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What Is OKR? Benefits, How to Create & Apply (with Examples)

What Is OKR? Benefits, How to Create & Apply (with Examples)

Curious about what an OKR is? And how to use them?

Creating OKRs has become a fundamental way for any business to meet their company objectives in 2020.

From Google and LinkedIn to Netflix and Spotify, almost every successful organisation is doing it!

But OKRs aren’t only limited to these titans. 

In fact, you can set personal OKRs, like putting on tons of muscle over the next two months to become like Terry! 

But what is OKR?

And more importantly, how do you create and use them?

In this article, you’ll learn what OKRs are, how to write them and learn about the three key benefits of OKRs. We’ll also cover how to use OKR software to make OKRs actually work for your organisation!

This Guide To OKRs Contains:

Let’s get cracking!

What is OKR?

OKR (Objectives and Key Results) is a goal setting framework that helps a business define individual and company goals while devising a way to measure them. 

The OKR framework has two components:

  1. Objectives: Goals that specify what you want to achieve
  2. Key results: Metrics that track your progress towards meeting your objectives

This is what it essentially means:

You complete a set of key results to achieve your objective. 

But wait.

Goals, metrics, progress, OKRs  — all this sounds so confusing!

But don’t worry.

We’ve brought in Amy Santiago from Brooklyn 99 to help you with this.

So why don’t we open herHistory of OKRsbinder to know how OKRs started in the first place.

A brief history of OKRs

The history of OKRs involves three significant events:

  • In 1954, Peter Drucker developed a goal-setting strategy called MBO (Management By Objectives)
  • In the 1970s, Andrew Grove, an Intel employee, took the best practices of Management By Objectives and created the OKR model — which inspired one of his engineers, John Doerr, to take it further.
  • In the 1990s, John introduced the OKR methodology to Google. It became an instant success and is still used as the performance measurement methodology in Google 

And like anything that Google did, everyone was quick to follow!

Soon enough, other companies, like Twitter and LinkedIn, also implemented the framework to manage their company objectives

That’s it! 

You now know how the OKR methodology was developed. 

Cool history. 

But how do you go about setting OKRs for your business?

Don’t worry. We’ll get there!

However, before diving into that, you need to know some basic concepts about the framework

The 4 core aspects of the OKR framework

OKRs can help you set goals and achieve them. 

Sounds simple enough, right?

But when it comes to OKRs objectives and key results aren’t the only things involved. 

It’s like saying Jake and Amy are the only detectives in the Nine-Nine! 

Just like how you’ve other detectives like Boyle and Rosa, the OKR framework also has other aspects, like:

A. OKR cycle

The OKR cycle outlines the various steps you need to follow when using the OKR framework. It involves multiple stages, like planning (an all-hands meeting), weekly check-ins, OKR reviews and retrospectives —  a lot like the meetings in an Agile and Scrum development cycle!

B. Initiatives

Initiatives describe the practical steps you’ll take to meet your key results. They’re activities like tasks or projects that could help you progress towards a key result
Here’s an example from the Nine-Nine:

  • Objective: Make the city of Brooklyn safer 
  • Key result: Reduce crime rate by 20% in two months
  • Initiative: Have a weekly community outreach program 

C. Grading OKRs

Grading OKRs is the process of evaluating how well you’ve achieved the objective

Each key result is first graded, and you use those grades to determine how the objective went. 

There are mainly two ways to grade OKRs:

  • The Andy method (yes, it’s actually called this after Andy Grove, former Intel CEO): This is a simple “yes” or “no” approach. Answer Y/N for each result and then grade your objective based on your result grades
  • The Google OKRs method: Uses a graded scale of “0” to “1.0” (where 0 = failure and 1 = success). Grade the key results and then take their rough average to grade the objective

If the Nine-Nine followed the OKR framework, we bet Amy’s favorite part would be grading OKRs:

D. The 2 main types of OKRs

When it comes to OKRs, you have two key variants:

1. Aspirational OKRs

Called moonshots, aspirational OKRs are your crazy, ambitious goals

And that’s exactly how an ideal OKR should be — super ambitious. This is what forces you to take your management strategy into truly innovative territory!

The Nine-Nine example we mentioned earlier is an aspirational OKR. So is expanding the footprint of your organisation across multiple countries or doubling your revenue in a year.

But just setting ambitious goals isn’t enough.

You also need to set counterbalancing results to balance out your ambitions. 

What does this mean?

Unidimensional ambitious OKRs can spell disaster for your outcomes. 

Why?

Because they’re so ambitious, they might be too hard to tackle — making them impossible to achieve. A counterbalance is a more realistic key result you attach to them to make these aspirational OKRs more attainable! 

For example, to counterbalance “reducing crime rate by 20% in two months”, the detectives could set another more moderate key result like: arrest 10 perps per week.

After all, what’s the point of something ambitious if you can never achieve it? 

And as these aspirational OKRs aren’t likely to be 100% successful, their expected score is around 0.7 in the Google OKRs model. 

2. Commitment OKRs

Unlike aspirational OKRs, the objectives in commitment OKRs are far more realistic and attainable. You’ll also have a clear plan of action to achieve your OKR goals.

For example, setting OKRs for reducing your weight by 10lbs in three months is a commitment OKR. You could easily achieve that by taking the necessary initiatives, like switching to a healthier diet.

And as they are achievable, the expected score for commitment OKRs is 1.0 in the Google OKRs model.

Phew!

Now that the briefing is out of the way, let’s dive into some action!

Writing Effective OKRS (with 2 practical OKR examples)

Writing OKRs is pretty easy, and you probably don’t need any specialized OKR training!

 After all, it’s definitely not as hard as filing case paperwork.

When it comes to writing OKRs, you only need to follow this simple formula:

I will: (objective)

As measured by: (set of key results)

It doesn’t matter if you set short-term or long-term goals; the formula is super important as it provides the means for you to achieve your goal

Now that we’ve learned the formula, let’s see how you can create some effective OKRs

1. Personal OKRs

Let’s tackle personal OKRs first. 

Hey Scully, you’re up!

Let’s say Scully’s objective is to lose weight. 

Great goal, but what key result will you use to measure it?

Stop eating?

Nope!

As Marissa Mayer (former Google VP) puts it in In the Plex, a book on how Google works:

“If it doesn’t have a number, it’s not a key result.”  

So Scully’s key result could be losing 15 pounds in three months instead!

Great! 

But is that ambitious — since that’s what OKRs are supposed to be?

Possibly.

It totally depends on your current patterns and initiatives

You could eat differently, exercise more or do a combination of both. 

How you get there is up to you, as long as you meet the result.
However, you may want to have a counterbalance key result that balances out the other key results.

Why do you need to counterbalance key results? 

It’s unhealthy to lose weight by starving yourself, right?

Sure, that would accomplish the goal, but that’s not going to be healthy!

So you could refine the key results like this:

I will: Lose weight

As measured by:

  • Decreasing weight by 15 lbs in 3 months
  • Lowering calorie count by 2x
  • Exercising 5x more often during the week

Now, you have healthier counterbalances to our ambitious and aspirational example!

Tip: If you create personal OKRs often, create some OKR templates to help you quickly get started each time you need a new one!

2. Product OKRs

It’s now Amy’s time to shine.

Let’s say Amy’s objective is to improve her Shoulder Nova invention.

But how will she measure progress?

Amy can compare it to the quality of her previous Nova version.

So her final OKR looks something like this:

I will: improve my Shoulder Nova invention

As measured by:

  • 30% faster activation time
  • 30% fewer bugs found 

With that combination, she’ll be able to create good OKRs and develop a much faster and hopefully, better product!

As you can see from these examples of OKRs, the key results provide specificity to your objective to help you with your progress

But wait. 

We’ve talked about what is OKR, some OKR best practices and how to write OKRs.

But why do OKRs work and why should you use them?

Three Key Benefits of OKRs

Sure, Google and tons of other businesses use OKRs to manage their company goals.  

But why do they use it? 

If Jake wants Holt to implement the OKRs framework in the Nine-Nine, he can’t just say: “the Google team uses it, so we should too”.  

I mean, there must be some key reasons why OKRs are a vital part of Google’s culture, right?

Here’s why:

1. They’re faster to create and easier to use

Many companies take weeks trying to develop a large-scale goal instead of spending time actually achieving that goal.

But writing OKRs is no biggie.

You just need to identify an objective, its key results and the initiatives you’ll take to achieve them.

And how long is this going to take you? 

Maybe a day, but that’s it!
You can now quickly focus on achieving your objective, like making that next arrest.

Moreover, OKRs are super simple to use. 

You break down a measurable objective into simple results that help you quickly determine if you achieved the objective or not. 

It’s so simple that even Scully could do it!

2. Boosts focus and commitment to goals 

When you set OKRs, you’re limiting your focus to specific objectives and key results

This way, you can complete things quickly and efficiently.

For example, the Nine-Nine can set two annual OKRs — each with four key results.

This way, all the team has to focus on is tackling those 8 key results throughout the year!

And when you’re able to focus on the objective, you can fully commit to it. 

3. The bi-directional approach helps you align goals better 

In most companies, goal setting is not a collaborative approach.

Top-level management decides what the goals are and everyone else has to follow.

This is a cascading approach to goal setting.

But a cascading goal strategy is really impractical — especially for cross-functional teams like Agile or Scrum teams

Why?

When your goals only contain top-level management insights, you fail to align them to your employee’s own goals. 

This will reduce employee engagement — making most team members confused and disillusioned about company objectives, like Jake over here:

But when you’re setting OKRs, it’s another story.

Why?

Instead of a cascading approach, the process is bi-directional

What does that mean?

The OKR setting process includes everyone in the company — it’s not just a top-down approach! Here, the top management and everyone else relate their objectives and key results together to make a cohesive plan. 

As this results in employee engagement over the OKR setting process, it helps you better align company-level OKRs with lower-level employee OKR objectives.

Additionally, you can also create company wide OKRs — where the whole organisation commits to the same goals, like the company’s mission.

 

How to Use OKR Software to Streamline the OKR Process

Sure, the OKRs framework is a great goal-setting strategy for groups like Agile and Scrum teams.

But wait… how do you go about OKR implementation?

You can’t just write OKRs on a piece of paper and ask your team to achieve them!

Luckily, all you need is a powerful OKR software like ClickUp to simplify the OKR process.

What’s ClickUp?

ClickUp is the world’s #1 project management tool.

Used by 100,000+ teams in companies from startups to giants like Google, Airbnb and Nike, ClickUp is the only tool you need for OKR management

From helping you set goals to OKR tracking, ClickUp makes implementing OKRs a cakewalk. 

It’s the perfect OKR tool for cross-functional teams like Agile and Scrum teams!

Here’s how the ClickUp goal management tool helps streamline the entire OKR cycle

1. Tackle your OKRs with Goals (ClickUp’s version of OKRs)

A detective who devises a great plan to catch a perp but doesn’t follow through is a bad detective, right?

Similarly, creating OKRs after looking at your company’s objectives and company’s vision isn’t enough.

Once you’ve determined your OKRs, you need to tackle them.

Luckily, all you need for that is ClickUp’s Goals!   

ClickUp’s Goals are high-level containers that contain smaller Targets that’ll help you finish each Goal.

So to put this in the OKR context,

ClickUp Goals = OKR objectives

ClickUp Targets = Key results

Here’s how you use it:

Step 1: Create a Goal

To create a Goal, just head to “Goals” in ClickUp and click on the “Add New Goal” button:

 

Step 2: Edit that Goal

ClickUp gives you a wide variety of customizations to create a Goal that’s perfect for your needs. 

You can set:

  • The Goal’s name
  • Due date
  • Who’s responsible for it
  • Who can access it
  • Its description for a detailed breakdown of your objective

Step 3: Set your Targets

The next step is to break down your Goal into measurable Targets, aka your key results.

Once your Goal’s ready, just click on the “Add Target” button to add a Target. 

Step 4: Edit those Targets

You can now edit your Targets the same way you edited your Goal

ClickUp lets you set:

  • The Target’s name
  • Its owner
  • What each Target tracks (number, true/false, tasks, currency)

Note: Numerical Targets are similar to the OKR Google model, while the true/false Targets are like the Andy model.

Step 5: Add more Targets

If you want to add more Targets (key results) to your Goal, repeat steps 3–4.

Step 6: Track your progress

Once your Targets are also ready, you can easily track your Goal progress in ClickUp.

The tool will highlight:

  • Your progress for each Target (key result)
    For example, if your Target was to catch 10 perps in the week, you can track how many you’ve arrested so far
  • How your Target progress has contributed to your Goal (objective)
    For example, if you’ve completed half of all your Targets so far, your Goal progress will be 50%. This tells you exactly how close you’re to finishing your objective

Setting OKRs has never been this simple!

2. Monitor your team’s progress with ClickUp’s Reports

Sure, ClickUp’s Goals help you monitor your team’s progress while they tackle OKRs.

But it isn’t the only way to do that in ClickUp!

This OKR software also gives you tons of detailed reports for accurate breakdowns of your team’s performance

You get reports like:

  • Task Completed Report: displays the tasks completed by each team member
  • Worked On Report: shows the total number of tasks each member worked on a specific day, week or month
  • Workspace Points Report: gamify your OKR process to motivate your team further
  • Who’s Behind Report: highlights which members have “work in progress” or unfinished tasks  
  • Time Tracked Report: displays the number of hours your team spends on their tasks 

While these ClickUp features help with OKR setting and tracking OKRs — there are tons of other features to help you manage your projects!

This goal management tool also gives you features like:

But wait…we’re not done yet.

Like any great cop show, there’s one last mystery that still needs to be solved:

What Are The Differences Between OKRs vs KPIs? 

While Amy, Jake, Boyle and Rosa are all amazing detectives at the Nine-Nine, each person has their own unique traits and approaches to solving cases.

Similarly, when it comes to goal setting and performance management, you have multiple techniques other than the OKR approach.

One of them is KPI.

But what is a KPI and how’s it different from the OKR methodology

Here’s a quick comparison chart for OKRs vs KPIs:

OKR (Objectives & Key Results

KPI (Key Performance Indicators)  

  • Used to set goals and track completion progress
  • Evaluates the performance of an ongoing process
  • Consists of objectives that have many key results under them. You complete these key results to meet your objective
  • Includes several key performance indicators depending on the business. For example, Customer Acquisition Cost (CAC) is a marketing KPI
  • Can include bold, ambitious goals to help push your team to achieve more
  • KPIs are usually well-defined, tried-and-tested and attainable 

But wait!

The KPI and OKR approach isn’t the only approach to goal setting and performance management!

There’s another performance management strategy called BSC (Balanced Scorecard)

It uses a report to track and analyze a company’s performance from four different perspectives: 

  • Learning & growth
  • Internal business processes
  • Customers
  • Finances

OKRs KPIs, BSC — this is a lot to take in!

Don’t worry. We know we’ve already covered too much in this guide to OKRs, so we’re going to stop there!

Conclusion

The OKRs framework helps you set ambitious goals, plan how to achieve them and measure your outcomes

And if you can align your company objectives with your employees’ OKRs, it’ll lead you to successjust like how it did with Google LinkedIn and other top companies.

But just setting OKRs and asking your team to achieve it… that’s not going to get them anywhere!

Even Amy and Jake would be helpless with that approach!

You also need powerful OKR tools like ClickUp for easy goal management

Luckily, the ClickUp OKR program has everything cross-functional teams need to plan their OKRs, tackle them and measure progress

So why not sign up for ClickUp today

It’s going to ensure that when it comes to goal management, you’re always “Right All The Time!”

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