OKRs How-To-Guide

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What are they and how to best use them in your organization?

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What are OKRs and why are they so popular?

Objectives and key results (OKR) is a framework for defining and tracking objectives and their outcomes.

It was originally developed by Andy Grove in the mid 70s and then applied by Intel Corporation in the mid 80s.

It became popular in the past years, as it was successfully used by Google, upon suggestion of John Doerr, a Partner at VC firm Kleiner Perkins, starting from 1999.

This management methodology aims to "ensure that the company focuses efforts on the same important issues throughout the organization" and it is credited for Google’s success in product development.

After Google, the OKRs methodology has been in use at several Silicon Valley “majors”, including LinkedIn, Twitter, Gett and Uber, as well as thousands of start ups.

How do OKRs work?

OKRs are crucial to create “alignment” across the organization on the immediate priorities and medium terms objectives, in particular in new product development.

For this reason we have created an online tool where the organization can build, share and constantly update the OKR framework and the progress towards achieving the results.

The best way to explain the OKR framework is Doerr’s Goal Formula: “I will ________ as measured by ____________” or “I will (Objective) as measured by (this set of Key Results)”.

As the name implies, OKRs have two key components, the Objectives and the Key Results:

• Objectives are memorable qualitative descriptions of what you want to achieve. Objectives should be short, inspirational and engaging. An Objective should motivate and challenge the team
• Key Results are a set of metrics that measure your progress towards the Objective. For each Objective, you should have a set of 2 to 5 Key Results. More than that and no one will remember them. All Key Results have to be quantitative and measurable.

OKRs are set on a quarterly basis and monitored throughout the quarter. Actions and tasks during the quarter need to be aligned to the Key Results in order to make progress and achieve them by the end of the quarter. 

The cycle management of OKRs is described in greater detail below.

How do OKRs relate to SWOT Analysis?

OKRs are set following a strategic assessment and a SWOT analysis, therefore a SWOT analysis is a key input to setting the Objectives for the next quarter and designing Key Results and tasks to be performed in order to achieve them.

Performing SWOT analysis at an organization or team level allows you to identify your strengths and weaknesses and set priorities on the opportunities that are available to you.

It also helps you better understand where you are and where you want to go, so the OKRs for the coming quarter become a “tool” to progress towards achieving your Company’s mission and strategy.

OKRs are shared across the organization, so that everyone knows and understands what they are working on, what their team is focused on and which are the overall priorities of the Organization, in such way that the whole Company is “rowing together” in the same direction  at a progressively faster pace to achieve their objectives and get closer to their mission.

You can find more about SWOT analysis here or watch our video below.

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The tricks for OKR cycle management: quarterly and weekly planning and activities

OKR planning and reviews have to be performed on a quarterly basis, with updates and short term tasks setting and monitoring, conducted on a weekly basis, to set the tone and pace of execution.

In particular, on a quarterly basis:

• The team needs to Conduct and update the SWOT analysis, first individually and then as a Group
• Individual team members propose their OKRs
• The team meets to discuss OKRs and identify dependencies and areas of concern with regards to delivery (and potentially prioritize / descope)
• The team prepares a “How to achieve” presentation, including the key tasks to be performed to achieve the Objectives and Key results and overall accountability for them

In addition, on a weekly basis:

• By Friday afternoon, each team member updates the key results achieved and actions completed during the week, as well as any comments and issues that have emerged. He/she also updates the colour status of the progress on the key results (and main tasks)
• By Monday 9am, each team member adds their weekly top 5/6 to dos (tasks) ranked by priority into their OKR plan, so they can be reviewed by all members

How do OKRs differ from MBO (Management by Objectives) and KPIs?

OKRs are very different from Management by Objectives (MBO) which have been in use in management organizations for decades. They still use KPIs, but in a different way.

MBO has an annual cycle: it links the variable compensation of the management team to the achievement of the business targets that were set at the beginning of the year. As a consequence:

• Targets are generally not very challenging, as they then need to be achieved 100% in order for management to get paid their full variable compensation
• Objectives are normally confidential between a person and his direct boss, who will also then perform the review and assessment of whether they have been achieved
• Not all KPIs are 100% measurable or objectively measurable, as there is a widespread usage of “soft” KPIs

Conversely, OKRs are stretch / aspirational targets that aim to be 70-80% achieved by the end of the period and are not typically linked to the compensation of individuals, as they track operational excellence in delivery (not necessarily commercial or business success of what is produced):

• OKRs need to be publicly known within the Organization, not just within a team, but also across teams to foster cooperation and “alignment” within and among teams
• All KPIs have to be 100% measurable in an objective way
• If OKRs are achieved in 100% of the cases, then it means that they were nor challenging enough and they were not set correctly

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How can you best start to use OKRs within your organization?

Implementing OKRs will require your organization to undergo structural changes.

Below a few tips to increase the probability of success of implementation of an OKR framework:

• Start at level 1 (CEO and direct reports) and test it for one quarter, then “fix” it before further pushing it down the organization. If Level 1 is not committed or unable to understand and manage OKRs in full then, by definition, it will fail, when it gets pushed further down the organization
• Keep it simple: be selective in the initial number of objectives for the quarter, bearing in mind that “80% of results can generally be achieved with 20% of the effort”, if this effort is correctly focused
• In the beginning, select objectives that are more controllable from the execution point of view and with less external and commercial dependencies, to build trust in the methodology and gain traction with your teams
• Be ready to say “no” and push back on new initiatives that emerge during the quarter. This will help you to stay focused on implementing / reaching the targets you set at the beginning of the quarter. You can always add more / new targets for next quarter

It now time to start to “test and learn” OKRs… 

Are you ready?