OKRs, Why I Like Them

I’m a big fan of Objectives and Key Results (OKRs). I’ve previously written about how they can be used to bring about Organisational Alignment when Establishing a Product Culture and I’ve also spoken with There Be Giants, on the world’s first OKR podcast about some of my lessons and tips when implementing them for the first time. Today, I wanted to explain to you why I like them so much, even if they aren’t always the easiest goal setting framework to get off the ground.

A quick recap on OKRs.

OKRs are about focus and alignment. They’re not the only things you need to do as an organisation but they should be the most important. When you take a step back, they should demonstrate the clear, incremental steps towards achieving your organisation’s overarching mission. Importantly, OKRs should be the universal single source of truth, used to create alignment throughout the business. Implementing them at an organisational level is key because without this, departments, managers and executives can walk into a room and state their own (potentially conflicting) priority. This can pull a team in multiple directions, causing frustration and throwing them into turmoil — resulting in an unhappy team, attrition and ultimately a failure to achieve any goals. So, in order to work effectively, I recommend you seek buy-in and endorsement from your executive leadership team, who should be using OKRs as their primary mechanism for communicating the business priorities.

The Objective is the outcome you want to achieve, the destination, or where you want to get to. The Key Result is how you measure progress towards achieving your Objective, or how close you are to your destination.

When writing OKRs at an organisational level I tend to suggest having between 1–4 Objectives, biassing towards 2–3 to maintain focus, while acknowledging there might be some breadth to the organisation’s goals. At a team level it should be more like 1–3, with a bias towards 1 to ensure absolute focus. When I say team in this context it assumes a group of cross-functional people of between ~3–8 individuals with a clear mission.

A good organisational level OKR might look something like this:
Objective: Increase paying subscribers such that we can increase investment in innovative & diverse new business lines to ensure long term success.
Key Result 1: 10% year-on-year increase in paying members that retain for at least 3 months.
Key result 2: 8% increase in subscriber revenue.
Key result 3: 4 new business lines tested in the market.

A good team level OKR might look something like this:
Objective: Improve customer retention and reduce operational costs by increasing paying subscribers self-serving updates to their account details online.
Key Result 1: 10% increase in 6 month retention for paying members.
Key result 2: 40% reduction in inbound call and email volume.

Now that that’s out of the way, let’s look at why I really like working with OKRs.

I advocate for OKRs for two main reasons: 1) they’re simple, and 2) they require organisations to have the difficult but important conversations up-front.

When I say simple, I mean they’re simple to read, rather than necessarily simple to come up with. The Objective should be written in plain language in a manner that anyone can understand. The Key Results should also be clear, but most importantly should be measurable. Good Key Results are free from dependencies beyond the team and through them we seek leading indicators that allow us to influence the result as we’re working towards it, rather than lagging indicators that are hard to rapidly respond to. Simple, and self contained, wonderful!

When I say important up-front conversations, I mean you have to find agreement about the outcome you’re really seeking, in order to write a clear Key Result. This is one of the reasons why OKRs can be challenging, because they force focus, which can be uncomfortable when everyone has so many ideas about what is the right thing to do! It encourages everyone to be really specific about the measure of success and it’s through this you reduce the likelihood of disagreement or direction changes part way through a quarter. I always encourage teams to provide early insight into “the things they might try”, or the initiatives they will investigate or experiment around in order to achieve their results. This further helps remove ambiguity about what a team will be working on without over-committing to a particular solution. This also further aids to set stakeholder expectations and can help when it comes to the noisy or HIPPO (Highest Paid Person’s Opinion) pet projects.

If you want to read more of my thoughts, you can check out my series of leadership articles, OKR articles and squad articles.

All the thoughts are my own.