OKR Best Practices
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OKR framework is not so complicated, what is really complicated is to make it work properly as it requires a change in mindset and changing deeply ingrained organizational structures and processes.
OKR methodology will enable decentralization of decision taking in your organization by moving authority where information and feedback is.
OKR methodology will maximize focus and strategic alignment as everything that is going on must be linked to an OKR which will be ultimately linked to an strategic goal or product vision.
OKR system will have the positive side effect of increasing morale, engagement and transparency because everybody will know what is going on, there will exist clear measures of progress and success and employees will feel connected to the strategy and purpose of the organization.
Let’s see what are those OKR best practices that will allow you to succeed with your OKR implementation and achieve extraordinary benefits for your organization.
Defining Objectives and Key Results
First of all, it is important to understand the basics.
In my experience as executive and team coach and business consultant I know how difficult it is for many people to define objectives and measures of success. It doesn’t come naturally for many people and you need to understand and be patient.
But rather than getting lost into details and complicated definitions, please make sure you get the basics right.
- An objective is a statement indicating where do you want to go.
- Key results are statements telling you got there and/or how much is left.
This is important, because sometimes people get lost in the details and definitions and we need to keep telling them to review this definition.
For instance, although it is highly recommended that an objective is qualitative sometimes it will not be, and that shouldn’t be a problem. Sometimes, it will occur that a key result for the upper level is a goal for the team.
So, always come back to the basics if you feel lost:
- Do we know what the end result is?
- Do we know how the end result looks like and how far are we from achieving it?
As I mentioned before, OKR framework improves focus and alignment, so you shouldn’t have too many objectives per organizational unit.
Our recommendation is to have a high level goal, which could be the vision for your company, product or team, and one to three objectives that allow you to accomplish that vision.
What is important with OKRs framework is that it must allow you to focus on what is most important for you in the next few months. Look at the example above. This is my understanding of achieving my vision of becoming an amateur runner, but perhaps for you it is different.
When people start to define more than three objectives it is not a good sign, and this could mean:
- there is no clarity and focus at the upper level
- people is not thinking in goals, but in activities or tasks
- people is defining too fine grained goals and they are missing the big picture
Guidelines for Objectives
- Maximum 5 objectives per organizational unit (do your best to make them less)
- Focus on customer and business value
- Connected to purpose and vision
Goals have to be positive in order to generate the right energy and engagement. So, whenever someone starts describing their goals in terms of what they do not want, simply ask them, “What do you want instead?” or “how does the future look like when you have achieved what you want?”, “what will be different?”.
Goals must create a creative tension towards them, they must act like a force pulling you ahead, rather than a force moving you away from (something you don’t want).
Characteristics of a Good Objective
Objectives must follow the next recommendations:
- Makes you feel uncomfortable
- Not necessarily measurable
- Business oriented
- Describing the gain for the company
- Agreed between management and team
- Allows different ways of reaching it (leaves space to team’s creativity on how to get there)
Questions to answer:
- How will we help the company achieve its strategic goals?
- What will we see when our mission is accomplished?
- What are our three main priorities?
- What three things do we need to get right to accomplish product vision?
- What would your best competitor see that will tell them that your company is being successful?
We have witnessed how many companies struggle in defining goals at this point because they have financial rewards linked to objectives. This is a huge problem and you should avoid this.
People will only do their best if they feel intrinsically connected with the goal and the vision it accomplishes regardless of the ambition. But, as soon as you put financial rewards linked to achieving objectives people will lower their expectations.
Goals are important to set direction and create focus and alignment. Achieving the goal is not the goal.
Characteristics of good Key Results (KR)
Key Results must follow the next recommendations:
- Results, not milestones, tasks or projects
- Quantitative and Measurable
- Leading metrics that can be influenced
- Maximum 5 key results per objective
- Ambitious and realizable
- Describing how the objective shall be achieved
Characteristics of a Good Key Result (KR):
- With a target value based on the desired state
- Stretchy, achieving 100% should be nearly impossible
- Reviewed frequently to incorporate new learnings
Questions to Answer:
- How can we track our progress towards an objective?
- How will we know we have achieved our goals?
- What things should be getting better as we approach our goal?
A typical problem when defining Key Results is that many people define tasks, activities or projects.