Managing OKRs – Raviga

What are OKRs?

OKRs are FAST goals with a higher velocity – they’re designed for organizations that are operating in a bit of uncertainty and volatility, or trying something new. They’re designed to push people a bit beyond their normal comfort zone. Like other FAST goals, they require frequent discussions, ambitious scope, specific milestones, and transparency.

Objectives are aspirational, ambitious, and typically qualitative goals – they articulate the core of what your organization wants to accomplish. They should be well-written and appeal to the emotions. An example is, ”let’s go to the moon”.

Key Results are very specific and measurable results that will get you to your objective – these should be quantitative targets and specific milestones that are objectively measurable and complement your objectives. For the moonshot example, key results might be 1. put a human on the moon, 2. return them home safely, 3. by the end of the decade.

How did modern OKRs develop?

1950s – Peter Drucker pioneered Management by Objectives – Peter Drucker created management by objectives in 1954. Most productivity models were geared towards factories and didn’t apply to knowledge work. In his top-down approach to goal setting, the CEO had board-approved objectives, then VPs would propose their functional objectives to contribute to the CEO’s goals. This approach was very siloed, only did annual reviews, and was tailored to engineers.

1980s – Andy Grove turned Management by Objectives into OKRs at Intel – Andy liked Drucker’s model but wanted a performance measurement and alignment model that was set more frequently and evaluated more rapidly. He designed the first OKRs for use at Intel.

2000’s – John Doerr refined and propagated the OKR approach – Doerr worked with Andy at Intel before joining a VC firm. He coined the term OKRs and recommended OKRs to all the companies he invested in—including Google where OKRs have been in use since they had 20 employees. Ever since, OKRs have been a startup world mainstay.

What are the benefits of using OKRs? How are OKRs more effective than other business goal-setting frameworks?

Focus – knowledge workers make constant decisions and prioritizations in their work. If they grasp the larger focus of the team and company, they’ll make better decisions. Many employees come in, knock out a long to-do list, and go home feeling like they achieved victory. OKRs encourage employees to direct their work towards your company’s strategic objectives. It’s the spirit of Agile development applied across functions.

Alignment – everyone in the organization should know what your organization is working towards. OKRs are especially helpful in cross-functional alignment. OKRs connect employees to the leadership beyond their boss and engage them in the process that’s delivering value to customers and results for investors.

Stretch – OKRs ask teams to do something they never have before. The targets are aspirational, they’re ambitious, and maybe even a bit uncomfortable. This is a crucial element of getting the most out of OKRs.

Transparency – if everyone can see what the rest of the organization is focused on, cross-functional alignment and cooperation improve. OKRs connect siloed fiefdoms in the organization; two teams might actually have to work together to accomplish a single key result.

What’s the difference between OKRs, KPIs, and individual performance goals?

OKRs target an ambitious goal, while KPIs support maintenance – OKRs typically require a lot more learning, and there is more risk of failure. They help you do something you’ve never done before. KPIs are health metrics, they monitor the processes that keep you stable and support your growth—but they don’t set ambitious targets for conquering new territory. KPIs stay more or less consistent within established bounds.

Individual OKRs only work for measurables only one person is responsible for – don’t use OKRs to encourage individual heroics. Google only uses individual OKRs during onboarding, after that, you’re working collaboratively towards achievement. It can be difficult to do something stretchy and ambitious alone, complex problems require a lot of innovation and teamwork. However, you could use individual OKRs to set goals for personal behavior and learning from leaders and team members, monitoring their learning and development.

Does every team need to use OKRs?

You might not need to use OKRs if you’re not doing anything new – some functions only need to measure and maintain their steady-state performance—for example, the department that runs the employee commuter buses at Google does not have OKRs.

Don’t link OKRs to compensation – if you have goals that dictate compensation, they shouldn’t be attached to risk propositions like OKRs. You don’t want someone skipping a family vacation because they didn’t get their bonus from a missed OKR.

What needs to be true of an organization for OKRs to be used successfully?

Team strategy requirements:

Dynamic – a five-year strategic plan that forecasts cash flow is delusional. Your strategy needs to be examined and adapted frequently so that OKRs remain current.
Lean – you want a “minimum viable strategy.” Strategic planning is an oxymoron—strategy is creative and out of the box, and planning is oriented around prediction and control—your strategy must be lean.
Widely understood – everyone in the organization should be exposed to the strategy and able to understand it so that they can contribute to OKR creation and completion productively.

Culture requirements:

Collaborative servant-leaders – leaders in your organization need to work to serve and empower their employees. OKRs won’t foster engagement if employees don’t feel like they’re an important part of the company’s mission.
High trust – you need a culture that creates psychological safety and the permission to have necessary conversations and be decisive without analysis paralysis.

What are the steps for setting OKRs?

Ask the questions to get to a minimum viable strategy – OKRs are a subset of company strategy. If you ask the questions (covered later in the guide) to devise a minimum viable strategy, some natural OKRs should fall out of that exercise. Without this step, you will likely write some well-crafted OKRs that put the ladder up the wrong tree.

Start with cross-functional, company-wide OKRs – every member of the executive team should have a stake in the completion of your first OKR. This will reinforce that they’re all trying to get to the same place.

Once functions are aligned company-wide, incorporate function-specific OKRs – let the enthusiasm for OKRs generate on a company-wide basis, then you can give OKRs to certain functions. Once they’ve had exposure, you create a coalition of the willing that is ready for the challenge.

Don’t try to set all your OKRs at once – if you tell people they need to think of individual, functional, and company-wide OKRs and turn them in by Friday, they will not buy in. You need to introduce OKRs on a company-wide and cross-functional basis before getting more granular.

Establish an actionable cadence for review and assessment – don’t set them and forget them. You should have a weekly or bi-weekly conversation about what’s going on with the OKRs and whether you need to make adjustments.

Who typically owns the creation, management, and evaluation of OKRs?

OKR creation should be a shared negotiation from senior leadership on down – if your CMO is setting your marketing OKRs with the CEO, that’s a top-down OKR that leaves out employees. The CEO and CMO should talk with members of the sales and marketing department so the process is collaborative. If employees understand what’s going on with OKRs and where they fit in, they’ll feel they have a stake in the enterprise.

Collaborative creation will lead to a higher likelihood of success – if your employees are cubicle gerbils just ticking through their to-do list to go home at the end of the day, they won’t be engaged. If they can contribute to your OKRs and buy into the mission, they’re more likely to come to work invested and engaged in your mission.

What makes for a strong (or weak) OKR?

Objectives

Objectives should be well-crafted, qualitative, and aspirational outcomes – you want your objectives to sound inspiring to people and speak to exactly what your company wants to accomplish at a high level.

Don’t use an “altitude shift” in performance as an objective – a good objective isn’t increasing sales by 25%. That’s too quantitative; that’s a key result, and it’s not very inspiring. If you start with an objective like that, your key results will end up looking like tasks. If you’re having trouble, ask yourself why you want to increase sales by 25%.

Don’t select a task – an objective to “onboard 2 new suppliers” misses the point—what do you actually want those new suppliers to do? If it’s to “wow our customers with lovable products,” use that as your objective. It works a lot better.

Key Results

Key results are lean and numerical- they should be specific, measurable, and preferably quantitative. Oftentimes, you can misidentify a task, a desired outcome, or a process as a key result.

Align your key results to accomplish your objectives – you don’t set key results that encourage sales to sell everything they can so engineering can’t keep up. Don’t encourage manufacturing to be as efficient as possible so the salespeople can’t promise customers what they want.

Identify up to 2-4 key results to use per objective – especially early on, you want to use as few key results as possible and align them really well. Get at the root of what you actually want to accomplish.

Avoid the temptation to set key results that have a long time horizon – you don’t want key results that extend onwards for years, they should be items that you can take action on this quarter.

How many OKRs can you have?

Your organization can likely support 2-4 objectives with 2-4 key results each – anything beyond that and you could end up with OKR clutter and you’re likely applying OKRs to areas and objectives where they have no business being.

Most companies need fewer OKRs than they think – many companies look to the Google model of abundant OKRs without realizing their organization is different. The engineers there are doing a lot of new development and projects. Deploying OKRs everywhere is not necessary or beneficial to most companies, where more of the work is maintaining vs. creating.

Keep a backlog of OKRs you can’t use now – you can deploy them down the road. It’s analogous to Agile software development except that the sprint is a quarter long rather than two weeks, and you can groom your backlog for the quarterly business review.

How do you translate OKRs into weekly action commitments?

Hold a weekly tactical conversation about your OKRs and cover four topics:

Evaluate the data and your quantitative progress toward key results – see what the data tells you about your progress. Find out whether you’re on target or whether you might need to reevaluate.
Take a more subjective temperature check of OKR progress – if you’re going to build a more collaborative and engaging goal-setting conversation, then people need to be able to say how they see things—including if they just sense that not enough progress is being made. Some key results won’t create data every week so you need to be able to talk to them from instinct.
Make task-level commitments weekly – each week you want the team and individuals to identify and commit to the tasks that will help the team reach their OKRs.
Ask how you are functioning as a team – do you feel like you have a healthy team process in place? Are people collaborating and working together effectively?

How ambitious should your OKRs be? What share of your resources should go to tackling moonshot OKRs?

In a model developed by McKinsey, there are three different horizons to focus on – your allocation of time between them varies by maturity level (the earlier-stage, the more “transform” and “grow” work you’ll do), but should be roughly :

Run: 70% Maintain and defend your core business – these are core business maintenance tasks that keep on the lights—this horizon can be measured with KPIs.
Grow: 20% Extending a product line – it’s something you probably know how to do and you just need to get focused to get it done. Measure this horizon with your “rooftop” (ambitious but achievable) OKRs.
Transform: 10% Moonshot into new terrain – you likely don’t quite know how to do this and if you can achieve it you might transform the whole business. Measure this horizon with your “moonshot” (very ambitious and lower odds of achievement) OKRs.

How far out can OKRs be effective? What should you do if you have a big initiative that will last multiple quarters?

Make a distinction between your roadmap and your destination – OKRs allow you to demonstrate that there’s engagement with stakeholders—which provides value. A roadmap might define budget and development and looks more like a project plan. It’s okay to use both—but don’t confuse roadmaps with an OKR.

Avoid the temptation to define key results too far out – if you get the Q1 results and they’re way off expectation, take a fresh look at your key results—your OKRs should be living documents.

How do you monitor OKRs after they are set and hold people accountable to the results? What do you do if results are missed?

Monitor OKRs through weekly or bi-weekly meetings – check in on how you’re tracking to your OKRs by the data, and do a gut-check with the team on the progress vs. expectation.

If you come up short, have an honest conversation about why – it might be too gnarly of a conversation to hold in a weekly team check-in. Two of you might need to go and have a conversation about why there’s always a reason something didn’t happen. Or it might be that you were too ambitious.

What is a minimum viable strategy?

It’s a strategy that acknowledges there might be unexpected future developments – strategic planning is an oxymoron; planning requires control and predictability while strategy is dynamic and requires reevaluating your circumstance. A minimum viable strategy is really a sequence of choices to help you create a strategy that is lean, clear, and dynamic:

What is our winning aspiration? – what are you trying to do? There is also a really compelling argument that this is also when you should define your values.
Where are we going to play? – be clear about what you will and won’t do with your company. You define the game in business and you can be very creative with it.
How will we win? – find the value proposition and competitive advantage that will make you successful at the game as you’ve defined it.
What capabilities and systems must be in place? – develop an understanding of what you need to become good at in your space to get to your advantage.
What outcomes do we want NOW? – what are you actually going to do in the next quarter? This is the problem with five-year strategic plans and why they’re obsolete. That’s just too far out, there’s too much to do, and too much can happen in the interim. This question is where OKRs really start to come in.
What initiatives will get us there? – look at the to-do lists, tasks, initiatives, and budgetary needs that will get you through the next quarter.

The OKRs fall out of this process – when you have the answers to these questions, especially #5, you’ll be much better prepared to articulate OKRs that align with your broader mission.

What is the 5-step agile strategy cycle and how is it relevant to OKRs?

It’s a timescale-independent model for understanding your circumstances, making a plan, and acting on it – the five steps are:

Assess – evaluate your circumstances and where you fit in.
Focus – identify what you’re trying to achieve.
Commit – make specific commitments to results
Act – take commitments and put them into action.
Learn – learn from what you just did.

Apply this to OKRs by doing a quarterly reassessment and taking an Agile approach to progress- check if the assumptions (Who’s our competition? What are we capable of, What will the tech stack we’re using enable us to do?) from the prior quarter are still true. If they’re not, does that change your focus?

An example of agile strategy in action:

Assess: you look at the market and it turns out you have a new competitor coming in from left field with a feature set you were working on.
Focus: you now have to redouble efforts and focus on this feature set to get ahead of the new competitor.
Commit: commit to getting the feature set in place in a month and the development of marketing collateral beforehand.
Act: go build the feature set and ramp up marketing of the feature set.
Learn: you reassess and try to learn from the results of your efforts.

What tools (homemade, or purpose-built software) help support the use of OKRs?

You can start from a spreadsheet – a spreadsheet can work well for the first quarter or two, but when more and more groups start to use OKRs and they’re updating and tracking them each quarter, you can see how a more comprehensive tool better supports more mature use of OKR

Purpose-built OKR system – these do a better job of showing how OKRs evolve over time and can integrate with other data sources to evaluate results in a single dashboard. Options include:

Solutions that combine OKRs and feedback– e.g. Betterworks. This really embodies what John Doerr laid out in Measure What Matters — it supports not only strategy OKRs, but also the human aspect of conversations, feedback, and recognition (CFRs)
Solutions focused on strategy execution – e.g. Quantive and Perdoo are built for company strategy execution. I tend to prefer this approach because I think strategy execution is the primary reason to do OKRs.
Solutions focused on HR – these tools are configured and marketed to HR leaders and they help with the human interaction aspects of OKRs like conversations, feedback and recognition (CFR).
Individual performance management (not true OKRs) – e.g. 15Five. Tailored to measure and manage the performance of individual team members—these aren’t true OKR solutions.

What are the most important pieces to get right?

Leadership needs to reinforce and support OKRs – if leaders don’t communicate that OKRs are a vital part of your strategy and execution, then you won’t get buy-in. If HR are the only people pushing the OKR program, OKRs will become a matter of secondary importance.

What are common pitfalls?

Don’t have ‘shadow goals’ – make sure that your OKRs speak to the core aims of your strategy. Often companies run the OKR creation exercise and afterward realize that what they’re actually targeting didn’t make it into OKRs. Make your priorities transparent.

Don’t set it and forget it – don’t be afraid to just change the OKRs if they’re not entirely relevant. This happened during the pandemic—people set OKRs beforehand and when the pandemic hit, they’d say, “We can’t focus on our OKRs right now, we’re trying to get everyone working from home.” Well, if that’s your focus, make it an OKR and come back to the others later.

Don’t have too many OKRs – your organization can only focus on so many objectives and key results at once. If an individual is working towards 5+ OKRs, it will create too many competing priorities and lead to less getting done.

Don’t take the ‘big bang’ approach to creation – too many companies try to implement OKRs on a company-wide, functional, and individual basis all at once. I have never seen that work, it’s a great way to turn employees off from OKRs.