OKRs: An Opinionated Guide To Driving Performance

Here’s a primer on OKRs, explained in full, and a guide on how to begin.
OKRs: An Opinionated Guide To Driving Performance
Here’s a primer on OKRs, explained in full, and a guide on how to begin.

In 2018, venture capitalist John Doerr wrote a book called Measure What Matters. It opens with an account of the day he visited “young” Google in 1999—the day he presented an ambitious goal-setting practice called OKRs that would, he told the assembled group, “guide you to the mountaintop.”

All these years later, it’s pretty clear this OKR system worked. And as Measure What Matters readers came to discover, it didn’t just work for Google; plenty of other successful organizations, like the Gates Foundation, Intel, and others, have also used it effectively. Now, OKRs (objectives and key results) has become one of the most popular frameworks for any organization—even outside Silicon Valley—that wants to set and reach goals in a unified and intentional way.  Basically, any organization that wants to implement their strategy.

So what’s an OKR system, exactly, and how can you put it into practice? If you’re looking for an in-depth explanation, you’re in the right place. But as you may have noticed in the title of this article, this description represents our view of how OKRs work—because there is no definitive guide. (That’s in contrast to the Balanced Scorecard framework, which has a defined methodology, training and certification programs, and research to support its use.) A lot of people are trying to do some version of an OKR system, but there are tons of different ways to do it. So, some of the information in this article is based on Doerr’s book, and some is based on our experience as strategy experts. We’d also love to hear what you think—so we hope you’ll take a minute to fill out this quick survey to tell us more about how you manage OKRs at your organization.

Chapter 1: What’s An OKR?

What is an OKR? | ClearPoint Strategy

What are objectives and key results? In his book, Doerr provides this OKR definition:

A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.

Essentially, it is a collaborative goal-setting system that aims to unify everyone’s efforts in pursuit of the organization’s broader mission. The OKR concept benefits organizations in that it forces them to identify high-level goals, direct and coordinate the efforts of employees, and link diverse departments and operations.

An OKR itself is a combination of:

  1. An objective: Ambitious qualitative goals that motivate the team and push the envelope. (According to psychology professor Edwin Locke, “stretch” goals that are also specific are the best at driving performance.) Objectives are the primary focus of a group and what it wants to accomplish over a period of time.
  2. Multiple key results: Three to five measurable outcomes that clarify what it means to get the objective done. Key results are like metrics or projects defined in the context of the objective.

Many organizations attempting to implement the OKR process find creating key results a challenge. That’s because sometimes key results look like traditional measures, for example, “reach $500,000 in sales”; other times, they look like projects, as in “pave nine miles of road.” In either case, a target is associated with the key result—either meeting a specific quantitative performance measure or reaching an activity milestone, like completing a project.

We’ve seen key results done both ways, as projects and quantitative performance measures; we’ve also seen them used in combination. So, if your objective is to improve sales, for instance, there might be multiple ways to understand whether you’ve accomplished that goal. Of your three key results, one might be to reach specific sales numbers, measured in dollars. Another might be to redesign the sales process, measured by percent complete. The third might be to hire four additional salespeople, measured by the actual number of new hires. Some of those results work like leading indicators (drivers) and some like lagging indicators (outcomes), but all are grouped around the singular objective: to improve sales.

Done right, the objectives and key results framework can definitely help organizations to stay on course and execute strategy successfully, but it isn’t necessarily the right tool for every company. Keep reading to learn more about when and why you might—or might not—use OKRs.

Chapter 2: Should My Organization Use OKRs?

Should my organization use OKRs? | ClearPoint Strategy

An internet search for OKRs—and a quick skim of most of the articles produced—might lead you to believe that any organization can and should adopt the OKR framework. There are situations, however, where it may not be ideal. In our strategy-related interactions with all types of companies over the years, here’s what we learned about when OKRs work best.

Your organization should consider implementing the objectives and key results framework when:

  • You want to convey a clear mission—Whether you’re a growing startup or a company with hundreds or thousands of employees, it can be difficult to keep teams on track toward a common goal. (Doerr says OKRs are a “survival tool” at startups and “neon-lit road signs” at enterprises.) With its focus on getting everyone to work in unison on the same important issues, OKRs leave no room for doubt as to what people should be doing and why they’re doing it.
  • You are trying to give teams ownership—OKRs are assigned to either a department or team; that group is then held responsible for producing an outcome that aligns with the larger organizational outcome. Employees who can clearly see how their work helps achieve a common goal are more likely to be more productive and engaged.
  • You want open communication about projects—Some people check progress on OKRs weekly; others check in bi‑weekly or monthly. The point is for everyone to stay informed and offer feedback around how work is progressing.
  • You want a top-down and bottom-up approach—With OKRs, management determines the high-level goals, while departments set their own objectives and key results based on what they believe needs to be done to achieve the high-level goals. That’s not to say departments can’t negotiate or adjust their goals, but collaborative goal-setting is the best way to implement OKRs (as opposed to completely top-down).

Your organization may not benefit from using OKRs when:

  • You want to mathematically roll up data about performance—In OKRs, people tend to use approximate numbers for measuring key results progress—as in, “we’re 75% of the way to our goal.” That’s not great for mathematically rolling up because it's not precise. You also can't mathematically roll up things like “redesign the sales process” or “hire more salespeople.” If you need to roll up data sets to inform your strategy progress—like gathering departmental expense data to see how they compare to the total organizational budget—you’re better off using KPIs rather than OKR sets.
  • You want to calculate performance bonuses—Calculating performance bonuses is also tricky to do within the OKR framework because OKRs are usually calculated on a zero to one or a zero to 100% scale. They're also more open to interpretation than KPIs.

Now that you have a better sense of what an OKR is and when they should be used, let’s turn the focus to the OKR process, starting with an overview of the OKR cycle.

Chapter 3: What Does An OKR Cycle Look Like?

What does an OKR cycle look like? | ClearPoint Strategy

Every OKR cycle has the same foundational elements: a kickoff stage, the management stage, and a reflection stage.

It’s a continuous improvement process, so each cycle you’ll repeat the same activities, improving the flow and effectiveness of the cycle. There are parts of the process that must be completed at the organizational level, and parts that are conducted at the team level. It also includes an element where the organization and team come together, which is where the improvement really happens. Below are high-level overviews of the three stages; each is discussed in more detail in the upcoming chapters.

OKR Cycle | ClearPoint Strategy

Kick Off The OKR Cycle

Each time you start a new cycle you’ll need to set the stage for what’s to come. We call this defining your OKR process. We talk about the kickoff more in the next chapter, but it’s critical to communicate this definition to your entire organization. If they don’t understand the process from the start, it will likely fail.

As part of the kickoff stage you’ll create the OKRs. Starting with a brainstorming session that includes senior leaders, first determine your annual and Q1 top-level OKRs. Start a month or two before the beginning of the quarter so you have time to rework it. You probably won't be able to settle on your OKRs in a single meeting, nor should you, since you’re prepping for an entire year.

Once the top-level OKRs are defined, communicate them with the rest of the company so they can prepare their own OKRs. This may also take a while, so we recommend that teams block off some time beginning a few weeks ahead of the quarter start to give everyone plenty of time to prepare.

Finally, at the start of the quarter, teams and individuals (if you’re doing it at the individual level) should share their OKRs and how they link up to those at the top-level.

Manage Your OKR Progress

Through the OKR cycle, teams should conduct OKR check-ins. We recommend holding these monthly or weekly, regardless of whether your cycle is annual or quarterly. These check-ins provide an opportunity to review progress and make adjustments to ensure that things are on track—and get them back on track if they aren’t. You don't want anyone to feel locked in for an entire quarter if circumstances change.

Reflect & Restart

At the end of the OKR cycle you’ll hold an OKR showcase. This is the second time that the organizational and team levels come together in the cycle. The showcase gives teams a chance to show off their OKRs and the progress they made.

Next you’ll gather feedback on the OKR cycle from your team, not only about their performance but also about how they perceived the process, and what they thought went well and what didn’t. The feedback you get from your team is the starting point for the organizational level process review, and a critical component to the success of your OKRs. If the process doesn’t work well (or teams don’t understand it), your OKRs won’t help drive performance.

The cycle ends with an OKR process refresher. Based on the feedback you collected, expand on the things that went well and redefine the areas that were murky. Once your refresh is complete, document it and then communicate the new OKR definition, starting the cycle over again.

In the next chapter, we’ll take an in-depth look at the kickoff stage.

Chapter 4: Kick Off Your OKR Cycle

Kick off your OKR cycle | ClearPoint Strategy

If you’re using OKRs for the first time, follow the steps below to give your rollout the best chance of success.

1. First, get organized.

The first step is to think about how you’ll approach OKRs. To start designing your program, consider the following questions:

At which levels will you set OKRs? Will you set it up just at the enterprise level, or will you extend it to include departments and individuals? A fair number of organizations keep it simple by starting with the enterprise level only and then include additional levels as they gain experience and buy-in. You may not even need to go down to the individual level if your company has an HR review-driven performance management system that includes assessing individual contributions to the organization.

What will be the start and end dates? When will you start reporting, and when should you plan to complete the OKR cycle? Most organizations do OKRs quarterly, although they may report more frequently. At the end of the quarter, they tie up these OKRs and create new ones for the next quarter. An alternative is to create annual OKRs and report on them on a regular basis, perhaps every month or every quarter. (According to Doerr, Google now uses annual OKRs and does quarterly—and sometimes even more frequent—reporting.)

Note that it is possible to have different start and end dates for each level or department, but you shouldn’t have different ones for each OKR. We do recommend keeping the dates aligned, however, for the sake of creating a cadence, as well as to maintain consistency in your communications about OKRs.

What constitutes “on track” vs. “off track” performance? Use red, yellow, and green to describe performance statuses and determine your tolerance ranges. We recommend that 70% or better be green, 40% or better be yellow, and anything less than 40% be red.

Will you normalize the results by date? Say you have an annual goal of $1 million in sales, and you reach $500,000 halfway through the year. You’re 50% of the way to your target, which technically constitutes “red” status. But, if you date-adjust your target, you’re exactly where you should be, having achieved fully half (100%) of your annual target goal (because you’re 50% complete at 50% of the way through reporting time). In that case, your OKR is green. It’s important to understand the concept of date-adjusting and decide if you plan to do it. In our view, normalizing your OKR results by date makes for a more realistic OKR assessment, which is ultimately more helpful.

2. Next, train your organization.

If you haven’t already explained OKRs to your employees, now’s the time. Provide a thorough OKR definition and state the purpose, which is to help your organization aim high and excel. And if you’re planning to have departments build their own OKRs, you’ll also need to cover the mechanics of the process (essentially, everything you figured out in step 1): cycle start and end dates, performance tracking, date-adjusting and how it works, and how to handle reporting.

3. Start creating OKRs at the top of your organization.

Begin creating your enterprise-level objectives and key results. You’ll want to create up to five objectives, with three to five measurable key results linked to each objective.

Each key result should have a start value and a target value. Progress toward the target should be noted as a current value (current being the time when you report). Data should be tracked as “progress” or percent complete. Some people express percent complete on a scale of zero to 100%; others use a 0–1 scale. So, if you’re trying to reach $1 million in sales, you can express the $500,000 point as 50% or 0.5.

4. Go to the department level.

Next, set OKRs at the department level (if you’ve decided to do so). Departmental objectives should link up to an enterprise-level objective. Fill in the start value and target value for each key result.

5. Publish your OKRs.

Everyone in your organization should be able to see everyone else’s objectives and key results. Sharing them publicly has four benefits:

  • It creates visibility around organizational goals.
  • It encourages commentary and feedback.
  • It provides context for activities, so no one feels like they are working in a vacuum.
  • It opens up avenues for collaboration. Using the sales example, someone outside of sales who is aware of the $1 million objective might now be encouraged to share potential sales opportunities that come up in their own area of the business.

There are a variety of ways to create visibility around organizational goals, everything from simply publishing them in a Word document to making them the centerpiece of a company meeting. Using performance management software like ClearPoint is another way to keep OKRs top of mind throughout the quarter, and make it easy for employees to reference them anytime.

Chapter 5: Start Managing Against Your OKRs

Start managing against your OKRs | ClearPoint Strategy

As teams work toward achieving their objectives, you need a system in place for tracking and reporting on progress. Below are some of our recommendations to consider as you formulate your own goal-tracking systems.

Set a process for reporting at each level of the organization.

Establish reporting at each level where you are using OKRs, following a defined process.

  • When it’s time to report, the owner of the OKR should fill in the current value for each key result. If, as in our sales example, the current value is $500,000, that would then convert to a value of 50%, which would then ideally be date-adjusted.
  • Calculate the overall OKR value based on the performance of each key result. (If you’re using performance management software or some other tool that enables it, this evaluation should be automatic.) Say the date-adjusted sales figure from above is green (100%); how did you perform on the rest of your key results? Combine and roll up all your key results to produce an evaluation for the overall objective itself.
  • The owner should provide additional qualitative information at the OKR level, covering all the key results that map to a particular objective. For our sales example, the analysis might be along the lines of, “Hey, we did $500,000 in sales, which is great—we're right where we want to be. But technically that consisted of just two sales, which were really big. For that reason, we're worried about sales for the second half of the year.”
  • During check-ins, the manager and owner should discuss current performance, give feedback, and acknowledge outstanding performance. In ClearPoint, we typically see organizations create three separate fields for conversation, feedback, and recognition, all of which both the OKR owner and their manager complete.
  • Depending on your timing, you may want to capture a snapshot of the report. If your OKR lasts all year and you plan to report monthly, then take a snapshot at the end of each month to capture the conversation, feedback, and the data so when you go to the next reporting period, you can add new information from there.

Create an OKR dashboard to show how all OKRs fit together.

Dashboards are a useful tool because they help you understand at a glance how you’re performing on all your OKRs. A single dashboard can display the progress of enterprise OKRs on the left, as well as departmental dashboards and how they support them on the right. Each department can have its own column showing performance during the same time period. Depending on how you report, this dashboard may be date-adjusted.

Conduct OKR check-ins.

Transparency is key to making OKRs work, so it’s essential to perform check-ins regularly during OKR cycles. We recommend scheduling two to three check-ins throughout the quarter. During these small group conversations, be prepared to discuss any items of importance with regard to progress, such as notable successes, concerns, roadblocks, and upcoming priorities, for example. Don’t forget to document these conversations as they happen.

Publish your OKR progress.

Just as it was important for everyone to see each other’s objectives and key results, it’s important to share everyone’s progress around achieving them. Doing so can help motivate people to do their best; it also gives you an opportunity to recognize high-performing teams. Again, using purpose-built software makes it easy to publish progress, minimizing any additional work on the part of OKR owners and managers.

Chapter 6: Reflect & Restart Your OKR Cycle

Reflect and restart your OKR cycle | ClearPoint Strategy

You’ve reached the end of your OKR cycle—congratulations! Publish an “OKR Showcase” that highlights achievements from every department. You may also want to recognize certain teams that came up with particularly innovative objectives, which could serve as a model for other groups going forward.

Additionally, no OKR cycle should conclude without taking time to reflect on how things went. Encourage teams to submit honest feedback about what they viewed as successes in your implementation, as well as areas of weakness. Also, have everyone involved take time to evaluate:

  • Were your objectives too easy, too difficult, or just right?
  • How would you rate the quality and quantity of your key results? Were there too many? Too few? Were you focused on the most impactful key results?
  • Were the obstacles you encountered within or outside your control?
  • How would you rate your execution and why?

Don’t be doomed to constantly repeat your mistakes; learn from them (and your successes) so you can improve the next cycle.

Once you’re done reflecting, do a final review of the OKRs, close them out, and start the cycle again.

Chapter 7: Observations

OKR observations | ClearPoint Strategy

As noted earlier, there isn’t one right way to do OKRs. As part of our work, we’ve had plenty of opportunities to see the framework in action in a variety of settings. Below are some of our observations that might be helpful if you’re just starting out.

Organizations new to OKRs tend to do things simply as they ramp up. For example:

  • They usually stop OKRs at the team level.
  • They tend not to do mathematical roll ups.
  • They evaluate performance more subjectively.
  • They set a primary goal of transparency around goals and activities.
  • They make decisions with the goal of getting buy-in for the OKR process.

In more mature OKR organizations:

  • They implement the OKR concept company-wide, frequently down to the individual level.
  • They create a very mathematical process.
  • They evaluate performance more objectively.
  • They have achieved transparency.
  • They have employees who’ve already bought into the OKR process.

Set yourself up for success with the OKR framework.

As Doerr points out in his book, OKRs are not a silver bullet. They can’t substitute for skilled leadership or sound judgement, and they must be properly designed and deployed. In short, there are a lot of factors working against good strategy execution (whether you’re using the OKR concept or any other management framework), so it’s to your benefit to simplify and support these efforts in whatever way you can.

ClearPoint can help manage your performance no matter your framework. If you're rolling out OKRs for the first time and some of your key results include non-mathematical performance measures, ClearPoint allows you to manually apply color status indicators. But as your organization matures, you can bring in the math and automate those manual entries. Once you start pulling data in from other sources automatically, you can let your measures run off calculations and your results run off evaluations—and ultimately start saving a lot of time on tracking and reporting.

Hopefully, this guide has been helpful. If you’ve been trying out the OKR framework at your organization, leverage ClearPoint AI OKR software for implementation processes - just answer a few questions and experience the future of OKRs!

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OKRs: An Opinionated Guide To Driving Performance

Ted Jackson

Co-Founder & Alabama Native

Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.