rule of thumb for objective clarity.
Good objective: Better, faster, stronger sales cadence
- Punchy, clear, easy to remember
Bad objective: Create 200 SQLs from MQLs derived from the DCT, OBL, and COS Campaigns
- This is a key result, at best
- This is not easily understood, and it’s too long
Writing great key results
Key results are time-bound quantitative indicators, ideally tied to a specific metric that matters for achieving your objective. They should be outcome based, as output-focused metrics are too task oriented and can be gamified. Asking the question “Why?” will help you distill the best possible key results. Additionally, creating at least one task per key result will help you achieve your objectives and ensure that you are maintaining outcome focus.
Good key result: Create 200 SQLs from MQLs by EOQ
- Quantitative, tied to a specific metric, time-bound
Bad Key Result: LTV/CAC Ratio is 3:1
- This is a KPI, and reflects an optimum value that doesn’t always require attention
A few examples
Company OKR example
Objective : Become a Leader in the HR Tech Market
Key result 1 : 25% of our revenues come from Forbes 100 companies
Key result 2 : 100% of our C-level team to be hired from Player-A companies
Key result 3 : Be recognized as the best HR tech B2B vendor by top 5 HR media
Key result 4 : 100% employee retention rate
Team OKR example (marketing)
Objective : Prime the Marketing Pump
Objective description : Improve the efficiency of our operations to create more impact
Key result 1 : 20% of SQLs begin as Trials
Key result 2 : 30% of MQLs are Organic
Key result 3 : Achieve $7.5mm of MGP
Individual OKR example (sales leader)
Objective : Break the 8 Figure Barrier
Objective description : Trim operational fat and crush expansion to amass $10mm in quarterly revenue
Key result 1 : Achieve $1.5mm in New ARR in NOAM region
Key result 2 : Reach >30% New Business Upsell/Cross-Sell for current customers
Key result 3 : Double SQL: Opportunity Conversion Rate to 14%
Key result 4 : Half the sales cycle for our baseline product from 42 to 21 days
Check out our OKR examples for more inspiration.
Who should own OKRs?
Naturally, the executive team will establish top-level OKRs for the organization. Once that is complete, it's tempting to cascade OKRs down through the organization — from company to department, to team, to individuals. But if all your goals fit together into a pretty parent/child tree, teams almost by definition aren’t thinking creatively, taking risks, or showing initiative. It hinders alignment and collective buy-in across the organization, too. It’s far better to flatten the levels of OKRs to just the company at large, departments, and teams, and allow your teams to set their own goals, aligning theirs to the company objectives in their own terms.
Cascade goals are a top-down, one-way, irreversible flow, with no feedback cycles that end crashing on the rocks. Everything an agile, innovative organization does not want to be. — Felipe Castro
Setting the top-level goals for the organization gives you the opportunity to align OKR development through a bottom-up process. Invite teams at every level to define their OKRs before bringing the organization together to understand and challenge their alignment with your overarching vision. Not all OKRs within the organization will align to the company-level, and that's okay.
Equally as important, especially for companies that are new to the OKR process, is keeping OKRs at the team level as opposed to going down to individual OKRs. Team members should lead or contribute to key results, but adding in another level of granularity creates additional fail points and too often ties OKRs to performance management, which discourages risk-taking and aspirational goal setting. Focusing on how teams as a whole contribute to overall company goals better helps them deliver on those goals.
Ultimately, you want to create a process where teams feel empowered to create their OKRs and then challenge teams across the business to ensure they’re focused on the right priorities at the right time. This process encourages creative thinking and informed risk-taking, all to push your business forward.
Rolling out OKRs to your organization
How you communicate your OKR strategy to the rest of the organization is an important factor in the success of your OKR implementation. Your teams already have their hands full with their day-to-day operations and asking them to add an additional layer to their work will only happen with a compelling reason why. Some common things to address when communicating with the rest of the organization:
- Focus on the benefits for the team. Everyone wants to know that the things they’re doing drive a larger impact and that they matter to the overall organization. Teams that work with purpose work better.
- People need three things to be motivated — autonomy, mastery, and purpose. Reminding your teams that you trust them, and then codifying that in how you work towards your goals, gives them that motivation.
- Set your team up for success. The main factors that drive both adoption and successful completion of OKRs are a regular review cadence, transparency, and understanding of how their work impacts adjacent teams.
Monitoring, tracking, and closing out OKRs
One of the biggest indicators of failure for OKRs is if a team doesn’t establish a regular cadence of reflections or check-ins on their goals. Too often, teams fall into the habit of setting their OKRs, putting them into a spreadsheet, and then only rediscovering them at the end of the quarter when it’s too late to make any changes that would have helped achieve those goals. If a regular team-wide cadence for input doesn’t exist, there’s no mechanism in place for the team to think critically about the progress they were making towards those goals or how to better strategize or prioritize so they see success.
Teams should consistently be prompted to provide their confidence scores and updates to their OKRs to have open and honest conversations on the likelihood of hitting their key results. This helps teams better surface leading indicators of failure and find ways around them, and also serves as a reminder that OKRs are learning opportunities, that hitting or missing their targets has value. By the same token, consistent review of progress allows for a celebration of successes along the way, and recognition of work well-done.
There are many technology options on the market to help you monitor and track your company’s OKR progress. An ideal solution will build and reinforce great practices while fitting in seamlessly with the way your team already works. By having purpose-built software for the job of goal tracking, you’ll avoid a ton of time spent running around and getting updates. Here are a few reasons why you should use software over a spreadsheet:
- Greater visibility, better focus: Never lose sight of strategic objectives and OKRs across teams — focus on what's important and report on what’s working and what's not.
- Improved team engagement: Team members and managers give and receive direct feedback—increasing engagement and collaboration with objectives and key results.
- Reduced meetings and process: Weekly reflections eliminate status update emails and reduce unnecessary meetings. Turn on Slack and email notifications to keep everyone informed the way they want.
- Less stress, more enjoyable work: Reduced employee stress through better alignment and focus. Eliminate wasted efforts. Raise concerns and catch issues before fires start.
When it comes to closing out OKRs, the process should be a team effort. Since everyone worked together to deliver the results, everyone should come together to see the results. An ideal process would be:
- As a team, go through each key result and have both the lead and the contributors explain what went well and what could have been better. Ask why the OKR was hit or missed and continue drilling down into the reasons why until you’ve found the core reasons for success or failure. This makes it easier to replicate the same success or avoid the same pitfalls in the future.
- If an OKR was missed, decide as a team if it should be rolled forward into the next quarter or if new OKRs should be set. If it’s being rolled forward, change the due date and adjust the metrics as needed. If it’s not, mark the OKR as complete.
- Decide which closed OKRs provide a worthwhile context for your new OKRs. Sometimes, seeing the progress you made in the past helps color the goals you’ve set moving forward. For instance, the previous quarter’s revenue numbers might give you insight into why this quarter’s numbers are set as high as they are. For OKRs that don’t offer additional context, archive them so your team can focus solely on the goals that are most relevant.
Turning the process of closing your team’s OKRs into more of a ceremony can make it into a milestone moment. Moving slowly through each key result and taking a moment to celebrate the wins and dig into the growth opportunities in an end-of-quarter meeting takes OKRs from a theoretical goal setting exercise to a way to come together and truly see all the progress that has been made as a team.
At Gtmhub, we’re committed to helping you bridge the gap between strategy and execution. Inspired by the Objectives and Key Results (OKR) methodology, our platform is designed to help you align your teams, improve focus and foster transparency.
Quick-start your OKR journey with ready-to-go OKR templates from our Marketplace or connect with 160+ Integrations to update your OKRs and KPIs automatically to easily make data-driven decisions with our customizable Insights and Dashboards.