Most people understand the need for objectives and some measurement of success. However, many of us experienced goal-setting exercises in a variety of companies, which, sometimes, made goals even more difficult to understand after they were set.
The book, and a companion site with useful and concise resources, give an excellent guidance on organizational goal setting and measurement of success.
I loved the idea of understandable goals, which could be distilled to the short list hanging in the company’s bathroom. The inspirational stories in the book were encouraging and uplifting; if a tiny startup can use the approach to clarify its direction, everybody can. And – based on the experience of other companies – the process is challenging enough and may not be done right from the first attempt. This is OK. This might be the first objective 🙂
Some simple tests to see if your OKRs are good:
— If you wrote them down in five minutes, they probably aren’t good. Think.
— If your objective doesn’t fit on one line, it probably isn’t crisp enough.
— If your KRs are expressed in team-internal terms (“Launch Foo 4.1”), they probably aren’t good. What matters isn’t the launch, but its impact. Why is Foo 4.1 important? Better: “Launch Foo 4.1 to improve sign-ups by 25 percent.” Or simply: “Improve sign-ups by 25 percent.”
— Use real dates. If every key result happens on the last day of the quarter, you likely don’t have a real plan.
— Make sure your key results are measurable: It must be possible to objectively assign a grade at the end of the quarter. “Improve sign-ups” isn’t a good key result. Better: “Improve daily sign-ups by 25 percent by May 1.”
— Make sure the metrics are unambiguous. If you say “1 million users,” is that all-time users or seven-day actives?
— If there are important activities on your team (or a significant fraction of its effort) that aren’t covered by
OKRs, add more.
— For larger groups, make OKRs hierarchical—have high level ones for the entire team, more detailed ones for subteams. Make sure that the “horizontal” OKRs (projects that need multiple teams to contribute) have supporting key results in each subteam.
OKRs and KPIs
OKRs have a soul and directionality to them. Your objective is what you want to accomplish. Your key results are how you get there. Since KPIs are measures, they make great key results. For example, a museum collects data on the number of visitors and number of donors and those serve as some of its KPIs. This museum in particular has an objective to: make the museum more relevant to the community. A good pair of key results would be: grow number of monthly visitors from the local area 30% by next quarter and host 2 community events focused on attracting local donors. Both KRs happen to incorporate the museum’s KPIs.
There is no competition, KPIs and OKRs complement each other. They both have their place in a wellfunctioning organization.