Transform Your Business with Objectives and Key Results (OKRs) | by Gabriel Rocha | Jan, 2023

Learn How to Implement OKRs and Achieve Your Goals

Have you ever heard of aligning goals and efforts across different hierarchical levels and business areas? OKRs do this for you, ensuring a consistent strategic approach for your entire company. OKRs have become so beloved due to their simplicity and effectiveness, yet even though we are talking about something simple, organizations still struggle, often falling into empty promises of planning without execution. Simplicity is not an easy task.

It takes a lot of creative energy to simplify and give meaning to things. And this work ultimately depends on people.

The more complicated an OKR is, the lower the probability it can be implemented effectively and efficiently. The risk of overcomplicating an OKR is much greater than under-explaining it’s functioning. OKRs are widely used in companies around the world to set goals and track progress. And as companies evolve and become more complex, OKRs remains a reliable way to stay on the right track and achieve goals. However, the use of OKRs is highly inconsistent, and the tool has become a polarized topic, whose usefulness is frequently intensely debated. In the current business world, having great ideas is not enough, you have to put them into action.

If you want to take your business to the next level and ensure a consistent strategic approach, consider implementing OKRs in your organization. This article will show you simply how to do this effectively.

In 1999, a venture capitalist named John Doerr knocked on the door of Google’s Silicon Valley office to talk to Larry Page, Sergey Brin, and around 30 other Googlers for 90 minutes about OKRs — Objectives and Key Results.

While they were not exactly convinced at the end of the presentation, Sergey realized that they needed a principle of organization and, as they did not have one, OKRs could be a good option. That’s how, my friends, OKRs became the foundation of Google’s operations to this day, and since then have become a fundamental pillar in the strategic plans of many companies, from small businesses to large multinationals like Amazon, Apple, and Microsoft.

As the name itself suggests, there are two main parts of OKRs: Objectives (WHAT, Abstraction) and Key Results (HOW, Tangible).

Objectives are what you’re trying to achieve with a particular set of initiatives, projects, and solutions, each company has its particularity. According to John Doerr, an OBJECTIVE is simply WHAT should be achieved, no more, no less. By definition, objectives are significant, concrete, action-oriented, and (ideally) inspiring. When designed and implemented properly, they are a vaccine against confused thinking and execution.

Key Results compare to HOW we monitor and reach the objective. Effective KRs are specific and have a defined deadline, aggressive but realistic. Above all, they are measurable and verifiable. As Marissa Mayer would say: (“We’re not talking about a key result unless it has a number.”) Either you meet the requirements of a key result or you don’t; there’s no gray area, no room for doubt.

They offer a simple yet powerful structure for setting and tracking ambitious goals. They provide shared understanding and collaboration to measure success and drive performance. Not only that, but they allow organizations to be agile and adjust their goals as needed. They offer superior flexibility and collaboration to traditional goal-setting methods. They are scalable and adaptable for organizations of any size.

All of this combined has made OKRs the beloved goal-setting system for companies of all sizes around the world, the success of the system speaks for itself, doesn’t it?

Now that we understand the fundamentals of OKRs, we will explore the four “superpowers” they possess:

Superpower #1 — Focus and commitment to prioritize:

This superpower gives us the ability to prioritize the most important work and eliminate distractions. There is the basic idea behind OKRs there is a limited amount of time and resources, and it’s indispensable to ensure that teams invest them in the most effective way possible. This means that it’s essential to ensure that all team members understand the company’s objectives and how they align with them.

By focusing on the main objectives and the associated key results, organizations are forced to make tough prioritization choices from the start. High-performing organizations focus on the work that matters and also have a great deal of clarity about what does not matter. Helping the team to focus on the tasks that matter to achieve your goal, instead of spreading out with less significant activities, OKRs bring with them some indirect benefits:

• Dispels the confusion of many unconnected goals.
• Intelligent allocation of resources (money, time, effort)
• Business and not functional results orientation (outcomes over outputs)

Superpower #2 — Alignment and connection for teamwork

Building Strong Teams with Healthy Boundaries, OKRs are a powerful tool for aligning goals and objectives across all levels of an organization. This promotes collaboration and mutual dependence among teams, as well as increases a sense of ownership and engagement among employees. They allow the team to focus on the most important priorities and improve their collective ability to focus on what truly matters. The alignment of OKRs also helps the team learn and iterate over time. The use of OKRs helps in understanding how results are created and improve the team’s ability to work together and align with the overall goals of the company. We are talking about the ability to work together and align with the overall goal of the company.

Superpower #3 — Tracking for accountability

One of the superpowers of OKRs is directly related to the quarterly (or semi-annual) cycle, making it easy to track progress over time and identify areas for improvement. OKRs allow organizations to remain agile and adjust their goals as needed. They are data-based and tracked regularly to ensure we are on the right track. It’s with the learning cycle that leaders can identify whether their OKRs are too challenging or not challenging enough, thus calibrating the challenges.

Superpower #4 — Challenge for the amazing

This superpower refers to the ability to challenge oneself and do more than what was thought possible. This helps the team to strive to create something truly innovative and to get out of their comfort zone. By setting challenging but achievable goals, OKRs encourage the team to push themselves to the limit to exceed their expectations. OKRs follow an evolutionary line of thinking, allowing teams to constantly challenge their way of being and generate value for the company. By testing our limits and offering the freedom to fail, they unleash our most creative and ambitious version.

Normally the recommendation is to review and plan your OKRs quarterly. Breaking the paradigm that doing OKRs annually is usually not enough to put the learning of iterations into practice. In some cases, companies do annual OKRs to complement the quarterly OKRs. This helps facilitate long-term planning for the whole year and also helps inform decisions such as hiring and budgets in general.

The “goals first” approach and the “roadmap first” approach.

In the GOALS-oriented approach, OKRs are set first, and the roadmap is built based on these goals. This approach can encourage teams to achieve short-term goals, but may not consider long-term strategy.

In contrast, the ROADMAP-oriented approach involves building the roadmap first and using it to inform the OKRs. This approach is closely linked to strategy, is more rigorous in its thinking, and empowers product teams to adopt a customer-centered approach to product development. An example of a company that uses this approach is Stripe, which expanded its offerings from its main payment product to related products and services. An effective roadmap helps the team set the right OKRs, as the two processes are closely intertwined.

1. Draft

The process of drafting OKRs, or objectives and key results, is crucial for setting goals and achieving success. OKRs allow for feedback that drives continuous learning and improvement, but this depends on well-crafted objectives and key results. The best product managers involve their teams in the drafting process to ensure early alignment and team empowerment.

To start, define 1–4 objectives based on the most important priorities in your roadmap. Then, identify 2–4 key results for each objective. These key results should be a mix of output metrics, outcome metrics, and key performance indicators (KPIs). Once the OKRs are drafted, assign an owner for each one to track progress throughout the quarter. Remember to collaborate with your team, or “pod,” during the drafting process to ensure early alignment and team empowerment.

2. Update

Updating OKRs is an indispensable step in the goal-setting process. It allows teams to incorporate learnings from the previous quarter and ensure they are on track to achieve their objectives. It’s especially essential to continue tracking key results that may take more than one quarter to fully measure. This may involve including previous OKRs in the tracker, with a note that the work has been completed but the key result tracking is ongoing. Don’t forget to take time to reflect and incorporate learnings from the previous quarter’s OKRs to continuously improve and drive progress.

3. Share, align and socialize

The OKRs process doesn’t just end with defining and updating objectives and key results. It’s also important to ensure they are shared, aligned, and socialized with all relevant stakeholders. This includes checking the OKRs with leadership and aligning them with interdependent teams.

A crucial part of this step is ensuring horizontal and vertical alignment of the OKRs. This involves sharing the three key outputs with all relevant stakeholders: the objectives, key results, and a list of initiatives that correspond to each objective. By explaining the OKRs, the reasoning behind each objective, and how they align with the higher-level goals of the company to leadership, we can gain support and commitment from stakeholders.

It’s also critical to socialize and align the OKRs with interdependent teams to ensure the necessary support. However, it’s significant to follow the correct order in this process. If OKRs are socialized with interdependent teams before being checked with leadership, this can lead to resistance and the need to revise OKRs, making the process appear erratic.

There are some common mistakes that teams make when socializing OKRs with cross-functional teams. One of them is negotiating or compromising on objectives before checking them with leadership, which can lead to a lower impact. Another mistake is having different objectives from an interdependent team, showing a lack of alignment and can lead to an achieved objective.

Gaining vertical and horizontal alignment may require editing and refining the OKRs, creating a small feedback loop in the process. By following this process and avoiding common mistakes, we can effectively share, align and socialize OKRs to ensure success.

4. Launch

It’s time to launch those OKRs and put your team on the path to a successful quarter! But before doing so, make sure everyone is fully clear about what these objectives and key results are. A strong launch at the beginning of the quarter is essential to empower your team and keep them focused throughout the whole quarter.

How can we do this? By holding a quarterly OKRs launch meeting with your team, of course! Make sure everyone understands the OKRs and the reasoning behind them. Remember, OKRs are supposed to be ambitious goals — don’t be afraid to be aggressive and ambitious. And if your team consistently achieves 100% of their OKRs quarter after quarter, it may be time to raise the bar a bit.

After the launch, don’t forget to remind the team how the OKRs will be reinforced and reviewed throughout the quarter. And when it comes to documenting and tracking your OKRs, keep it simple. There are many sophisticated OKR tools out there, but sometimes a good old Excel spreadsheet is all you need. Also, using a tool the company is already familiar with can help reduce friction and resistance from the team.

5. Reinforce and review

But what if you need to change priorities in the middle of the quarter due to new information? Don’t worry, this is completely acceptable, as long as it’s done explicitly and with a clear understanding of the impact on all OKRs. Just ask yourself: did new information arise that wasn’t present during the creation process? If the answer is no, then keep the focus on the quarter’s OKRs. But if there truly is new information, then have an explicit conversation about how to reprioritize. Remember, this is math when it comes to resources (time, effort, and money), so if you’re prioritizing something new, something else will have to be deprioritized.

If you do need to make a change in the middle of the quarter, don’t forget to review the process you used to share and socialize your objectives and goals. Validate the change with leadership, present clear reasoning, and communicate with interdependent stakeholders to ensure horizontal alignment. Believe me, regular reinforcement and review of your OKRs will keep your team focused and on the right track without overwhelming them with extra meetings and processes.

6. Perform the post-quarter analysis

This is the key step that drives accelerated and improved learning, creating an advantage for the company. Through this analysis, you improve your understanding of how results are created and enhance the collective ability of the team to focus on what matters most in the long term.

During this step, the team dedicates time to systematically reflect on the quarter. Although this step involves assigning scores and honestly reflecting on performance during the quarter, it’s essential that the specific OKRs scores are not tied to performance evaluations and compensation.

If they are, it’s very challenging to perform an OKR cycle that enables meaningful learning.

First, ensure that you have a consistent scoring structure. The specific scoring guidelines don’t matter as much as ensuring consistency. An example is a simple green, yellow, and red scoring system.

Start by evaluating performance against key results:

• Green = 100%+ achieved
• Yellow > 70% achieved
• Red < 70% achieved

For objectives, the simplest way to score objectives is as the average of the key results scores. However, some discretion should be applied, as not all key results have the same importance for a specific objective.

For example, if the most indicative key result is red while all the others are green, it’s likely that the overall OKR will be yellow or even red. This also means honestly reflecting on the question: did we achieve the spirit of this objective (regardless of the key results)?

As mentioned in the previous lesson, OKRs are intended to be challenging goals. As a result, the team should embrace a culture of stretching goals.

• Do not confuse organizational-level objectives with revenue goals.
• Be careful not to have too many objectives, 3 to 5 objectives are recommended.
• Be very careful with non-measurable key results; (the risk of having an illusion of impact is high).
• Do not use tasks as Key Results.
• Do not turn the Key Result into an Objective.

OKRs, take it as a model and appropriate it based on what you want to happen. We have learned that OKRs are a valuable tool for effectively managing goals and objectives, but it is important to remember that they are not a magic solution. Strong leadership, common sense, and creative culture are fundamental for success.

By using OKRs, teams can align their actions with global objectives and maximize their impact, increasing efficiency and effectiveness. With the increasingly competitive scenario, being able to communicate assertively, work as a team, take risks and deal with uncertainties will become increasingly valuable skills.