Setting organizational goals usually brings KPIs (key performance indicators) to mind first. OKRs (Objectives & Key Results) are a less-used term for a highly effective approach to defining measurable goals and tracking outcomes, and this OKR template gives you a starting point for writing your own. The methodology is generally attributed to Andy Grove, who introduced it during his time at Intel, before Google adopted it in 1999.
What is OKR?
OKRs, or Objectives & Key Results, is a tool for building specific and measurable goals, or objectives, in order to successfully communicate, monitor and achieve the desired outcomes. This framework is used by many high-achieving tech companies, such as Google, LinkedIn and Intel.
OKRs, as the name suggests, consist of two main aspects. Objectives are short but specific definitions of what the company wishes to achieve within a period of time. Depending on the company, there could typically be around three objectives per quarter. It essentially dictates the direction and resources that the organization should take in order to achieve these targets.
Key Results are an indicator of the progress or success of an objective. Each objective generally has three to five key results. These have to be measurable and clear so that companies will have an idea of whether or not they have achieved a specific goal.
According to John Doerr, who worked with Andy Grove at Intel, the way to structure OKR is by using the formula:
I will (Objective) as measured by (set of Key Results).
Difference between OKR and KPI
In the business environment, a more commonly-heard term when it comes to goal setting is KPI. Key Performance Indicators are essentially a type of quantifiable performance measurement that tracks the progress of a company in regards to a specific objective. Revenue per month or new customers acquired are some popular business metrics that enterprises keep track of using KPIs. These KPIs are defined by a period of time, which could be hourly, daily, weekly, monthly, quarterly or yearly. The main objective of having KPIs is to keep an eye on past performance in order to make data-driven decisions and predictions about future activities and performance.
On the other hand, OKRs are a much broader, strategic goal-setting framework to define the goals of the organization moving forward. This sets a precedent for areas of focus, company direction and business activities that work together to achieve the desired outcome. In other words, OKRs help to define what KPIs are worth looking at. For instance, an organization could set an objective to increase their target audience by incorporating more product offerings. Thus, they will look at key results like their number of new products and the go-to market date. KPIs, such as revenue growth or customer engagement, can be used to support the project.
What are the Benefits of Using an OKR Template
The first step of the OKR framework, setting the objective, is often the hardest part: it sets the direction for all business activities that quarter. This can be a stressful step for leaders and teams, which is why it helps to use an OKR Template.
Here are some benefits of using an OKR Template.
Sets a level of consistency
Setting OKRs is a regular activity that happens every quarter. Using a template will help to ensure that there is a standard quality and format that everyone adheres to when writing OKRs, so that it does not differ from employee to employee. By keeping things the same throughout, new hires will also be able to quickly familiarize themselves with the procedure.
Cuts down on time
Mulling over what goes into an OKR framework can be time-consuming. By having a pre-written OKR document, the process is made simple and straightforward. All that needs to be done is to fill in the blanks on the OKR document. This can also help to cut down on unnecessary details or the risk of missing necessary components.
Ensures easy understanding and readability
An OKR template is written in a clear and definitive way, to provide clarity to the reader. Having a confusing and hard-to-comprehend framework can lead to confusion and even mistakes, which are detrimental to hitting targets. On the OKR template, it should be clearly outlined what the objective is, along with three key results.
Steer employees in the right direction
Business success depends on getting all stakeholders aligned on the same objectives. An OKR template creates focus on a single priority (or multiple, depending on the organization) by communicating the objectives for the quarter. This way, everyone who has access to the OKR template can be pointed in the right direction.
Sample OKR Template for Accurate Goal-Setting
Setting OKRs is an enterprise-wide strategy, so aim to be as detailed and specific as possible. We’ve put together a sample OKR template (see the top of this article) for easy and specific goal-setting. We also included some examples to help you get started. But do note that they’re not set in stone, and can be modified based on business strategy and goals!
How to Score OKRs
Since OKRs are built on a fundamental concept of measurable goals, it is important to know how to score OKRs. More specifically, you have to know what counts as success for Key Results. There are a few ways to score OKRs. Originally, the Andy Grove method would just rely on a simple yes/no as a way to track progress. For instance, based on the template above, it would say:
- Reduce monthly churn rate by 5%? Yes.
Doerr, however, further developed the OKR scoring method at Google which led to its proliferation, using a 0 to 1.0 scale. This is a more advanced scoring scale, which measures results by using:
- 0.0 to 0.3: Failure to make progress
- 0.4 to 0.6: Some progress, but short of completion
- 0.7 to 1.0: Successfully completed
This method, however, may not take into account intangible achievements. For instance, the objective to increase revenue may have fallen into the 0.4 to 0.6 (yellow) range, but one of these leads may be a large spender who generated profits that were worth over fifty clients. In a way, the objective to hit sales targets was increased but not in a way that was necessarily expected.
Tips and Best Practices for Writing OKRs
Use SMART Goals
For the OKR framework to actually work, the objectives have to be effective. One way to achieve this is by using SMART goals. SMART goals have to be:
- Specific: well-defined, using clear and concise language
- Measurable: able to be tracked using key results and in a quantifiable manner in order to communicate progress
- Achievable: the goal must be able to materialize through specific people and activities
- Realistic/Relevant: must be relevant and closely aligned to the company objectives
- Time-Bound: an established deadline to achieve each objective/key result
Applying the SMART concepts to your objective setting will help you create feasible and attainable goals that leave no room for interpretation. It can be helpful to ask questions like: what will help advance the company’s vision? What is the goal and how can we get there?
Keep It Simple
As much as it helps to be ambitious and detailed, a long-winded OKR framework will only set out to confuse the reader. You don’t want your organization to be spread out over multiple objectives and burnt out by the end of the quarter. The general rule of thumb is to have one company-wide objective and one for each team, so that everyone has a priority to work towards. Then, assign two to three key results to each objective.
Encourage a Growth Mindset
An OKR framework only works if people treat a partial score as useful information, not a failure. Teams that penalize anyone who lands at 0.6 soon start setting easy objectives they know they can hit, which defeats the point of OKRs. Treating a stretch objective that lands at 0.7 as a good quarter, not a shortfall, keeps people setting ambitious goals instead of safe ones.
Make It Easy to Collaborate On
Companies which encourage their employees to actively contribute and participate in OKRs can benefit from the flow of knowledge and different perspectives. When employees are given a say in what the company’s objectives are, they will in turn want to do better to achieve the key results and make meaningful contributions. Using a company-wide knowledge management platform like Kipwise can make it easier for teams to collaborate on OKRs.
