Setting goals is crucial for any business that wants to be successful. Setting clear goals that give you a focus can be the difference between success and failure.
A successful business needs to operate with ruthless focus. In order to beat your competition, there needs to be efficient growth at a sustainable rate. One way to achieve this is to introduce a performance-based culture into your business, like OKRs.
OKRs are focused on growth-based initiatives that minimise the inefficiencies and misalignment in your business. They are used by some of the biggest and best companies in the world and, used correctly, can have a transformational effect on your business’ ability to hit targets.
So, with that in mind, we have created this extensive guide for you to live and breathe OKRs so that you too can supercharge your business’ results…
- What Is an OKR and What Does It Stand For?
- Why Do You Need OKRs
- How to Set Objectives
- Moonshots and Roofshots
- How to Set Key Results
- How to Measure your OKRs - with Scoring
- OKR Software- The Benefits
- OKR Examples - (Company, Team, Individual)
- Getting Started
- I Love OKRs! - What's Next?
What Is an OKR and What Does It Stand For?
OKR stands for “Objectives and Key Results” and, since their inception, they have become a popular goal management process that helps companies implement an effective strategy.
So, how are OKRs different to your average goal setting strategy?
OKRs are designed to connect company, team and personal objectives in a hierarchical manner. The idea of OKRs is to measure the results of all employees together to form one, unified direction.
OKRs started life at Intel and have since been developed and utilised by some of the biggest and best organisations on the planet, such as Google and Amazon. They have adopted this technique into each stage of their planning and, from their success, you can see it’s worked!
John Doerr, billionaire American Investor and author of ‘Measure What Matters’, has this to say about OKRs:
“When people have conflicting priorities or unclear, meaningless, or arbitrarily shifting goals, they become frustrated, cynical, and demotivated.”
OKRs are a simple process that can engage your team and embrace creativity into your strategy.
Why Do You Need OKRs?
You need OKRs to maximise the focus and alignment of your business.
Keeping the vision, goals, and objectives in the headlights of yourself and your employees will help to keep all operations on track. If your employees know what is expected of them, they will be able to align their work with your goals and objectives to achieve further success.
The purpose of OKRs is to create alignment with your company. If everyone in your organisation works towards business, departmental and individual OKRs, each level of your company will be able to work towards a single, unified goal.
Alignment is at the core of OKRs. It can only occur when your team has structured conversations of what to prioritise. Prioritising and documenting the most impactful tasks will help generate success quickly and save time when aligning with the next task.
How to Set Objectives
An Objective is simply WHAT is to be achieved, no more and no less.
By definition, objectives are significant, concrete, action-orientated, and, ideally, they are inspirational. Objectives set a clear direction for a goal to be achieved in the future, it describes where you want to go. Objectives can be long-lived, rolled over a year or even longer.
For an OKR structure, you should start by defining no more than 3-5 key objectives on a company, team, and individual level. Your objectives should not be vague or else they will become immeasurable.
When properly designed and positioned, they’re a vaccine against fuzzy thinking and fuzzy execution. When running a business ‘fuzzy’ is your worst enemy. You need clarity through OKRs to stamp out ‘fuzzy’.
Moonshots and Roofshots
When we talk about objectives, it’s important to note that there are two OKR distinctions. The first is a moonshot objectives and the second is a roofshot objective.
When setting your company objectives, you should decide if what you’re looking to achieve is aspirational or realistic. A moonshot is exactly what it sounds like - it’s shooting for the moon. Whereas, a roofshot is much more achievable and should be considered an objective that needs to be achieved.
If you don’t quite hit your moonshot objective, it shouldn’t be taken as a failure. It might sound counterintuitive to set an objective that you don’t expect to achieve but some of the most forward-thinking companies in the world, like Google, utilise moonshot objectives to go above and beyond what is expected of them.
You don’t become an industry leader by hitting every small target you set yourself, you get there by over stretching yourself in comparison to your competition.
How to Set Key Results
Key results benchmark and monitor HOW we get to our objective. Effective key results are specific and timely, aggressive and, yet, realistic. Most important of all, they need to be measurable and verifiable.
Under each objective, you should define 3-4 measurable results, but no more. Too many and the process to achieve your objective will become clouded.
These key results should be specific, measurable, actionable, relevant and time-based by either the team or person. You either meet a key result’s requirements or you don’t. There is no grey area, no room for doubt. If you don’t achieve your objective, you’ll be able to trace back through your key results to see where you went wrong.
See the OKR Examples section below to get an idea of how to construct your own:
How to Measure Your OKRs - with Scoring
Measuring your OKRs is how you’ll be able to monitor your progress and see if you are on track to achieve your goals. OKRs only work when there are consistent ‘check-ins’ and measurements in place. Once an objective deadline is hit, it is then time to get the team together, analyse and score your objectives.
This constant system of analysis and scoring will mean that your OKR setting process improves consistently and a new culture of targets, results, and analysis is embedded in your organisation.
How to Score Your Objectives
The simplest, cleanest way to score an objective is to average the percentage completion rates of its associated key results. Google has implemented their own process, which is now widely used, and uses a scale of 0.0 to 1.0.
It’s important to note that these scores are based on Google’s moonshot objectives that they don’t always expect to achieve:
- 0.7 to 1.0 = Green (You delivered)
- 0.4 to 0.6 = Yellow (You made progress, but fell short of completion)
- 0.0 to 0.3 = Red (You failed to make real progress)
When scoring your OKRs, you can mark what you’ve achieved and address how you might do it differently next time. A low score can force reassessment: Is the objective still worth pursuing? If so, what can we change to achieve it?
Scores can be assigned based on numeric results i.e. if you had to sell 100 units by 1st March and you sold 70, this is a score of 0.7. However, the OKR system is also flexible enough that the person responsible for this objective could score this result 0.9 because whilst only 70 units were sold the average sale price was 40% higher than normal.
Evidence of Google’s penchant for using moonshot objectives, Rick Klau, a former manager at Google, says,
“Objectives are ambitious and should feel somewhat uncomfortable.
The 'sweet spot' for an OKR grade is 0.6-0.7; if someone consistently gets 1.0, their OKRs aren’t ambitious enough.
If you get 1’s, you’re not crushing it, you’re sandbagging.”
The idea is not to think 70% is the new 100%, it is to keep trying to stretch to 100%, even though you might not reach it in the end. This can be monitored by tracking weekly.
Accommodating the flexible scoring system ensures that your team communicates the reasons behind the score and the results, reinforcing the analysis and self-improvement that OKRs can deliver.
OKR Software - the Benefits
The simplest way to implement OKRs is through bespoke OKR software. This is generally quite affordable and allows you to consign the dreaded spreadsheet to the trash.
Using software can help you build a strong internal structure for your OKRs. You are able to add your objectives and key results, seeing the progression over time.
The software can also help you find clarity for your OKRs and can give you and your employees a 360 overview of your organisations priorities and progress, leaving no one out of the loop.
So, how do I stay on track of my OKRs?
Embrace your OKRs and work them into your routine with weekly check-ins. These check-ins are short meetings for tracking results.
Tracking your results weekly gives you an idea of the success of your key results and if there needs to be any adjustments.
The idea is to make the most of existing meetings that are in place and to make them more productive. Making your meetings laser-focused on key results can improve the engagement and motivation of your employees.
Keep them short - these meetings should be limited to an hour maximum. Weekly check-ins are the most powerful tool for OKR success, making sure each part of the business is on track.
Alongside reviewing them weekly, reviewing them quarterly will help you to see if you have reached your objective. This might seem like it may be time consuming but it is worth it to analyse your results and improve your next set of OKRs.
Make sure you are focused on improving results and not just making excuses for why results aren’t going to progress.
OKR Examples - (Company, Team & Individual)
To understand OKRs more clearly, we have provided you with examples to think about. We have categorised them to show you how OKRs can get more specific as they go into personal tasks.
We have provided Marketing, Operations, and Finance examples to help you on your way.
- Become the most downloaded social media app in App Store by 2020
- Conduct a survey to identify the top 10 most demanded features and launch 5 of them by 3rd Quarter 2018
- Conduct 10 user tests to identify UX issues
- Show at least a 50% improvement in satisfaction rate with UX via customer surveys
- Increase social media engagement by 35% by 2nd Quarter 2019
- Research and identify 3 of the most popular social media sites among 2 new target audiences and develop a strategy by 1st Quarter 2019
- Participate in 5 Twitter chats involving industry leaders
- Respond to new Facebook comments within 30 minutes
- Increase brand recognition and awareness through advertising
- Increase media engagement through ads by 20% by 2nd Quarter 2019
- Expand thought leadership program by placing guest articles on 4 industry-related websites that have an Alexa ranking of at least 30,000
- Launch customer referral program by 3rd Quarter 2019
- Define the message by 2nd Quarter 2019
- Show the message CEO by end of 2nd Quarter 2019
- Finalise message and launch referral program by start of 2nd Quarter 2019
- Increase Twitter and LinkedIn connections by 35%
- Increase posting to Twitter by 8x daily
- Join 5 new LinkedIn groups with at least 2,500 members each
- Leave comments on the 10 most popular discussions in each group
- Design and deploy new ad for an ad campaign by 2nd Quarter 2019
- Present design ideas by 1st Quarter 2019
- Finalise design ideas by end of 1st Quarter 2019
- Deploy ad by start of 2nd Quarter 2019
- Launch customer referral program by 2nd Quarter 2019
- Research topics for referral program by 1st Quarter 2019
- Narrow down 3 topics by end of 1st Quarter 2019
- Pick and get approval of topic by end of 1st Quarter 2019
- Increase efficiency by 20% in all areas of the organisation by 2021
- Introduce new tools and techniques by 3rd Quarter 2020
- Plan training sessions for new tools and techniques for 2nd Quarter 2020
- Increase productivity of the organisation by 35% by the 4th Quarter in 2020
- Improve IT infrastructure by 4th Quarter 2020
- IT support staff responds to all complaints within 30 minutes
- Reduce service downtime by 20% by next Quarter
- Create backup sources, made available within 20 minutes in case of emergency.
- Make maximum use of office layout
- Provide a better office environment by decluttering 80% of cramped spaces by 2nd Quarter 2020
- Replace cupboards for open spacing by 4th Quarter 2020
- Install vending machines in created spaces by 4th Quarter 2020
- Improve inventory management method by 4th Quarter 2020
- Identify and calculate all departments by 3rd Quarter 2020
- Track excess quantity by 1st Quarter 2020
- Purchase improved software to help track with inventory management by 3rd Quarter 2020
- Improve the efficiency of finding solutions to customers by 2nd Quarter 2020
- Learn new skills to help with efficiency by 1st Quarter 2020
- Address all complaints within 30 minutes from the time they are logged
- Achieve 80% positive feedback for resolving customers problems efficiently
- Standardise material process by 4th Quarter 2020
- All invoices converted into digital format and stored in a CRM
- Create policies to ensure all goods do not move from one place
- Enforce guidelines for all vendors to ensure a smooth transfer
- Create a financial strategy that increases revenue by 5% in the next 2 years (2021)
- Finalise budget by 4th Quarter 2018
- Have discussions with 20 Venture Capitalists 4th Quarter 2019
- Raise £40,000 seed funding
- Establish a network of Venture Capitalists to assist funding
- Set meetings with 80 Venture Capitalists by 4th Quarter 2019
- Active discussions with 25 Venture Capitalists by 4th Quarter 2019
- Finalise budget for 4th Quarter 2019
- X amount required by 4th Quarter 2019 as discussed with all department heads
- Identify areas of loss and reduce by 80% by 4th Quarter 2019
- Analyse market and forecast budget for 4th Quarter 2019
- Identify which company products are in demand in the current Fiscal year and reasons why
- Determine if pricing and primary feature of products is a key leader of growth.
- Comparison chart of competitors products reveals a difference of X amount
- Create a comparison chart to determine the products with the highest revenue in 2019
- Submit the final report to the head of the department for approval
- Create and finalise accounts payable by 4th Quarter 2019
- Improve analytical and reporting skills by joining relevant courses online
- Identify duplicate receipts to avoid causing errors in calculation
- Reduce excess expenditure by 4th Quarter 2019
- Identify departments where losses were made in the last 6 months
- Collab with the Purchasing Department to find alternative goods dealers
- Reduce expenditure with new goods dealers
- Create a comparison chart for highest revenue companies
- Research companies with the highest revenue for a comparison chart
- Design comparison chart
- Submit chart to the head of the department for approval by 1st Quarter 2019
We hope these examples have helped with the construction of your OKRs. Remember to be as specific as possible as this will mean your goals are more measurable.
When it comes to planning OKRs, you should set your company shorter goal cycles so that you can respond and adapt to any change.
Simplicity is key when planning your objectives as otherwise, they will become muddled and unrealistic. Make sure your objectives are one clear line so they look conclusive and measurable.
Personal or company objectives should be planned thoroughly to determine where the weaknesses are and where you can improve. If your objectives are not planned, they will either be unrealistic or immeasurable.
Here is an OKR Template from us at Luminate Digital to help you on your way to achieving your goals!
When OKRs are set up, they are really simple to use. They don’t take a lot of time to set up or follow. Reviewing your key results each week is a great way to stay on track with your goals, check-in your progress and see how far you have come.
Don’t be set and forget. Don’t treat your OKRs like a New Year's Resolution!
I Love OKRs! What’s Next?
Once you have begun to implement the OKR system into your organisation, the next step is to aim higher!
OKRs can also include stretch goals to help you push even further. As mentioned, Google often set stretch goals that are ambitious but reachable. Stretch goals are just beyond the threshold of what seems possible to you or your business. Hitting a score between 0.6 to 0.8 on these would be a great result.
Setting stretch goals should be ambitious. They will feel uncomfortable at first but don’t worry, this is part of the process. These goals will take you out of your comfort zone, but this is exciting. The idea is to push you and your team further than you’ve gone before to reach results you weren’t sure were possible.
When aiming high, even failing some goals can achieve substantial advances for your business.
Google has said,
“We set ourselves goals we know we can’t reach yet, because we know by stretching to meet them we can get further than expected.”
Maybe you have been thinking of goals for your company, but think they are too ambitious? Well, think again. Your ambitious goals are already taking you out of your comfort zone. The only issue happens if your team is not stretching.
Don’t fall behind, be a leader.
Many business leaders may end each quarter with the same concerns. What motivates employees? What makes employees feel included and brings out their best work?
The answer is OKRs.
Asking questions is one of the most powerful tools a leader can do. Andy Grove developed OKRs to answer two simple questions: Where do I want to go? How will I know I’m getting there?
These two questions look at how employees focus their time at work. Each objective set is aligned with the company's mission, vision, and values. So, as you approach the end of 2018 and the start of 2019, think about the leadership of your teams and how you can develop them using OKRs.
By utilising these steps, you’ll be an OKR wizard and will be able to communicate with your teams in a deeper and horizontal way. Say “no” to the vertical way of working and choose OKRs to help direct your business.
OKRs are something you should definitely be implemented into your business to achieve further success. So, go on, get constructing!
If you still unsure on how to construct your objectives for OKR ’s, head over to Luminate to download our FREE SMART Marketing Goals Template