Objectives and key results (shortened to OKR) is a goal setting framework that businesses use to drive focus, alignment and execution. Companies can use OKRs to establish priorities, create internal alignment, increase accountability for individuals and often reach their objectives.
Not every objective needs to be met for OKR to be successful. Sometimes companies will set goals that are achievable and drive focus for that quarter. Other times, companies will "shoot for the stars" and set objectives and key results that are higher than what is possible to really motivate employees to push themselves. OKR is a popular and successful goal setting framework for organisations in many industries, including in non-profits as well.
OKRs can be reviewed yearly, quarterly or monthly—depending on how ambitious the goals are. For highly ambitious goals, a company might only change OKRs every five years or so. For smaller OKRs, they might change every six months. It all depends on the level of the goals and how much time those goals will take.
OKR consists of two key components: objectives and key results. Both components are important to successful implementation of OKR for an organisation. The first component is objectives. Objectives are what the company or organisation wants to achieve. They are typically aligned with business goals and set high enough to motivate the employees to achieve more than before.
The second component of OKR is key results. Key results are the metric used to measure progress toward the objectives. Key results are typically more specific and time-bound to help provide a reasonable way to measure progress and success. Key results can also be considered smaller goals to hit along the way to succeeding with an overall objective. Key results can also benefit from regular check-ins and evaluations.
The OKR framework was originally developed by Andy Grove at the company Intel. He initially called it Intel Management by Objectives, but it was later simplified by John Doerr to be called Objectives and Key Results. He taught this style of goal setting to John Doerr who took it to the company Kleiner Perkins, which brought OKR to Silicon Valley. OKR revolutionised the companies in Silicon Valley because of its simple yet effective way of setting goals and driving execution.
Doerr introduced OKR to Google's founders in 1999, and Google has used OKR within its company strategy and management framework ever since. Due to Google's immense success, many more companies have continued to adapt OKRs for their own use.
OKRs have been used to remarkable success at many companies, including highly successful ones like Google. OKRs bring many benefits, such as increased focus, alignment and accountability. Below are some of the key benefits organisations can experience by utilising OKRs in their goal setting processes:
Goals are most effective when they are aligned with a business's ultimate purpose. When goals are aligned with top-level priorities, the work at the organisation feels aligned and oriented toward success. OKRs is a method designed to help an organisation align its goals through every layer and to align with an organisation's purpose. John Doerr considered alignment to be one of the major benefits of implementing OKRs.
When there are too many different goals at a company, it is hard for the teams to know where to focus. With OKRs, there are only a few main objectives and key results that they are working toward. That allows teams to rally behind the company's main priorities at the time and work toward one common goal.
With OKRs, everyone at an organisation can be on the same page about what the objective they are working toward. This framework is designed to give organisations clarity on what their priorities are at the moment and where they hope to be in the coming years. Clarity can then help boost drive and motivation. When everyone knows what they are working towards, they can move the company forward.
OKRs provide organisations with clear-cut goals and a way to measure progress. That, in turn, improves accountability because everyone in the company knows exactly what they are working towards and if they are on-track. Key results are met or they are not, which means everyone must stay accountable for hitting the key results and objectives.
Motivation is a powerful force to have at work because it can drive results and execution. OKRs are a way to improve motivation since the simple framework provides the organisation with an objective to reach someday and smaller key results to achieve as everyone works towards the larger goal. That can be motivating for employees as they do their own individual work. They know that they are contributing to something larger and more powerful than what they can do on their own.
An OKR is a simple framework and with that comes a certain type of adaptability that empowers companies to shift and make changes as needed. An objective is a big-picture goal that orients the organisation towards its purpose, but the key results can be adjusted and adapted to current circumstances to move the organisation to the objectives.
OKRs also provide transparency on what a company's priorities and goals are. Everyone at the organisation will understand what the company stands for and where it hopes to be. That transparency can be both motivating and empowering.
Objectives can often be stretching goals that will push the company to perform better than ever before. That push can provide opportunities for learning and growth on all levels. Every individual will need to learn and grow to move the organisation toward such a lofty objective.
With increased transparency, there is also increased communication. To help everyone stay on the same page, employees and managers at all levels should be communicating well to drive success with key results.
Key results are also a powerful way to measure success and growth. It is important to have ways to measure development and key results are a built in way to ensure measurement is happening at all levels.
OKRs provide companies with many benefits, but what do they look like in practice? To start, there are three main types of OKRs at various levels. Many companies have utilised OKRs to great success and examples help illustrate exactly what OKRs can look like and how powerful they can be. It is also worth exploring the differences between OKRs and other goal setting and measurement frameworks to understand exactly what OKR means.
There are three main types of OKRs that can be used:
Company-wide OKR examples
Team-specific OKR examples
Personal OKR examples
To better understand company-wide OKR, here is a powerful example. One example of OKR comes from the clothing company Allbirds, a company that has been utilising this framework for years to immense success. Here is how Allbirds used an OKR:
Objective: Create the lowest carbon footprint in our industry.
Key result: Supply chain and shipping infrastructure 100% zero waste.
Key result: Pay 100% carbon offset for calculated carbon dioxide emissions.
Key result: 25% of material is compostable.
Key result: 75% of material is biodegradable.
The objective shows the company's overall goals, as well as the specific numbers it needs to achieve to reach the goal someday.
OKRs can also be used for individual teams. Here is an example for a marketing department that illustrates how this framework can be used on a lower level:
Objective: Increase brand awareness
Key Result: Hit 1 million web visitors
Key Result: Increase social media following by 10
Key Result: Recruit and onboard 1,000 community members
OKRs can also be used on an individual level as well. John Doerr (one of the influential key figures of this system) used it to increase the amount of time he spent with his family outside of work. This was his OKR he used personally:
Objective: Have more quality family time as measured by:
Key Result: Getting home for dinner by 6 pm, 20 nights a month.
Key Result: Being present by turning off the internet router to eliminate distractions.
OKRs and KPIs both sound remarkably similar and they are both goal setting frameworks. However, they differ in several ways:
Definition
OKRs are goals with measurable components. KPIs, on the other hand, are numbers and metrics used to track business goals.Base
OKRs are based on a company's mission and purpose, with the goal of alignment. KPIs are based on past results and current projects.Purpose
OKRs are a motivational tool put into action to drive execution. KPIs are a tool used for performance evaluation and to determine if the company is hitting important metrics.Duration
OKRs typically have a longer duration as they are designed to drive performance. KPIs often have a shorter duration as business goals are tracked.
Companies can benefit from using both OKRs and KPIs to drive performance and measure success
OKRs also differ from ODMs in key ways. ODM stands for outcome-driven metrics. These are operational metrics that have a direct line of sight to business impacts. The business objectives that they support drive organisational priorities and investments. ODMs are more of a representation of daily actions that are supporting business value, rather than a collection of goals and measurable components like OKRs.
SMART goals are specific, measurable, attainable, realistic and time-bound. SMART is a framework to help people set goals that are meaningful and measurable. OKRs, on the other hand, are bigger picture, with an orientation towards alignment with business purpose. The SMART framework can be used to set helpful key results.
Agile is a project management approach that stresses the significance of continuous improvement and value-added activities. It finds its roots in software development. While both can be used for goal setting, agile is typically used more for direct project management instead of action-oriented goals. Agile does not have an end goal either, while an end goal is one of the main components of an OKR. Both agile and OKR can provide companies with similar benefits.
While OKRs differ from many other frameworks, they are simple to implement into an organisation.
To set effective OKRs, organisations need to determine an overall objective and at least one key result. It is often helpful to write down or visualise an OKR with this formula:
We will ____(objective)_____ as measured by ______(key result)_______.
Setting objectives
The objective should be aligned with the organisation's overall purpose and be something that can motivate employees, both on a team level and a company-wide level. It can be powerful in some instances to set some objectives that are technically beyond reach to be a motivational tool. Even in those instances, they are most effective when paired with achievable key results that can be measured.Setting key results
Key results should be measurable and time-bound when possible. The measurements help companies gauge success and progress toward the objective. Time-bound key results also help companies know when they have achieved a key result.Setting initiatives
Initiatives are one level lower than key results. These are specific projects or actions a team or individual can take to achieve key results. Setting these can be helpful to provide smaller successes along the way. It is important to prioritise initiatives to ensure that they are not overwhelming the bigger picture. It could be helpful to have only a few initiatives to each key result.
OKRs are meant to align with business strategies. Business strategies are designed to provide value in the market, so OKRs should be enhancing that. When an objective is aligned with the ultimate goal of the business, it should also be aligned with the business strategies used to create real value.
Some of the best practices for utilising OKRs include:
Regular check-ins
It's helpful to regularly discuss and evaluate OKRs. OKRs that are created and put to the side are not motivating or driving success. Instead, it is important to regularly check-in. The regularity of these check-ins will depend on the span of the objective. For an objective that spans a year, it could be helpful to have monthly check-ins.Cascading OKRs
Cascading OKRs are when top level management sets an objective that is aligned with business goals and strategies and that flows to managers who then take ownership of a key result that their team will accomplish to move the company forward toward the objective.Tracking progress
It's helpful to track progress, so individuals and the company as a whole can determine how close they are to achieving specific goals.
There are also challenges that come with OKRs. Here are a few and how they can be overcome:
Unrealistic goal setting
Problems can occur when all the goals are so unrealistic that they become discouraging, rather than motivating. To overcome this challenge, it can be beneficial to ensure that initiatives and key results are realistic and time bound. Achieving smaller level goals can help keep motivation high.Lack of buy-in
It can be hard to drive success with OKRs if teams do not understand the benefits of doing so. To overcome this challenge, it is helpful to illustrate the power of OKRs. Examples can be particularly useful to show how this framework can be a motivational tool.Ineffective tracking
If tracking is ineffective, sometimes progress is lost. Instead, it is helpful to have a centralised tracking system that is easily accessible for relevant parties.
Having a centralised tool can transform the way businesses use OKRs. With Strategic Portfolio Management (SPM) from ServiceNow, companies have one central tool to strategise, align and deliver business outcomes. SPM is designed to provide you with a tool that aligns strategy to the work that is happening at your organisation. With strategic planning capabilities, you and your teams will be able to set objectives and key results and effectively track progress. SPM is specifically designed to close the gap between strategy and delivery
Learn more about ServiceNow Strategic Portfolio Management to begin effectively utilising the OKR framework and measuring your company's success.