The Basics of OKRs: What You Need to Know
If you’re like most organizations that engage in strategic planning, you’ve probably faced confusion around the different strategic planning methodologies. And likely scratched your head at a few acronyms in your search for the best fit.
While spending time researching methodologies is a necessary evil, it doesn’t have to be complicated.
In this article, we will discuss the basics of what you need to know about OKRs, which is one of the more common goal-setting methodologies.
What is an OKR?
Simply put, OKRs answer two fundamental questions:
What do we want to accomplish?
How will success be evidenced?
By definition, OKRs, or Objectives and Key Results, is a goal-setting methodology driven by outcomes. It helps companies align their goals and objectives to measurable outcomes. To fully understand the methodology, it’s important to define both of the two components:
- Objectives are statements or goals that outline what’s important in your organization. They answer the question “What do we want to accomplish?”
- Key Results are metrics that indicate progress towards the objective. They answer the question: “how will success be evidenced?” or “how are we going to measure progress for our objective?”
In Jeff Gothelf’s HBR article, he outlines exactly why the OKR approach is beneficial to companies. He notes that it keeps planning and progress-tracking focused on the impact the work is having, rather than micromanaging the specific work that teams are doing on a daily basis.
Because of this, it is an effective mechanism for aligning top-down strategy with bottom-up, team-level commitments to intermediate goals in support of that strategy.
The strength of OKRs explicitly lies in de-emphasizing specific tasks, and instead emphasizing the value that those tasks deliver.
What Makes a Good OKR?
According to Doerr’s OKR strategy, the formula for creating a solid OKR is simple. You should be able to complete the following statement:
“We will [objective] as measured by [key result]”.
In crafting your OKRs, keep in mind the following best practices:
- Reflect organizational efforts.
- Indicate the purpose of your efforts.
Key results should:
- Indicate how you’re going to achieve your objective.
- Be quantitative in nature.
Examples of OKRs:
- Objective #1: Improve Financial Performance
- Key Result: Grow Annual Recurring Revenue by 20%
- Key Result: Decrease Customer Churn by 10%
- Statement Example: We will improve financial performance by growing annual revenue by 20%.
- Objective #2: Increase Customer Satisfaction
- Key Result: Increase Renewals by 15%
- Key Result: Address 90%+ of Customer Support Issues through Digital Channels
- Statement Example: We will increase customer satisfaction, which will be evidenced by us increasing renewals by 15%.
- Objective #3: Improve the Client Onboarding Process
- Key Result: Decrease Average Client Onboarding Time by 3 Weeks
- Key Result: Train 80% of New Users Within 6 Months of Contract Starting
- Statement Example: We will improve the Client Onboarding Process by decreasing the average client onboarding time by 3 weeks.
As you can see, each of the OKR examples above answers the fundamental questions: “What do we want to accomplish and how will success be evidenced?”
Tracking the Progress of Your OKRs
Don’t devote a ton of energy to developing your OKRs just to skimp on monitoring them. Once your OKRs have been determined, it is imperative to have a proper mechanism in place to track them.
Not only will you want to know the status of the OKRs you’re tracking, but you’ll also want to know how it’s trending. It’s also critical to understand what activities have been completed and will be completed in the near future. The combination of these elements is key towards accomplishing objectives and key results.
Having a platform that does this for you will make your progress updates informative and actionable, improving the likelihood that you will achieve your objectives.
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