How to Use OKRs

How to Use OKRs

How To Implement OKRs

Context: There has been much written about how to write OKRs. Just as important as writing OKRs is how to use them. In fact, executing towards your goals as a company is probably more important than spending time fine-tuning the writing of your OKRs. This document is meant to cover how to implement OKRs at a company.

Practically, What are OKRs?

The process of using Objectives and Key Results (OKRs) enables teams within a company to effectively prioritize, execute, and evaluate their work in order to deliver long-term benefits to customers and the company. Use the OKR process to push yourself to deliver more for your customers in a shorter time frame. The OKR process includes: (i) evaluating and prioritizing what to work on; (ii) appropriate allocation of team members’ time; (iii) mapping of cross-functional dependencies; (iv) mapping team goals to higher-level company and customer goals; (v) evaluating how each team or the company is performing relative to those goals; and (vi) communicating progress and results to the company.

Who are DRIs?

A Directly Responsible Individual (DRI) is someone who is responsible for delivering a specific OKR work stream. A DRI is responsible for coordinating work across their team or cross-functionally. They do this by setting OKRs, building project lists, and evaluating performance against OKRs. DRI work is in addition to the person's regular job duties. This work is never done in a silo, and requires involving relevant stakeholders and team members for input, feedback, and to buy-in. It is also each DRI’s responsibility to clearly map back their OKRs to the company-level OKRs.

How are Objectives and Key Results structured?

For each calendar year, set a company-level Objective and 3 Key Results. Below is an example of OKRs for a cooking app company.

image

A few points to note:

  • The Company Objective has 3 KRs. When writing your company Objective and Key Results, limit your KRs to three. By rigorously writing out OKRs, you'll be able to narrowly focus your company, and each team member, on the most important areas that will deliver value to your customers and to the company.
  • Each company level KR has three KRs that come of of it. Again, try your best to limit to three KRs. Sometimes you may have two, and more rarely four. The key here is inclusion of the most important things and exclusion of less important things
  • As you get further to the right, the KRs become more narrow, with your KRs together explaining how you'll achieve its parent KR or Objective.
  • Each KR on the right hand side should have an exclusive DRI. If you are limited in the number of capable DRIs at your company, you should reduce the number of Sub-KRs. If you have one or two exceptional performers, you could consider giving them two KRs.
  • These are annual goals. For each quarter, each DRI will build quarterly OKRs and project lists for the quarter. For example, the Q1 KRs may be focused on recipe production, and not include anything about live cooking classes, as that may be a Q3 initiative.

What are the Key Components of OKRs?

Swimlane-specific full-year OKRs

In addition to the full-year company-level OKRs, each DRI should have full-year OKRs for their swimlane. In fast-growing startup, roles and responsibilities may change or evolve over the course of the year. This is natural. However, it is impossible to know today how those roles and responsibilities will evolve. Thus, each DRI should craft their full-year OKRs for the swimlane, not for themselves. The DRI’s Objective can be one of the company-level KRs, or one of the company-level sub-KRs, or something else that clearly ladders up to one these KRs.

Each DRI’s full-year KRs should be Specific, Measurable, Achievable, Relevant and Time-bound.

image

If a new DRI joins during the year, ask them to put together a full-year OKR through the end of the year.

Looking forward - OKRs for Each Quarter

At the beginning of each Quarter, each DRI should identify an Objective (can be the same as previous quarter) and 3 KRs for their swimlane. Each KR should ladder up to one of the full-year KRs, which already ladders up to a full-year company-level KR. If you have a well thought out full-year OKR for your swimlane, and project plans for long-term projects, then setting OKRs each quarter should be a relatively quick exercise that can be completed in a few hours within one week. Each quarter should not be a bottoms up planning exercise unless there is significant new information that makes it necessary to do so.

Tracking progress - Have a dashboard

After taking the effort to set SMART KRs, it is important to measure how you are performing. This should not be an ad hoc process or a something that is figured out each week. If it is, you’ll spend too much time figuring out how to do it, and you’ll likely end up with inconsistencies and confusion. Set up a dashboard. The dashboard can be a clear Chartio or Zendesk dashboard, or a spreadsheet that you manually update at the end of every week. It should be accessible to everyone with one click. These should be linked in your OKR Planning Docs. Every Monday, DRIs should review the dashboards with management and their team and discuss how the quarter is going.

image

Execute every day by planning upfront - Project Lists

After setting KRs for the upcoming quarter, it is critical to put together a Project List that is prioritized by impact and effort. By having project lists set ahead of time, every day you’ll know what your team should be working on and what’s next, and what’s after that. This will provide stability and reduce effort throughout the quarter, improving execution cadence. Some swimlanes will have a very long project list, and a cut line for what can get done in the quarter. Others will just have three or four projects. Some projects are quick (test 5 headlines on an ad type). Some require many hours (perform 10 user interviews). Some are easy, and some are challenging. A general guideline is that you should prioritize the higher-Impact, lower-effort projects at the beginning of a quarter or a project plan. This way, you’ll have a higher likelihood of accomplishing your KRs and completing work on the larger effort projects. By phasing this way, for many projects, you’ll also get the benefits of compounding returns. For example, if you can increase the growth rate by 1% in the first week of the quarter, you’ll be up 12.7% at the end of the quarter. If you launch that same project in the last week of the quarter, you’ll be up 1%. All for the same amount of effort. Parallel processing is also a key consideration. If you can launch a product that needs 3 weeks to collect data early in the quarter, and then work on something else while that’s happening, you will be more likely to achieve your KRs.

Reflecting - Scoring KRs for Each Quarter

At the end of each quarter, each DRI should score how they did relative to their KRs. With dashboards, scores should be able to be quickly calculated, and reflecting on the why behind the score should be a 1-2 hour activity. It is important to remember that your job performance is not judged on your OKR scores. The process, not the results, are what impact how your job performance is evaluated. If you don’t take calculated risks, you will not be able to achieve your mission. The expectation by leadership is that not everything we do will be successful. If everything is successful, we aren’t setting goals that are audacious enough.

image

Pro-tips

  • If you’re relying on another team or DRI for support, it is your responsibility to flag this, and ensure their part is on their KRs. Otherwise, its probably not getting done, and you and the company should know this sooner rather than later.
  • As with anything new, your company wont be great at this the first time through. It should take 3-4 quarters to get good at this process.
  • Documentation is helpful. Try setting up one doc with links to everything. It will become a central resource of your company.