OKRs: what they are and what they are for
Big rocks first
This is a translation of the article originally written in Spanish:
OKRs: qué son y para qué sirven.
How many times have you heard this phrase: If you don’t measure it, you can’t improve it. Probably hundreds. I am sure you’ve repeated it as many times as well.
This sentence, which at first sight seems so innocent and so simple to follow in order to achieve success (measure to improve), deep down hides the same keys to face the great challenges: knowing how to ask oneself and answer the right questions:
- What do we measure?
- How do we measure it?
- What do we want to improve?
- How much do we want to improve?
- In what time frame?
And by going a little deeper, these questions can lead to more interesting scenarios:
- And why improve this and not the other?
- What does it mean to improve? Who is impacted by this improvement?
- For what purpose?
- How will we do it? Who is in charge of what?
- What lines should we not cross?
- And what will we do if we do not get it?
- …?
Something that seemed so simple has become a bit complicated, right? :)
The difficulty is no longer what or how you measure it, but how you organize it to measure and learn.
To know what to measure, how to measure it, for what purpose, and above all, how to organize the process and define the product well before starting, OKRs are one of the best frameworks that can help you plan your work.
Let’s start!
OKR stands for Objectives and Key Results
What are OKRs?
An OKR is a management and implementation tool of Objectives to improve the operational efficiency of a team, a company, or even a single person.
In broad terms, the anatomy of an OKR divides into two parts (I will explain them in depth later):
- Objectives
The high-level defined objectives. The qualitative What (What do we want to achieve?). They must be meaningful, inspiring, ambitious, and most importantly, respond to a mission by delivering value. - Key Results
Quantifiable results that measure progress against objectives. The quantitative How (How will we know if we have achieved it?). They must be specific, limited in time, achievable, measurable.
If you don’t measure it, you can’t improve it
The obvious part is that you need to measure to know if you are reaching the Goal. And the maybe-not-so-obvious part, and what the OKRs provide, is that you need Objectives to give a reason for that measurement. For those Results.
So, Objectives and Key Results are two sides of the same coin. They are inseparable. They need each other.
And aren’t KPIs enough?
Many companies use KPIs to measure the performance of their equipment and products. And to some extent, that’s okay. The problem is that KPIs are often extracted to see “how things are going”, or to set expectations for growth or performance through figures, and these alone do not move anything.
OKRs provide that point of intentional improvement and growth through value in everything you purpose to do.
I will explain later how, with the Key Results, we achieve that traction or constant improvement dynamic and you will more easily see the difference between OKRs and KPIs.
Hey! If your intention is not to grow but to stay where you are, with KPIs you have more than enough. The question you should ask yourself is: Do I want no to grow? What will happen if I don’t?
Where OKRs come from
The OKRs methodology is not new. It was created at Intel by Andy Grove in the early 80s. Under his tenure as CEO, Intel grew 994% in market capitalization, making the company the most valuable in the world at the time. A mere trifle.
OKRs would later become popular worldwide when John Doerr introduced them to Google back in 1999.
Today, in addition to Google, companies like Airbnb, Spotify, Intel, LinkedIn, Twitter, etc., use this methodology.
How to define OKRs
Defining OKRs requires thinking. It will be such a difficult or easy task as knowing how to answer these questions:
- What are we here for? (Mission)
- What do we want to achieve next? (Objectives)
- How will we add value? How will we know? (Key Results)
Achieving a good definition of OKRs with your equipment requires practice and, generally, they do not come out quite right the first time. Don’t worry about finding the optimal definition: it will come with time and practice. Now, the important thing is to start laying the foundations of this new way of working in which the whole team must agree.
Yes, the whole team. The definition of OKRs must involve all the people as it must be a top-down and bottom-up process to be really effective. It implies transparency and collaboration. The purpose is none other than to allow everyone to be aware of each other’s work and to be able to align Top-down, Bottom-up, and horizontally.
Mission: Why are we here?
Before you start defining the Objectives, you should take a step back and have another look at the company: What is the vision? What is your mission?
The objectives should point in that direction and not another.
Vision, mission, and values of the company are the board and the rules of the game.
Objectives: What do we want to achieve next?
Ambitious
Think big! Don’t be afraid to set ambitious goals. Not reaching 100% of your goals doesn’t have to be a sign of not trying hard enough. In fact, achieving 100% of your goals every time is a sign of not thinking big enough when setting them.
Do you know that when you leave nothing on your plate, and you swipe up to the last drop of sauce, it’s a sign that you’ve gone hungry? Well, this would be something similar.
Relevant
Asking “what do we want to achieve”, and avoiding asking “what do we want to do” is another key to defining a good Objective. As you introduce this new way of thinking, in which you look beyond the functionalities to look for the value that these functionalities bring to the user, in the changes that they cause, you will realize how many functionalities you have developed in the past lacking value.
How many objectives? Well, 1 or 2, 3 at most. The more objectives you define, the less relevant each one will be.
One of the advantages of OKRs is that you can use them for anything. For the examples, I will use them not for a digital product but a company’s culture.
Example:
O1: Becoming a company with a goal-oriented culture.
Key Results: How will we add value? How will we know?
Considering that for objectives, rather than the tasks to be developed, we have to think more about the changes to bring about, do you think it is also true for the Key Results? Of course.
Let’s compare 2 situations:
If our objective is to fulfill the development of a few functionalities, we will measure how many functionalities we develop. And therefore, the more we do, the better. A few vanity metrics will be enough for the data to support us as the Super Stars of the Universe. — Keep it up! — They will tell us.
However, if our objective is to improve people’s lives, solve their problems… what should we measure to know if we have achieved it? Will it be of any use to measure and count how many functionalities we have developed?
Obviously not.
The Key Results should not be turned into a to-do list. The purpose of OKRs is to drive significant change for the company and users, and the only way to know if we are achieving it is precisely by measuring those changes, rather than checking on the features we are developing. The symbiosis between Objectives and Key Results is evident.
It is highly recommended that the KRs meet these characteristics:
Quantifiable
I repeat the phrase for the umpteenth time: if you don’t measure it, you can’t improve it.
An easy way to make a Key Result quantifiable is through numbers. Your Key Results will be easier to measure if they incorporate a number or a percentage.
In the end, it is a matter of being able to compare the result obtained with the starting state and the desired state. The result should be between the two, and preferably closer to the second than to the first.
Specific and understandable
No ambiguities are valid. The Key Results must be specific and understandable by everyone.
First of all, those who are going to achieve them must be very clear about the focus.
What should you specify? It will depend on the OKR and the moment, but to give you an idea:
- The time-bound to reach the goal.
- If you have several channels, specify which one should produce the result.
- The figure to be reached. Don’t just say “increase your income”. Specify from where to where.
And secondly, I have already commented that the OKRs must be public so that the whole company can see them, so anyone who sees them must understand them clearly and easily.
Reachable
This does not mean they are easy to reach, but that it is possible to achieve them. That there are no impediments that block us.
At Google are happy with a result of more than 70%. Well, and me as the father of two children, too. That is, if they eat the steak and forget the potatoes :)
Examples:
KR1: 100% of employees have contributed to defining or reviewing at least two OKRs in the first quarter.
KR2: 80% of the developments in the first quarter have been goal-oriented.
KR3: All objectives are visible to all members of the company.
Extra point
For larger teams, OKRs should be hierarchical: that is, strategic or high-level OKRs, tactical OKRs that respond to the former, and finally, more detailed and operational OKRs that respond to the latter.
The Key Results of the strategic OKRs will be the guideline for creating the Objectives of the lower level OKRs, and so on.
There will be cases where “horizontal” OKRs (projects that need the contribution of several teams at once) appear, so make sure the OKRs have supporting Key Results on each team.
Benefits of using OKRs
5 advantages in 5 points to remember with the FACTS mnemonic
F: Focus
Most importantly, OKRs provide clarity in identifying priorities and help avoid distractions by keeping the focus on that direction.
Big rocks first!
A: Alignment
How do you manage to start from more general and strategic objectives, and trace the flow towards tactical objectives, and then in more concrete operations, and that the whole team agrees? With transparency and visibility of what you want to achieve. This transparency draws the line in the field on which all departments and areas of the company are aligned.
C: Commitment
Another advantage of the outcomes over the outputs. It is not the same to work with the objective in mind of building a row of stones one after another and that’s it, to work with the objective that X people manage to cross a river in N days. Having Key Results based on outcomes fully involves the team and makes them motivated and committed to the product and the value it brings to the user.
T: Track
The very definition of Key Results already requires a follow-up of the work we are doing. Are we doing well? Will we reach the goal by the end of the quarter?
At the end of each period, preferably one week, the OKRs are a reference to evaluate how the team is working in achieving its objectives. This reference serves to better plan and define the next work period.
Thanks to this monitoring of the key results, the 3 previous points are strengthened, and a greater predisposition is obtained for the 5th and last point.
S: Stretch
Setting ambitious goals forces the team to rack their brains, to get out of the comfort zone of “what we know works”, administering a motivational shot to want to exceed expectations.
What OKRs are for
In closing, I want to summarize very briefly what OKRs are for.
Positive changes in people’s behavior and lives always occur through the delivery of value. Usually through tools or solutions that solve their problems or facilitate their tasks.
OKRs prevent us from falling into the trap of increasing the product through sterile functionalities and force us to think and focus on how to improve these people’s lives.
OKRs highlight the difference between developing functionalities and delivering value.
Want more about OKRs?
What Matters
Inspired by “Measure What Matters”, John Doerr, Ryan Panchadsaram, and Lisa Shufro lead this space where you will find all the resources and tools about OKR you need.
The cultural impact of OKRs
The changes a company experiences after implementing the OKR methodology summarized in this article by Vanesa Tejada, based on her own experience. (In Spanish)
Best practices after 18 months of OKRs
The Ontruck team has long been applying and explaining how they implement the OKR methodology and what lessons they learn. In this article written by their CPO Javier Escribano, they recommend their best practices.
From words to deeds
The easy part of the OKRs is what I just did: explain the theory. Putting them into practice is quite a fine job. It is clearly explained point by point by Luz de Leon (Diga33!) in this article that she just published just a few days ago. (In Spanish)
Toolitis :)
Niket Desai Template
Inspired by OKRs methodology while working at Google, Niket wrote and published in 2013 this template for writing OKRs that will help you start using them.
https://docs.google.com/document/d/1OHpQOvZz76_10ebJP2AKvvXUF3H9yd6FC89F5jS4mks
Weekdone
I love this tool to manage your OKRs. The interface to visualize the state of things freaks me out. In addition to the OKRs, it has several features that allow you to track your team, progress, and options for giving feedback and acknowledgments.
Anama
Another good tool to manage performance through generating product culture and OKRs. Uploading and aligning your first OKRs to this tool is very very easy.
Profit
Perhaps the one that offers more options to define OKRs in more detail, and perhaps that’s why it’s a little more complex to understand and use.
Muchas gracias for reading this far 🥰
Muchas gracias Laura por ayudarme con la traducción :)
