Objectives and Key Results
Objectives and Key Results are a common way for companies to create, manage and measure the most important goals for a business.
If you’ve ever heard the jargon-y phrase, “moving the needle”, OKRs are how we decide what needle to move and how. They were pioneered by Andy Grove at Intel while he was looking for a way to take the common “Management By Objective” (MBO) approach and tweak it to better motivate and inspire his teams. They were made better by Google throughout years of application.
Adrienne Fuller
First published 1/24/23
I’m constantly updating it - feedback? Insight? Email me
The intention of OKRs are not only to help us manage projects and stay organized. They also play a role in the overall motivation and success of a team. The benefit of having a structured framework for hitting goals, can also be the thing that prevents you from hitting them. And heres why.
What are Objectives?
Objectives are intended to be lofty, big accomplishments that demonstrates your improved position in the market. Oftentimes, it can be translated into a number of marketing statements that pin your company above your competitors. For example: “[Company Name] is the #1 software for X”.
The rOKR
The rOKR is the Revenue OKR, which is always an overarching goal for the whole company. Every company is in business to make money, right? The rOKR ensures that activities are linked to revenue; that achieving the Objectives means revenue increases.
If the score of the OKRs is high but not correlating with increased revenue, you have what we call “happy ears”: people seeing that their work hit a metric, but that metric is disconnected from revenue. So the team feels success, but the accounting team and leadership are pulling their hair out and telling everyone they’re failing.
What are Key Results?
Key results are the specific outcomes that your team works toward through projects/initiatives. These are typically numeric milestones that can always be measured and quantified, like number of downloads, customer satisfaction scores or video views. Key Results are how you prove that you reached the Objective.
What would it mean to become the #1 software for X? This could mean you reached #1 on a 3rd party review site, and the KPI is total # of reviews, total score, and securing the #1 ranking on that site. The initiatives then become to build reviews through emails, chatbot triggers and social media.
Examples of Objectives and Key Results:
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Key Results: Earn #1 rating on Accounting Reviews 3rd party site with 200+ reviews at 4.6 stars or higher.
Initiatives: Email blasts to favorite customer lists + segments, 2x/month, interview 20 top customers, pin request to the We <3 Accounting private Facebook group.
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Key Results: These are milestones for 3-5 key finish lines in a product launch. The last milestone is always, meet with sales, marketing and customer service to plan the launch and supporting documentation and marketing campaigns.
Initiatives: Spec product, speak to users, design and ux, build, test, launch, market, iterate.
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Key Results: Choose which podcasting platform you want to rank #1 on and set a deadline for this target.
Initiatives: Create weekly episodes, choose high quality guests and secure backlinks and social shares from guests. Send at least 3x emails requesting reviews.
Scoring
At the end of the quarter, all OKRs are scored on a scale of 0 to 1, 0 meaning you got nowhere, and 1 meaning you hit or exceeded the goal. According to google, OKRs are supposed to be aggressive enough to only hit 0.70, ie. get 70% of the way there.
This keeps the goal big and exciting!
And also realistic enough to be motivating.
Two ways to score
There are two common ways companies do scoring;
Binary level: Either you hit the Key Result or you don’t. If you have 3-5 Key Results for the quarter, you would average these together at the end and this is your score.
Sliding scale: You divide your progress by the goal and figure out what % of the way there you made it.
There is a third way, which is that you can actually score above 1! This is NOT recommended because it makes no sense. Don’t do this. (IE: If the goal is 10 and you make it to 1000, you score 100!!!! This only means you need to get better at making goals, not that you crushed it).
Example OKR scoring
Key Result
Get 200 reviews
At a score of 4.6 or higher
Remember our OKR was to become the most loved Accounting software. Let’s say the actual results were that you got 175 reviews at a score of 4.8 and you rank #1 on the site.
Binary method: This is a score of 0.67 or 2/3; you met the overall objective and the 2 key results: become #1 and exceed 4.6 stars on average. But you didn’t hit the review goal. Overall, this was an aggressive goal and the marketing tagline is secured. The team would feel great under this.
Sliding method: This is a score of (175/200) = (.875 + 1 +1) / 3 = .96
As you can see, the team would feel even greater under the sliding method, but it’s the same results and efforts being scored. One might make the team more motivated! Or complacent… One might make the team feel like they failed; or that they made huge progress on an aggressive goal.
It’s all in your framing as a manager, and how you take the lessons learned into the next quarter. What, honestly, needs to happen to hit the Key Results? Are you sure the Key Results will lead you to the rOKR?
Scoring is a ritual that teaches us about our goal setting, motivators, and innovative approaches
Scoring becomes a feedback loop for the way we set goals and the quality of our goals. If you blow past 1, the goals are too easy. If you can’t hit 0.5, the goals are too hard. This teaches us about how our OKRs are affecting our team:
Are we smart about the goals we are setting?
Are they motivating, or are they crushing souls?
Are they prompting us to get creative and innovative and think differently, or are they so frustrating that we’re just banging our heads against the wall?
Regardless of the scoring method you choose, understanding the impact that this quarter will have on the team is your job as a manager to help frame.
The OKR Death Spiral: Do NOT use OKRs as a weapon
If the goals are unrealistic, a zillion, and intended to be motivators and 70% is considered “success”, then you can never hit the goal. That’s intentional, and a good thing. But, if you simultaneously argue that you must hit be hitting the goals to get new resources approved, or a promotion, or commission, then the goal is now a weapon, because they are intentionally being designed to never be hit.
If the goal is a zillion, then you will never hit it, you’ll never get the new resources approved, without the new resources you won’t hit the new goal, so it becomes impossible, and will inevitably become a growing source of resentment.
Goals cannot be aggressive + motivating; and realistically achievable + punishable at the same time. These are mutually exclusive approaches.
In most startups, the goals are moonshots
There are investors counting on you to make a return, and so is the CEO and so is the sales guy with a commission. Everything is on fire all the time, and there is no time to wait for data to teach us. At least, that’s the danger of making the goal a moonshot.
Unrealistic vs. Aggressive goals
Unrealistic goals create detrimental framing: We are constantly being reminded how far off we are from a goal, rather than focusing on what's working.
Consider, “how did we double August from July, and how can we double it again in September?” rather than, “why is August still 50% off the goal?” When the goal is artificially unrealistic, and 70% is “good”, being off the goal is always going to be the case.
This creates a culture where everyone always feels like they’re failing because they’re so far off the goal, even when they’re literally doubling from one month to the next.
To be clear, I’m not saying to make the goal easy; or never talk about how we’re behind; but rather: Use it as a framework for how to make better decisions, by constantly revisiting the initiatives through the lens of the data in relation to the goal. Take the emotion out of it, and use data as learnings, not points on a scoreboard for each employee.
Download the free OKR template
Let me know how you change it up to suit your needs.
More OKR Templates we love
Using Notion? Check out this beautiful example of OKR framing and scoring by Buffer.
Leveraging OKRs as motivators
If the team can see the finish line in the distance, they’ll keep running. But if it's so far off they can’t even see it, they’ll start walking. After managing 75 people for 5 years this is a pretty tried and true behavior.
Psychologically, people give up when they think something is impossible. When it’s drummed into their head every month that they’re behind, they’ll quickly decide it’s not worth the constant stress and to use a trendy term, “quiet quit” or as I like to say, get complacent and coast.
On the other hand, aggressive goals, which are still big and bold but not impossible like an unrealistic goal (we are bound to what we physically can do after all), can be motivating.
“We are % behind plan” can’t be used to deny new resources; because it ignores that you need to be investing in what’s working in order to grow exponentially to meet the plan!
You cannot increase motivation in the already motivated
From a leadership perspective, there’s pulling (telling the team they’re far off a moonshot goal and using this deficit to deny resources); and there’s pushing: telling the team what they are doing is working and that in order to hit the goal they’ll need to evaluate those things constantly; and how to expand them and eliminate what’s not working.
Pushing is always more effective than pulling, it’s easier to guide motivated people to success than to inspire unmotivated people.
Unrealistic goals used as motivators is confusing because it negates the good work people are doing and makes people feel like they're failing when they’re not, this is the fastest way to burn out and to build resentment.
The team could fly by the goal but still be told they’re failing. That’s… not a culture we want to perpetuate.
Data will tell you or deceive you
Further, separating individual department goals from the company rOKR causes teams to make hasty decisions that are disconnected from the rest of the company.
If you don’t have accurate data collection and measurement, with an agreed upon formula for attribution, you can’t accurately measure the link between marketing, sales, and revenue. When you don’t know how all of the parts of the engine work together to impact the business, you can’t make decisions about each individual part of the engine and anticipate how it will affect the whole.
Here’s how it makes you look as a manager to weaponize OKRs
It’s a fake goal so ends up feeling like “no because I said so”
People then fight hard to make the goals easier instead of figuring out how to hit them
They also work harder on their excuses as to why they’re not hitting them (beware of increase in meaningless jargon during the scoring retro)
It’s the fastest way to burnout and losing people
Human capital in an early startup is just as important as advertising; because humans create systems and foundations and the brand. Without them, you are only limited to what you are doing now.
Advertising is the throughput of customers through the system, but employees create the system it all goes through.
In conclusion, OKRs are meant to be more of a perspective, than a prescription. If they help us think innovatively, get creative, and stay organized; we’ll achieve exponential growth and suddenly, unrealistic goals will feel more achievable than they did before. When the team can see that finish line, they’ll top up their tanks to get there.