The Fundamentals of OKRs

Learn what OKRs are, how they work, and why they're important for aligning on and executing the strategy within your organization.

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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 Definition: What are Objectives & Key Results?

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.

OKR Origins: How OKRs first developed at Intel & Google

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.

Defining “Objectives” (with examples)

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.

The following 4 characteristics define a strong Objective:

  • Aspirational: An Objective describes an ideal future-state and should inspire and motivate people with a sense of purpose. Objectives are the lofty, aspirational “stretch goals” that may seem almost impossible, but motivate team members to reach higher than ever before.
  • Not Measurable: Objectives are not meant to be numerical, measurable goals - that’s what Key Results are for.
  • Short or Long-Range: Depending on how lofty an Objective is, it may require months or years to achieve. Objectives may be short-term or long-term goals, lasting a single quarter, multiple quarters, or more than a year.
  • 5 or Less: In an effort to focus people’s time and resources, teams should ideally have no more than 3-5 Objectives per quarter.

Examples of poor Objectives:

  • Train the Sales Team
  • Ship 6.4 Product Release

Examples of strong Objectives:

  • Enable our Sales Team to compete and win!
  • Digipay is delightfully fast for our customers.

Defining “Key Results” (with examples)

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.

The following 4 attributes are characteristic of good Key Results:

  • Measurable: Key Results are numerical, with a target metric and a time frame that clearly defines what it means to be complete.
  • Defined Quarterly: Unlike Objectives, which may require multiple quarters or years to achieve, KRs are outcomes specifically designed to be completed within a given quarter.
  • 4-6 per Objective: In an effort to focus people’s time and resources, teams should ideally have 4-6 KRs per Objective.
  • Outcome-Focused: Although it can feel natural to think of Key Results as specific activities, great KRs actually describe the intended outcome achieved by completing those top priorities. In other words, we care more about realizing an intended outcome than simply completing a series of activities. Outcomes, not activities.

Examples of poor Key Results:

  • Publish new Sales Playbook
  • Update Persona Cards
  • Design new Sales Data Sheets
  • Finish 17 items in the Product Release Backlog

Examples of strong Key Results:

  • 85% of Sales Reps report that they are confident they can compete and win following Sales Training
  • Reduce the number of Payment steps from 7 to 3.
  • Decrease Transaction Processing Time by 3 seconds

How to write OKRs (a connected example)

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.

Example Objective

Create an employee experience that enables all teammates to achieve their fullest potential

What makes this a great example Objective?

  • Good Objectives are aspirational: The Objective describes an aspirational goal that can inspire and motivate the team.
  • Good Objectives are not measurable: This Objective does not attempt to define how success will be measured.
  • Good Objectives are can be short or long-range: Realistically, achieving this aspirational Objective may require months or even years. This may be a consistent Objective over the next several quarters. How efficiently we achieve this example Objective will be determined by how well we achieve our associated KRs.

Key Results Examples for Our Objective

  • >80% of people understand our company strategy and feel confident in how their daily work contributes to achieving it.
  • Participation in Employee Resource Groups increases from 7% to 15% of all employees so we build networks and relationships beyond any individual team
  • <5% differential in under-represented groups for new hires and first-line managers (visible to Leadership and HR only)
  • <3% differential in belonging index across under-represented groups, gender, and age

What makes these example Key Results great?

  • Good key results are measurable: Each Key Result is numerical, with a target that clearly defines when we have achieved success.
  • Good key results are defined quarterly: Although our Objective may require multiple quarters to achieve, each of our KRs are defined and measured within the present quarter.
  • 4-6 Key Results per Objective: We have four KRs for this particular Objective, so that people can focus time and resources on the few outcomes that matter most.
  • Good key results are outcome-focused: Each KR describes an outcome, not an activity.

Check out more OKR examples by company function.

What’s the difference between an OKR and a KPI?

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

What is OKR Software?

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.

Selecting the right OKR solution

Choosing the right OKR tool is completely dependent upon the size and needs of your team. Options include:

  • Manual OKR planning with Excel or PowerPoint - This option is best for small teams, but becomes untenable for growing organizations.
  • Out-of-the-box OKR solutions - Best for medium-sized teams. Out-of-the-box solutions can be cost-effective for housing and tracking key Objectives and associated Key Results.
  • OKR Software - Best for large enterprises of more than a thousand employees. Advanced software helps large teams achieve greater alignment and outcomes with a more robust and dynamic solution.

Additional benefits to using OKR software include:

  • A greater ability to measure the progress of each KR in relation to Objectives
  • Centralization of outcomes, so that alignment occurs vertically and laterally across teams and individuals
  • Collaborative brainstorming tools to inspire and assist teams with writing OKRs
  • Integrations with existing tools and technology platforms for collaboration and data connectivity

Conclusion

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.

OKR FAQs

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.

Marketing Team OKR

Objective

Enable the sales team to open, win and close more deals

Key Results

  • Deliver new leads with $13m in pipeline value this quarter
  • Launch integrated campaigns to 2 target channels
  • Secure 3k inbound leads
  • Set 500 demos

Engineering Team OKR

Objective

Deliver high quality, scalable solutions

Key Results

  • Maintain <500 milliseconds average successful response time on server requests
  • Fewer than 15 field reported bugs per month
  • Maintain 100% uptime

View more OKRs by business function