How to Ace your OKRs
OKRs are usually viewed as a tool to track progress towards a specific goal. They are set up depending on what the company is planning to do or based on a problem the company has at that point in time.
However, this does not leverage the whole power of OKRs.
What are OKRs?
OKRs are objective key results. They are usually defined within a quarter, but they can also contribute to a goal that you want to achieve within a year. Setting OKRs is all about setting the right goals to make sure you move in the direction that you want to move to. That is why they should be in tune with the big picture – the vision, mission, strategy, and user needs.
This is also why it makes sense to define a proper product roadmap before you define OKRs – the right roadmap already implies business value, strategic fit, and customer value. But that shall be the topic of my next post. Let’s stick with OKRs for this one.
Why are OKRs important?
If done right, OKRs
- focus the effort of the team – because they are clearly stated and everyone knows which direction to go
- empower the Team – since everyone knows what the ultimate goal is and the team is free to decide themselves how they solve a particular problem
- secure Leadership buy in – OKRs help move into a certain direction, aligning them with leadership thus implies that leadership agrees with the direction a team is heading to
- help build product intuition – reviewing the quality of the OKRs and which of them you have reached and which you have failed to reach, is a powerful tool to understand the impact of your initiatives.
Objectives & Key Results
An Objective is what you hope to accomplish with a given set of initiatives. Objectives should be outcome-oriented (metric focused and measure meaningful user or business outcomes, e.g. a conversion rate).
A Key result is a numerically-based expression of success or progress towards an objective. Here it is best to go with a mix of output and outcome goals (e.g. focused on delivering a feature or action within a specific timeframe).
While OKRs seem to be a simple framework, they are rarely used to their full potential. They are seen as a linear process, rather than a feedback loop, that drives rapid learning and impact for the company.
Here are some golden rules, which will make setting OKRs more powerful for you:
- Utilize outcome-oriented OKRs: Outcome-oriented OKRs focus the team on driving business value rather than dictating a single way of how to do things. You might be surprised by the solutions your team comes up with.
- Think of OKRs as feedback loops: By implementing review processes within your OKR process, you will learn important facts about your business and customers.
- Use OKRs in a larger system: To harness the full power of OKRs, they should be viewed as one piece within a larger system and thus compliment your strategy.
Output Metrics are usually used a lot more, since
- Outputs are easier to control than outcomes
- Teams are afraid that the outcome does not materialize in the short term
Outputs indicate that work has been completed. They focus on specific actions or deliverables. Focusing too much on output goals might create a culture of “getting done, what we have promised to do”, rather than first figuring out, what would be the smartest and most impactful way to do it.
Also with the mindset of “more is more” teams tend to focus on over-optimizing delivery. This can lead to celebrating milestones, launches, features or other outputs, which may have little impact on business outcomes. The team is more focused on the quantity of feature launches than the quality of features.
How do I set the right OKRs?
- Draft OKRs – define your objectives based on your roadmap. Next, define 2-4 key results per objective. While objectives can be treated in isolation, key results shouldn’t be treated in isolation. They come together to paint a picture of what needs to happen for your objective to be successful.
- Update your OKRs – ensure you update your OKRs, based on what you have learned from the OKRs from the previous quarter.
- Sharing, aligning, and socializing the OKRs
- Do a proper check-in with leadership “Do you have any concerns about the extent to which these priorities align with the company’s priorities?” ”Is there any additional context that would be important for us to consider as we push towards these OKRs and initiatives?” “Given your vantage point and understanding of other teams priorities, do you see any OKRs or initiatives that may not have sufficient cross-functional alignment?”
- Socialize and align with important stakeholders. Can they support the initiatives you are planning? Does this align with activities that they have planned for? Do they have any concern about the work required to meet the OKRs? Also ask yourself: Are we scoped to support other cross-functional team’s initiatives to the extent necessary? Do we need to adjust our roadmap given the priorities from other teams?
- Strong launch of OKRs – after adapting and finalizing the OKRs, communicate the final version to everyone in your team and everyone else who needs to know, so everyone is on the same page moving forward.
- Reinforce and review OKRs – e.g. via regular status updates, sprint reviews, 1:1 check-ins with managers and your team, product reviews, and weekly business reviews.
- Conduct quarterly OKR reviews – this improves your understanding of how results are created, and it improves your team’s collective ability to focus on what matters most in the long run.
- Reflect, learn and iterate.
- Develop a “data bank” of initiative data to support decisions.
When not to use OKRs
While OKRs are immensely powerful, it is not the right tool for every team in every situation. In particular if you are working in a high risk environment, that is e.g. companies in the exploratory phase. There are also cases beyond tech, where the nature of the business makes effective instrumentation and quarterly measurement more challenging or impossible.