What is an OKR?
April 20, 2020

You’ve probably heard the term OKR thrown around a couple times at work. It has come up in a few meetings, and you’ve also seen it mentioned in a few articles online. But you still don’t completely understand what an OKR actually is.

In this article, we’ll get you up to speed on what an OKR is, talk about best practices for setting OKRs, and we will share why leading companies use OKRs to guide their growth.


What is an OKR?

OKRs are incredibly useful for companies that want to focus on the right things. OKRs have been growing in popularity in recent years, and they are here to stay. 

John Doerr shares in his book Measure What Matters how companies like Google, Intel, the Gates Foundation, and other cutting edge organizations use OKRs to focus their team. So what exactly are OKRs?


OKR Definition

The acronym OKR stands for Objective and Key Results. Let’s break that down a bit further:

  • Objective - a high level goal you want to achieve.
  • Key Results - measurable metrics you track to determine success.


So if you combine those two into a definition, an OKR is a high level goal you want to achieve that has measurable metrics to determine success. Seems simple enough. So what does an actual OKR look like?


Example OKR

Let's first talk about company OKRs. Company OKRs are often set at the leadership level, and play a significant role in executing upon the mission and vision for the company. OKRs set at a company-wide level can also help provide transparency and clarity for employees. Here is an example:


Objective:

Release New Product


Key Results

  • Launch New Product by July 1st
  • $500,000 in ARR from new product by Dec 31st
  • $200,000 in customer upsells from new product by Dec 31st
  • 300+ attendees for product launch event


In the example above, the objective being set is a company-wide goal that is crucial to the direction of the company. “Release new product” is a goal that will likely impact multiple departments, teams, and individuals. Often with the breadth and scope of company OKRs, teams can lose sight of what success looks like upon completion. That is where key results come in as a true measurement for what matters to your company.

As you can see, the key results are specific and measurable. There will not be a question if the company reached those goals. The crucial element for key results is that they are able to be quantified. It eliminates the subjectivity or guesswork, and helps provide an objective view into success.


OKR Best Practices

Hopefully the above example gave you a sense of what an OKR looks like. That was a company OKR, but you also have departmental OKRs, as well as individual OKRs.

Here are some best practices of what makes a good OKR:


Objectives

Objectives should be aspirational and push people outside of their comfort zone. While they shouldn’t be so unattainable that they are discouraging, they also shouldn’t be so easy that you complete 100% with ease.

There should be objectives for each level of the organization (company, each department, and each person). More specifically, let’s look at how they can be set through each level of the company:

  • Company - Your company should have 3-5 main OKRs. As mentioned earlier, company OKRs are often set at the leadership level. They play a significant role in executing upon the mission and vision for the company. 
  • Departments - At the department level, your teams should have 3-5 OKRs that tie into the company’s 3-5 main OKRs.
  • Individuals - For individuals, we want to keep OKRs a bit tighter. Individuals should have 1-3 OKRs, each of which contributes to the 3-5 main company OKRs.


Key Results

Each objective should have 3-4 key results. Narrowing objectives down to only 3-4 key results will focus your team’s attention on the most important key results for that objective.

Key results should also be measurable and specific. They should be tied to an outcome, rather than an output. While outputs are important to track and understand, you ultimately care about reaching the outcome. 


Why You Should Use OKRs

Many leading companies have experienced great success by implementing OKRs. OKRs create alignment, transparency, and focus. They create a shared vision of success.

If there are not clear goals or direction, how will the team know what they are striving towards? How will they know what are the most important tasks to prioritize? The simple answer is that they won’t. Avoid this confusion by implementing and tracking OKRs in your organization today.

Looking to implement OKRs in your business? Reach out to us today to learn how to we have helped some of the fastest growing companies accelerate their business with OKRs.