The OKR approach to setting goals has been used at Google, Zynga, General Assembly, and beyond, and is spreading like wildfire across successful Silicon Valley companies. The companies that have adopted the approach are growing like weeds.
OKR stands for Objectives and Key Results. The form of the OKR has been more or less standardized. The Objective is qualitative and the KRs (most often three) are quantitative. They are used to focus a group or individual around a bold goal. The Objective establishes a goal for a set period of time, usually a quarter. The Key Results tell you if the Objective has been met by the end of the time.
Your Objective is a single sentence that is:
The Objective is designed to get people jumping out of bed in the morning with excitement. And while CEOs and VCs may jump out of bed in the morning with joy over a three percent gain in conversion, a sense of meaning and progress excites most mere mortals. Use the language of your team. If they want to use slang and say “pwn it” or “kill it,” use that wording.
For example, doable in a month or a quarter. You want it to be a clear sprint toward a goal. If it takes a year, your Objective may be a strategy or maybe even a mission.
This is less of a problem for startups, but bigger companies often struggle because of interdependence. Your Objective has to be truly yours, and you can’t have the excuse of “Marketing didn’t market it.”
An Objective is like a mission statement, only for a shorter period of time. A great Objective inspires the team, is hard (but not impossible) to do in a set time frame, and can be done by the person or people who have set it, independently.
Here are some good Objectives:
and some poor Objectives:
Why are those bad Objectives bad? Probably because they are actually Key Results.
Key Results take all that inspirational language and quantify it. You create them by asking a simple question, “How would we know if we met our Objective?” This causes you to define what you mean by “awesome,” “kill it,” or “pwn.” Typically you have three Key Results. Key Results can be based on anything you can measure, including:
That last one can throw people. It seems hard to measure quality. But with tools like NPS, it can be done. (NPS = Net Promoter Score, a number based on customers’ willingness to recommend a given product to friends and family. See “The Only Number You Need to Grow,” Harvard Business Review, December 2003.)
If you select your KRs wisely, you can balance forces like growth and performance, or revenue and quality, by making sure you have the potentially opposing forces represented.
“Launch an Awesome MVP” might have KRs of:
Notice how hard those are?
OKRs are always stretch goals. A great way to do this is to set a confidence level of five out of ten on the OKR. By confidence level of five out of ten, I mean, “I have confidence I have only a fifty-fifty shot of making this goal.” A confidence level of one means, “Never gonna happen, my friend.” A confidence level of ten means, “Yeah, gonna nail this one.” It also means you are setting your goals way too low, which is often called sandbagging. In companies where failure is punished, employees quickly learn not to try. If you want to achieve great things, you have to find a way to make it safe to reach further than anyone has before.
As you set the KR, you are looking for the sweet spot where you are pushing yourself and your team to do bigger things, yet not making it impossible. I think that sweet spot is when you have a fifty-fifty shot of failing.
Take a look at your KRs. If you are getting a funny little feeling in the pit of your stomach saying, “We are really going to have to all bring our A game to hit these…” then you are probably setting them correctly. If you look at them and think, “We’re doomed,” you’ve set them too hard. If you look them and think, “I can do that with some hard work,” they are too easy.