Objectives and Key Results (OKR) tutorial
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Objectives and Key Results (OKR) tutorial

Objective

What is OKR?

OKR stands for Objectives and Key Results.

OKR is a method of defining objectives and tracking their outcomes:

  • The Objective: what we want to achieve
  • The Key Results: how do we know we are getting there

To create an OKR, use this one sentence:

  • I will (Objective) as measured by (this set of Key Results).

Purpose:

  • OKR connects objectives of organizations, teams, and individuals.

  • OKR connects objectives to measurable results, making people move together in the right direction.

  • OKR makes sure everyone understands what's expected of them at work.

History:

  • OKR was invented at Intel and championed by Andy Grove, Intel CEO.
  • OKR is in use by many companies, including Intel, Google, Microsoft, Twitter, and Uber.

Ground rules:

  • OKR items are visible to the whole organization, by default.

  • OKR visbility helps teams work together, and helps everyone know what others are doing.

Related:

What is an objective?

Your objective should be:

  • Qualitative

  • Inspirational

    • Provide a sense of meaning and progress.

    • Skip anything such as a small percentage gain.

  • Relatable

    • Use language that your team knows and likes.

    • Skip abstract language and unfamiliar acronyms.

  • Timely

    • Aim for a clear sprint toward a goal, such as doable this month, or doable this quarter.

    • If it takes a year, your objective may be strategy, or maybe even a mission.

  • Actionable by the team independently

    • Your Objective has to be truly yours

    • You can’t have any excuse of interdependence, such as "marketing didn’t market it."

For example, some good objectives:

  • Launch an Awesome MVP.
  • Succeed in raising Series A investment.
  • Transform San Francisco’s shopping habits.

For example, some good key results:

  • Sales numbers up 30%.
  • Raise a Series A investment of $1MM.
  • Double our userbase.

All high-performance OKR systems have these commonalities:

  • The ability to track results on a quantitative basis.

    • Key results are not general or subjective actions you plan to take.

    • They should always include numbers to make it clear how much has been achieved.

    • For example, if Mary’s objective is to improve her sales prospecting skills, one key result might be to spend two hours a week shadowing Jennifer, the team member who demonstrates the most prospecting success.

  • Make it something people look at, every quarter, every week, every day.

    • This consistency turns goal-setting into a habit and changes how people think about their work and approach their everyday to-dos.

    • It puts in place natural milestones that make you think about what you need to do next and aim high.

  • They have to be a stretch.

    • You want your objectives to be ambitious enough to push you beyond your limits.

    • When everyone does this, it forces the tough conversations about what's truly needed to beat expectations.

    • Most people wouldn’t consider 70% to be a good grade, but for OKRs that’s just about perfect, Davis says.

What is a key result?

Key results take the inspirational language and quantify it.

Create key results by asking a simple question “how would we know if we met our objective?”

Typically you have 1-3 key results.

Metrics can be based on:

  • Growth
  • Engagement
  • Revenue
  • Performance
  • Quality

For example, “Launch an Awesome MVP” might have KR’s of:

  • Net Promotor Score (NPS) of 8/10
  • 20% of users come back 2X in one week
  • 10% conversion

OKR quotes by Andy Grove, Intel CEO

Andy Grove, Intel CEO, first spoke about “Objectives and Key Results” (OKR) in his book High Output Management.

"A successful system needs only to answer two questions: Where do I want to go? The answer provides the Objective. How will I pace myself to see if I’m getting there? The answer gives us Key Results."

“The one thing OKR provides par excellence is focus.”

“We see a nesting hierarchy of Objectives: if the subordinate’s Objectives are met, the supervisor’s Objectives will be met as well.”

“To be useful a Key Result must contain very specific wording and dates, so that when the deadline time arrives, there is no room for ambiguity.”

“OKR is meant to pace a person – to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review, but should be just one input used to determine how well an individual is doing. If the supervisor mechanically relies on the MBO system to evaluate his subordinate’s performance, or if the subordinate uses it rigidly and forgoes taking advantage of an emerging opportunity because it was not a specified Objective or Key Result, then both are behaving in a petty and unprofessional fashion.”

For more information