The Essential Guide To Setting OKRs (Objectives and Key Results)

So you’re ready to achieve your goals using Objectives and Key Results!

OKRs (Objectives and Key Results) have helped companies like Intel and Google become industry leaders. Former Google CEO Larry Page says, “OKRs have helped lead us to 10x growth, many times over.”

While it takes skill and experience to become an OKR expert, anyone can begin to see results by simply starting with writing out and tracking their goals. A two-year study by Deloitte found that the biggest impact on employee engagement comes from “clearly defined goals that are written down and shared freely.”

This guide will equip you with the knowledge and skills to achieve outstanding results using OKRs!

How to Write Inspiring Objectives and Key Results

Objectives set your direction and focus for your planning period. Objectives should provide clarity on your desired outcome whether its driving growth, changing a process, or innovating on a new project. Objectives should not be tied to a number (Unlike Key Results).

Great objectives should be tied to your aspirational vision of where you want to be as an organization, as a team, and as an individual.  According to Harvard Business Review, companies where their everyday activities are tied to the organization’s vision—are more than twice as likely to be top performers.

How many OKRs should you have?

While it may be tempting to pile on Objectives, their effectiveness comes from their focus. At the company level, there should only be one to two objectives for the planning period (most likely a quarter).  This will cascade down into 1-2 Objectives for each team and 1-2 Objectives for each individual on these teams. Objectives should answer the question “What are the top one to two things we should strive to achieve this quarter to progress our long-term vision?”

At Google, OKRs fall into two categories: Committed Goals (like product releases, hiring, and customer impact) to be hit 100% and Aspirational Goals (like higher-risk, big picture growth and innovation) where 60-70% achievement is acceptable. If you are using OKRs to manage all your work, your company, team, and individuals should all have 1-2 of both committed and aspirational goals. If you’re just getting started with OKRs, we recommend focusing solely on aspirational goals to

Your objectives can also serve to balance each other. An Objective focused on improving efficiency can be balanced with one focused on quality. Don’t forget that by choosing what to focus on, you are also choosing what not to focus on.

OKR tree

How to Create Your Key Results

Key Results are the metric-bound targets you hit to achieve your Objectives. Defining a quantifiable measure of success in your Key Result provides clarity to your Objective and makes it easier to reach. Each objective should have around 3-5 Key Results attached to it.

Key Results can be thought of as the levers you pull to drive your objective. They should not be one-off tasks or deadlines. At the end of the quarter, your Key Results should allow you to say, as John Doerr explains, “without any arguments: Did I do that or did I not do it? Yes? No? Simple. No judgments in it”

Common Mistakes and How to Avoid Them

Setting OKRs is a powerful practice, but it’s not without its challenges. Here’s a look at some common mistakes and how you can sidestep them:

  • Being Too Vague: Objectives should inspire, and key results should be measurable. Avoid ambiguity by being specific and clear in your wording.
  • Overloading with OKRs: Less is often more. Focus on what truly matters and avoid diluting your efforts by setting too many OKRs.
  • Disconnect from Company Vision: OKRs should align with your organization’s mission and values. Ensure that every OKR is a stepping stone towards your broader goals.
  • Ignoring Regular Check-Ins: OKRs are not a “set and forget” tool. Regular reviews and updates keep everyone aligned and accountable.
  • Avoiding Tough Conversations: If an OKR is off track, address it head-on. Open dialogue fosters collaboration and problem-solving.

Remember, mistakes are learning opportunities. Embrace them, learn from them, and let them guide your OKR journey towards success.

How Aggressive should our Key Result targets be?

For Aspirational Objectives, you should set Key Results that are achievable at 60-70% confidence. As Google Veteran Rick Klau explains, “The “sweet spot” for an OKR grade is .6 — .7; if someone consistently gets 1.0, their OKRs aren’t ambitious enough. If you get 1s, you’re not crushing it, you’re sandbagging.”

This leads to greater creativity and experimentation when attempting to achieve your Objective. Your Key Results should stretch your team by setting a threshold just beyond what currently seems achievable. With a “growth mindset”, your Key Results help your team grow to accomplish Objectives.

What does OKR success look like?

Success using OKRs comes down to 5 key factors (easily abbreviated to FACTS) outlined by John Doerr: Focus, Alignment, Commitment, Tracking, and Stretching. Let’s take a look at what each one means to your goal-setting.

Focus with OKRs

As previously mentioned, OKRs are just as much about choosing what to focus on as they are about choosing what not to focus on. When you select your 1-2 quarterly OKRs, you are selecting the work that matters most to achieving your mission. This selection should align with your stated values.

Alignment with OKRs

Successful OKR implementation requires aligning individual and team objectives with overall company objectives. The impact of OKRs is maximized when every member of your organization is working together to progress the mission. Transparently sharing these objectives and visualizing how they roll up to top line objectives unlocks the motivational power of aligned goals.

Commitment to OKRs

OKRs are public commitments to getting the work done that move your mission forward. This commitment requires accountability that starts with leadership. Rather than merely performance goals set by management, OKRs work best as promises agreed upon collectively. Any leader looking to begin implementing OKRs should start by publicly sharing and committing to their own set and clearly defining company mission, vision, and top-line objectives.

Tracking OKRs

Publicly sharing your goals and progress is a key driver of their success. By consistently tracking and reviewing goals, your organization will quickly understand where they are falling behind and strategize ways to improve performance. Transparent tracking increases accountability and ownership as well as improving on the teamwork needed to achieve ambitious goals.

Stretching Yourself with OKRs

The final component of OKRs is the stretch. By extending goals just beyond the current capacity of the organization, team, or individual OKRs encourage us to take a growth mindset. A great Objective should inspire aggressive but achievable Key Results that require innovation and creativity to achieve.

Measuring Performance with Objectives and Key Results

Tying performance to measurable goals is critical for a fair and objective appraisal process. An employee who makes significant progress on their Key Results in a quarter is probably a high performer. But should they be a substitute for annual performance goals?

Rather than use OKRs as the staple of annual performance reviews and promotion decisions, OKRs work best when continuously managed. OKRs are dynamic and aspirational. They can change as quarters move along to incorporate new information. They allow for a process of continuous refinement and improvement.

This adaptability over time means frequent discussion on objectives is key. OKRs are not performance benchmarks assessed annually or semi-annually. They are a living blueprint for the direction of the organization and the collective efforts of every individual.

OKRs can be seen as a cornerstone of performance management, but not the whole building. They help shape the direction of innovation in an organization but do not fully represent an individual’s contributions. Performance management can start with a discussion of OKR performance but should also delve into other areas: non-OKR task completion, relationships with team members, and long-term career goals.

OKRs are effective as a tool of performance management because their frequent review and aspirational nature inspire engagement and foster creativity. They help assess and adjust performance expectations in real-time. As John Doerr explains, “Without frequent status updates, goals slide into irrelevance… At quarter’s end (or worse, year’s end), we’re left with zombie OKRs, on-paper whats, and hows devoid of life or meaning.”

The Pitfalls of Using Objectives and Key Results for Performance Appraisals

While OKRs can help add measurable results to performance expectations, John Doerr and others recommend their separation for a few reasons.

Incentivizing Sandbagging

One key component of OKRs is that their creation is collaborative. With Management by Objectives frameworks, management hands down goals to departments and managers set performance goals for their reports based on these top-level goals. Objectives and Key Results should be the result of brainstorming by managers and their reports in collaboration.

As a result, tying OKRs to performance management can incentivize individuals to set goals that they can be sure they’ll achieve. Ideally, OKRs are achievable at a 60-70% confidence level. If performance appraisal depends on OKR success, employees may understate their potential when setting goals.

If progress is tracking ahead of expectations, employees won’t have an incentive to update OKRs to keep them ambitious. When incorporated into continuous performance management, OKRs help identify top performers while allowing goals to adapt to maintain relevance and ambition.

Reducing Creativity

OKRs foster creativity by setting objectives beyond the current capacity of the organization. An objective like “Become the industry leader in customer satisfaction” implies that:

  • your organization is not currently the industry leader
  • new processes and ideas are required to elevate current performance

A focus on goal completion may distract from the underlying motivation for the objective in a performance management context.

Limiting Collaboration

OKRs align an organization behind its most critical areas of strategic focus. They work by rolling up individual objectives into the team and organization-wide goals.

In many organizations, employees may feel, rightly or not, that they are competing with teammates for raises and promotions. Tying OKRs to performance appraisals can create a focus on individual goals at the expense of team goals. OKRs may effectively incentivize performance but only at the team level.

Should OKR performance affect compensation?

According to John Doerr, the answer is no. “Divorce compensation (both raises and bonuses) from OKRs,” he recommends. “These should be two distinct conversations, with their own cadences and calendars.”

Even if they comprise different workstreams, OKR performance can still be a valuable input of the appraisal process. Someone who continually exceeds expectations as evidenced by OKR performance deserves special recognition in promotion and compensation decisions.

OKRs are useful for performance appraisals because they serve as a record of contributions to innovation and growth. They balance out other inputs like 360 Feedback and non-OKR task performance.

If OKRs are consistently reviewed as part of continuous performance management, every individual should already know where they stand with regards to compensation and promotion. Their success or failure does not determine how managers assess performance. But the innovation and successful improvements over time should help employees advance their career goals.

Performance Reviews vs Conversations, Feedback, Recognition (CFRs)

In contrast to the annual performance review, continuous performance management with OKRs involves what John Doerr calls CFR- conversations, feedback, and recognition.

OKRs can be measurably assessed: was the goal achieved or not? CFR provides the color commentary to the results achieved.

While OKRs may be time-bound, CFRs are the continuous tracking, sharing, and discussion of goal performance. Conversations and Feedback allow managers to coach reports to achieve their results. A core question of these conversations is “What can I do to help?”

Rather than reward or punish performance, these conversations give an opportunity to adjust course in real-time and identify emerging blockers and opportunities. They provide managers a window into how they can help their team achieve peak performance.

Recognition transforms company culture by building team investment in achieving goals. By transparently sharing OKR progress, every member of the organization can celebrate the accomplishments of their peers. When one objective advances, every member of the team can celebrate the progress being made.

OKRs in Practice

To understand how OKRs can transform an organization’s culture and improve performance it’s helpful to take a look at a few examples of companies using OKRs. OKRs are truly versatile and applicable in any context. As John Doerr explains, “They’re transparent vessels that describe the “what” and the “how.” The values we pour into those vessels are the answers for the question, “Why?”

Which company was the first to use OKRs?

OKRs originate from the management philosophy of Andy Grove, the third employee and eventual third CEO of Intel. At a previous company, Andy saw the limitations of the OKRs’ predecessor, Management By Objectives (MBOs).

MBOs tied employee compensation to the employee’s ability to hit targets set by management. The result was goals that lacked employee engagement and failed to reflect new information as the business evolved.

As Intel transitioned its product focus from memory to microprocessors, OKRs allowed the company to think ahead to lead a new revolution in technology. The ability for every employee to set their own goals drove innovation and a culture of success at Intel.

Grove defined this OKR in his classic book, High Output Management, as the answer to these two fundamental questions: “1) Where do I want to go? and 2) How will I know I’m getting there?”

OKRs at Google

If Andy Grove is the father of OKRs, John Doerr is, as he self-proclaims, The ‘Johnny Appleseed’ of OKRs.
Dick Costolo, former CEO of Twitter and Google alum, explains it as follows:

The thing that I saw at Google that I definitely have applied at Twitter are OKRs—Objectives and Key Results. Those are a great way to help everyone in the company understand what’s important and how you’re going to measure what’s important. It’s essentially a great way to communicate strategy and how you’re going to measure strategy. And that’s how we try to use them. As you grow a company, the single hardest thing to scale is communication. It’s remarkably difficult. OKRs are a great way to make sure everyone understands how you’re going to measure success and strategy.

Google still openly publishes their OKRs on areas of focus like sustainability. Every employee, from the CEO to programming interns, shares their OKRs publicly.

How does Google set goals with OKRs?

The key to the success of OKRs at Google comes from their aggressive, but achievable targets. Google targets a 70% success rate on their OKRs, allowing for learning from failure. re:Work, Google’s official guide to work describes this strategy:

Google often sets goals that are just beyond the threshold of what seems possible, sometimes referred to as “stretch goals.” Creating unachievable goals is tricky as it could be seen as setting a team up for failure. However, more often than not, such goals can tend to attract the best people and create the most exciting work environments. Moreover, when aiming high, even failed goals tend to result in substantial advancements.

This tolerance of failure created a learning culture at Google. This culture attracted employees who wanted to experiment and drive innovation. As Lazslo Bock, former head of People at Google explains, “If your goals are ambitious and crazy enough, even failure will be a pretty good achievement.”

For a deep dive on how Google sets OKRs, check out this training from Google Ventures Startup Lab partner Rick Klau.

Other than Google, what companies use OKR?

A wide array of companies have used OKRs to achieve success. Thanks to John Doerr, many organizations including the Gates Foundation, Zynga, and Kleiner Perkins-funded start-ups chose OKRs as their preferred goal setting method. Let’s dive into a few of these companies to see how they utilized OKRs.

OKRs at Intel

Intel used OKRs to power the shift from traditional memory storage to become the leader in microprocessors. Originally, Andy Grove called them ‘iMBOs’ for “Intel Management by Objectives”. As he explains, it took some iteration to get right. “We didn’t fully understand the principal purpose of it. And we are kind of doing better with it as time goes on.”

Andy developed the understanding that stretch goals were useful for driving innovation. “Output will tend to be greater,” Grove says in High Output Management, “when everybody strives for a level of achievement beyond [their] immediate grasp. . . . Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.”

Grove also realized that maximizing OKR effectiveness meant dissociating it from compensation decisions. While they can be a factor in performance reviews, they are not the sole basis for evaluation like with many MBO programs. The OKR, Andy says, “is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review.”

OKRs at The Bill and Melinda Gates Foundation

When Bill Gates started the Gates Foundation he began with Jim Collins guiding question from Good to Great: “What can you be the best at in the world?” Having built Microsoft, he settled on ‘using technology to create change’. From there, the foundation decided to focus on impacting DALY (Disability-Adjusted Life Years) through vaccination campaigns.

When John Doerr introduced OKRs to the Gates Foundation, they decided to set an objective of eliminating Guinea Worm worldwide. The objective (eliminating a particular disease) powered their mission (increasing length and quality of life). Their Key Results involved quarterly and annual targets for eradication program rollouts. As a result of their grants, global incidences of Guinea worm declined from 75,000 in 2000 to just 22 in 2015.

OKRs at Netflix

One critical component of OKRs is their transparency. The visibility into every team and individual priority drives accountability and weeds out those who would rather avoid such scrutiny. Such is the case in the radically transparent OKR culture at Netflix.

An impressive 94% of employees at Netflix say the company’s goals are clear and they are invested in them. However, this doesn’t come without its detractors. In interviews with the Wall Street Journal, some employees described the culture as “ruthless, demoralizing and transparent to the point of dysfunctional.”

Clearly, this type of culture is not for everyone. And Netflix is OK with that. As they explain in their culture guide:

“Being on a dream team is not right for everyone, and that is OK. Many people value job security very highly and would prefer to work at companies whose orientation is more about stability, seniority, and working around inconsistent employee effectiveness. Our model works best for people who highly value consistent excellence in their colleagues.”

Does Amazon use OKRs?

Many teams at Amazon use OKRs to structure their work. As CEO Jeff Bezos says, “Our goal is to be earth’s most customer-centric company.”

OKRs align with the company’s approach to ambitious goal-setting. Bezos declares, If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunities on the table.

Recently, this led to the release of newly developed goals committed to diversity. These comprise the top line Objectives that will drive personnel decisions across Amazon. Here are a few:

  • Inspect any statistically significant demographic differences in Q1 2021 performance ratings by VP team to identify root causes and, as necessary, implement action plans.
  • Inspect any statistically significant demographic differences in attrition and low-performance actions by VP team on a monthly basis to identify root causes and, as necessary, implement action plans.
  • Retain employees at statistically similar rates across all demographics.

Real-World OKR Examples

The following examples of successful OKRs show how they can make an impact on for-profit, non-profit, and personal goals. Objectives and Key Results are a versatile way to execute a solution to any problem!

Gates Foundation OKRs to cure Guinea Worm

When Bill Gates started the Gates Foundation he began with Jim Collins guiding question from Good to Great: “What can you be the best at in the world?” Having built Microsoft, he settled on ‘using technology to create change’. From there, the foundation decided to focus on impacting DALY (Disability-Adjusted Life Years) through vaccination campaigns.

When John Doerr introduced OKRs to the Gates Foundation, they decided to set an objective of eliminating Guinea Worm worldwide. The objective (eliminating a particular disease) powered their mission (increasing length and quality of life). Their Key Results involved quarterly and annual targets for eradication program rollouts. As a result of their grants, global incidences of Guinea worm declined from 75,000 in 2000 to just 22 in 2015.

Google OKRs for Sustainability

As part of a new sustainability initiative at Google, their team structured their sustainability goals into three objectives focused on reducing environmental impact: 1. “Design products and services for circularity and reuse materials at their highest environmental and social value.” 2. “Be the neighbor everyone wants in the communities in which we operate.” and 3. “Make technology that puts people first and expand access to the benefits of technology.” Each component contained a set of up to 3 key results focused on improving sustainability.

By starting with an aspirational and open-ended objective like “Be the neighbor everyone wants in the communities in which we operate” Google inspires its employees to think creatively about how to enable their company mission with this objective. They break down their Key Results into ambitious but obtainable metrics like “100% of shipments of all Made by Google hardware to and from Google’s direct customers are carbon neutral.” and committing $150M to renewable energy projects to spur $1.5B in renewable energy. By publicly sharing this OKR, Google ensures they will be held accountable for living up to their stated values and goals.

John Doerr OKRs for a Happy Family

OKRs can serve as powerful personal motivators as well. The godfather of OKRs, John Doerr, used his simple goal-setting framework to improve his relationship with his family. His mission was to be the best father and his objective was to spend quality time with his family. The key result he chose was “to get home for dinner by 6 PM at least 20 nights a month, and be present, with our phones in another room”. At the 70% threshold, this meant at least 14 nights per month.

FAQs About Setting OKRs

You’ve got questions, we’ve got answers. Here’s a rundown of some frequently asked queries about setting OKRs:

  • Q: How many OKRs should I set? A: Focus on quality over quantity. Typically, 3-5 OKRs per quarter strikes a good balance.
  • Q: Can individual employees have their own OKRs? A: Absolutely! Individual OKRs can align with team and organizational goals, fostering personal growth and contribution.
  • Q: How often should we review OKRs? A: Regular check-ins are vital. Weekly or bi-weekly reviews keep everyone on track and aligned.
  • Q: What if we don’t meet our OKRs? A: OKRs are about aspiration and learning. Falling short is an opportunity to reflect, learn, and adjust. It’s not a failure; it’s a growth opportunity.
  • Q: Can OKRs change during a quarter? A: Flexibility is key. If circumstances change, it’s wise to revisit and adjust OKRs to keep them relevant and achievable.

Setting OKRs is a journey, not a destination. These FAQs are your roadmap, guiding you through common questions and concerns. Embrace the process, learn as you go, and watch your organization thrive.

How to Track Your OKRs

Central to any OKR program is the ability to publicly share progress towards Objectives. Transparently tracking goals also allows for greater collaboration when identifying issues and correcting course. It also adds accountability to OKRs that motivate your team to keep them front and center in their daily routines.

At Google, each individual from CEO to the junior developer has publicly visible OKRs. Studies show however that only 51% of companies try to create aligned goals and a mere 6% actually revisit them. Deloitte found that companies who revisit goals quarterly see “threefold greater improvement in performance and retention than those that revisit goals yearly.” This is in line with internal Align data that showed 3.5X increases in performance with a system of publicly tracked goals.

The right system can make all the difference between OKR success and goals that soon become ignored. Any OKR system should transparently track company-wide, team-wide, and individual goals and demonstrate the alignment between them.

While some companies may attempt to track their OKRs in spreadsheets or existing systems, these methods often fail because they are not visible to every member of the organization. Additionally, the power of OKRs comes from the connection between quarterly objectives and long-term mission and vision. An effective OKR software helps every member of an organization understand that their day-to-day work matters to the organization’s long-term impact.

To learn more about the tools to connect OKRs with mission, vision, and values, speak to Align’s OKR software expert today!

OKR Resources

OKR Primer Webinar

Align partnered with the OKR experts from OKR advisors to develop a comprehensive introduction to OKR implementation. Joe Ottinger and Rick Maguire have over 50 years of combined executive experience across the technology sector. As the co-founders of OKR Advisors, they’ve helped companies like T-Mobile, Best Buy, and Nike facilitate change and achieve growth with OKRs. Watch the full webinar here!

OKR Templates

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