Learn what OKRs are, how they work, and why they're important for aligning on and executing the strategy within your organization.
Most organizations have big, bold strategies and real urgency to execute them.
But their current process to achieve the strategy is inefficient, primarily due to low alignment, accountability, and focus across the organization.
The OKR framework helps organizations tackle all three of these challenges, so everyone in the company is focused on achieving outcomes, rather than outputs, and knows exactly how their work contributes to achieving the strategy.
OKR (acronym for “Objectives and Key Results”) is a goal-setting framework that companies use to define, align, and execute on the company’s desired outcomes. OKRs are categorized into two parts: Objectives are the ambitious goals that teams define for future outcomes, and Key Results are the milestones that teams use to measure progress toward the company’s strategic goals.
This OKR framework provides a common language and framework for defining, aligning, and driving desired outcomes across all areas of the business.
Effective OKRs give team members clarity on what they are trying to achieve within a given quarter and how they will measure milestones on their path to achieving it. This process ensures that all areas of the business are unilaterally working toward the same objective outcomes.
Objectives and Key Results were developed by Intel CEO, Andrew Grove, in the late 1960s. With roots in Peter Drucker’s Management by Objectives (MBOs), OKRs were introduced as a framework to define and execute Intel’s ambitious goals.
One of Grove’s early students, John Doerr, went on to author Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs in 2017. Doerr later served on the board of Google, where he introduced OKRs to Google’s founders, Larry Page and Sergey Brin.
Credited with helping Google rapidly scale from a small team to over 150,000 employees, OKRs are now used by companies across industries to dynamically focus people and resources on their most important and ambitious goals.
As a pioneer in OKRs, Intel sought the right Enterprise OKR Management and Strategy Execution Platform for its internal teams, and ultimately invested in WorkBoard.
An Objective is a statement of direction and intent, i.e., where an organization or team wants to go. Company objectives are not meant to describe how the team will get there.
Setting a lofty Objective can inspire a team to reach high and work diligently. But how do you know if you’ve successfully achieved an Objective? Key Results are the measurable, quantitative outcomes that, if realized, move the associated Objective materially forward.
Now that we’ve explored examples of Objectives and Key Results separately, let’s look at how they connect to make up one complete OKR. The following tips will help you learn how to write your own Objectives and Key Results.
Create an employee experience that enables all teammates to achieve their fullest potential
Check out more OKR examples by company function.
OKRs are a strategy execution framework, while KPIs (Key Performance Indicators) are operating metrics used to measure and track the status of activities.
Although both are methods of managing performance, Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs) provide value in very different ways.
OKRs help facilitate discussions around what matters most in a given quarter and inherently provide context and communicate priority - i.e. OKRs communicate the company’s or team’s highest priorities and initiatives over the next 90 days, and how it will allocate human capital to executing those priorities.
KPIs, on the other hand, communicate the progress of a given activity. A company may track dozens or hundreds of KPIs company-wide to gauge progress towards its goals.
OKRs and KPIs primarily differ in the following ways:
Objectives and Key Results (OKRs): |
Key Peformance Indicators (KPIs): |
Strategy Execution Framework |
Operating Metrics |
3-5 Objectives, 4-6 Key Results |
100s of measures |
Time-bound, Quarterly |
On-going |
Focus on “What” and “Why” of work |
Focus on measurement of activities |
Outcome-oriented |
Activity-oriented |
Drives focus on the highest priority outcomes |
Communicates progress against company activities - does not provide context or learnings |
Enables vertical andl lateral alignment |
(Not meant as an alignment tool) |
OKRs cascade from top and authored locally, by team |
Typically authored and managed from top-down |
Leading and lagging measures |
Primarily lagging measures |
OKR software is the technology for goal-setting and strategy execution on a team level. Advanced OKR tools are widely used by companies such as Intel, Google, Ford, Walmart, and many others. Although some teams choose to simply capture their OKRs in static Excel spreadsheets or PowerPoint slides, many fast-moving companies are leveraging dedicated OKR software to capture their priority Objectives and measure progress to plan.
An excerpt from Bain & Company’s Answering Five Critical Questions Executives Ask about OKRs provides an insightful third-party perspective:
“Excel is often used for a first OKR deployment when technical requirements are comparatively low. More specialized tools list the OKRs, track progress scores and verbatims, and calculate averages of these scores, offering a visual indication of progress. Any tool should be accessible and editable by many people and serve as a single, reliable source of truth for the entire organization. For large-scale adoption, more advanced software solutions are important.”
Some OKR software also integrates with third-party tools including Salesforce, Microsoft Teams, and Jira, enabling teams to dynamically update KRs from external applications.
Choosing the right OKR tool is completely dependent upon the size and needs of your team. Options include:
In summary, the OKR process is one of the most powerful goal-setting frameworks that companies, teams, and individuals can use to clarify objectives and measure progress on the initiatives that directly influence their most ambitious outcomes.
When teams begin to define aspirational Objectives, gain radical clarity on their KRs, and execute with accountability, growth becomes a common language and team sport.
OKRs are used by some of the biggest and boldest companies across the globe, including Intel, Google, Microsoft, Amazon, VMWare, Spotify T-Mobile, AstraZeneca, Ford, and Capital One.
While roots of the OKR methodology trace back to Andy Grove and the late 1960’s, it wasn’t until the 1970’s when John Doerr became exposed to Andy’s goal-planning system, and it wouldn’t reach Google until the fall of 1999, when John Doerr presented OKRs to Larry Page & Sergey Brin.
Andy Grove, “the Father of OKRs,” was the Executive Vice President, and later CEO of Intel. Andy’s OKR system can even be traced back to an earlier system, called “MBOs,” which was a well-known management system, popularized in the 1960’s by Peter Drucker.
MBOs, however, were riddled with shortcomings, so the OKR method became a more effective asset in strategy execution.
John went on to describe the OKR as “a tool for world-class execution.”
Although there is no unilateral format for writing good OKRs, some teams may create templates to incorporate in a goal management framework.
While setting OKRs, teams sometimes choose to simply capture their OKRs in static Excel spreadsheets or PowerPoint templates, many fast-moving companies are leveraging dedicated OKR software to capture their priority Objectives and measure progress to plan. Some OKR software also integrates with third-party tools including Salesforce, Microsoft Teams, and Jira, enabling teams to dynamically update KRs from external applications.
OKRs empower teams to build greater alignment, accountability, and focus — all necessary for efficient and profitable growth. When everyone knows what the strategy is and how they contribute to achieving it, people feel more connected to the company goals. OKRs cultivate a culture of employee engagement in which achieving smarter results is a team sport.
Although the structure and purpose of OKRs does not change, different teams or functions within an organization will use OKRs to drive different outcomes. Take a look at the following example and OKR set by a Sales Team compared to an OKR set by an Engineering Team. Both clearly define the relevant team’s aspiration Objective, along with their measurable Key Results.
Objective
Enable the sales team to open, win and close more deals
Key Results
Objective
Deliver high quality, scalable solutions
Key Results