Objectives and Key Results (OKRs) is a goal-setting framework that helps organizations focus on what matters, and create transparency around progress. Originally developed by Andy Grove at Intel and later evangelized by Google, this approach has become the most common way to set targets and track progress in the tech industry. In this article, we will introduce you to the fundamentals of OKRs, provide you with practical OKR templates, and share real-life examples of effective OKRs. So whether you are a lover or a hater of OKRs, this guide will get you up to speed on OKRs, and get them working for you.
OKRs have become so popular that many people treat them as a silver bullet to get organizations operating effectively. This reverence has in turn attracted an equal share of criticism as OKRs fail to deliver on such exaggerated claims. The reality is, of course, far less exciting and controversial. OKRs can be very effective for setting goals and increasing transparency if used appropriately and tailored to a given organization. However, they cannot solve fundamental issues with strategy or poor leadership, and may well exacerbate these sorts of problems.
What are OKRs
As their name might suggest, at their most basic OKRs consist of a combination of:
- Objectives – an inspiring goal that the team is trying to achieve
- Key Results – quantified measures of progress that allow you to see unambiguously whether you’ve hit your objective or not.
Example OKRs
Here is are two example OKRs:
Team: Growth team
Cycle: Q1 2023
Objective: Create a radically better onboarding experience
Key Results:
- Reduce percentage of users dropping out of onboarding process from 30% to 10%
- Increase new user activation rate (i.e. users purchasing with first 7 days) from 5% to 10%
- Reduce average time for new users to complete onboarding from 600s to 300s
Team: Supply team
Cycle: Q1 2023
Objective: Dramatically increase average scale of sellers
Key Results:
- Increase the average number of items listed by sellers from 20 to 25
- Increase average seller sales from 10 to 14 items (rolling 30 days)
- Increase the average seller revenue from £225 to £340 (rolling 30 days)
OKR template
Our OKR template is a ready-to-go template that you can use for one or multiple teams. Whilst the examples in it have been tailored for product teams, you can use this template for any team within your organization, from Ops to Sales to Finance.
Hustle Badger OKR template Get the OKR template: Google Sheets | Excel | Notion
Create a FREE account to access our OKR templates: Google Sheets | Excel | Notion
Why are OKRs important
Used well, OKRs have four main benefits:
- Focus – They force teams to define where their focus is, they make it easier for teams to spend more time on high value strategic work, and say no to other initiatives that would be distracting
- Visibility – They allow everyone to see how teams are progressing towards their goals
- Flexibility – They allow leaders to define outcomes they want teams to deliver, whilst giving teams the freedom on what route they take to achieve those outcomes
- Alignment – OKRs provide a common framework for all teams to state their plans for the coming cycle. This creates transparency and alignment between teams
How to use OKRs
There’s a lot of variation in how OKRs are used from company to company, and the best companies will treat OKRs as a pattern that is most effective when tailored to their specific culture and circumstances. Process should always be an accelerator for teams, and you should beware anyone advocating a strict interpretation of OKRs that results in them becoming an end in their own right.
In this light, the following guidelines should be considered a helpful starting point, rather than an immutable set of rules. If possible, introduce OKRs to 1-2 high performing teams, and only roll them out further once you see what works for them. Whatever you do, continually evolve the process to whatever gives you the best results.
Objectives
One objective per team
Teams should have a single objective to create focus. The progress you can make on any objective drops off steeply as you increase the number of objectives for two reasons:
- Your time is split in multiple directions
- You need to deal with the context switching and trade-offs between objectives
Make the objective as narrow as possible and you’ll create the conditions for a team to do amazing things.
Make it inspiring
The objective should be inspiring for teams and give them a sense of urgency and purpose. This follows when the company has a strong mission and each team’s work clearly relates back to forwarding that mission. Objectives are typically not quantified, as this is the role that the key results take.
Bad: Increase retention
Good: Deliver value to our users every day
Give context around objectives
Teams need to know the context in which their objectives have been set. The better they understand the internal and external conditions the company is operating in, the better decisions and prioritization they will be able to make. A good way to do this is for leadership to kick off the planning cycle by running through the context with the whole company:
- Mission – What is our purpose? Why do we get up in the morning?
- Vision – What does the future look like with our product? (ideally visuals)
- Strategic Pillars – Where are we focusing to move towards our vision?
- Events – What is happening right now that we need to bear in mind (e.g. internal transformations, external market events, upcoming funding events)
Key Results
1-3 key results per objective
Key Results turn an inspiring objective into a concrete outcome that a team can push towards. Make sure your key results focus the team around a single goal, rather than create confusion by taking a broad objective and expressing it in very different directions.
There are three good ways of doing this:
1. Single key result – you don’t need to have multiple key results.
E.g. Objective: Create a radically better onboarding experience
Key result: Reduce the percentage of users dropping out during the onboarding process from 30% to 10%
2. Triangulation – multiple metrics help you converge on an objective that is intuitive, but hard to measure.
E.g. Objective: Create a radically better onboarding experience
Key results:
- Reduce percentage of users dropping out of onboarding process from 30% to 10%
- Increase new user activation rate (i.e. users purchasing with first 7 days) from 5% to 10%
- Reduce average time for new users to complete onboarding from 600s to 300s
3. Horizons of success – use the same metric with different targets to create good / better / best levels of achievement.
E.g. Objective: Create a radically better onboarding experience
Key results:
- Reduce percentage of users dropping out of onboarding process from 30% to 20%
- Reduce percentage of users dropping out of onboarding process from 30% to 15%
- Reduce percentage of users dropping out of onboarding process from 30% to 10%
Format
A great format for defining key results is:
Move [metric] from [baseline] to [target] by [deadline]
E.g. Reduce percentage of users dropping out of onboarding process from 30% to 10% by end of Q1 2023
This makes it very clear what the team is trying to achieve. Usually the deadline will match the length of the cycle you’re planning for (e.g. Q1 2023), and you don’t need to keep restating this.
Initiatives
In addition to setting your objectives and key results, it can be helpful to share the initiatives that you think will help you achieve your OKRs. For product teams, your initiatives will be the major items on your backlog. These are not commitments, and everyone should understand that they will likely change over the course of the cycle, but having some idea of what the team will work on:
- Shows whether you have a believable plan to reach your OKRs
- Helps you align your plans with other teams
- Helps you track whether you are pacing towards your OKRs
- Gives people outside product transparency on what you’re working on as the quarter progresses
Check-ins
Fundamental to making OKRs work in any organization is having a regular cadence of publicly reviewing the OKRs and progress towards them. How regularly you check in on OKRs will depend on the organization, but it should be long enough for the teams to take action and things to change, but short enough that problems can be flagged to leaders and peers for early resolution.
Having a check in every 1 or 2 weeks is a good place to start. If you are finding that nothing has changed since the last meeting, then that’s a signal that the check ins are too regular. If you are finding that issues have already been resolved by the time you hear about them, that’s a signal that the check-ins aren’t frequent enough.
Public accountability
People naturally assume that what is talked about by leaders is what leaders care about. Conversely, if you don’t talk regularly about your ORKs, then people will assume they are not that important. If all your check-ins do is keep OKRs front of mind for people, then they are worth doing, but you can get additional value out of them.
Check in on pacing
Checking in on OKRs on a regular basis allows you to see if you are on track to reach your OKRs. Usually this is as simple as extrapolating past progress forwards, and seeing if your trajectory hits your goal. However, for product teams, key results typically move in steps as features are released, rather than on a continuous basis. To take an extreme example, you could spend a whole quarter shipping one feature that delivered all the impact you wanted, but halfway through the quarter your key results won’t have moved at all as nothing will have been shipped.
Key results often aren’t a great pacing measure for product teams As a result, you’ll need to use a combination of progress against the key results, initiatives and a healthy dose of good judgment to tell whether teams are on track or falling behind. Either way, it’s critical to do, so you have early warning of whether you’ll hit your OKRs, and time to act and correct things if it’s not looking good.
Highlight blockers
The final reason for having regular check-ins on OKRs is that this gives teams a chance to highlight blockers they are facing, and to get support from leadership on removing them. Leaders always have a number of levers that aren’t available to teams (e.g. adding new team members or talking peer-to-peer with leaders of other departments), as well as a very different perspective on the difficulties a team is facing. High performance teams use leaders as thought partners and valuable tools to reach their goals, not just as people they report to.
Evaluating OKRs
Traditionally, key results are marked at the end of the quarter between 0 (the baseline) and 1 (the target). Google defined success as achieving 0.7 or more, with the idea that the target should always stretch the team a bit to get the best performance out of them. In practice, if you are holding weekly accountability check-ins, then an OKR score will not be a surprise to anyone, and there’s little additional value to doing this accounting.
Whether or not you score your OKRs at the end of the quarter, you’ll want to ensure three things:
- Standard approach to setting targets – decide as a company if teams should be setting goals where 0.7 or 1 is the expected outcome. It’s hugely demoralizing to think you’ve had a great quarter having scored 0.7, only to get beaten up by leadership for “missing” your target by 30%, and worse if teams that were very conservative are praised for hitting much more modest goals.
- Have a retro before planning the next cycle – make sure you learn from what went well and what didn’t go so well, so that you can learn and improve your performance for the next quarter.
- Don’t get hung up on the timing – if you’re doing quarterly OKRs then you might start planning the next quarter a month in advance… or when you’re only two-thirds of the way through the current cycle. Don’t worry about having the full quarter to reflect on. You’ll still have plenty of insights to take into the next planning cycle.
Limitations of OKRs
OKRs have become extremely controversial in recent years, and whilst some people find them very effective, many teams find using OKRs painful and counterproductive. If you’re going to use OKRs effectively, then it’s helpful to understand the common failure patterns so you can avoid them.
Fundamental Issues OKRs don’t solve
As a goal-setting framework, OKRs don’t resolve fundamental issues with strategy:
- Lack of focus – more objectives results in less progress. If you want to see results, then you need to be disciplined enough to say “no” to almost everything, and focus on THE most important items.
- Lack of insights – you need to know which user problems you can solve to deliver impact. Without this, you can have OKRs and a backlog, but the backlog is unlikely to result in you hitting your OKRs.
- Too rigid process – “Individuals and interactions over processes and tools” is one of the core tenets of the agile manifesto. Don’t treat OKRs with some sacred reverence, or expect to find a “one true way” of doing them. Consider them a pattern for setting goals that many companies have found helpful, if adapted to their particular context.
- Too rigid a plan – Don’t become a slave to initiatives or key results if you realize that something else is more important. Plans are useful, but creating user value is the ultimate goal.
When NOT to use OKRs
Whilst OKRs are a general use tool that is applicable to most teams, there are a couple of cases that they are not well suited to:
- Low data environments – if you don’t have the data to establish a baseline, or measure progress towards a target, then OKRs aren’t going to be much use. One example of this is when you’re still establishing the value proposition for a new product. Here you are better off optimizing for learning, and not worrying too much about how to measure that.
- Shipping projects – Sometimes product teams just need to build a thing (e.g. integrate new payment provider, or retire a legacy product). You can use OKRs for these, but because the output is goal, then your key results and initiatives will be the same. Don’t waste time doubling up on reporting for both, just get on with shipping.
OKR Traps to avoid
Finally, there are a number of common traps you want to avoid falling into with OKRs:
Unaligned key results
If your key results are chosen poorly, they’ll end up splitting team time amongst competing priorities, rather than helping triangulate on a given objective. If in doubt, stick to a single key result for an objective. You don’t need to have more.
Dependencies on other teams
It’s a recipe for disaster when teams commit to pieces of work that depend on other teams without their buy-in.
E.g. marketing commits to 100k new users… assuming a product team can build them some new landing page s. But all product teams have committed to key results on the basis of using 100% of their capacity themselves.
If possible, remove dependencies by identifying the most important objectives at the company level, and then creating cross functional (product + non product teams) groups to deliver on these objectives
Misalignment between teams
Effectively the same problem as dependencies, but even worse. Teams have set their OKRs without sufficient context, and are actually acting in an opposition direction to another team.
E.g. Seller team trying to reduce onboarding friction to increase number of sellers, whilst fraud team tries to increase onboarding friction to reduce amount of fraud.
This is why giving teams context before they start planning is a must, and as far as possible, each cycle should be an evolution of effort and strategy, rather than a brand new direction.
Delivery lag
Product teams are often working on features where there is a lag between shipping the feature and it delivering maximum impact.
E.g. Feature shipped in week 12 does not reach max adoption until week 18 due to AB testing, roll out and product marketing
This is fine as long as everyone recognises the “contract” that OKRs signify. Will you be judged on the value realized in the quarter, or the value of the features shipped in the quarter (even if not realized until much later). Make this kind of value accounting explicit and documented to avoid misunderstandings later.
Summary
Objectives and key results can be an extremely powerful method of driving performance across companies. The combination of an inspiring goal, together with quantified ways of measuring progress towards it can galvanize teams to deliver there best work, creating clarity around what you want to achieve, visibility on how you’re progressing, and flexibility on how you get there. However, OKRs are not a silver bullet to operating excellence, and should always be adapted to your company’s culture and context.
Resources
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* OKR template (Google Sheets | Excel | Notion)
Further reading
