Step-by-Step Guide to OKRs PDF

Step by Step Guide to OKRs Step by Step Guide to OKRs 1 Introduction………………………………………………………………………………..….….2 What are OKRs?……………………………………………………………………………..…..4 What is Goal Setting?…………………………………………………………………..……..9 Beneﬁts of OKRs……………………………………………………………………………….16 Getting Started with OKR………………………………………….………………………21 Writing Good Objectives……………………………………………………………………23 Setting Key Results…………………………………...………………………………………25 How OKRs and KPIs can coexist…………………………………………………………36 Committed and Aspirational OKRs……………………………………….……………45 Personal OKRs…………………………………………………………………………………...50 How to Write Actionable OKRs…………………………………………………………..56 Weekly Plans……………………………………………………………………………………..65 OKR Alignment………………………………………………………………………………….73 OKR Examples…………………………………………………………………………………...81 The OKR Process………………………………………………………………………………..91 The OKR Weekly Check In………………………………………………………………….94 The OKR Quarterly Review……………………………………………………………….100 The Secret Behind Successfully Implementing OKRs………………………...107 OKR Implementation Guide……………………………………………………………..111 Getting an OKR Coach………………………………………………………………...……112 OKR Best Practices and Tips…………………………………………………..…………116 OKR Case Studies……………………………………………………………………..……...119 Conclusion……………………………………………………………………………………….128 Resources………………………………………………………………………………………..129 Step by Step Guide to OKRs 2 Introduction Objective and Key Results (OKRs) are often seen as a simple framework with only a couple of principles to follow to help your business achieve its goals. It's so much more than that! “Measure What Matters” is great for motivation and overview, but you probably won't be an OKR expert after reading it. Even those so said “simple principles'' are diﬃcult for most to understand. As an OKR software, we have worked with hundreds of companies and we see them making the same common mistakes. Every day we see customers who say they are using OKRs, but when we look at them we cannot ﬁnd one single OKR listed. That doesn't mean that people are not able to understand or learn the methodology. They just are stuck in their old habits. Many people want to use new, popular methodologies, but they are not ready to put in the eﬀort to change and adapt. Now this isn’t to discourage you and your lofty dreams of success, but rather to emphasize the point that learning and implementing OKRs takes time, patience, and a change in company culture. There are countless success stories of companies who have implemented the methodology and have had incredible success, with Google, Amazon, and Intel being some of the bigger names. But this then raises the question, what did these teams do right that so many others have struggles with? It doesn’t have anything to do with size or funding. We have seen plenty of smaller and mid-sized companies, non-proﬁts, and start-ups have incredible success. It really all comes down to the willingness to change the way things are done and understanding that implementing OKRs takes more than just implementing a methodology. What do we mean by that? To put it simply, a methodology is not a method. A methodology is a way of understanding how to do something; you also need to have a method and a process for applying it. Many materials on OKRs out there teach you all the great things about the methodology and best practices without helping people understand the methods they need to actually implement OKRs. Beyond that, OKR methodology has quite a lot of nuance and terms such as ‘cascading’ and ‘alignment’’ that can easily be confused and set you up for failure if not properly understood from the start. Understanding the ﬁne details and ﬁnding a method that works for you and your company is often what makes or breaks successful OKR implementation. Step by Step Guide to OKRs 3 So that's why we wrote this book: to help companies and teams understand both the big and the small of Objectives and Key Result. The materials in this book will give you the foundation you need to master both the methodology and the method, so that you can be added to the list of OKR success stories. Step by Step Guide to OKRs 4 What are OKRs? Objectives and Key Results (OKR) is a critical thinking framework and goal setting methodology that helps companies to align goals and ensure everyone is working collaboratively on goals that really matter. OKRs can be implemented using spreadsheets, or more commonly, with an OKR software. OKR methodology diﬀers from other goal-setting methodologies such as balanced scorecards, and KPIs. The OKR methodology is a simple process of setting and aligning company and team goals (Objectives) and connecting each Objective with 3-5 measurable results (Key Results) to measure progress. For example, increase _____ from X to Y. Reduce ______ by X%. Improve ______ up to X%. Key Results can be measured on a 0-100% scale or any numerical unit (ex: dollar amount, %, items, etc.). As progress is made on each Key Result, progress on the Objective moves forward on a 0-100% scale. Objectives are also supported by your weekly activities and initiatives (plans) that you’ll do to drive forward the progress of an Objective. Plans should be created on a weekly basis and be linked to your Objectives. Step by Step Guide to OKRs 5 Objectives Key Results Plans Aspirational Measurable Actions/Initiatives Qualitative Quantitative Tactical Time Bound Value-based Weekly Priorities Example OKRs Now that you have a basic idea of what an OKR is, let’s run through some OKR examples and see what is good or could be improved about each. Example 1: Let’s say that your company is ready for a growth phase and now you want to reach a lot of people. Marketing decides that they will focus on going viral online to drive more attention to your company. They set an OKR that look like this: Objective: Make our company go viral Key Results: KR1: Generate 100,000 views on our Youtube channel KR2: Get 10,000 new followers on Instagram KR3: Increase organic search traﬃc to our website by 20% This is a good example of an OKR. The Objective is aspirational and moves the company forward while the KRs are numeric and objectively quantify the success of the overall Objective. Bad Key Results for this Objective would include: Bad Key Results: KR1: Make videos for youtube, Step by Step Guide to OKRs 6 KR2: Get more Instagram followers KR3: Improve SEO Those examples are bad because they are not focusing on outcomes but are just about getting something done. Just making videos doesn’t always mean that people like them and a lot of people will see them. You need focus on the measurable result to see if your eﬀorts are actually working. Example 2: Let’s pretend that you are a software company who is selling a project planning software for businesses. You know that to keep up with competitors you need to develop your product to oﬀer more functionalities for your customers. You have decided that you need to come out with a new feature. You set an OKR: Objective: Design, create, and launch a new feature Key Results: KR1: Interview 50 existing customers on what are their needs regarding to project management tools KR2: Create new feature What do you think, is it a good OKR? We would say that the OKR could use some work. The Objective is likely not possible to achieve in a single quarter. And while the ﬁrst KR is good, the second result is not quantiﬁable. Realistically, during the ﬁrst quarter you will only manage researching the customer needs and designing the ﬁrst prototype. Let’s try again to set a better OKR: Objective: Research our customers needs and design a new feature Key Results: KR1: Interview 50 existing customers on what are their needs regarding to project management tools KR2: Choose 2 important needs that can be covered with one new feature Step by Step Guide to OKRs 7 KR3: Test and review 10 competitor tools and document 2 ideas from each to design our new feature Now our example is more realistic and doable in one quarter. Next quarter, when we are launching the feature, we can set another OKR that focuses on the success and usage of the new feature. Example 3: Your company is struggling with bringing enough money in. After looking into your data, you know that the problem is not having enough leads. You decide that you need to try some new ideas and marketing channels. Email campaigns seem to be the best thing to try so you set your goal: Objective: Implement new outbound email campaign Key Results: KR1: Write email copy to send to outbound leads KR2: Get a list of outbound leads KR3: Send email to everyone on list Unfortunately this would not be considered an OKR but rather a project with a task list. The Key Results do not contain any numbers. Remember, Objectives are large aspiration goals and KRs are a quantiﬁable measurement of that goal. If we were to rewrite the OKR, it would look like this: Objective: Implement new outbound email campaign Key Results: KR1: Improve open rates from 15 to 25% KR2: Increase monthly email sign-ups from 200 to 300 KR3: Grow email list from 30,000 to 40,000 Step by Step Guide to OKRs 8 Now the OKR is much better. The Objective is inspiring and the Key Results are now quantiﬁable. From there the team can ask how they can drive those Key Results forward with their work. For example, they may improve sign-ups through a better call to action or grow the email list through an advertising campaign or content exchanges. Step by Step Guide to OKRs 9 What is Goal Setting? OKRs serve as a goal setting methodology. But before jumping into them in more depth, you should really understand what the term “goal” actually means. You’ve probably heard of diﬀerent terms like goals, targets, OKRs, Key Performance Indicators (KPIs) and metrics. In many cases, these terms get mixed-up. Each of them needs to be deﬁned so there’s no real confusion. What are goals? Goals in a business are something that a company plans to achieve in the future. A goal is the result you want to obtain. At their core, goals are all about commitment. They give a business direction and help you focus on what’s important. Goals can be overarching (directional) and focus on the largest aims of the company (aka company goals), or operational and focus on function-speciﬁc team level priorities. Depending on the level though, goals can ﬁll speciﬁc niches based on development needs as well. Goals should be known by everybody in the company and planned initiatives should help your team move towards those goals. Step by Step Guide to OKRs 10 Goals vs Objectives The line between goals and Objectives is so thin that it basically doesn’t exist. They both represent a desired result or achievement. There are diﬀerent theories saying that goals are usually more long-term and cover the big picture and Objectives are more speciﬁc, actionable and set quarterly. Separating goals from Objectives may be relevant to some goal setting methods but it’s deﬁnitely not needed while using OKRs. We say they are the same thing! Trying to separate those two terms doesn’t actually give you any value, so why bother? OKRs vs KPIs Key Performance Indicators (aka business metrics) are numbers that you look at to make sure you are maintaining a healthy business. You need to set numeric expectations of performance and set clear targets for the company, departments, teams and individuals. These indicators direct your attention towards what they are monitoring, and they simply tell you if you are meeting your targets or not. For example, your Sales team KPI might be a number of closed deals per week, and a target (expected level of performance) could be from 10 to 15 on average. So if you’re meeting the KPI target of at least 10 deals, it means you’re maintaining your eﬃciency. In most companies, KPIs reﬂect revenue targets and month-on-month growth of various business metrics. You can track all of your regular business activities with KPIs, such as: revenue, customer acquisition cost, changes in website traﬃc, ROI, market share, employee turnover rate, customer satisfaction, number of new and recurring purchases, sales by region, a number of daily meetings you have with potential clients, etc. Step by Step Guide to OKRs 11 These targets can be annual, quarterly, monthly, daily or even hourly, depending on your needs. Numbers don’t lie, and looking at KPIs in retrospect helps you to make predictions for the future: which months are going to be good, which potential clients are more likely to become paying customers, etc. Analysing your performance against KPI targets allows you to understand how to keep your business going. Simply put, you cannot have a functional, well-organized company if you are not measuring your KPIs. However, having these numbers doesn’t really tell you directly how to improve them. You cannot grow a business by simply saying “we need to hit a higher revenue target”. And if you’re falling behind on your KPI targets, what exactly do you need to improve to put everything back on track? This is where we begin to discuss the diﬀerence between OKR and KPI. OKR vs. KPI: How can you tell the diﬀerence? You cannot switch from KPIs to OKRs as they are not interchangeable and their purpose is completely diﬀerent. If you want to grow, improve and sustain your business, you should learn to use both. Step by Step Guide to OKRs 12 KPIs as “Health Metrics” help to identify where attention is needed. Do you know how much money your business is capable of making on a monthly basis? That is your monthly revenue KPI, and if your target is $100,000, you would deem yourself in good shape if you were hitting it each month. If suddenly revenue drops to $90,000, you would direct your attention to this and start digging into the “why”. Normally, each team will have a KPI to measure their own eﬃciency and analyze if everything is working as it should. For example, let’s take a look at Company A whose Sales team’s KPI target (health metric) is to bring 50 new paying customers each month. KPIs are usually achieved with business-as-usual and as a part of the daily routine. In other words, when people are doing what their job description says they should be doing, they should be achieving these targets. Step by Step Guide to OKRs 13 If in a given month, the team is bringing in at least 50 new customers, the team is hitting the KPI target and no extra attention is required. Whatever tactics they apply, it works. But if new customers’ number drops below 50, then both the team and the company know an extra focus is needed to analyze what happened and what needs to be improved. So a sudden drop in your KPI suggests that you need an OKR to improve a particular area in your business. KPIs as business-as-usual growth targets help to specify expectations for performance. Companies also use KPI targets to maintain steady business growth. Normally, each company has a revenue target and month-on-month growth expectations. It may be a 5% or 20% month-on-month increase in revenue or client base. Remember, a target is the level of performance you want to achieve. But what if the company wants to achieve explosive growth in the foreseeable future? Let’s say, Company A has a revenue target in mind: they want to double their earnings in 5 months from now. This is a challenge that deﬁnitely requires an OKR goal-setting process. Step by Step Guide to OKRs 14 As a ﬁrst step, what would you need to improve, change and rethink as a company to drive growth? Would you consider expanding your business to a new market, or increasing revenue per customer, or leveraging unconventional marketing channels, or looking for new audiences? You should choose a speciﬁc area to focus on and set it as a Company Objective for a quarter. When the Company level direction is clear, what can each team contribute to move the company forward? Team OKRs should align with the company level overarching goal. If the company direction is to increase the revenue per customer, Sales team can focus on upselling to new customers, Product Development can increase engagement of the client base and make sure that the product becomes indispensable, Marketing can develop new subscription oﬀers and packages to make longer-term cooperation more appealing. Step by Step Guide to OKRs 15 As you can see, KPIs and OKRs actually work together quite nicely: KPI being a starting point of a conversation about improvements to implement or problems to solve, and OKR specifying a focus area and measurable outcomes to be achieved to deliver on those improvements. Your goals are set, what’s next? Goals are driven forward by plans. If goals answer the question “where”, then initiatives are the “how” part. We like to use the term initiatives, but you may use diﬀerent terms like – plans, tasks, (key) actions, projects, etc. Goals deﬁnitely aren’t just a list of initiatives because completing one initiative doesn’t mean that the outcome is what was expected. Initiatives are important because if you don’t focus on your goals and don’t have a plan for how to achieve them, then there is a big chance you are going to fail. Whenever your goals aren’t moving forward you need to change what you are doing or try new initiatives. It’s crucial to have a readiness and open mindset to change methods or try new things in your company when you are trying to take it to new heights. Step by Step Guide to OKRs 16 Beneﬁts of OKRs All companies recognize the importance of goal-setting. That is why there are so many articles on how to write goals and measure success. The beneﬁts of OKRs deﬁnitely come to those who follow best practices and avoid the most common mistakes. But remember, when you “do things your own way” and bend the methodology too much, you might lose the beneﬁts. Here we will discuss what beneﬁts you can expect from OKRs and why you should implement this methodology. Whether you’re a novice or an expert, you will ﬁnd great insights in this chapter to understand the beneﬁts of OKRs and explain these beneﬁts to your teams. OKR creates intense focus and teaches your team to be result-oriented. Clear focus for the team and company Their main purpose of OKRs is to better your business by singling out improvement areas for the quarter. You can either identify what needs ﬁxing or brainstorm ideas for doing things in a new way. Start by deﬁning the direction for the whole company, and have teams write OKRs to align with the overarching, company goal. You win by having a clear destination for all teams in your organization. OKRs help you agree on the main focus for the quarter and make sure teams deliver the results that are bringing value for the business. The world’s most successful organizations set OKRs quarterly. Three months is enough time to deliver valuable outcomes. During this time you will learn what works best and adjust your focus areas for the next quarterly cycle. By reviewing your Objectives and Key Results every 3 months, you have 4 chances per year to respond to the changes in the real world. As opposed to having an annual review and realizing that you’ve been on the wrong path for a year. The world is constantly changing, and so is the market. You have to respond! Step by Step Guide to OKRs 17 Teams take ownership of moving the company forward Team OKRs should align with the Company Objectives and contribute to them. This means that the company is creating a uniﬁed direction through Objectives, and teams will take ownership of delivering on their OKRs to move the company forward. Ownership mentality cannot be assigned, it rather comes naturally to the teams who are trusted to do the right thing. That is why, to live up to their potential, teams should be responsible for writing their own collaborative OKRs and deciding on how to invest their time and energy in the best possible way: i.e. what can they ﬁx, change or improve? The OKR framework encourages teams to think about what kind of role they are playing and what they can do to make their contributions more valuable. Uniﬁed understanding of success According to the OKR method, an Objective should have 3 to 5 Key Results to deﬁne what exactly you want to achieve. So Key Results are measurable outcomes that determine the success of a particular Objective. When the Key Results are clear, the teams then have freedom in deciding which plans are more likely to deliver on the desired outcomes. They can try diﬀerent approaches and tactics until the Key Results are achieved. With OKRs, your whole company is aligned and moving in the same direction. Alignment is often the very reason why companies want to implement OKRs in the ﬁrst place. And if the framework is implemented properly, all teams will move in a uniﬁed direction. OKRs make sure your whole company understands what’s important right now. It sounds quite simple, but in reality, it’s all too common for teams to work on their own things in silos, use valuable resources (like time and money), and pull the company in diﬀerent directions. If you’re not rowing in the same direction, you’re either moving slowly or not moving at all. Step by Step Guide to OKRs 18 That doesn’t mean that all teams should have exactly the same shared OKR. What it actually means is that teams would be approaching a bigger overarching Objective from a team-speciﬁc perspective, function, and expertise. There are always many things for teams to do, but if they are not working towards the same company goals, they are most probably slowing down the entire organization. Alignment (if done right) has strong implications for growth and eﬃciency. You gain organization-wide transparency and build eﬀective communication. To align the teams and have everyone move in the same direction you need to allow transparency throughout the entire organization. Ideas and pieces of information, like pieces of a puzzle, need to connect to produce a bigger picture. This is not about sharing high-level ﬁnancial targets; transparency comes from meaningful discussions led by the OKR process. It begins with communicating Company Objectives for the quarter with context and background information. What problems are we facing? What areas should we improve? What’s stopping us? Encouraging everyone to share ideas and participate in these discussions creates an environment for eﬀective communication among teams and individuals. Sharing information and key learnings in the company (either in meetings or in organized digital workspaces) is crucial for healthy work relationships, nurturing trust, and connecting ideas. It’s deﬁnitely worth doing because transparency leads to eﬀective communication and improved productivity. By using an OKR software like Weekdone, you eﬀortlessly allow full visibility of OKRs, Weekly Check-ins (Plans, Progress, and Problems), comments, and updates related to them. They are clearly structured and easy to access. Here’s what you get with full visibility and easy access to quarterly OKRs and weekly plans: It saves teams time in meetings so they can focus on execution. Team discussions should be about getting organized and keeping track of their progress: what’s working, what’s not. Everything else people can read on their own time. Step by Step Guide to OKRs 19 Business processes run faster. Since people know what’s going on in the company’s life, it’s much easier to maintain a sense of urgency for Company Objectives. It boosts engagement and fuels accountability. When a team’s priorities and achievements are seen by others, there’s no place for excuses or just pretending to be busy. There’s also no place for procrastination. And, more importantly, when they get it done, others can see how valuable their work is, and they feel appreciated. Motivated teams who take ownership of their OKRs is the dream of every leader. OKRs lead growth, improvement, and innovation. Companies use OKRs to drive growth through improvement and innovation. This means OKRs are not a list of everything you do in your business. Business-as-usual operations are your regular day-to-day work, and OKRs focus on change: either in what you’re doing or how you’re doing it. Working with OKRs means that all teams need to think about what they can contribute to achieving Company Objectives. What can they do better? What should they improve? Is there something they are doing great and can they raise the bar and bring even better results? These questions start meaningful conversations in your teams and your company would beneﬁt greatly from knowing the answers. To get incredible results you need a goal-setting methodology that leads you to think outside of the box. While agreeing on the ambitious results (measurable outcomes), you leave a lot of room for creativity on how to achieve them. Versus, if you just tell people what to do (outputs) and might be completely wrong about what works and what doesn’t. OKRs put great emphasis on eﬀective teamwork, alignment, and accountability which is achieved through focusing the entire team on working smarter, not harder. When you work hard, you cross 50 items oﬀ your list, and nothing changes in your business. Working smart, however, means ﬁguring out high-level priorities, deﬁning measurable outcomes that you want to achieve, and taking immediate massive action. Step by Step Guide to OKRs 20 The beneﬁts of OKRs are not circumstantial or accidental. You can enjoy them fully only if you are being intentional in your goal-setting process and follow the main principles and guidelines. Step by Step Guide to OKRs 21 Getting Started with OKR Before we go into speciﬁcs about OKRs, let’s go over the basic OKR process to give you some overview about how all this works. The basic OKR structure is rather simple and streamlined. You can deﬁne OKRs in a spreadsheet or special OKR software like Weekdone. 1. Set your Objectives As you begin setting your ﬁrst OKRs start by deﬁning 1 Objective for your company. (As you get more comfortable using OKRs, you can add more Company Objectives, but you will never want more than 5.) Communicate and explain this Objective to your functional teams (for example, Product Development, Marketing, Sales, etc.) and ask the teams to set their contributing Objectives to be aligned with the Company Objective. Each team should think about how they can help move forward the company goals. Remember, Objectives should be ambitious, qualitative, achievable in a quarter, and actionable. 2. Deﬁne your Key Results Under each Team Objective set 3-4 measurable Key Results. The job of Key Results is to measure how close you're getting to achieving your Team Objective. The company Objectives don’t need Key Results because those goals will be moved forward by Team OKRs. Measurable Key Results can be set in a diﬀerent ways: Increase ______ from X to Y Reduce ______ by X% Improve ______ up to X% Achieve X amount of ________ By moving the needle on Key Results, you're driving the Objective forward. Key Results can be based on growth, performance, revenue, or engagement. Step by Step Guide to OKRs 22 3. Update your OKRs While you should set Team OKRs quarterly, it is important to go over your OKRs every week. This way you can make sure you stay on track with your goals and provide feedback to team members as necessary. 4. Plan your activities and have weekly check-ins It is also important to incorporate OKRs into your weekly activities. Each week think about what projects and plans you should focus on to achieve those Objectives and write them out. This way you can see how all your eﬀorts help you achieve your goals. It’s good if once a week you check-in with your team to see how the OKRs are progressing and what they have been up to. You will learn more about weekly plans and how to run good weekly OKR check-ins in future chapters. 5. Review your OKRs At the end of the quarter each team should then look back at the accomplishment of their OKRs. See what you did well and what you can improve. It’s really important that you mark down your learnings. Even if you failed moving your Objectives forward percent wise, you might have gained a lot of new knowledge. From there you can start planning your team’s OKRs for the next quarter. Company wide, you should have an OKR review 2-3 times a quarter to share thoughts and learnings. We will go over in depth what it takes for a successful OKR quarterly review in a future chapter. Step by Step Guide to OKRs 23 Writing Good Objectives Before writing an OKR you need a good understanding of what you want to accomplish. First focus on your Objective. Think of the potential Objectives you’d like to accomplish this quarter, and ask yourself the following questions: 1. Does the Objective help achieve company goals? 2. Is the Objective inspiring? 3. Does this Objective provide business value? 4. Is this Objective really achievable in one quarter? 5. Is this Objective solving the problems our team is having? 6. Is this Objective actionable and achievable by just us? It is also important to consider what Objectives are not: Objectives should not be easy. If you are starting out with OKRs, create committed OKRs and try achieving 100% of your Objective in 3 months. It will help to support team morale and motivate people to set more ambitious goals next quarter. If an Objective is achieved well before the end of the quarter you weren’t thinking big enough. If you don’t reach anywhere near that, you may have set an annual goal instead. When you become more comfortable with OKRs, you will want to make them aspirational OKRs. When you hit 65-70% of an ambitious goal, it is still quite an accomplishment! This is why you should be satisﬁed if you only achieve two-thirds of your Objective in a quarter. That being said, you want to make sure that two-thirds doesn't become the new 100% for your team! Everyone should always aim to achieve 100% of their Objective by coming up with new ways to produce better results. We will talk more about committed vs aspirational OKRs in a future chapter. Step by Step Guide to OKRs 24 Objectives are not projects with sub tasks. Objectives are aspirational goals. They are not one-oﬀ activities, which would be considered tasks or plans. So if we wanted to write an Objective for a company to increase their revenue, a good Objective would be: O: Increase product reach in Germany in Q3 This Objective works, since it's aspirational, time bound, and helps move the company forward. An example of a bad Objective would be: Objective: Write a product marketing plan for Germany This is a bad Objective as it is not something that you will do all quarter, it’s not inspiring, and not forward-looking. With Objectives, it’s all about being qualitative. They should describe the desired outcome. For example: Understand customer needs is a good Objective because it’s clear and aspirational. You don’t need Objectives to be measurable, unlike with Key Results. Keep in mind that Objectives should also be time-bound. Either quarterly for Company or Team Objectives, or annually for Company Objectives. If you are setting company annual goals, you should further break them down into quarterly Objectives. There’s no point in setting goals at all if they’ll just carry over quarter to quarter without any improvement. They would then be KPIs, which are useful for monitoring the status quo. You can see more examples of Objectives for your given ﬁeld at okrexamples.co. To play around with deﬁning OKRs, sign up for free at Weekdone and try setting some OKRs with our OKR Wizard. Step by Step Guide to OKRs 25 Setting Key Results Key Results measure how close you're getting to achieving your quarterly Objectives. After analyzing your major priorities and deciding to focus on a particular Objective, you then need to decide on your Key Results. Remember Key Results are the way you measure your Objective. Key Results should be speciﬁc, measurable (quantiﬁable), achievable, actionable, objectively graded, and be diﬃcult but not impossible. It’s also important to think about what Key Results are not as well: Step by Step Guide to OKRs 26 They are not binary. Key Results should be numeric and be updated throughout the quarter. If your Key Result is binary it may be a task or plan and not a Key Result. Which moves us to the next point. They are not tasks to be completed. While plans and projects are important in supporting your objectives, Key Results are measurable business outcomes and should be treated as such. Before we made a good Objective example stating “Increase product reach in Germany”. Some good examples of Key Results for that Objective would include: KR1: Increase German Sign-up to MQL conversion rate from 15 to 20% KR2: Increase German MQLs from 300 to 500 KR3: Increase German SQLs from 200 to 300 These examples are measurable (quantiﬁable), objectively graded, and while challenging they should be achievable. A bad example of a Key Result would be: KR: Discuss how to market our product in Germany This Key Result is not numerically measurable and it is not objectively clear how it contributes to the Objective, as just discussing something doesn’t show any kind of progress. This would be considered as a thing to do. Remember that Objectives are large aspirational goals and Key Results are a quantiﬁable measurement of that goal. You can see more examples of Key Results for your given ﬁeld at okrexamples.co. Outputs vs Outcomes The biggest challenge that most companies face is that instead of deﬁning Key Results as measurable outcomes, they set a list of action based outputs. This goes against the Step by Step Guide to OKRs 27 whole point of OKRs. Let’s look at the diﬀerence between outputs and outcomes and why this topic is important. Output is just one term that can be used to describe activities. You can also call them initiatives, plans, projects, deliverables, milestones, tactics, etc. There is a slight diﬀerence in those terms, but within OKR methodology they mean the same. Output is an action that you take towards your goals. One thing is for sure, they are not measurable outcomes! Writing and delivering a new marketing plan doesn't mean that the new plan is good and that it will bring lots of new customers. Outcomes are the measurable results that you hope to see after you have completed your outputs. Outcomes are not about doing, they are about delivering real, valuable business results. If the marketing plan is our output then the desired outcome of it might be that executing the new marketing plan increases incoming leads from 4000 to 5500 per quarter. Everything has its place, and so do outputs. They are still important to achieve your goals but it's not where your focus should be, and it’s not a way to measure success. You need to keep your eye on measurable results that deliver business value. If something doesn’t deliver that success - then stop doing it! Step by Step Guide to OKRs 28 Why do Outputs vs Outcomes even matter? Writing a list of outputs instead of thinking about real business outcomes is one of the main reasons why companies fail with OKRs. The core point and value of OKR methodology is in setting measurable business outcomes. OKRs are about focusing on results that bring real business value instead of just doing diﬀerent activities. If you are not setting any measurable outcomes, then it's impossible to see the real beneﬁts of this methodology. A lot of companies say that "this is the way we do OKRs". Why do you put people through all the trouble of changing their workﬂow and adapting the new OKR method if at the end of the day you still keep doing the same projects and delivering outputs that aren’t driving the results you need? Focusing on outputs is yesterday's practice. Focusing on outputs is what a lot of companies are used to. The management sets its long-term or annual strategic goals and decides on how those will be approached. Step by Step Guide to OKRs 29 Meaning they set the high-level outputs, KPIs or metrics targets. And as we learned earlier, KPIs and metrics are not the same as OKRs! After setting outputs, they are cascaded down and teams are asked to deliver those diﬀerent projects on certain due dates. No one even asks why they are working on this, or even considers if something has changed in the business landscape they need to adapt to. The outputs get delivered and the team gets their praise because they are on time. But did everything work out and did these activities bring any business value? Was it even the right thing to do? Cascading outputs from management to teams has many other downsides, which eventually means that the company achieves less than it’s actually capable of. The cascaded outputs tend to be complex long term plans which can confuse the individuals they are assigned to. The most common downsides of cascading outputs Lack of clarity brings low business value Cascading outputs mean that people just know what they need to work on but they are missing the why. It’s hard to deliver something good if you don’t even understand why you are doing it. For example, you have to write a new marketing plan. But if you don’t know why then how do you know what areas the marketing should be improved? You might decide to focus on cooler ad designs but what the company actually needs might be more high-quality leads. Cooler ads are just cool and attract even more unneeded leads. So no real clarity equals low business value and you have just wasted a lot of your valuable time. Step by Step Guide to OKRs 30 Step by Step Guide to OKRs 31 Unmotivated employees If employees feel that their opinion is not valued in making decisions about the right things to improve, even though they are the experts in some areas in the company, it can cause low motivation and productivity. If you know more about motivational theories, you would know that self-realization and feeling valued plays an important role in employees' work motivation. Also, low clarity and not delivering business value might mean that management is unhappy because things are not actually improving. That dissatisfaction is passed down to the employees who feel that they are just constantly doing something but things are not progressing for the better. Think for a second, how long would you be motivated if you feel that you put in a lot of energy but it just doesn’t work out? Probably not for very long. Without any input from teams, management can make the wrong decisions Even though management is a group of people who are leading the company, it doesn't mean that valuable input and information can't come from other employees. People who work in certain job positions, like sales, marketing, etc. daily are probably the best people to tell you what seems to be working and what needs improvement in those areas. Management should collect this information and help teams set and align their goals. For example, management might see that revenue isn’t coming in as it should and sets a goal for Sales to get more customers. But just reiterating targets doesn't make targets happen. People in sales, on the other hand, know that they could upsell a lot of current customers and could focus on that to increase revenue. Bringing in more customers is harder and keeping old ones adds more long-term value. Outputs might simply not work Upper-level management might think that they have chosen to work on something that will bring the company a large beneﬁt but what if they are wrong? If you are focusing on the action and not the results that you are hoping for then how do you know when you Step by Step Guide to OKRs 32 are oﬀ track? Time is valuable, so why would you spend your time on just doing things if focusing on results could help you choose the right things to work on. If you want to be the next Google you need to be ready to adapt OKRs as they are. Not just calling what you're doing OKRs without really putting in any eﬀort. What are outcomes and how to set correct Key Results? Outcomes are the measurable Key Results and the success indicators of your Objective. When the Objective deﬁnes the direction and the focus then the Key Results help you to understand what you are looking to achieve. Key Results measure the success to know when you have achieved your Objective. Let's continue with the new marketing plan example. Your company realized that you need more leads to increase sales. Marketing wants to write a new marketing plan to try to increase leads. In that case, your Marketing team Objective might be "Increase our brand awareness to bring in new leads". The new plan is just a way to approach this. From this Objective we can see that we need to deﬁne Key Results in at least two areas: 1) What measurements will show that we have done a good job sharing our brand? and 2) How many new leads are we hoping to get? Depending on what works best for your company, there are many ways to measure if you have made your brand visible to new audiences. If you have a blog you could set a KR saying "Increase blog new visitors by 35%". And you could try to be more visible in social networks as well by setting a KR "Increase Linkedin average post views from 40k to 56k". Your ﬁrst thought may be that we will set a Key Result to publish one new post per week. This is an output, not an outcome! Maybe the article is bad and no one shares it. Or it doesn’t start ranking in search engines and doesn't reach many people. In that case, we can't say that we have increased our brand awareness. Focus on the outcomes! If the article did not bring the results then let's analyze why and not keep writing more useless articles. Step by Step Guide to OKRs 33 When it comes to getting more leads, think about what you actually want. Do you want just more leads or you want leads that actually convert to customers as well? Probably the latter. That means if you do not know yet which kind of leads have the highest chance of ending up as customers, then it's time to look into it. You should start by deﬁning the requirements for Marketing Qualiﬁed Leads (MQL). Based on that we can set a new Key Result saying "Increase Marketing Qualiﬁed Leads (MQL) from 3000 to 4400". Again, any lead doesn’t count, only the ones that match the MQL criteria. And we have our Objective with proper, measurable, outcome-based Key Results: Keep asking “Why” As you can see from the example above, setting Key Results is like being a curious 5-year-old who is continuously asking “WHY?”. The why questions are a good way to take you from the ﬁrst ideas (which are usually outputs), to a deeper understanding of the actual needs. The "why" is the outcome we need for the business. If you are stuck with setting outcome-based Key Results, ask someone to keep asking you “why” and continue the dialogue until you are happy with what you are hearing. Let’s go through more examples. Sales example: (Bad) KR: Implement new sales process Why?: “Because our results are too low right now.” Why?: “Because our sales take too long and we can’t sell enough in one month.” Step by Step Guide to OKRs 34 Our outcome isn’t that we have the new process, this is our output. The real outcome that we are looking for is that we could close sales faster. We just need to deﬁne how fast is enough. Our KR could be something like: KR: Reduce lead to closed sale average time from 14 to 10 days. If the new process doesn't bring immediate results, we need to keep improving it until we have reduced the average close time. We keep the focus on the measurable outcome! Product Team example: (Bad) KR: Update our in-product onboarding tips Why?: “Because customers do not follow them.” Why?: “There seems to be too many and they get tired of them.” What we actually want is to have less but useful onboarding tips so customers would complete all of them. We could set two good Key Results from that. One focusing on making onboarding shorter: KR: Reduce onboarding steps from 15 to 7. And another making sure that now customers are really completing them: KR: Increase onboarding steps completion rate from 20% to 56%. If you focus on just updating the tips, it may not make any diﬀerence. You need to understand why you are doing this and if it really helps. Outcomes drive the business forward, not outputs Remember, that output is an action or a delivered project, document, etc. It just shows that something is done! Outcome is a measurable result that helps you see if something you did brought any business value. You need to start focusing on outcomes because this is what drives the business forward, motivates people, and brings in more clarity for the people in your company. Outcomes also help you to deﬁne which projects are important to work on now. When you clearly see the results projects bring, you can stop Step by Step Guide to OKRs 35 wasting your valuable time on something that isn’t worth the trouble. Here is a quick tip on seeing if your Key Results are outcomes. Does your Key Result have a number in it? If not, then most probably you have an output instead of outcome. And if there is a number, make sure that you aren’t just measuring the number of tasks but the desired outcome of those tasks. Remember, keep asking “why”! Step by Step Guide to OKRs 36 How OKRs and KPIs can coexist While KPIs are business metrics that reﬂect performance, OKR is a goal-setting method that helps you improve performance and drive change. So KPIs let you know what you need to analyze to determine the basis for your OKRs. There are two speciﬁc instances when a KPI number suggests that an OKR is needed to address a particular issue: If you’re falling behind on your KPI target, you need an OKR to put everything back on track. If you want to achieve a more ambitious KPI target (like a big revenue number), you need OKRs that will guide you there. OKRs are the bridges between where you are and where you want to be. The purpose of the OKR methodology is to single out improvement areas for the quarter and focus your teams’ attention on delivering valuable business results. Step by Step Guide to OKRs 37 If you have discovered that you’re falling behind on your KPI targets, how do you identify the problem? How do you know what’s causing you trouble? To understand why the team is falling behind, you need to analyse cause-eﬀect relationships in your business environment and understand what’s changed. Sometimes the change you’re seeing is a by-product of a diﬀerent issue that you need to solve ﬁrst. As we stated in the previous chapter, to get to the root cause of the problem, you should continuously ask “why” something is happening. So if your Sales team KPI target is to close 50 new paying customers per month, and now they are only bringing 30, here’s how you start digging: If you have discovered that the issue is indeed customers choosing another oﬀering, ask your teams to suggest their OKRs to increase the competitive strength of your product by setting this as a Company Objective. The focus area for diﬀerent teams could be on improving certain aspects of your product/service, marketing activities that could attract more potential buyers, Step by Step Guide to OKRs 38 sales process, communication channels or something else. Deciding on what matters most is the foundation for writing Objectives and Key Results. Here’s an example of what Team OKRs might look like. Product Team Objective: O: Increase engagement in our product KR1: Increase average session duration from 10 min to 25 min KR2: Analyze competitor’s oﬀering and implement top 3 improvement ideas. KR3: Increase average daily activity per user by 12%. Action plans: 1. Make a list to compare our product with the competitor and brainstorm ideas for improvement. Step by Step Guide to OKRs 39 2. Reach out to loyal customers and ask for feedback. 3. Design and launch a “wow” feature to ignite discussions and trigger customer engagement. Marketing Team Objective: O: Leverage “social proof” to increase credibility and improve reputation KR1: Get at least 15,000 views on our testimonials page. KR2: Reach an average click-through rate of 20% in the communication campaign. KR3: Increase the number of shares on Linkedin from 30 to 1000. KR4: Reduce an average acquisition cost per customer from $100 to $20. Action plans: 1. Partner up with thought leaders to promote our testimonials page. 2. Reach out to power users and ask to share their success stories in video format. 3. Brainstorm ideas for LinkedIn marketing. Sales Team Objective: O: Personalize sales approach and nurture new potential customers better KR1: Increase the number of touchpoints with a new lead from 3 to 6 KR2: Increase follow up email open rate from 14% to 45% KR3: Reach 8/10 average score on customer satisfaction survey with at least 100 responses Action plans: 1. Update the customer journey map to improve the nurturing process. 2. Take a course on best practice email approaches and consult with the Marketing team. 3. Create diﬀerent oﬀers for diﬀerent use cases, review the sales pitch. Step by Step Guide to OKRs 40 Key Results are not the same as KPIs Both Key Results and Key Performance Indicators are measurable and both reﬂect a team’s performance. What’s diﬀerent, however, is what exactly you measure and how you come up with those measurements. KPIs reﬂect performance but don’t tell you what needs to change or improve to drive growth of those numbers. They are high level business metrics that you analyze with precise frequency (yearly, quarterly, monthly, weekly, etc.). When you see the numbers dropping below target, you should go deep into analysis, identify bottlenecks and constraints, and determine what needs to be changed, ﬁxed or improved. And once you’ve decided on which area needs improvement, you write an Objective focused on that area and Key Results to measure how close you’re getting to this Objective. So Key Results are speciﬁc to a particular focus area represented by an Objective. There are always a million things a team could do to improve a KPI number, and that is why the Objective of your Team OKR has to be speciﬁcally focused on a valuable improvement area. If everything is a priority, nothing is. So choose wisely and direct your team’s attention towards speciﬁc outcomes. Customer Success example Let’s say company A’s Customer Success team has a KPI target of 100 meetings per quarter. They realize that to onboard more customers and increase customer lifetime value, they need to have more meetings. So they decide to pursue a much higher KPI target of 300 meetings per quarter. This is an explosive KPI growth target. Step by Step Guide to OKRs 41 What exactly do they need to focus on to deliver on this KPI target? Will they focus on new customers or the ones who subscribed in the past 6 months? When are the customers more likely to book a meeting? What has to be true for them to have interest? How will the team approach this: through email communication, in-product notiﬁcations or a landing page? Where in the sales funnel should the changes happen: early on when potential customers are still learning about the service or somewhere in the middle when they discover its value hands-on? Would it be more impactful to focus on long-term customers and engage them more often? How many meetings per customer is enough to make sure continuous usage and engagement? If customers are not booking follow ups, is it because of the bad ﬁrst impression? Should the team consider improving the sales pitch and demo approach? So… what does it mean exactly “to increase the number of meetings” and why is that important? Step by Step Guide to OKRs 42 In the reasoning process and in team discussions, it will become clear that some areas are more impactful than others, and you have more faith and conﬁdence in some ideas for delivering actual change. Place your bid on the highest impact idea and deﬁne how you will measure success of achieving this Objective. These measurable outcomes will be your Key Results. We’ve established that Key Results should be narrowly focused to pinpoint what outcomes you need to achieve to reach the Objective. To continue with our example, let’s imagine that the Customer Success team decided to focus on the customers who subscribed in the past 3 months and increase their engagement. The team will apply diﬀerent tactics to deliver on the desirable outcomes. But which outcomes are desirable here? Usually companies think that the KPI should be one of the Key Results under the Objective, but this isn’t the best practice. Instead of writing “increase the number of meetings from 100 to 300” (which is just reiterating the KPI target), try to identify an outcome that the team can inﬂuence on an ongoing basis. Something that they can track every week and take action when the progress is at risk, for example: “increase the number of follow-up meetings booked [a speciﬁc type of a meeting] from 7 to 21 per week [measurable on a weekly basis]”. Remember, you should have at least 2-3 and no more than 5 Key Results per Objective. What other outcomes will the team try to deliver? Customer Success Team Objective: O: Increase engagement with new paying customers KR1: Increase open rate of our in-product communication from 4% to 15% KR2: Increase the number of follow-up meetings booked from 7 to 21 per week KR3: Achieve service quality rating 9 out of 10 based on the post-meeting anonymous poll KR4: Reduce average response time from 5h to 1h Step by Step Guide to OKRs 43 Now, when the team has drafted the Key Results, look at them and ask yourself: do you know what the team will do next? Is there an action plan that will move the needle on these Key Results? Numbers won’t change without an action plan. Action plan: Analyse open rates from the previous quarter and draft new copies for in-app messages. Personalize outgoing communications. Create a high quality FAQ section and stock answers to speed up responses. Survey our high engagement customers to ask what they like in our services. So, for OKRs to work, you need to deﬁne the Objective so clearly that it would shape the thought process and prioritisation framework for the entire quarter. Knowing the actual outcomes helps the team to choose the right tasks to work on, and not to waste their time on pursuing everything that comes to mind. Everyone should stay focused. Marketing example If your Marketing team KPI is to bring 2000 qualiﬁed leads to your website per month, and now they are falling behind on this number, your ﬁrst impulse might be to create an Objective: Increase the number of high quality leads, with the ﬁrst Key Result being: increase the number of qualiﬁed leads from 1500 to 2000. Reiterating your KPI targets in your Key Results will not help you achieve them. So consider a closer look into the reasons behind the KPI changes and maybe there’s a diﬀerent approach or a better path you could take. A KPI simply lets you know that there is an issue, but Key Results should be measuring success or failure of your Objective. So if the Objective is really to increase the number of qualiﬁed leads, what outcomes would you like to deliver and what Key Results should you consider? Perhaps 50% of the new leads were coming from a free ebook. However, this ebook is now 5 years old and over the years the percentage of leads has been going down regularly. Step by Step Guide to OKRs 44 You may want to write a Key Result to focus on updating the ebook and generating downloads of the new edition. Other Key Results may be about diversifying your communication channels and nurturing leads for them to reach your qualiﬁcation criteria. Marketing Team Objective O: Increase the number of high quality leads KR1: Reach 3000 downloads of the updated version of the free ebook. KR2: Increase traﬃc from software review platforms from 500 to >2000 leads. KR3: Reach >2000 reads per article on our new blog content. Don’t confuse OKRs and KPIs There shouldn’t really be the word “versus” between OKR and KPI since they do not compete for your preference. They coexist very well and you should use both frameworks in your business but for completely diﬀerent purposes. Use OKRs for goal-setting and improving your business and KPIs for monitoring general business performance. Most companies choose to track their KPI targets in a spreadsheet where you can be as detailed as needed: Company KPIs -> Department KPIs -> Team KPIs -> Individual KPIs, and track those per year, quarter, month, week, day or even per hour. For improvement-oriented and focused goal-setting, you should deﬁnitely use OKRs. The OKR methodology oﬀers great beneﬁts for organizations. The best way to achieve success with the methodology is by using dedicated software like Weekdone that allows company-wide transparency, eﬀective communication of priorities, and, most importantly, alignment of Objectives. Step by Step Guide to OKRs 45 Committed and Aspirational OKRs As we mentioned in the beginning of this book, when it comes to OKR methodology there are two types of goals one can set – committed or aspirational OKRs. Committed OKRs are ones that your organization or team has agreed to execute and might have a clear action plan for achieving. Aspirationational OKRs are more visionary and likely won’t get completed 100%, but they are important for moving towards the future. While just deﬁning these types of goals is easy enough, it doesn’t give you a real picture of the diﬀerence between the two. You need to think about when you should choose one type of OKR over another. In many cases, you will even combine them together. Let’s go over the diﬀerences between committed and aspirational OKRs and provide examples of each. Hopefully it will give you some insight into which will work best for you and your team. Committed OKRs A committed OKR should be achieved by 100%. The success of a committed Objective is critical to the success of the company or team. The outcomes of these Objectives should push you to be better, but they should still be achievable. Committed Objectives describe business-as-usual and the Key Results should be reﬂective of expected measurable outcomes. Committed Key Results are often considered roof shot goals where 100% progress is expected. It’s important to remember that even though committed OKRs are more like business-as-usual, they still are still goals! This means a committed Objective isn’t a target like the number of client meetings or calls month-to-month. A target is usually the expected level of performance that is needed to keep the company going. OKRs are all about growth, going through some needed changes, innovation, etc. They are pushing the company to have better results. Committed Key Results Even though KPI or metric targets and OKRs aren't the same things, your KPIs can become your OKRs in some situations. First, if your KPI hasn't been met and it's starting to cause a problem. You probably need to have some improvements to restore its Step by Step Guide to OKRs 46 historical level. The second situation might be that you have decided that you just need to improve some KPIs to achieve some of your Objectives. For example, one of the KPIs in your company is Net Promoter Score (NPS) and it has a target of 50. Now, this is something that you should keep an eye on, but you can expect to hit the target by just doing your day-to-day job well. It shows you the health of the company and if it's good, it doesn't require any extra action. Now let's say you are starting to see a drop below your usual target. You might have a problem and you want to improve the situation. To solve this you might set an Objective to improve the NPS. NPS will now be your team's central focus. Once you have set an OKR you will also want to set plans that help you to drive the NPS back above 50. Once you achieve your Objective and get your score back to 50, it will become just another KPI to keep an eye on again. From there it's time to improve or change something else in the company. You might have many diﬀerent KPIs or metrics that show you how your company is doing but you should choose only a few and the most important OKRs to work on and drive the focus to for the quarter. Committed OKR Example Having an Objective means that your team needs to put your heads together and think of various ways to achieve it. If later the Objective is achieved by doing what you usually do, then the Objective lacks drive. You should rethink it by testing new ideas or doing changes to the work culture. Committed OKRs may also focus on making necessary changes in the company as well. For example, you have internal communication processes in place but the information still goes missing or moves too slowly, which has led people to feel frustrated. That’s a sign that you need to rethink your internal communication process and you need to get it working well. You could set an OKR like this: O: Improve internal communication process KR1: 80% of employees have answered the communication survey KR2: Analyze results and choose 5 improvement areas to execute Step by Step Guide to OKRs 47 KR3: Interview 40 employees; 35 of them should conﬁrm that they have seen an improvement Once committed Objectives are achieved within the quarter then usually new ones are set for the next quarter. If you keep having the same OKR quarter after a quarter then you may just be measuring KPIs and not setting Objectives. Aspirational Objectives If a committed OKR was realistic and needs to be achieved around 100% then aspirational OKRs are the lofty and ambitious Objectives where 100% completion is likely impossible. Aspirational Objectives should be set with very high bars. Achieving these OKRs brings huge success, but the risk of failing is high as well. Usually, 65-70% progress achievement can already be called a success. But you have to be careful. While these goals should be just out of reach, it’s important that people still take them seriously and aim for the highest possible result. If 66% becomes the new 100% in people's minds, nobody will push hard enough. Aspirational OKR example Aspirational OKRs are also called moonshots. Like the term implies, it’s about aiming high. What you measure with the Key Results can be the same for committed or aspirational OKRs, but how big the stretch is will deﬁne which type of goal it is. For example, a Sales team committed OKR might be: O: Expand to the German market KR1: Close ﬁrst 5 enterprise customers KR2: Achieve sales circle average (from lead to closed) of 27 days KR3: 15% increase of Q1 revenue for the German Market To make it aspirational we could make it look like this: O: Expand to the German market and start taking over the market KR1: Get 10 enterprise customers to switch to our product Step by Step Guide to OKRs 48 KR2: Achieve sales circle average (from leads to closed) of 15 days KR3: 20% increase of Q1 revenue for the German Market Both examples cover expanding the company and entering into the German market. The diﬀerence between the two examples is that the committed one is more realistic and completion of all the Key Results is necessary to call the venture a success. The aspiring example is aiming high. Their goal is not just to successfully enter the market but also to start taking over the market. That one is a lot harder, almost even impossible to achieve in such a short time frame. As succeeding with aspirational OKRs might be very challenging, team or company-wide readiness is very important. The company has to be open to testing new ideas, failing, trying again, and learning from the process. Also, before setting aspirational OKRs, your resources should be evaluated. There’s no point in setting high OKRs if you don’t have the time or manpower to work on them weekly. With any type of OKRs, you should consider and record your weekly initiatives towards them. Aspirational OKR example You are a Software as a Service (SaaS) company and you have diﬀerent features in your product. Feature X isn’t performing as you would like and you can see that it is harmful for the overall reputation of the product. Only 10% of the users use the feature and you get many complaints about it. You have tried to do some small changes, but the maximum use case has been 12%. You want to improve the feature to avoid negative responses and you also know its value but it’s not comprehensive right now. If potential customers could see the value it could actually bring in more revenue. From there, your Product team sets an Objective “Improve feature X” and one of the aspirational Key Results is feature usage increased from 10% to 35%. As mentioned before, 12% has been the highest before so 35% is a really high bar! The Product team doesn't even know if it’s doable but they are ready to put in the eﬀort and try to achieve it. Even getting the usage up to 15% would be a great success, but hitting the 35% could make the product a lot more valuable. This would have a noticeable eﬀect on company revenue! Step by Step Guide to OKRs 49 The balance between them Committed Objectives are the best to use when you ﬁrst start implementing the OKR methodology. By changing the way you are thinking about your existing goals, it makes it easier for people in the company to form a new habit. Becoming a result-driven company needs time, discipline, and changes in how people and management think. First, your focus should be on adapting the methodology and setting up the necessary process around it. If you start with too many aspirational OKRs then people can easily feel overwhelmed. Everyone needs to adopt a new habit and on top of that, the goals are set really high. It’s just too much to handle. Once your company is more used to the OKR methodology, you can start setting some aspirational OKRs or just some aspirational Key Results. As mentioned above both the whole OKR or just one Key Result under each Objective can be aspirational. That means you either have a whole goal with all the results aiming high or you have a goal where some results are committed and easier to achieve and some are aiming higher. The exact number of the aspirational Objectives you should have depends on your company's resources but remember, the less you have the stronger the focus and chance of achieving success. Step by Step Guide to OKRs 50 Personal OKRs OKRs can be set on many levels but that doesn’t mean they should be set on every level possible. One common misconception is that OKRs should be set on an individual level. It makes sense that people have their weekly plans and maybe also a list of individual KPIs. But OKRs are a bit diﬀerent. They rarely produce any business value if they are set on individual levels. Of course, that doesn’t mean that individuals do not work towards any goals. They do, they work collaboratively towards their team goals. Let us explain why your company shouldn’t ask people to set individual OKRs and should instead focus on Team OKRs. Team level vs individual level goals When we explain to customers that OKRs should be set on a team level, and personal level goals are not needed at all, they are at ﬁrst resistant to this idea. They think that for success they need to tell each person to set goals and later keep a close watch on how each person is doing. Companies hope that individual OKRs add more responsibility and therefore people take more action. But what we see happens is that people feel frustrated and don’t understand why they have to do it. They set easy and rather task-based goals which actually doesn’t bring any value to the bigger picture. Instead of collaborating and creating brilliant ideas together, they struggle alone with small tweaks. Eventually, forcing individual OKRs might just kill any motivation to do OKRs at all. Don’t get us wrong, we are not saying people never need goals. Individual goals are important, but their focus should be on personal development. There is a huge diﬀerence between setting team goals that drive the company forward versus people developing themselves to have a better career and happier life. Team OKRs don’t mean people are any way left out of the process. The purpose of Team OKRs is to actually focus people to work towards them every day. To prove our point, let’s walk you through one example. This kind of scenario is something that happens to many companies. Step by Step Guide to OKRs 51 Company Blue implements OKRs to drive improvements Company Blue is a software company that oﬀers productivity and tracking tools for businesses. They have been on the market for a couple of years and are still ﬁguring out some things. For the last half of the year, they have been having problems with revenue. It’s clear that they need straightforward goal-setting to drive improvements and focus on measurable results. They decide to set OKRs and start the necessary learning process and discussions. Management starts by thinking about what the overall focus should be for the company. After discussing with the team managers they realize that their approaches and processes need to be improved. There are not enough leads, Sales take too much time or fail completely, and the product has problems with on-time and bug-free releases. Management decides that the company’s overarching Objective will be to improve our processes to drive revenue back to positive. Now, it is time for the teams to set their goals. Here are two ways how this company can approach OKR settings: ﬁrst is by focusing on Personal OKRs and the second is by focusing on Team OKRs. Wrong approach – focusing on personal goals After the management discussion, the Sales Team Manager goes back to his team and announces that the results are low and everyone needs to set goals for themselves to have better results. Team members are struggling with setting the goals and it takes a month before everyone has decided on their “OKRs”. People end up writing down how many meetings they need to have, what kind of email templates they need or what sales books to read. Instead of measuring outcomes they mostly end up counting how many things they plan to do. Everyone is thinking about their own results but not what Sales as a function should improve. Personal goals become more important than having better results as a team. At the end of the quarter some results might come in, but the problem is that people have been pushing hard to get the results for their personal goals, which have been tiring and they are losing motivation. Personal goals were just micromanagement and Step by Step Guide to OKRs 52 took focus away from the bigger picture. Even the ones that were written well didn’t actually help move the team forward. The team members might be smarter in some ways but if they decide to leave the team, so goes the new knowledge. If each person has their own goals to achieve, then other team members’ problems are mostly their own issues. I have my own eﬀorts to make, why should I put my energy into yours? Instead of working together as a team, people might end up competing with each other to have better results on their personal goals. Also, because the team never focused on setting actual measurable and business value-oriented Key Results on a team level, they don’t know how much or if anything was improved. Or even what or exactly how they were supposed to improve. This isn’t what a team should be doing and it doesn’t move the team forward. As Henry Ford said, “If everyone is moving together, then success takes care of itself”. We think time has proved that he deﬁnitely knew the secrets to a successful business! Let’s take a step back to the beginning of the story. Now, instead of asking people to set their personal goals, teams will set their OKRs together. The right approach – focus on team improvements The company shares its overarching Objective “Improve our processes to drive revenue back to positive”. Now it’s time for the teams to set their contributing goals. The Sales team knows that current approaches do not work and they need to change something to start selling more. After discussing together with the team, they have concluded that something is up with their sales process. It takes too much time to close deals. Many potential customers seem to get tired in the process so they go to competitors. The Sales team chooses to set a quarterly Objective “Speed up our sales cycle”. It contributes to the Company Objective and should eventually help to increase revenue. After setting the Objective, the team also sets Key Results. For example, good Key Results would be: KR1: Reduce lead to sales time from 60 days to 31 days on average KR2: Increase SQL to trial conversion rate from 30% to 60% Step by Step Guide to OKRs 53 Once the OKR is agreed upon, the team starts working on achieving it. Now, even though it’s a team goal, each person has his or her own role and responsibilities. Each week team members set new plans to execute and the week after they check how much was done. They share lessons learned to improve their collective knowledge. Together they measure the progress of Key Results and discuss any occurring challenges. Because they are working together as a team, they can make decisions that have a bigger impact and change how Sales operate. Everyone can test new ways and collect feedback. Which is later shared and conclusions are made based on the experience of the whole team, not just one person. At the end of the quarter, the Objective is achieved with really satisfying progress of 82%! Sales take less time, fewer customers drop oﬀ in the process which means it also helps with increasing revenue. The Sales team has been improved and is ready to take on another challenge. When the Team Objective is accomplished, the positive change is rather long-lasting or even permanent in some cases. It doesn’t matter if someone is on sick leave or leaves the company permanently, the Objective has improved the Sales process and new ways can be applied by anyone. Instead of just working harder, people work smarter. Which means they are more motivated and bring more to the table. What can we learn from this example? 1. Personal OKRs are not valuable to the business, they are for personal growth. Even though personal growth is also important, teams need to focus on their collaborative growth as well. For that, teams should focus on team-level goals. Individuals can always set their own goals as well if they want to but it’s not something the company/team needs to think about. Or, more importantly, it is not something that should be demanded from people. 2. Personal OKRs set limits and end up driving small tweaks and quick ﬁxes that are in many cases dependent on more eﬀort. Personal OKRs do not drive actual positive change on a team level. Rationally speaking, one person in a team of 5 can’t change the Step by Step Guide to OKRs 54 whole sales process. But when the team works on it together, they are more likely to succeed in changing the sales process as a whole. 3. Personal OKRs drive people to be competitive and divide the team while Team OKRs encourage collaboration and exchange of great ideas. With Team OKRs, people are not struggling alone with the challenges. Those become team challenges that will be solved a lot quicker because many heads are put together. 4. Personal OKRs make the company dependent on certain persons while Team OKRs improve the team as a whole. It reduces the risk for the company. The positive changes made while executing Team OKRs are long-lasting vs having small personal changes that are always dependent on a certain person’s eﬀort. Teams should not lose their capability to function and deliver good results if people leave the company. Of course, if new people join the team, it takes time to adapt but if the team has everything in place then the results follow fast. 5. Team OKRs are a lot more motivating. Team members can work together on things, encourage each other and help each other out with the challenges. Results should be celebrated together! It’s much better than constantly worrying if I can achieve enough on my personal goals, and what should I even do. 6. Personal OKRs slow down the company. Imagine if everyone needs to set their own OKRs… which is pretty hard because OKR principles are hard to follow on an individual level. Then the managers need to make sure that this somehow aligns with what the team or company wants to do. That is a lot of back and forth reviewing and agreeing. Eventually, you will have tons of tasks listed as Key Results and focus from business-valuable outcomes is shifted to just doing things. Believe us, people will be tired and they won’t see value in that. As a summary: Personal OKRs is a bad idea Google tried Personal OKRs, it didn’t work. Spotify tried Personal OKRs, it didn’t work. We tried them too in Weekdone. They didn't work as well. So this is a friendly recommendation from many companies that learned this lesson the hard way – focus on Team OKRs and do not force your people to set their own Personal OKRs! Step by Step Guide to OKRs 55 To motivate you even more to throw out the idea of Personal OKRs and focus on the Team OKRs instead, here’s another saying from a man who deﬁnitely knows what he is talking about: “Great things in business are never done by one person; they’re done by a team of people.” -Steve Jobs Step by Step Guide to OKRs 56 How to Write Actionable OKRs A goal without a timeline is just a dream. People believe in this idea, and yet they still approach the goal-setting process superﬁcially. Bad goal setting in business means your team may never get around to achieving much. If you want to set powerful and actionable goals that have an impact, you need to learn how to set and write them properly from the start. We will cover 4 practical tips that you can use to determine what matters to your business right now, so you can write relevant and actionable OKRs. Rule #1: Identify the problem correctly. Rule #2: Keep asking why. Rule #3: Come prepared to brainstorming meetings. Rule #4: Focus on what matters. How actionable OKRs help you succeed Rule #1: Identify the problem correctly To illustrate this point, let’s borrow an example from Teresa Torres, Product Discovery Coach, and tell you a story. Imagine you own a business in the 16th century: transporting goods by sea from Europe to North America. Your biggest order is just about to be shipped oﬀ across the Atlantic, so you organize a meeting with the captain and senior members of the crew. You ask them: "Is there any speciﬁc problem we should tackle before you leave". And the captain is the ﬁrst to answer: "We need to make sure everyone on the ship is healthy and able to work, and we're often struggling with lack of Vitamin C, the disease commonly known as scurvy. It's dangerous and can delay us signiﬁcantly." "How do we prevent or treat scurvy?" "Citrus is rich in Vitamin C, so we should bring oranges with us," – says one of the most experienced members of the crew, and another one jumps in: "That's right! But oranges are hard to peel, can we bring grapefruits instead?" Step by Step Guide to OKRs 57 Another person reasonably points out: "Grapefruits would be too expensive and very hard to ﬁnd at the moment, can we go with apples instead?" And so it's settled, the crew is to bring apples on their journey. Somewhere in the middle of this seemingly logical conversation, the crew forgot that the problem they were solving was not about feeding the team a type of fruit, but about treating scurvy. And severe Vitamin C deﬁciency cannot be prevented or treated with apples, so the solution does not solve the problem which means the crew will not reach the destination on time or at all. What does this story tell you? Obviously, you cannot come up with a solution without discussing the problem. But how do we stay on track and how can we tell a convenient ﬁx (apples) from the actual solution (oranges)? Let's imagine that (instead of crossing the Atlantic successfully) the leadership of the modern-day company set a quarterly Company Objective to improve internal processes and encourage cross-team collaboration. As a uniﬁed direction, the Company Objective Step by Step Guide to OKRs 58 would lead the teams to think about their role in the company and how they can contribute to the overall success. Each team should have a productive discussion and ﬁnd the answers to the questions: What can we improve? What is slowing us down? What can be changed for us to have better results as a team? Through this discussion, the Marketing team of the same company came to realize that they are not able to allocate time to participate in cross-team collaboration, and they need to reorganize their workﬂow. One of the team members suggests: “We don’t have enough time to execute our ideas because our meetings are too long.” Their ﬁrst impulse might be to cut the time spent in meetings and, eventually, cancel those meetings altogether. But without those meetings, the team members could become even more disengaged. Because when no one communicates their ongoing progress, things tend to get much worse. It becomes clear that the problem wasn’t solved because the most obvious solution was not the right one. So, one way to avoid false reasoning is not to jump to conclusions. "Because our meetings are too long" clearly suggests a solution – to cut meetings short, so when you're identifying a problem ("we don't have enough time to execute our ideas"), don't suggest an immediate solution, it might not be the right one. The issue in the Marketing team clearly was: “We spend too much time talking, and not enough time doing things” but the duration of the meetings was a symptom and not the root cause of the problem. Now, how do we ﬁnd out what’s really behind this issue? Rule #2: Keep asking why Five Whys was developed by the Toyota Motor Corporation to improve their manufacturing process. The technique has been borrowed and implemented by thousands of companies around the world. In Five Whys you keep asking yourself “why something is happening”, with every following “why” being based on the answer to the previous one. This helps you get to the root cause of the problem. Step by Step Guide to OKRs 59 The management team in the ABC company has found a problem to solve, they say: “We spend too much time in meetings.” Let’s ﬁnd out what’s causing this issue. So the meetings are long because people are not prepared and there is no clear agenda. Perhaps there’s no preparation whatsoever, and participants come to the meetings with everything they’ve got and go with the ﬂow. Now that we know the root cause of the problem, how do we write an OKR that can help us focus on solving this issue? The Objective might be to implement best practice weekly status reporting and improve teamwork. But what does it mean and how will they measure the success of this Objective? This is the question you ask to write Key Results – measurable outcomes that the team wants to deliver. In this case, the ﬁrst Key Result might focus on the time management issue that the team has identiﬁed from the very beginning: for example, reduce the average time per meeting from 120 to 45 minutes. But it is not enough to cut the time spent in meetings – Step by Step Guide to OKRs 60 what if it doesn't impact productivity at all? How will the team know that they are managing their work better? To make sure that improvement is on the way, the second Key Result might be to complete 90% of prioritized plans each week and move them to "done". Getting things done is the direct outcome of better time-management and eﬀective communication. To improve teamwork and accountability, the third Key Result could specify outcomes related to the implementation of the most valuable ideas that come from team members: for example, implement the top 3 most upvoted improvement ideas from the team. Here is what this OKR would look like. With our expectations numerically deﬁned and desired outcomes clearly communicated, we can actually get things done by completing prioritized plans on a weekly basis. From the example, you might have noticed that Team Objectives and Key Results: address what matters to the business right now, will be executed by a team in collaboration, are set for a quarter, should be updated on a weekly basis. Step by Step Guide to OKRs 61 With the Key Results being the numeric outcomes that you want to achieve, you still have the possibility of trying out diﬀerent plans and activities to move those numbers. The team might start by organizing a clear agenda for the meetings, brainstorming improvement ideas, ﬁguring out the best approach to prioritize plans, and evaluate their impact. There are many things that the team will learn in the process, and it will deﬁnitely result in more trust and mutual understanding. Rule #3: Come prepared to brainstorming meetings Creativity thrives in the sweet spot between too much order and too much anarchy. The computer scientist, Christopher Langton, concluded a long time ago that innovative environments are borderline chaotic but not completely without discipline. That brings us to the topic of organized brainstorming. Brainstorming is often reduced to letting everyone speak their mind and exchange ideas with no restrictions. These are the meetings that last for hours, very often bringing no practical value in the end. To tap into the collective intelligence of your group, you should introduce some restrictions to the ideation process. Creativity asks for restrictions because, evolutionary speaking, our brain works better when it’s challenged with overcoming obstacles. Restrictions force us to think harder and think better. So before scheduling a brainstorming meeting, structure your teams' thought process and ask them to answer these questions: Step by Step Guide to OKRs 62 The answers to these questions would present good ideas for your Objectives that could be further discussed and recorded in a shared document for later review and feedback. Download our free spreadsheet for recording and categorizing ideas. When the answers are thought through and added to the shared document, allow a week for reading each other's thoughts, give feedback and hold 1:1 discussions. When the most shared concerns are clear and particular Objectives are upvoted by most of the team, you can ﬁnally schedule a brainstorming meeting with a clear purpose: to come up with an action plan for execution. Rule #4: Focus on what matters When you are building new software from scratch, you need to ﬁgure out “what happens if I click here” before you can even start optimizing around what color the buttons should be to generate more clicks. That’s why roadmaps were invented. Because you can’t get from Paris to New York without crossing the ocean. And to reveal what’s hiding around the corner, you have to move your feet ﬁrst and point your searchlight into the shadows. Imagine that your company set out to go viral. When you try to come up with a viral idea, you have no way of predicting whether it would work or whether you'd need to Step by Step Guide to OKRs 63 tackle other issues that come with virality (reputation management, website crashing due to traﬃc overload, etc.). But what you can do is try out diﬀerent things and give people various reasons to talk about the product. Whichever idea generates more buzz should be considered a winner and developed further. If your adorable cat video didn’t go viral, you change the content and try something new until you move the needle on your Key Results (for example, Increase post engagement on Twitter to 20%; Increase website traﬃc by 50%, etc.). Before you've ﬁgured out the way to go viral, you shouldn’t set a goal to increase your server capacity to handle the overload of new traﬃc. It might be nice to think that this may be a problem you'll need to solve in the future, but it is not the problem to solve right now. If you decide to "prepare" ahead of time for when virality hits you, you might ask your IT team to work on the server and dedicate their valuable time to solving the issue that might or might not occur. While long-term planning and preparation in itself is a good thing, what might actually happen is that in a month your Marketing team ﬁnds a better way to get new users and abandons the original idea of going viral all together. At this point, your IT team would have lost time they could have spent ﬁxing real issues. Wasting a team's time is demotivating and has a long lasting eﬀect on morale. People deserve to feel that their work is valuable. So focus your attention on ﬁguring out your current business problems and opportunities and make sure to tackle them immediately. Don't try to get ahead of yourself and solve problems that you might or might not have in the future. We’d like you to remember that absentmindedly striving for growth will not make things happen. You need to deﬁne an area for improvement with your Objective, measure its progress with Key Results, try diﬀerent things to drive change, compare results, and understand what makes a diﬀerence. OKRs provide you with a framework to keep your focus in place while you’re trying out diﬀerent tactical approaches. Step by Step Guide to OKRs 64 How actionable OKRs help you succeed If we had to summarize this whole chapter into one sentence, we’d say: your OKRs should be focused exclusively on the things that could have the biggest impact right now, and everything else should wait. When you are chasing everything, you are catching nothing. Objectives and Key Results help you see your main issues and improvement opportunities clearly, and not mix them up with day-to-day operations. Not everything you do for your business should be considered an OKR. OKRs should cover the areas you need to improve: from the ways you work (internal processes) to the ways you think about growth opportunities. Whenever you feel like there are a billion improvements you absolutely have to implement, remember that in the beginner’s mind there are many possibilities, but in the expert’s mind there are few. So keep your eyes on the prize, and don’t give in to distractions. Step by Step Guide to OKRs 65 Weekly Plans: How to Make Progress on OKRs The OKR framework helps to focus your team on the outcomes they need to deliver. You have heard repeatedly by now that Key Results are not plans, tasks, projects, or any kind of other activities. Key Results are the outcomes that you are hoping to achieve. That being said, planning is still important to drive OKRs forward. Just because plans aren’t listed as part of the Key Results, doesn’t mean that there is no planning. It is just important to distinguish what is what. Weekly planning drives the OKRs forward by focusing your attention on what you need to do. The OKRs set goals. Weekly plans remind you to achieve them! Objectives and Key Results need to be actionable. That doesn’t mean that OKRs are just one-oﬀ actions. It means that if a team sets an OKR, they should also have some ideas or plans on how to drive it forward. If we set a goal and we can’t think of how to achieve it, then this goal is not actionable. It could even be total nonsense. While writing your OKRs, try to also discuss what could be done to drive the Key Results. This way you will see if this goal even makes sense. For example, you are a production company and one of your goals is to increase the proﬁt earned on each product. The team sets a Key Result to “reduce production time from 12h to 9h”. Seems logical at ﬁrst but then, once they start thinking about how to achieve it, no reasonable course of action comes up. The speed of the production machines is already maximized, there’s no money to replace any of the equipment or to add more, and the process can’t be changed. There’s not a single idea to start with to try to reach this goal. Even though it would be a nice Key Result to have, if we can’t plan any actions to deliver it, it’s quite a useless Key Result because it won’t be achievable. In addition to evaluating the achievability of an OKR at the beginning of the quarter, planning should take place on a weekly basis. While OKRs are set on the team level and all of the team members will work towards achieving these results, executing plans takes place on the individual level. This is how individuals contribute to the team goals:

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