What are OKRs and Why They Are Key To Reach Your Goals In 2024
Feeling frustrated by the lack of progress in your business? I can’t tell you how many entrepreneurs I’ve met that feel the same way! They’ve hit a plateau. Their teams are frustrated with inconsistent goals. They’ve no idea what the priorities for the year are.
Introduced back in the disco era at Intel, OKRs have become the GPS for tech companies wanting to make sure everyone’s rowing in the same direction. Why? Because, when everyone knows what the goal is and how they will measure success, magic happens. People get engaged. Productivity goes through the roof. According to studies (including this one by Oxford University’s Saïd Business School), when the team sees their work as significant, they perform like rockstars.
I will never get tired of saying this: if you want to reach your goals, you must define your OKRs (Objectives and Key Results). So, if you need a reminder of what these are, and how to set them up, keep reading.
First things first: what are OKRs
Putting it simply: OKRs are the process of setting, communicating and monitoring goals within your organisation. Imagine you’re in a boat. Your Objective is the island paradise you’re aiming for – that big, audacious thing you’re burning to achieve. It’s not about paddling around in circles feeling good about being busy; it’s about setting your sights on where you really want to end up. The Key Results are your compass and map – concrete, measurable signs that you’re moving closer to your island or if you’re just getting a suntan going nowhere.
Let’s break it down:
Objectives
Your rallying cry. Short, punchy, gets the blood pumping. These are your big, hairy, audacious goals. The kind that gets you out of bed in the morning with a fire in your belly. They’re not your everyday ‘increase sales by 3%’ kind of snooze fest. We’re talking ‘dominate the market’ or ‘revolutionise customer service’ level of ambition. Other examples of high-level objectives are:
- Increase recurring revenue
- Scale system performance
- Reduce the number of data errors in the system
Key Results
So you’ve got objectives like ‘Increase engagement with new customers’ or ‘Make our customers love us so much they tattoo our logo on themselves’. But how you know you’re winning, you’ve got to measure —that’s where key results come in. Few in number but mighty in impact, they’re your reality check. They’re not vague wishes like ‘do better’ or ‘increase stuff’. Nope. They’re specific, concrete, and as measurable as the number of swear words in a locker room after a lost game. Think ‘achieve 20% growth in revenue’ or ‘cut customer complaints by 50%’.
If your objective is to ‘increase engagement with new customers’ your key results might be:
- Key result 1: Triple communication open rate in-product from 6% to 18%
- Key result 2: Triple follow-up meetings booked per week to 24.
- Key result 3: Achieve a service quality rating of 9.5 or higher.
- Key result 4: Reduce response time by 300%
Ready to roll up your sleeves and set killer OKRs that’ll drive your business forward, read on
Setting OKRs that’ll blow your competitors out of the water
Over the years, we’ve seen and set a lot of OKRs. Based on experience, here are our tips for creating the most effective OKRs:
1. Determine who is accountable for what
The primary function of OKRs is to provide clarity on both the individual and collective goals within the company. They establish ‘Who is accountable for What and by When’. This will help you create a culture of accountability and set precise delivery targets. Whether these are time-bound or activity-based, OKRs will map out the progression towards the overarching objective.
Adopted effectively, OKRs offer unparalleled transparency on organisational expectations. They provide everyone with a clear direction, a sense of the required pace, and real-time performance feedback. Plus, it’s a team sport. Everyone gets a say in setting these goals and deciding how they’ll know they’ve scored.
2. Think specific
This is more challenging than it seems. To avoid ambiguity, start by establishing the context. When you work through this, ask yourself: Is your objective aimed at delivering incremental change? Is it aimed at achieving a step change? or making a discovery?
Formulate the OKR as an action statement, such as “We will deliver, achieve, or measure something.” From the objective’s wording, it should be immediately clear how you will know it has been achieved.
Here’s a pro tip: Mix up your actions and your key results. You want to reduce data errors? Great objective. But don’t say ‘Install software version X.Y.Z’ and call it a day. How will you know it worked? Measure the mistakes, the complaints, and the things that show real, tangible improvement.
3. Keep it simple
Avoid being too verbose. If in doubt, make it shorter. And can it be written memorably? Some companies have a corporate style of writing using alliteration or punchy language. This is good. It makes you think about the words you choose and put the effort in to get it right from the start.
4. Think FAST, not SMART
OKRs are pivotal for communicating change initiatives planned throughout the year, distinctly different from KPIs, which measure regular business operations. To be effective, OKRs need to be FAST: Frequently Discussed, Ambitious, Specific, and Transparent.
- Frequently Discussed OKRs are integral to daily huddles and weekly team meetings. This constant dialogue ensures that goals are central to ongoing evaluations, helping people to allocate resources and make key decisions, keeping staff focused on what matters and linking to concrete goals
- Ambitious OKRs should be challenging yet achievable, ideally set to a 70% success probability. Instead of benchmarking against the top performer, set key results that your second or third strongest team member can reach, thereby elevating overall performance.
- Specific means having clear, precise expectations for your team. KPIs are essential to define the minimum standards and ensure everyone knows exactly what is measured.
- Transparency in OKRs involves making each team member’s goals accessible to others. This openness not only fosters a culture of accountability but also encourages a supportive environment where team members can thrive collectively.
5. Don’t ‘set and forget’
Implementing effective OKRs means not just settling on the first set of objectives and results. The world moves fast; what made sense yesterday might be as useful as a chocolate teapot today. Frequent discussion is crucial—absolutely essential. We advise conducting check-ins on progress at least weekly, if not daily, and focusing on the metrics and milestones associated with your key results.
I recommend adopting a system of quarterly goal setting complemented by weekly or daily review of milestones. This approach can significantly transform the rhythm and momentum of your business, ensuring that objectives are continuously monitored and that team members remain engaged with their targets throughout the year. This shift from annual to more frequent reviews encourages a dynamic and responsive work environment, fostering greater overall success.
And let’s not forget: OKRs and Agile are like peas and carrots. Agile is all about being ready to pivot, and OKRs keep your eyes on the prize while you do. So, you keep your objectives clear, your key results tight, and you review regularly. Adapt or die, as they say.
Bottom line: OKRs align with your mission like stars aligning in the sky. They guide your ship, keeping everyone from the deckhands to the captain focused on the same horizon. Start small, think big, and measure often. And remember, this isn’t just about ticking boxes; it’s about transformational agility. Get on the OKR bandwagon, and let’s turn this ship around.
Written by business coach and CEO mentor Dominic Monkhouse, read more of his work here. Read his new book, Mind Your F**king Business here.