How to Set (and Crush) OKRs for Operations
It’s still a win-win, even when you fail
This article originally appear on the Next Matter blog here.
Operations teams know the stereotype – they’re the “catch all” department of the business.
That notion is supported by the fact that the roles and responsibilities of the operations department differ completely from one organization to the next. Variability is, in essence, the one thing that every operations department has in common.
A side effect of that variability is that operations teams sometimes lack longer-term business objectives. “Deliver work on time and in full” is a vague but fitting summary of the mission for most operations teams.
“Keep the ship afloat” is what it feels like in practice.
That's because, for many companies, the structure of their operations work is also highly disjointed, and long-term planning can feel like a useless exercise. With each major business challenge overcome, is another one brimming on the horizon. And operations is usually the team tasked with figuring it out, sacrificing their processes (and often, their sanity) to meet the need. It’s hardly conducive to thorough planning and goal setting.
Unintentionally, many operations managers end up taking a “set-and-forget” approach to goal-setting: set goals at the beginning of the quarter or year, and quickly forget them in the wake of the next, urgent business “crisis”, only to scramble something together again for the quarterly or yearly review.
It's a far cry from effective operations leadership, and holds the operations organization in a chronic state of reactiveness and stress.
Sound familiar? To alleviate this, consider setting operations OKRs.
What are OKRs?
Attributed to Andy Grove’s career at Intel, and spread to Google and beyond by John Doerr, OKRs (Objectives and Key Results) is a focused and action-oriented, goal-setting framework.
When implemented correctly, OKRs can help to establish greater strategic alignment and improve operational performance, as teams understand how their work contributes to your business’s top objectives.
Why OKRs are a powerful tool for operations
There are many benefits of adopting the OKR framework, but here are 5 of the most often cited, which are incredibly helpful to have as assets in the aforementioned operations “chaos”:
- Bring clarity to your objectives
- Meaningful track and report your progress
- Become more ambitious in your performance
- Increase focus at work for managers and teams
- Collaborate better, organization-wide
How to set up OKRs for operations
First, some simple definitions:
- Objectives are qualitative, somewhat high-level statements of what you're trying to achieve, e.g. “Meaningfully improve our operational efficiency”
- Key results are quantitative, measurable outcomes that state the impact you'll have in reaching your objective, e.g. “Close 90% of return requests in under 2 business days.”
- Every Objective has unique Key Results attached to it.
As state previously, the OKRs framework advocates ambition. Teams should not be hitting their objectives. If they do, it simply means that the objective wasn’t ambitious enough in the first place.
OKRs often start with executive teams, but they should involve everybody. They’re as much a bottom-up initiatives as they are top-down. We recommend engaging your operations team as much as possible in the OKR setting and tracking process.
What to do
Consider: “What are the most important objectives you want to accomplish in the coming quarter?”
This is the question you and your team need to answer. Everything else trickles down from there. Think big here, and don’t worry about the details yet – remember, objectives are generally qualitative in nature.
Another way to think about it: where do you want to be at the end of the quarter?
Be bold, see what ideas you come up with, and try not to think of the “how_”_ logistics just yet.
Next, align your operations objectives with the broader, company objectives.
You’ll want to make certain that both the executive team and your team are in lock step about what each wants to achieve. You’ve probably taken this into account already, but a logic-checking and alignment step is very important regardless.
Take as an example of a broader, company objective: “Win the DACH market”.
This example has the right scope and big ambition. It’s high-level enough, but also very clear in intention. It’s relatable for the whole company, and it can be easily distilled down into departmental and team objectives.
Now, going off that example, one operations-specific objective could be: “Deliver the best customer experience in DACH.” It’s well in-line with the company objective, yet still relatable, sufficiently high-level, and very ambitious.
Write out your objectives, and keep them short and sweet. Objectives should be phrased in a very simple and concise way. And you don’t want any more than 3 objectives in total.
Now that you have your objectives, it’s time to think about how you’ll track your progress. What data will tell you that you are, in fact, “delivering the best customer experience in DACH”, and how can you measure that?
At this stage, it is imperative that you do not think simply in terms of work you want to get done. For example:
Release new, major product feature?
Good for you. But not a quantifiable indicator of progress.
Close more support tickets than last quarter?
Closer, but still no. Shows quantifiable progress, but not progress toward your objective.
What matters here is that you impacted the right metrics by a large enough amount. In the previous examples, the key results were either not quantifiable, or were not direct strong enough indicators of progress vis-à-vis your objective.
Key result metrics need to be measurable data points that directly contribute to achieving your objectives. For that you need to consider what actual constitutes real, meaningful results, and then decide which of those would be clear indicators of success if your team absolutely smashes their numbers.
To “deliver the best customer experience in DACH”, you could use objectives like:
Decrease churn rate from 15% to 5%
Increase NPS from 6.0 to 9.0
Note what both key results have in common: they’re measurable, clearly stated, and – if achieved – would indicate clear progress toward the stated objective.
And perhaps most importantly, they're truly ambitious. Remember: you shouldn't actually hit your target, but try to land as close as possible to it. If you're falling within 70-80% of your key results consistently, this should be an indicator of good performance.
Every 2-3 weeks (we found two week intervals to work best), you need to schedule mandatory checkpoints with your teams to see how much progress has been made, discuss learnings, and make strategic adjustments along the way.
Regardless of what progress has been made (or not) it is paramount for your teams to have this checkpoint on a consistent basis. In doing so, you’ll keep the objectives front of mind, and have a healthy and ongoing discussion with your teams about how best to hit them.
Keep review sessions focused, consistent, and brief. Avoid messy coordination and lengthy email threads at all costs. Focus on the numbers, interpretation, and immediate actions to be taken.
This is a core differentiator of OKRs. The formula only works to the extent that you and your team are able to engage with your objectives, results, and performance on a consistent basis.
So make it count, and be consistent with reviews.
At the end of the quarter, every team should present their results.
Admittedly, this can feel a bit awkward the first time through, depending on how ambitious the OKRs were, and how the team’s actual performance measured up to them.
How much have they moved the needle? What did they do to achieve this? What worked for them, and what didn’t? If your teams landed far from their targets, remember: that’s OK, as long as there were important learnings made along the way.
Maybe the initial objective was the wrong one to pursue, or maybe you tracked the wrong key results. Regardless of the performance outcome, the learnings need to be clearly stated and understood, before moving on to the next round of OKRs.
Once OKRs have become a recurring practice in your organization, you’ll notice something highly valuable.
Whether you’re hitting your OKRs every time, 50% of the time, or almost never, there should be a consistently positive, upward trajectory in your organizational performance.
That’s because the real work of OKRs isn’t one-to-one, goals measured against performance with linear outcomes. In setting them, you are motivating teams to take specific, targeted actions to achieve ambitious but tangible goals.
If they can’t hit those goals, it’s rarely because they aren’t trying hard enough. That’s where the review sessions and accelerated learning comes into play.
Many operations managers learn, for example, that a key result cannot be achieved because an internal operations process is broken or terribly “manual” – a potentially high-cost issue, which will need to be resolved in order for your team to reach for their key results. With OKRs in place, you can quickly identify core process issues, then work on solving them in preparation for your next, more ambitious round.
It’s still a win-win, even when you fail.