This is a complete guide to understanding, implementing, and succeeding with OKRs. As a result, it’s not a quick read - 30 minutes or so. There are lots of surface level guides out there that give people just enough information to go and make a mess. I didn’t want this to be one of them. This guide will ensure you fully understand how OKRs differ from other frameworks, and walk you through setting them using the minimum effective management philosophy.
It’s in two parts. The Part 1 is about a 20 minute read and focuses entirely on explaining what OKRs are, how they work, and why they’re different to other goal setting frameworks.
Part 2 is a step by step guide to implementing them in your organisation.
There are three components to an OKR that perform very different functions. They are:
Objectives are the simplest bit, but there are still a few common errors. An objective is something that you want to make happen. There are pretty much no other rules for them. They’re the target - the tangible change in the world you want everyone to make happen, however big or small.
“Become the market leader”
“Make our customers love us”
All three of these are acceptable objectives. If you’re from the SMART objective world, they will seem woefully inadequate, because they’re not trying to do as much as a SMART objective would. With SMART, the objective is doing all the heavy lifting. It’s communicating what you’re trying to achieve, how you’ll know you’ve achieved it, and when you’ll have achieved it by. Consequently, they can be quite uninspiring: Achieve revenue of x by the end of Q4 is not as interesting as Get Rich!, even if it is much more specific.
The primary purpose of an objective is to get people enthusiastic. When my co-founders and I first started DoThings, we had a simple objective: Get Paid. We were bootstrapping, so the business wouldn’t be able to pay us until it generated revenue. If we’d been using SMART, we’d have had to set a bunch of objectives relating to revenue, expenditure and growth. The resulting objectives would have been dull and uninspiring, and they’d have failed to convey the thing we actually wanted, which was for our business to support us financially.
That term I just used “our business to support us financially” leads me to the next point about objectives. They can be worded however you like, and they work best when they’re worded exactly as you would think them or talk about them. The reason our objective was “Get Paid” and not the more professional sounding “Enable our business to support us financially” was that we wanted to word it the way we thought about it. When we were working our asses off building the business, we didn’t think to ourselves “won’t it be great when the business is able to support us financially”. We thought “I can’t wait until we can get paid”. Wording your objectives the way you think them is really powerful. It makes them more human, and ultimately the more human the objective is, the more effective it is.
The objective just needs to provide the aspiration. By itself it needn’t do anything more than that, but it should do that one thing extremely well. It should be something that people can really get behind and that they’ll want to help achieve.
Obviously just providing an aspiration isn’t going to be enough on its own though. You’ll need to be able to measure your progress toward it. This is where Key Results come in.
Key Results are how you can measure the progress towards your objective. In my experience, this is where the wheels start to fall off for a lot of people. For the sake of clarity we’ll only use one Key Result per objective in these examples, but in practice you can set anywhere up to around five.
Let’s start with the basics. Key Results must be measurable, they must be numbers, and their values can’t be subjective. If the objective component is all about excitement and motivation, Key Results are about measuring and guiding.
John Doeer, one of the leading voices regarding OKRs uses this formula when setting an OKR:
I will [Objective] as measured by [Key Results]
Misinterpreting this formula is one of the biggest mistakes I see people make when setting OKRs. People often think that this means a Key Result must be a way of measuring if the objective has been achieved. This isn’t the case. A Key Result is a way to measure progress, but not necessarily success. This might seem like semantics, but it’s a really important distinction.
Imagine you have the simple objective: get a dog. What are the measures of success for if you have a dog or not?
Objective: Get a dog
Key Result: Number of dogs to be 1
The only measure of success for if you have a dog or not is the number of dogs you have. Although technically this is still an OKR, in practice it’s really not giving you anything useful. It’s obviously not right, but you have nowhere to go if you think of Key Results purely as measures of success.
This is the same objective, but with Key Results being treated as measures of progress:
Objective: Get a dog
Key Result: Disposable income over x per month
Obviously your disposable income is not a way for you to measure if you have a dog or not, but it is a way to measure if you can get a dog or not. From this, I can see that the reason I can’t have a dog is that I can’t afford one, and the thing I need to change to make it possible for me to get a dog is my disposable income.
This is the power of Key Results in comparison to the measures of success that other goal setting frameworks rely on. They can communicate the specific levers that can be pulled in order to get something achieved, even if those things aren’t direct measures of success.
None of this is to say that Key Results can’t be measures of success - for some objectives that will work perfectly well. They just don’t have to be. The important thing for a Key Result is that it shouldn’t be something that can only be measurable in retrospect. If you set the “number of dogs to be 1” Key Result for example, sure, it would be the best measure for if you’ve achieved the objective or not, but it would offer nothing to you on your way to achieving it.
Another important quality a Key Result should have is that they should be exactly that: Results. Not actions you can take, but the necessary results of your actions.
Take this example of an incorrectly set Key Result (taken from a popular OKR example site):
Objective: Hire a Chief Marketing Officer
Key Result: Submit a job listing to 5 major recruitment platforms
This kind of mistake is extremely common. It’s a number, it’s quantifiable, so it’s an acceptable Key Result, right?
Wrong. This isn’t the result of you doing something, this is you doing something. The action itself does not help you achieve your objective. What if you submitted the job listing to 5 major recruitment platforms, but nobody applied for the role? You wouldn’t have made any progress to your objective at all, even though the Key Result was delivered.
A Key Result shouldn’t be an action, it should be the intended result of your actions. The way to get this right is to always consider if the Key Result you’ve chosen is something that actually needs to happen, or if you would still need something else to happen as a result of it. In the example we’re using, posting the job listing wouldn’t help you at all unless people applied to the role as a result of it. So, a better Key Result would be:
Objective: Hire a Chief Marketing Officer
Key Result: Receive 20 applications for the role
To put it simply, a Key Result is exactly what it says it is - it’s a result that is key to the success of the objective.
However, what if we still wanted to plan and communicate specific actions that we think will help achieve the Key Result? If we’re sure that the best way to receive those 20 applications is to submit the job listing on 5 major recruitment platforms, how do we communicate that?
We do that with Initiatives.
Initiatives are specific things you can do to do to affect the Key Results. If it’s an action you can take through choice, then it’s an Initiative. At DoThings we don’t actually call them Iniatives, we call them Projects because it just fits with our natural language more comfortably. Some people call them Deliverables. It doesn’t matter what you call them, as long as you understand that they’re complete pieces of work you can deliver that you believe will help achieve one or more of your objectives.
Objective: Hire a Chief Marketing Office
Key Result: Receive 20 applications
Initiative: Submit a job listing on all major recruitment platforms
You might be wondering why “Hire a Chief Marketing Officer” isn’t an Initiative. After all, isn’t that an action you can take? The reason this is an objective rather than an initiative comes down to control. Hiring a CMO is not as simple as just doing it. Other things need to happen to allow you to take that action, and it isn’t entirely within your control whether it happens or not.
You can’t just decide to hire a great CMO. You would first need to create a role profile, find candidates, create an interview process, carry out interviews etc etc. Hiring a CMO is going to be the end result of a lot of different actions and external factors, rather than an action you can simply carry out the moment you want to do it.
Imagine you were setting OKRs relating to getting better at a sport. What category do these two things fall into?
You can simply choose to practise 5 times a week, so that’s an initiative. It’s entirely within your control if that happens or not. Winning the tournament isn’t a choice you can make, it’s a thing you want to happen, but it’s not entirely within your control. If you’re ever unsure if something should be an objective or an initiative, just ask yourself if you can simply choose to do the thing in question. If it’s directly in your control whether it happens or not, it’s an initiative.
You don’t need to decide what your initiatives are when you’re planning your OKRs. In fact, where possible you should empower people to make those decisions in a more agile way. But you should keep initiatives in mind when you’re planning in order to make sure you aren’t setting Key Results or objectives that should actually be initiatives.
This one is really easy. If you ask whoever understands the objective best if you think it will be achieved, the answer should be “Err…maybe”.
The standard guidance is that you should probably be achieving around 60-70% of your OKRs. Any more than that and you’re not being ambitious enough, any less and you might want to dial it down a notch. I don’t necessarily disagree with that guidance, but I think it’s over-complicating it a bit. If you set an objective and you’re not sure if you can achieve it or not, but think you have a good shot, you’re probably in the sweet spot.
Objectives should be possible, but far from guaranteed. If you think you’ll definitely achieve it, you should aim higher. If you don’t think you can achieve it, you should probably aim lower.
If you’re completely convinced you can become one of the market leaders, then maybe you should aim to be the market leader.
If you really don’t believe it’s possible to become the market leader, maybe you should aim to just become one of the market leaders. Everything should come down to how confident you are at the time.
This is where I think they are almost always over-complicated. There are various guidelines relating to operational or strategic cadences, and talk of quarterly or annual OKR periods. My advice is to ignore all of this. Be agile. What’s important is what you are trying to achieve, and in most cases those things won’t fit into the same time frames. You don’t need to arbitrarily fit all your objectives into set periods. There’s no need to have quarterly or annual objectives, just have objectives, and set sensible time frames for them on a case by case basis.
If you want to become the market leading product and you think it will take you 2 years, then work to that time frame.
If you want to move to a new office and you think it will take 13 weeks, set that as the time frame.
If you want to become a place people love to work and you think it will take 10 months, set that as the time frame.
The point is, the time frames should fit your objectives, not the other way around. When one objective is complete, you can always create a new one. There’s no need to do it in batches.
This one is more complicated. Coupling bonuses or reward to the success or failure of any OKR is a bad idea. However, this is not the same as coupling reward to results.
Although those two things might sound very similar, they produce very different outcomes. To illustrate this, imagine you want to set this extremely ambitious OKR:
Objective: Make our product the market leader
Now, consider these two ways of approaching reward in relation to this objective.
With this approach, you decide to motivate everyone by linking a proportion of the bonus pool to success or failure of the objective. If you achieve the goal, everyone will be rewarded more. Seems like a good way to motivate everyone to get it achieved, right?
The first problem you’re going to face will be immediate. You’re going to get pushback on the objective itself. People will say that the goal is too ambitious, because they know there’s a good chance they’ll fail and that will cost them money. They will want a more realistic objective, and the chances are you’re going to have to accept just trying to be one of the market leaders, not the market leader.
The second problem you won’t see until later. Imagine there are a couple of months left of the year, and you find yourself in a situation where the objective obviously can’t be achieved. Everyone knows they are going to fail no matter what they do, so they stop trying.
Or conversely, you find yourself in a situation where the objective has been achieved with a few months to spare, and with the reward already secured, everyone takes their foot off the pedal.
By linking reward to success or failure, you incentivise people to set less ambitious goals that are less likely to be achieved or surpassed.
In short, it’s not a good idea.
This time, you decide to link reward to the Total Customer Number metric. You make it so the more paying customers you have, the greater the bonus pool will be (I’m not necessarily advocating this metric or this approach, this is just an example).
If you do this:
Connecting reward to results in this way avoids the problems that connecting to success or failure creates, but still allows you to provide shared economic incentives to succeed. The key word there is shared. If the economic incentive for the business is the same as it is for the employees, that’s only going to help you. The simple message here is - if we make money, you make money.
I believe this message is extremely powerful - if says the company doesn’t expect you to work hard only for the company. It says if we do well, you’ll do well too.
Short answer again. No. Absolutely not. When evaluating performance you can look at the OKRs an individual contributed to, but their success or failure should be irrelevant. OKRs are not a performance measurement tool, and if you use them that way you’ll fall into the same trap as linking them to success or failure for reward. People will push for less ambitious objectives.
Your OKRs are a tool for getting everyone aligned. That’s it. You should evaluate individual performance based on job skill, behaviour, and the impact they have on others. If you link success or failure of OKRs to individual performance measurement, you’re going to create a culture where people value “their” objectives more than others. That’s counter-productive.
As it happens, it shouldn’t even be possible, as in most cases OKRs shouldn’t really be assigned to individuals anyway. This leads to the next common question.
This is an area where I think best practice, and experience of other goal setting frameworks, can lead people astray. Generally speaking, I don’t recommend that OKRs be assigned to individuals. Not in a traditional sense.
Most people shouldn’t have their own OKRs, and even when someone does own one, that shouldn’t make them responsible for it succeeding. The owner of an OKR should really just be its representative. They should be the person that monitors it and reports back to everyone else on how it’s progressing. The owner should just be someone who:
That’s it. They shouldn’t be any more responsible for delivering it than anyone else, they should just be responsible for tracking it. Think of them as a representative for that OKR, nothing more.
Not assigning someone their own OKR doesn’t mean you can’t provide them with specific focus. Any number of other people can be asked to focus on achieving a specific OKR regardless of who owns it. They don’t need to own it to direct their energy toward it.
However, if you do want to assign specific OKRs to individuals, that’s not necessarily bad, but there is one golden rule you should follow. Never give anyone an OKR if they can’t choose the initiatives that will be carried out. Let’s say you have a team of 5 people, and the team leader decides what that team works on. The 4 people who don’t get a say in what they work on should not have OKRs. If you want to drive how they behave and help get that work done, that’s a performance management issue, but if you can’t choose initiatives yourself, you shouldn’t be given OKRs.
The short answer to this is Yes. It’s universally agreed that OKRs should be ‘transparent” meaning that they shouldn’t be hidden from anyone. But I’ve noticed this short answer often leads to a lazy solution.
The most common solution is usually a variant of “make them all available on the intranet”. And I mean, sure, if that works for you, great. You must have one of those intranets that people actually read that I’ve heard so much about. But for the rest of us, we need to do something else.
If you just make everyone’s OKRs “available” to everyone else, the chances are they aren’t ever going to look at them, and even if they do they’re probably going to immediately forget them. It’s a lazy action that probably won’t really deliver the outcome you want.
The better solution to this is what I call contextual transparency. Instead of just exposing every OKR and expecting people to remember them all at all times, we can make sure that people know the relevant OKR for every initiative they’re part of.
You can make this extremely easy with software like DoThings, but even without software it’s not hard. When someone starts working on an initiative, whoever is running that initiative just needs to make sure that person knows which OKRs the initiative is intended to help achieve.
This provides all the transparency you need. You can still make all the objectives available at all times, but this ensures that people are aware of the ones that they’re playing a direct role in.
Truly understanding OKRs is the most important factor when it comes to your success or failure. When you understand them and you set them right, OKRs will give motivation, clarity and guidance, without stifling agility or creativity. Tools like DoThings can help you simplify the whole process, and obviously we recommend it or we wouldn’t have built it, but even without using DoThings or any other tools, just understanding OKRs will give you a great chance of being successful with them.
Understanding OKRs is the first and most important step you need to take if you’re going to use them in your company. However, when it comes to setting them and actually delivering them, there are a whole host of traps that people commonly fall into even if they do understand them. Part 2 of our guide will help you avoid those traps.
Now that you know how an OKR should be structured and what each component is used for, let’s go step-by-step through the process of setting and delivering OKRs in your organisation. As always, we’ll base this on the Minimum Effective Management philosophy. We want to get the most benefit from the least management effort.
With that in mind, let’s set some ground rules that will help keep you on track.
Setting your company OKRs can and should be simple. If it’s getting complicated, that’s a sign that maybe you need to get clear on what the company vision is.
When you set your company OKRs, everyone who has a say in company strategy should be in the room. Whether that’s the founders, the exec team, the board, whoever - if they have a say in company strategy, they need to be there.
Only one person in this room needs to fully understand OKRs, but the more the better.
As a group, agree what the next most exciting milestones you could aim at are. You should know what your company purpose is, and now you should be aiming at the next obvious stepping stone to get there.
To expand on what I mean by that, let me use a tech example. In the world of AI, let’s assume the ultimate goal is to make an AI that’s sentient. But first they tried to get AI to be able to beat a human at chess. Once they achieved that, they tried to get it to beat a human at Go. Once they achieved that, they tried to get it to beat a human at No Limit Hold ‘em. Each challenge was harder, and built on the previous one.
Creating a sentient AI is the company purpose. The objectives they have set along the way have been the obvious and exciting stepping stones to getting there.
Ignore time frames when you set these goals. If there’s something you all want to achieve that you think will take 15 months, go for it. Too often I see founders agree on a great objective that is clearly the next exciting stepping stone, but then break it down into less inspiring objectives because they didn’t think it would be achievable within 12 months. That’s unnecessary. If the objective is the next exciting stepping stone, whether it will take you 18 weeks or 18 months, that should be a company OKR.
Once you’ve decided the next milestone you want to aim at, you can turn it into an OKR using everything you learned in part 1.
Once you’ve done that, you can decide if you think you have capacity to work on another Objective at the same time. You can set as many company OKRs as you like, but keep in mind that the more you set, the less impact each one has. I think one or two company OKRs usually does the job.
For this guide, we’re going to create two company OKRs for a hypothetical start up.
These are the company OKRs we’re going to work with:
Objective: Create a competitive Product
Objective: Become profitable and require no further investment
These two OKRs will form the basis of everything else.
We now need to translate our company OKRs into something that can shape the work we do.
Anyone who has a say in what work is carried out. A simple rule would be that all the managers should be in the room. Use your judgement here, if you need to trim the meeting size down and there’s a group of people who you think could be represented by a single person, do what works for you. If you have multiple layers of management in each department, you could perhaps just include the department heads.
Whoever does end up in the room though, they need to fully understand OKRs. These people are your decision makers. These are the people who are going to continually set new OKRs as capacity opens up, so they need to understand how they work.
First of all, you need to explain the company objectives (ignore the Key Results for now). Explain what you’re trying to do, why you decided to aim at these things, and why you may have decided against other things that people might have expected to see.
Once everyone knows what the company is trying to achieve, you can move on to explaining the metrics. List every metric that’s used in all of your Key Results. In the case of our two company OKRs, it’s these:
Everyone who controls the work that is going to get done now knows what the company is trying to achieve, and the levers they need to pull to help achieve it. They can now use this information as a basis to create your aligned OKRs.
The same rules that applied to the company OKRs also apply here. Pick the next exciting milestone in each area you focus on. The time frames don’t matter, and they don’t have to be the same. One Objective could be deliverable in a month, another a year. What matters is that it’s the next exciting step on that particular path.
For example, we could…
By handling this as a group, we’ve allowed for recommendations to come from every different part of the business. Nothing has been discussed in silos and everyone is talking about the different things the business could try to do together. They’re aligned to the same metrics, and we haven’t cascaded them out to different parts of the business. For example, Marketing hasn’t been made responsible for the customer growth rate, customer services hasn’t been made responsible for customer churn. Everyone as a group has been asked to work together to agree on different things they could do to affect any and all of the metrics that matter to the business.
Once you’ve agreed the objectives you’re going to try to achieve, you can create OKRs with them. This time, you’ll naturally find that you’re setting much more specific key results.
Using what you learned in Part 1, go through and create OKRs for all the objectives you’ve agreed as a group. You can do all of them together, or break off and take on different ones in smaller groups. Whatever works best for you.
For our hypothetical startup, these are the ones we’re going to use.
Objective: Automate the customer onboarding Key Results:
Objective: Build a beautiful website Key Results
Objective: Find our perfect price point Key Results
Objective: Deliver great online customer service Key Results
Objective: Create a blog that’s useful and entertaining Key Results
Notice that the key results for these objectives are far more closely connected to the work people will actually do. They are based on metrics that you could more easily see how to influence.
Once you have this first set of aligned OKRs, you’re almost ready to get to work. You just have one more thing you need to do before that can happen.
So, we have a set of objectives:
And we have a set of Metrics that will drive them:
What we have to do now is:
To make sure we stay on top of how every OKRs is progressing, we’re going to give each one an owner. This person won’t any more or less responsible for getting it achieved than anyone else. All they will be responsible for is providing weekly updates on:
Assigning an owner who isn’t responsible for success is crucial to the Minimum Effective Management approach. It ensures that every objective has a representitive, but without creating any conflicting incentives. If you make people responsible for achieving “their” objectives, they’ll treat that objective as more important than the other ones, regardless of it’s actual value to the business. You want to avoid that. The owner of an OKR is nothing more than it’s representative. They make sure it isn’t forgotten about, that’s all. It doesn’t matter who owns each objective, as long as they:
You’ll probably find that the objectives you set in this session naturally find owners. It will be whoever suggested it, or someone who will have the most access to the resources needed to achieve it. It doesn’t matter though, because as we’ll show, anyone can work on any objective. We don’t need to prescribe that.
Your OKRs obviously will be no good at all if nobody other than the people who set them know what they are. The traditional way of keeping everyone connected to company goals was to cascade them, so every individual in the company would end up with their own set of goals that was, theoretically at least, connected to the company goals.
It didn’t often work. and even when it did, it was overly complicated and time-consuming. There’s a much easier way.
Assigning individuals their own objectives creates huge management overhead and potential for conflict and game playing. So you’re not going to do that. Instead, you’re going to align all the initiatives you carry out to your OKRs, and make sure everyone working on those initiatives is aware of those aligned objectives. That will give you all the transparency you need, and none of the headaches and administration you don’t.
Every action in this step could be performed manually. You could have weekly status meetings with the OKR decision makers, and you could ensure that project owners talk to everyone who joins a project and explains the objectives that it’s aligned to.
I highly recommend a different approach though.
One of the key tenets of Minimum Effective Management is to use technology wherever possible to make our jobs easier. When it comes to OKRs, our time and energy should be spent on actually deciding what they should be, not the admin of communicating them.
So, you should find a tool that’s going to allow you to:
Now, we make a tool that does all this. DoThings will handle all of this for you and more, but if you find another tool you prefer, that’s fine too. Whether you use DoThings or not, I can’t think of a single argument for handling this manually versus using technology to support it, so find a tool that works for you.
That’s it. You’re ready to go. The people who control what work gets done know what you’re trying to achieve, and you have a mechanism for moving the relevant information up and down through the company.
Now, send your decision makers off to go and achieve the objectives as best they can with the resources they have at their disposal. The weekly OKR updates provided by the owners will ensure they know if an objective isn’t getting enough effort put towards it, and they can adjust accordingly. Because you haven’t created silos by assigning specific people responsibility for specific objectives, your decision makers can collectively choose the best areas to focus on without conflicting incentives getting in the way.
As each objective is achieved, or more resource becomes available, the decision makers can create a new aligned objective to start working on. This can be the next step along the road. For example, let’s say the owner of our Deliver great online customer service objective reports back that it’s been acheived, you could now set a new objective Make it so we can off telephone support to our customers.
And as each new company OKR is achieved, the strategic group can get together and do the same thing.
In each case, there’s no need to be bound by set time frames, once you’ve kicked off the process, there can be a constant flow of new OKRs as and when there’s capacity for them. Each group just needs to pick the next exciting milestone along the particular path.
Understanding OKRs, and implementing them based on the Minimum Effective Management guidelines will allow you to give everyone in your business complete clarity. It will keep meetings to a minimum, prevent silos forming, and ensure there are no conflicting incentives.
If you follow these steps to set your OKRs, you’ll avoid all the common pitfalls, save huge amounts of time, and benefit from the transformative power of OKRs.
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