What Are OKRs?

11 Min Read

Being a leader means that you’re responsible for making key decisions that can make or break your company. But how can you do that confidently? The short answer isβ€”OKRs. OKRs (Objectives and Key Results) are one of the most popular goal-setting methods around.

Big corporations such as Amazon, Dell, Netflix, and Microsoft use OKRs to drive results. And so can you. But you don’t have to spend millions to follow in their footsteps.

In today’s article, you’ll learn what OKRs are and how to use them properly.

Before we dive into everything you need to know about OKRs, here are a few essential resources on team and project management you should check when you’re done reading.

  1. πŸ› οΈ Best Project Management Tools List
  2. 🌱 A Guide On Project Management Basics
  3. ⚑️ What Is Agile Project Management?

πŸ€” What Are OKRs?

Known also as objectives and key results, The OKR methodology is one of the most popular goal-setting techniques that companies use today. OKRs first came about in the 1970s when the then-CEO of Intel, Andy Grove, created it as a means to help set goals.

Image of Andy Grove released in 2008.
Image of Andy Grove released in 2008. Source: Bloomberg News

OKRs are simple to understand as it essentially involves you listing down the goals you want your company to achieve, and how you’re going to achieve those goals.

What makes OKRs different from other goal-setting methods is that OKRs place an emphasis on making sure that you include a way to measure your progress. This makes it function as a reliable compass to help your organization navigate through today’s volatile market.

Furthermore, OKRs are set quarterly by senior management. It is then up to the individual teams to decide the best approach to achieve their key results.

The bigger the organization, the more teams and individuals are involved in working towards company goals. Hence it is important that the management team finds a way to keep employees on the same wavelength.

The OKR framework helps bridge the gap that is commonly found between organizational goals and team goals. OKRs help align employees and lets them know that there is a reason for them to work towards achieving a certain key result.

Knowing that their efforts will benefit the organization as a whole keeps employees motivated at work by giving them a sense of belonging.

Let’s now look at all of the components involved in setting OKRs.

🍰 What Components Do OKRs Contain?

What are OKRs?

The OKR methodology is easy to understand as it consists of only two major components: Objectives, and Key Results. An Objective is the main direction or goal that you want to achieve, and Key Results are the measurable steps that you will take to make sure that you’re on track to achieve your Objectives (Goals).

What Are Objectives in OKRs?

Objectives refer to the main goal that you want your company to achieve. As a rule of thumb, every objective will be accompanied by three to five Key Results to ensure that they are achievable.

It is important to set ambitious yet achievable goals when it comes to setting objectives in OKRs. You want to challenge your team and at the same time not dent their motivation with unrealistic expectations.

Simply put, Think of Objectives as “What do I want to achieve with my business”? Setting clear and concise objectives is important so that your team is crystal clear on the role that they play in the organization.

What Are Key Results in OKRs?

After goal-setting via your Objectives, Key Results are used to chart out your path to achieving your goals. Think of it as the smaller steps you have to take to achieve your overall goal.

Each Objective should have 3 to 5 Key Results pegged to them. These Key Results should also have an indicator to allow teams to track their overall progress on a scale of 0-100%

To summarize, Key Results are measurable steps in ensuring that your business achieves its Objectives.

πŸ“Š How Do You Measure Success for Your OKRs?

OKRs are unique because achieving 100% on a Key Result is actually not ideal. It basically just means that your goals were too easy and that you were underutilizing your resources.

Getting 100% on a Key Result means that you should have set more ambitious OKR objectives.

The best practice for OKR success is to aim for at least 70% completion. Once you hit at least 70% you would have achieved your OKRs. On the other hand, scoring around 40% would mean that your goals were too much of a stretch goal for your team to accomplish.

Generally, OKRs are not done in short sprints. Instead, OKRs are ambitious goals that take some time to achieve. Typically, OKRs can run for more than a quarter, with monthly check-ins from the management to check the team’s progress.

πŸ€Ήβ€β™€οΈ Examples of OKRs

OKRs have a number of use cases. Here are three examples of using OKRs for effective goal-setting.

Scenario 1: Online magazine

Objective: Successfully scale your company’s blog in 2023

Key Results:

  • Hire 6 more freelance writers
  • Publish 250 new blog posts by Q4 2023
  • Increase total blog traffic by 150%

Scenario 2: SEO agency

Objective: To become the leading SEO company in your area

Key Results:

  • Increase local clients by 50%
  • Increase company headcount by 20%
  • Retain 95% of current clients
  • Hit revenue target of $10 Million via retainers and consulting

Scenario 3: Music artist

Objective: Successfully launch an album in 2023

Key Results:

  • Get coverage from 10 reputable online media sources
  • Get playlisted into 3 official Spotify playlists
  • Go viral on TikTok with a dance challenge featuring a track from the album
  • Achieve 5 million total album streams by Q4 2023

As seen in the examples above, OKRs are flexible and can be used as an effective tool to help you create achievable and measurable goals.

Use our free OKR template and get started today!

πŸš€ Benefits of Using an OKR System

There are a lot of benefits that come with using OKRs to set goals for your business. Here are some examples of how it can benefit your company:

  • Increased clarity. By setting measurable objectives and key results, everyone on your team can stay on the same page and understand their role in the company. This allows employees to focus on achieving the same common goal.
  • Worker motivation. Employees perform best when they’re motivated to work. OKRs help motivate employees by providing a sense of purpose and direction. Teams can stay motivated and engaged when they have clear and attainable goals to work towards.
  • Enhanced communication. OKRs help to establish clear communication in your company. One of the main pillars of successful OKRs includes transparency and regular check-ins to ensure that everyone is on track. This helps promote clearer communication as your team progresses toward achieving its objectives.
  • Saves time. By breaking down your goal-setting process into objectives and key results, OKRs help you save time via a streamlined goal-setting process. This helps you save time by prioritizing only goals that have the most impact on your company.

In short, OKRs are a great way to help you and your team stay focused and motivated. Regardless if you’re a startup or a large corporation, OKRs help you progress towards your goals and objectives efficiently.

πŸ₯Š How Does ORK Compare to Key Performance Indicators (KPIs)?

Before we can compare the two, we first need to understand what a KPI is.

What Is a KPI?

A dartboard with a light bulb and a "KPI, Key, Performance, Indicator" text in the center.

KPI stands for Key Performance Indicator, and it is a metric used to measure the performance of a business or organization. KPIs are used to track progress toward specific goals and objectives, which can help organizations measure their success and make informed decisions.

A good KPI will be specific, measurable, and time-bound, and will provide clear and actionable data. By regularly measuring and tracking KPIs, businesses can track their progress and make adjustments as needed.

This in turn gives businesses greater insights into their progress and helps them to make better decisions.

Which Is better, OKRs or KPIs?

While both OKRs and KPIs can be useful, there is no one-size-fits-all answer to the question of which is better.

It really depends on your business needs and the goals that you’re trying to achieve.

OKRs are a great way of setting and tracking ambitious goals, while KPIs can give you an in-depth understanding of the performance of an individual or your whole team in general.

Generally, OKRs will be used to set organization-level objectives, while KPIs are more geared towards smaller teams and individuals. The best practice when it comes to OKRs and KPIs is to use both in tandem depending on what you need them for.

Both tools are useful and can when used correctly can be beneficial both to you and your business.

πŸ‘‹ Parting Words

Learning how to use OKRs to make good decisions is just the first step in ensuring success for your business. You need to use it consistently to steer your team in the right direction.

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