No matter if you are a team of 5 or a +200.000 person multi-nation cooperation, you need to align around some sort of shared goals.
But not all goals were born equal and neither were their underlying frameworks. Revisiting the fashion fads and new truths about goal setting in teams and corporations is a testament to this. Everything from SMART and BSQ to WIG. It seems that what all goal-frameworks have in common is a clunky abbreviation, and yes, this also happens to be true for the framework we are looking at today: OKRs
OK-What? OKR – Objectives and Key Results
The agile and incredibly interactive way of setting goals on team and corporate level.
But it’s more than that, it’s the foundation of a culture, centered around results rather than actions. OKRs are not an employee management tool, it’s a strategic tool – so please don’t adopt these to revamp your bonus structure.
Objectives and key results can be traced back to the ’50s where Peter Drucker developed the framework of Management by Objectives aka MBO
But before I dazzle you with the incredible powers of OKRs, let’s dive into the history a bit. Objectives and Key Results can be traced back to the ’50s where Peter Drucker developed the framework of Management by Objectives aka MBO. OKRs, as we know them today, was popularized by Google in 1999, helping them scale from 40 employees to the Google we know today. Other companies using OKRs include Spotify, Twitter, LinkedIn, and Airbnb – oh yes, this is the strategy darling of Silicon Valley.
OKRs Consists of 3 Levels
Objectives: The dream, the major goal ahead that the entire company is working toward. This is qualitative and not measurable as such – an example could be: Become the greatest SaaS company in all of the Milky Way galaxy.
Key results: The results, that if realized, will prove that you have reached your overarching objective. These can always be measured, otherwise, it’s not a key result but merely a to-do list. Focus on the results, not the actions, remember? Settle on 1 to 5 key results, for example: Increase customer retention to 99.9% by 01/01 2019. Key results can be shared among teams, which is what makes OKR so effing awesome.
Initiatives: But hol’up, what about the actions that are getting us there? Not to worry, OKR got these covered as well and we call these: Initiatives. These are agile and can be changed during an OKR cycle. See if you’re focusing on the results, you’re not bound to carry out a task that isn’t giving you the results you hoped for. So, in the pursuit of fulfilling the key results you can change initiatives as you go, pursuing the most effective ones.
Typically, OKRs run in two cadences – a long-term around a year or two and a shot-term around 3-6 months. The specific length of the OKR cycle depends on the size and composition of your company. We review our objectives and key result once a week in a 15-min stand-up session where each of us answer the following questions:
1) What did I do last week?
2) What am I doing the next?
3) What do I need help with?
4) Will I reach this key result?
4 Reasons We Started Using OKRs
By now, you’ve probably noticed that I am preeeetty enthusiastic about OKRs. I would recommend it for anything: “Feeling the flu creeping in? OKR it away!”.
But what are the main reasons for my obsession with this specific goal-framework? I’ll give you four:
1 Working Toward a Common Goal
“Duh, that's the point of goals to begin with... what's so special about OKRs?”, you might ask.
Well, it’s the fact that suddenly goals are no longer something that’s only relevant once a year, but also on a regular Tuesday afternoon. And here’s why:
With OKR, you set an objective for the entire company, everything in the business should somehow feed into this overarching objective
With OKR, you set an objective for the entire company, meaning that everything that is carried out in the business should somehow feed into this overarching objective. This helps teams and individuals understand what their role is in achieving this goal.
This way goals don’t become something that is detached from your everyday tactics and actions, but rather, OKRs let you paint an easy path from simple daily tasks to company-wide strategy.
2 Aligned Around Objectives, Not Tasks
Imagine this: Two companies both want to increase their sales and both believe that focusing on cold-email outreach will result in an increase around 15% in the coming quarter. We'll call them Company 1 and Company 2.
Company 1 manages to get their sales and marketing team to collaborate on a big-scale email campaign, releasing a total of 500k emails in 3 months. Quite impressive really. Sales increase by 6.5%.
Company 2, on the other hand, start small. In the first month they send out 50k emails, but aren't satisfied with the initial results and therefore decide to change their approach. Instead, they initiate a LinkedIn campaign targeting relevant prospects with different video content. By the end of the quarter they had increased sales by 15.8%.
Who did best? The team that stuck with their initial plan or the team that changed tactics during the run to make sure they got their desired results? Obviously, company 2. This is why your goals should encourage behavior as done by company 2, i.e. always keep the overall result in mind while allowing yourself to change your approach if things don't work as intended.
3 Internal Dependencies
In a product company it’s almost impossible to say where marketing starts and where sales and product begin. Conventional goal-setting frameworks, e.g. a key notion in SMART goals is that you shouldn’t set goals that you aren’t in control of.
Yet, by setting department-specific goals you ignore internal dependencies, create silos and increase interdepartmental detachment. E.g. if we have a goal to reduce customer churn, this affects both our re-activation campaigns in marketing, the user education in customer success and our in-app onboarding.
Fencing this project in, e.g. to live only in Marketing, would be like trying to make a square fit in a circle – you are gonna end up very frustrated with little to show for it.
Instead, we agree on an overarching objective relating to churn, e.g. “have the happiest customers on earth”. A key result here, that would indicate we’ve reached this objective, could be “reduce churn to 0.1%”. We then proceed to map primary and secondary teams for this KR. The primary is the team that owns the KR to make sure it lives somewhere. But in the end, we are all working towards the same objective and mapping out the team-specific KRs.
4 Cadence That Matches Speed
In our team, we like to joke about startup years. They work sort of like dog years; 7 years in startup years is the rough equivalent of 1 normal year.
Things move fast, they change - looking back a year, means looking back at an entirely different business.
Things move fast, they change - looking back a year means looking back at an entirely different business. New clients, new opportunities, new challenges. This should be reflected in the goals you set for your company. Here OKRs are again to the rescue- due to two reasons.
- The fact, that you can decide on a time frame and cadence that matches your team, we go 3 months and 1 year, means that the OKR is relevant for small teams as well as large multinationals.
- Agile initiatives mean we are able to change tactics in sync with the company learning curve and during our trial and error testing. This ensures our goals are always at the center of the company and stay relevant throughout the cycle - not something that we dust off once a year.
Here you’ll find some awesome examples on how to construct OKRs. It's a skill that takes practice, so be patient and keep at it. The startup Weekdone has built a great tool where you and your team can track your progress.