What do Google and Microsoft have in common? They use the same framework to align their team, focus on their goals, and measure their progress: Objectives and Key Results (OKRs).
Implementing OKRs can be a game-changer for your team’s performance by turning abstract goals into measurable achievements and increasing alignment throughout your organization.
What Are Objectives and Key Results (OKRs)?
Objectives and Key Results (OKRs) is a goal-setting framework designed to improve your focus by identifying key priorities and aligning your team on one shared goal. It’s becoming the standard for goal-setting among top companies such as Dropbox, LinkedIn, and Netflix.
OKRs are divided into two parts: 1) objective, which is an abstract vision of what you want to achieve: 2) key results, which are how you measure progress toward your larger objective. Here’s a quick example:
- Objective: Drive more sales for my eCommerce store
- Key Results:
- Reduce cart abandonment by 30%
- Boost average-order-value by 20% with upsell offers
- Drive 25% more traffic with Facebook ads
A Brief History of OKRs
The history of the OKRs framework goes back to 1968, when Andrew Grove, then CEO of Intel, developed the method and taught it to venture capitalist John Doerr. In his book High Output Management, Grove explains that OKRs answer two important questions:
- Where do I want to go?: The answer will help you identify the objective.
- How will I pace myself to see if I’m going there?: The answer will help you identify key milestones and results
At the time that Doerr was working at Intel, the brand was shifting away from being a memory company to a microprocessor company. Thanks to OKRs, Grove was able to lead his team to focus on those new priorities, align everyone on the new goal, and have a successful transition.
In 1999, as Doerr’s company Kleiner Perkins Caufield & Byers became one of Google’s first major investors, he introduced the idea to the future tech giant. Since then, Objective and Key Results have played a central role in Google’s culture.
"OKRs have helped lead us to 10× growth, many times over,” says Google co-founder Larry Page in Doerr’s book Measure What Matters. “They’ve helped make our crazily bold mission of 'organizing the world’s information' perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
The 3 Benefits of Establishing OKRs
Here’s how companies benefit from establishing Objectives and Key Results as part of their workplace culture:
1. Clarify Your Company and Team-Wide Goals
Establishing OKRs requires teams to focus on what matters most by picking a big-picture objective. Then it pushes them to focus their attention on the smaller achievements that add up to big picture success.
As the saying goes: “If you chase two rabbits, both will escape.” If you have numerous goals you want to reach at once, you’ll have difficulty achieving any of them. OKRs help set your priorities so you’re not focusing on countless different goals that don't serve your larger strategy.
2. Improve Alignment and Team Engagement
Individuals and teams will have objectives that tie to the overall company vision. As a result, alignment will improve and each department will understand which tasks they must complete to contribute to the company’s objective.
For example, you might feel your marketing and development team are disconnected and work on unrelated issues. With OKRs, you can see that driving ecommerce traffic via Facebook ads and streamlining the payment process are both part of the same larger objective of increasing online sales.
Keep in mind that how well your team is aligned has a significant influence on your company's success. According to Harvard Business Review, companies with aligned employees are 2.2X more likely to perform better than their competitors. So on top of boosting team alignment with OKRs, you’ll also increase your company’s revenue.
3. Easily Track Your Progress
The bigger a goal is, the harder it can be to measure. A critical aspect of objectives and key results is that they are designed to be measurable.
For each objective, you’ll have a specific set of tasks to make it happen. OKRs simplify the process of keeping track of the progress you’re making towards your goals.
3 Steps to Identify and Create Your OKRs
Setting up OKRs doesn’t require everyone to read a book or attend a day-long seminar. It’s a fairly straightforward process designed to save time. Here are three simple steps to get your team started with OKRs:
1. Define Your Objective With Your Company Mission
Your company mission is what your organization stands for and the value it wants to bring to its customers. It’s what drives your team to do what it does.
Your objectives need to align with your mission. Reviewing it will help direct you in creating your OKRs.
Here’s an example from Coursera, an online course platform. Their company mission is to build a world “where anyone, anywhere has the power to transform their life through learning.” In this OKR from Doerr’s book Measure What Matters, we can clearly see how their objective aligns with their mission:
- Objective: Extend Coursera’s reach to new students
- Key Result 1: Perform A/B tests, learn, and iterate on ways to acquire new students and engage existing students
- Key Result 2: Increase mobile monthly active users (MAU) to 150K
- Key Result 3: Create internal tools to track key growth metrics
- Key Result 4: Launch features that enable instructors to create more engaging videos
Here’s another great example from tech giant Google that has made protecting the environment a key part of its company mission and turned it into OKRs:
- Objective: Design products and services for circularity and reuse materials at their highest environmental and social value
- Key Result 1: 100% of Made by Google products launching in 2022 and every year after will include recycled materials, with a drive to maximize recycled content wherever possible
- Key result 2: Use recycled or renewable content in at least 50% of plastic used across the product portfolio by 2025, prioritizing recycled plastic wherever possible
- Key Result 3: Eliminate plastic from packaging and make all packaging fully recyclable by 2025
- Key Result 4: Achieve UL 2799 Zero Waste to Landfill certification for all final assembly manufacturing sites by 2022
2. Cascade Your OKRs From the Top-Down
Once you define your objective, it’s time to “cascade” your OKRs within your company. In Measure What Matters, Doerr describes cascading as a method that makes OKRs more coherent by aligning different departments to one common goal.
In his book, Doerr uses this example to show what cascading looks like. Let’s say you’re the head coach of a professional soccer team, and your objective is to win the World Cup. Here’s what your OKRs would look like:
- Objective: Win the World Cup
- Key Result 1: Average scored goals rate of 2 throughout the tournament
- Key Result 2: Average conceded goals rate of 0.5 throughout the tournament
- Key Result 3: Ball possession rate of 75%
In order to cascade those OKRs, you’ll have to assign different tasks for each member of your soccer team. Here’s what the OKRs are going to be for the offensive coach in order to achieve your top-level objective:
- Objective: Generate a passing attack of 700 meters per game
- Key Result 1: Pass completion rate of 85%
- Key Result 2: Shots on target rate of 80%
- Key Result 3: Penalty kick conversion rate of 100%
From there, you can go continue to go down and provide each team member their own OKRs.
Cascading your OKRs is such a powerful method that it helped Intel overcome an existential threat to its company. During the 1970s, Intel’s competitor Motorola made microprocessors more efficient and easier to use, putting Intel's place in their market at risk.
Intel used top-down OKRs called “Operation Crush” to adapt, with the objective of delivering the highest-performing 16-bit microprocessor. They cascaded OKRs so that Intel's executives, engineers, marketing , and sales all had their own clear goals to reach the top-level objective. By 1980, Intel was able to beat Motorola and gain back its spot as a leading company.
3. Measure Progress
As you’re working on your objectives and key results, it’s essential to check in with your team to measure progress. Pick time periods that make sense for your objectives. For example, Google holds company-wide meetings each quarter to discuss their progress towards OKRs.
These check-ins give you the chance to identify problems you’ve encountered and adjust methods accordingly. Let's say your customer support team is struggling to resolve tickets efficiently. That might indicate they need improved training or software. In this way, OKRs can spotlight internal issues you might otherwise have missed.
Examples of OKRs in Action
In need of inspiration? Here are examples of objectives and key results you can use to motivate your whole team and company:
Company-Wide OKRs
Company-wide OKRs consist of goals that require the input of many different departments. Examples of company-wide OKRs include:
Objective #1: Improve Customer Lifetime Value
- Key Results:
- Reduce customer churn by 20%
- Release 4 features our audience is looking for over the next 6 months
- Create and launch two webinars each month to engage existing users
- Deliver an average customer response time of 24 hours
Why It’s a Relevant OKR:
According to a study by Bain & Company, a 5% increase in customer retention can lead to a 25% increase in profit. If you’re not trying to improve your customer lifetime value, you’re likely missing significant revenue.
The departments involved in achieving this OKR are:
- The development team, which will build new features
- The content marketing team, which will create monthly webinars
- The customer service team, which will quickly follow up with customer requests
Objective #2: Boost Brand Awareness
- Key Results:
- Improve search rankings by making our webpage responsive and improving our website speed
- Get 10,000 subscribers on our YouTube channel
- Guest post on two relevant websites in our industry each month
- Run targeted Facebook ads three times per week
Why It’s a Relevant OKR:
The more people know about your product or service, the more customers you can generate. Even with the best product in the market, if you’re not promoting to your audience, you’re losing to your competition.
The departments involved in boosting your product awareness are:
- The marketing team, which will create guest posts, gain YouTube subscribers, and run Facebook ads
- The developer team, which will improve search rankings by making the website responsive and improving its speed
Team-wide OKRs, on the other hand, focus on the needs of a specific department. Here are examples of what these might look like:
Objective #1: Boost Employee Engagement
Key Results:
- Increase the number of available training programs by 25%
- Reduce annual employee turnover by 30%
- Achieve an Employee Net Promoter score of 8
Why It’s a Relevant OKR:
According to Harvard Business Review, companies that prioritize employee engagement generate 4X more profit and 2X more revenue than companies that don’t.
Also, retaining employees through engagement helps decrease the time and money it costs to replace them. It costs over $4,129 on average to hire a new employee and onboard them.
Your Human Resources department will be most interested in utilizing this OKR.
Objective #2: Improve User Support
Key Results:
- Reduce call wait times to under 5 minutes
- Respond to customer inquiries in less than 24 hours
- Reduce cost-per-contact by 20%
Why It’s a Relevant OKR:
The quality of your company’s support has a significant impact on customer satisfaction and profitability. The objective is relevant to your company’s long-term success, and the key results are measurable and achievable. From there, you can cascade tasks for each member of your customer service team.
Don’t Be Afraid to Think Big With OKRs
OKRs represent an opportunity to think big while keeping you focused. By outlining key results to measure how you’ll get to your objective, even the most ambitious goals are within reach.
Ultimately OKRs can flex and change, depending on your needs or the market trends. Always be ready to adjust your objectives and key results.
