What are OKRs? (Objectives and Key Results)
This is an excerpt from our upcoming Evolutionary OKRs Playbook. To subscribe to our newsletter and receive chapters as they’re released, visit http://findrc.co/newsletter ! All content here is (c) Sara Lobkovich, Red Currant Collective LLC. All Rights Reserved.
Objectives and Key Results (OKRs) are a method for collaborative goal setting and alignment. In practice, well-formed OKRs can help us fill the gap between our high-level strategy and our tactical implementation decisions, so that what we do is better aligned with achieving our most important outcomes.
OKRs derived from Peter Drucker's concept of Management by Objectives, and were popularized by John Doerr’s book Measure What Matters. Measure What Matters -- considered "the book" about OKRs -- was based on his work with Andy Grove and Google’s implementation of OKRs in addition to other (mostly high-tech startup) example case studies.
Based on the enthusiasm and buzz that Measure What Matters has created in the workplace, thousands of organizations worldwide have adopted OKRs. Some have succeeded; others have struggled. In recent years, the introduction of over 127 different OKR management software platforms has resulted in additional methodology confusion. Some OKR platforms do a good job of teaching coherent OKR methodology, but some are more focused on selling large software contracts than on the details of implementing the OKR methodology successfully.
In part, the methodology confusion stems from the truth that there is no one “correct” way to implement OKRs. Every expert in the field has developed their own definition of what the words “Objective” and “Key Result” mean, in part because the definitions used in Measure What Matters – which is the resource that many implementations start and finish their homework with – may be helpful in an engineering organization within Google, but may not apply as helpfully to other industries and/or parts of the business. So ever since Measure What Matters, practitioners have been filling in the gaps left by that text.
To be clear: some organizations can implement the Measure What Matters model (or, OKRs based on the Google Playbook) successfully, and have that implementation deliver on the job they hired OKRs to do. If you’ve read Measure What Matters and the cases in that book sounded familiar to you; and the example Objectives and Key Results given would fill important gaps in your current planning stack, then you might just stop reading and hand this book to a friend or colleague who mentions their organizations’ struggles with OKRs after being unable to implement based on Measure What Matters. But among the organizations I’ve worked with, I’ve seen few aside from engineering organizations who were able to successfully implement OKRs to achieve an adequate return on time invested based on the Measure What Matters and/or Google Playbook model.
Enter: The Evolutionary organization
Evolutionary OKRs are the “flavor” of OKRs that has emerged from my work mostly with high-change, innovation-oriented, system-transforming organizations where success depends on improving outcomes on human impact measures. Other OKR experts will have their own models that work best for the environments they work with the most: so if, for example, you work in an industry where increasing revenue is as relatively straightforward as turning on an advertising budget spigot, the practices in this Playbook may be overkill for your environment. Or, if you work in a small / flat organization where it’s relatively easy for leaders to maintain alignment with their teams, and where we don’t have big gaps in understanding between the strategic and implementation layers of our organization, the Measure What Matters model may work just fine. The level of coherence of the words, meanings, and practices shared in this book may just not be necessary for all organizations.
The practices you’ll learn here are helpful where those approaches fail. (So if you’re experiencing an OKR implementation that’s “not working” today, this Playbook may help you issue spot some opportunities for improvement, and right the course).
And if you’re in an organization where improving the bottom line depends on improving performance on hard-to-influence outcome measures – like human safety, or health outcomes, or educational outcomes – then the Evolutionary OKR model you’ll learn about here is designed specifically for your organization.
Evolutionary OKRs are also a method for collaborative goal setting and organizational alignment.
Evolutionary OKRs are also a thinking, deciding, and learning practice, that helps us achieve greater growth, transformation, and innovation, by aligning on our most important measures of success and progress (typically before we decide on our action or activity plans for the goal period).
Where most organizations create a durable strategic plan or annual operating plan (AOP), and then the organization divies up to decide what to do to support that strategic plan or AOP; Evolutionary organizations create that durable strategic plan and/or AOP, and then ask themselves a few additional questions before they plan their activities:
In our current goal cycle:
What might be possible (and incredible) to achieve to advance our strategy?
What would it mean to maximize our success toward our strategy for this period of time?
How might we quantify our progress toward that maximum contribution to our strategy?
Evolutionary organizations align on their theory of success and progress before they begin their work; and then the organization is able to operate based on continuous learning and improvement. Evolutionary organizations aren’t overly attached to pet projects and are aware of the cognitive biases that keep us doggedly pursuing planned activities that aren’t working (because human brains are fascinating and flawed). Evolutionary organizations have more objective data to make decisions based on, because they’re unafraid of quantifying goals, success, and progress in the pursuit of improving our outcomes. They’re able to recognize which factual truths must be known and shared for people in the organization to plan and execute (and monitor the success of) their work.
In an Evolutionary organization we’re either “winning” or we’re learning; and our learnings help us improve the likelihood that we’ll “win” in the future.
Evolutionary OKRs are a practice for:
Thinking deeply (quickly) about what's most important and what might be possible;
Identifying which measures of progress and success help us make better decisions in our work and organizations; and
Curiosity, experimentation, and even “failure” help us learn how to improve and grow.
Sound like a pain in the butt?
Maybe so.
But for some organizations and industries, these are exactly the skills and practices that may unlock the transformation necessary for success.
Objectives and Key Results, defined
One of the biggest problems I see in OKR implementations that "aren't working" is that the words "Objectives" and "Key Results" don’t have specific meaning -- a consistent and coherent definition -- that’s been learned by the organization at scale, to guide their OKR implementation.
When that's the case, people spend cognitive bandwidth trying to understand the methodology, when they can and should be focused on goal-setting, achievement, and learning; and your “OKR” implementation risks being a confusing and distracting waste of time. I’ve also seen organizations devote endless cycles of discussion to what certain words mean – Is an Objective a Goal? Is a Goal an Objective? What’s the difference between a Goal and an Objective? – and in my experience such philosophical discussions were almost always (perhaps subconsciously) a delay tactic as a result of anxiety about goal-setting, not actual efforts to learn and understand the methodology.
Something I found interesting when I started teaching OKR coaching, is how often I got the feedback from students that it was helpful (and unique) that I taught Objectives and Key Results as two separate things. Apparently, OKRs are sometimes thought of and treated as a "monolith:" OKRs all one word, as a single concept. But OKRs are actually two terms of art, with special meaning:
Objectives, and
Key Results.
We'll dive deeper into each separately when we get into creating each, but for now, let’s cover some quick definitions so we can begin to think about Objectives and Key Results as separate tools, that may be leveraged for different purposes (and that work really well together).
What are Objectives?
Objectives are directional (usually not measurable) purpose statements, describing what we're pursuing together and why it matters (and sometimes, to whom it matters most). (We'll talk about why Objectives are usually not measurable in Chapter 7 about Objectives.)
Our Objectives serve as a "container" for Key Results, and help us focus on a small number of most important directions for improvement. Typically, we aim for a working group or organization to have three to five Objectives at a time: personally, I aim for up to four (since up to four fit nicely on one sheet of paper so we can keep them top of mind and in view at all times).
There are many different structures for Objectives, but the formula I advocate starting with is a "What Why" Objective. They're quicker to write than other forms; they're clear on their face without needing a lot of additional explanation or context; and they provide an answer to our two most important Objective-forming questions:
What's most important for us to achieve?
Why does that matter?
The "building blocks" of a "What Why" Objective are:
[What's most important for us to achieve] to [Why it matters] [and for whom, if necessary]
And a couple of example Objectives might be:
"Create an inspired, empowered work culture so our people can wow every customer interaction."
-or-
"Product Release XYZ maximizes buzz and positive reputational impact."
If you remember nothing else about Objectives, remember:
Objectives are like "mini vision statements." They describe the small number of important directions we're looking to improve in, and typically answer the question of what's most important, and why does that matter.
What are Key Results?
Key Results are the most uniquely important and most misunderstood part of OKRs. What’s generally universally stated by OKR “experts” is that Key Results should describe our most important outcomes, and not our activities: but then many “experts” will then go on to show examples of Key Results that are nothing but activities. This “do as I say, not as I do” is one of the biggest issues with most OKR implementations: if we start including activities in our Key Results, it’s really hard to know when and where to stop. So this lack of coherence and discipline can lead to one of the biggest problems most organizations run into with OKRs: way too many OKRs. When I begin working with a new team, the vast majority of their "Key Results" that contain a number are either quantified activity (Do a thing X times) or milestones (Launch a thing by X date); so we work to create narrow criteria for activity to be considered a Key Result, and keep our Key Results as objectively measurable as possible.
The definition of “Key Result” I use in the Evolutionary OKR model is:
Key Results are objectively measurable targets that describe our most important measures of progress and/or success toward an individual Objective.
People are typically more comfortable writing activity-based goals or milestones because we naturally feel more in control of our activities (what we plan to do). (That overlooks the fact that humans are quite poor estimators and planners; and sidesteps a host of cognitive biases that affect our ability to accurately estimate our progress toward a milestone.)
In the Evolutionary OKR model:
We work to create safety to create aspirational and inspired Key Results around goals that we influence but don’t control; since that is how we achieve more than incremental change to the status quo; and
We work with people and teams to help them think more creatively about objectively measuring or quantifying their progress and impact, by envisioning the outcome their effort may achieve; and what signal they may be able to observe that lets them know they’re on or off track.
When creating Key Results, and people inevitably begin talking about their activity plans, or the milestones they have planned, we ask a few questions to help them move their thinking beyond output and into outcomes:
When we do that thing X times, how will we know we succeeded? or
When we launch the thing by X date, what would it mean to succeed wildly? or
While we're doing the thing X times, what will indicate that we're on the right track? or
While we're working to launch the thing by X date, how will we objectively know we're making progress?
And then the answers to those questions may yield ideas for Key Results that will give us much better direction about how to work during the goal term than just describing our planned activities. When we land on a Key Result candidate, we do a last check: Is this actually one of the most important outcomes we collectively must aim for together this goal term? Or have we just come up with a justification for our planned activity and/or a goal for a specific project or team? The former, is an organizational Key Result. The latter may be a Key Result for that project or initiative, but does not belong in our organizational Key Results. And these types of “gates” are how we keep our organizational Key Results prioritized and focused to the smallest possible number of most important truths of the performance of our business that we require objective data to understand.
In the Evolutionary OKR model, we encourage writing outcome-based goals as Key Results. We recognize that we don't necessarily control the outcome of every Key Result. We may influence (or hope to influence) the outcome of our Key Results; and they're measures of progress and success important enough for us to aim for them even if we don't know we can achieve them. They are stretch measures of the progress and success we aspire to achieve. So if we achieve them, we celebrate; and if we don't achieve them, we take stock of our learnings and then run a new Key Result "experiment" in the next quarter to try again to improve our progress or outcome performance.
The formula I coach for Key Results is:
[Increase / decrease / improve] + [metric / measure / observable behavior] by [change % or pts] (from [start value] to [finish value])
We'll look at lots of examples as we go: but in my experience, that formula is a solid way to make sure you're writing an objectively measurable Key Result (instead of quantifying activity or writing a milestone). Here are two examples of Key Results written in that “textbook” form:
Increase CSAT by 30% (from 6 to 9); or
Increase the frequency with which we hear spontaneous feedback from our customers about how delightful their experience with one of our associates was by 3x (from twice a week to six times per week).
If you remember nothing else about Key Results, remember:
Key Results are our experiments in quantifying our improvement. They make clear what objective measures we're working to improve on, as our most important measures of progress and/or success.
Pressure test time: does that help you better understand Objectives and Key Results in the OKR context? This chapter is designed to be as brief as possible while giving a complete overview, so fingers crossed it achieves both goals. Would you keep reading? Or have I lost you already? Drop me a note and let me know: we're still in final editing so it's not too late to make improvements (and feedback from Chapter One readers was incredibly helpful).
