What is OKR (Objectives and Key Results)

What are OKRs

OKR Framework for Goal setting

Objective: Where do we want to go? What are my goals?

Key Results: How do we know we are getting there? How do I know my goals are met?

Hypotheses: What will I do to get there? How to achieve the key results? Hypotheses can be product initiatives or features (introduce or kill a feature) or marketing features (change in pricing, promotion, place, or channel), etc.

Example of OKR

Example: Below is the OKR of an e-commerce retailer

Example of OKR for an e-commerce retailer

In the above example, “Expand international shopping”, “Launch a mobile app” cannot be good key results since these outputs are not measurable outcomes. These prescriptive key results will not allow the team to be creative to design their hypotheses. Instead “increase sales volume through our brand to 60%” is a good key result. It allows the team to come up with initiatives to support objectives and key results.

Purpose of Creating OKR

OKR is a goal-setting framework for the strategy execution or product planning that is used by organizations, teams, and individuals to create alignment, plan and measure the success of their work.

Principles of OKRs

1. Aspire and Inspire: Goals set should be challenging and not too easy that we can always reach 100% of goals. Usual guideline is to be able to achieve 60-70% of the goals.
2. Organizational and Team: Teams come up with tactical OKRs that are aligned with higher-level strategic OKRs (organization level) as well as with other teams, ensuring all teams are working towards the organizational objectives. While strategic OKRs are business outcomes, teams and subteams map tactical outcomes that are leading indicators and are more granular. Tactical OKRs are about how to achieve strategic OKRs. OKRs align and do not just start at the top and cascade down one way.
3. Agile: Company can set its OKRs annually while teams can set OKRs quarterly. The cadence will depend on the context of the team. OKRs help to stay focused on the outcomes and use retrospectives to learn, adapt (change goals or hypotheses) and iterate. Learnings can come from changes in the marketplace(change in customer preference, new competitors, etc) or results of the hypotheses that were put to test.
4. Outcome Focus: Provides clarity of purpose. The focus is on “impact” of the work and not on specific tasks or micromanaging teams. Teams work independently to come up with initiatives to meet the objectives and drive key results.
5. Transparent: OKRs are public and everyone has access to organizational and team OKRs

How to use OKRs to come up with product strategy and roadmap

Organizational Objectives and Key Results or OKRs drive company strategy or hypotheses/how to get there. Company strategy drives product strategy which in turn determine which products and features to pursue

Company Objective and Key Result→ Company Strategy (Initiatives to pursue and Hypotheses to Test) → Product Objectives and Key results → Product Strategy (Initiatives to pursue and hypotheses to Test) → Product Roadmap

Example:

1. Company’s Objective and key results is to “gain market share by expanding internationally” → Key result = gain market share, Objective = expand internationally
2. Company’s strategy to “expand internationally” is to pursue initiatives around “localization of product and marketing mix” , and hypotheses can be “We are losing to competitors that are able to localize product and marketing mix”
3. Product Objectives can be “create better international experience” , “competitive pricing in local market”
4. Product Strategy or initiatives to pursue can be “procure local products” , “build local sites” “language translation” . These initiatives will form the product roadmap