A Comprehensive Guide to Objectives and Key Results (OKR)

You can't afford to wait and let things happen to your business. That's a recipe for disaster.

As a business leader, you must be intentional about your success. You must set your business goals with the utmost care.

So, how can you set objectives and keep tabs on them to ensure you achieve them? That's where the goal-setting tool, the OKR framework, will be helpful.

You don't have to worry if you have never used this tool. We will tell you all you need about it and how to utilize it.

What Is an OKR?

OKR is an acronym for objectives and key results. It is a personal and organizational goal-setting tool that allows users to combine ambitious goals with trackable results. In other words, it connects strategy and execution by tying a team's daily tasks to its objectives.

With the OKR framework, you can boost employee engagement, track progress, and ensure your goals align with your vision. Some companies using the OKR methodology include Microsoft, Google, Amazon, Netflix, Spotify, and Asana.

Components of OKRs.

The OKR formula consists of the objective, key results, and initiatives. Let's define each of these terms:

Objective.

An objective is what you plan to achieve. It gives everyone an idea of what you want to do.

Increase the company's profits.

Key Results.

For each objective, you should have several key results. A key result is the required to reach your goal. For a critical impact to be effective, it must be direct, time-bound, trackable, ambitious, yet realistic.

In simpler terms, key results will help you track your progress toward your objective.

Reduce operating costs by 20%.

Initiatives.

Initiatives represent the steps you will take to arrive at your key results. They include tasks, projects, and other actions.

Automate business processes such as data reporting and customer service.

Types of OKRs.

You can choose between two types of OKRs depending on your unique situation. Knowing the difference between them will help you make the right choice.

Aspirational OKR.

Aspirational OKRs are also called stretch goals. They push a team or individual to achieve a goal beyond their capability. As a result, aspirational OKRs have a high level of difficulty.

However, the inability to meet an aspirational OKR isn't a failure since its primary purpose is to motivate and engage employees.

Committed OKR.

Committed OKRs are the opposite of aspirational OKRs. Organizations set determined OKRs because they want them accomplished. There is no room for failure.

A committed OKR directs a team toward areas where an organization requires a win. If a team encounters issues while trying to accomplish the goal, they must contact their superiors to find a solution or alternative.

Check out our SMART goal template.

Setting OKRs.

After choosing the type of OKR to pursue, you can finally get started. We have broken down the entire process for creating OKRs into steps:

Choose Your OKR Champion.

OKRs make goal setting more transparent, inclusive, and measurable. However, you must choose an OKR champion to get the best out of it.

An OKR champion fully understands the framework and works to ensure the company implements it successfully. The role involves the training, engagement, and support of everyone involved.

Set Your OKR Cadence.

Cadence refers to the frequency at which you set your OKRs. You can set your OKRs quarterly or annually.

Since company OKRs are directional, they are set annually. On the other hand, personal and team OKRs are more flexible. So, they are assessed quarterly. Read this article to get more information on OKR cadence.

Create Your Ultimate Goal.

Your ultimate goal refers to your utmost priority. You can create it by combining your company's mission and vision. It must also be a long-term objective that will take decades to accomplish.

Once you have your ultimate goal, your teams can align their OKRs. Your ultimate objective may look like this:

To be the first space company to take humans to Mars.

Writing Company OKRs.

Company OKRs decide the usage of an organization's resources. Your organizational OKRs may include three to five objectives you want to achieve over the next year.

Ensure all key stakeholders and employees come together to deliberate on company goals and decide the priorities. The information gathered from this event should then be compared with the company strategy to create OKRs.

Writing Team and Individual OKRs.

After defining OKRs for the entire organization, it's time to write OKRs for teams and individuals. These OKRs will represent what they must do to contribute to the company's long-term goals.

OKRs allow teams and individuals to concentrate on essential tasks and motivate them. Additionally, these OKRs must be achievable within a quarter. They should also be updated and tracked regularly to ensure progress.

Need a template to depict your company's growth? Download our business growth concept template.

Scoring OKRs.

A scoring strategy will allow you to measure a team or individual's progress toward an objective. You can score your goals in different ways.

For instance, you may score them on a scale of 1 to 10. You may label scores above seven as excellent and those below four as poor.

Tracking OKRs.

To utilize OKRs effectively, you must measure progress regularly. You can do this during weekly meetings and quarterly reviews. Track your OKRs with free tools like Google Docs and Google Sheets. You may also use free tools such as Asana, BetterWorks, and Gtmhub.

OKR Vs. KPI.

Objectives, key results (OKRs), and key performance indicators (KPIs) are similar. Hence, you may easily mistake them. Fortunately, there are critical differences between them.

• KPIs are a tool for measuring your performance towards a goal, while OKRs are for setting goals.
• OKRs require KPIs to be effective. For instance, your OKR can be "improve your customer base by improving website traffic by 50%". Your KPI will be your website's traffic.

Despite their difference, KPIs and OKRs will be vital to setting measurable goals. You can learn more about the differences between OKRs and KPIs here.

OKR Examples.

Here are some OKR examples to help you understand how OKRs work better:

Company OKRs.

Objective: To become the most sustainable company in the region.

Key Result 1: Increase biodegradable materials by 40%.

Key Result 2: Reduce waste to zero.

Key Result 3: Invest $50,000 in energy-saving technology

Team OKRs.

Objective: To increase sales

Key Result 1: Increase monthly lead by 5o%.

Key Result 2: Have a 30% lead conversion rate.

Key Result 3: 40% of car sales in the region.

Individual OKRs.

Objective:  To become healthy

Key Result 1: Spend two hours a day in the gym.

Key Result 2: Get eight hours of sleep every night.

Key Result 3: Avoid sugary beverages.
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Advantages of OKRs.

Here are some of the advantages of choosing the OKR methodology for your goal management:

• OKRs improve business performance
• They improve company culture
• They boost employee engagement and collaboration
• They ensure strategic alignment
• Stretch goals can be included in critical results
• They provide a clearable

Download Our Free OKR Template.

You can begin your OKR journey with our professionally designed presentation template. It consists of several slides for setting and tracking your objectives. You will also find it fully customizable.

Frequently Asked Questions:

What does OKR stand for?

OKR stands for objectives and key results.

What is the purpose of OKR?

An OKR is a goal-management tool for pairing strategic objectives with daily tasks.

What is the difference between OKR and KPI?

An OKR is a goal-setting model, while a KPI measures progress.

Related Articles:

What are stretch goals?

What are SMART goals?

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