OKRs stand for Objectives and Key Results.
Peter Drucker invented them in 1954 as MBO, Management by Objectives. Intel used them first. Then John Doerr, once at Intel, brought them to Google. Larry Page and Sergey Brin, Google's founders, learned from him.
An OKR has two parts: the objective, your goal, and the key results, what success looks like. You should limit key results to five per objective. OKRs aim for an outcome, not just an output. For example, don't just say, "Launch app x." Instead, define why you're launching it. What change do you seek? That's your true objective.
Remember this: if you're stuck, ask "Why?" Why are we doing this? The answer often reveals the real goal. Measuring success is crucial. Vague goals like "increase engagement" don't help. Be specific. Say, "boost retention by 5%." That's measurable.
OKRs fit everywhere, from big-picture strategies to specific product developments. They link high-level vision with day-to-day tactics. In product-driven companies, they align all levels of operation.
Step By Step Plan
Let’s say you’re a founder of a startup, and you’ve just hit traction.
First of all, congratulations on reaching this pivotal moment in your startup's journey.
As you navigate this new phase of expansion and complexity, it's crucial to align your team's efforts and maintain focus on what truly matters for sustained growth. This is where OKRs become vital.
What follows is a step-by-step guide designed to help you implement OKRs effectively.
This guide will cover setting clear objectives, defining measurable key results, and ensuring these OKRs resonate at every level of your organization.
It's tailored to maintain the agility and innovation of your startup while scaling operations efficiently.
Let's dive in!
Day 1: Identify Strategic Gaps & Formulate Key Hypotheses
Morning: Identify strategic gaps.
Begin by reviewing current performance data and long-term goals. Engage in discussions with department leads to uncover areas where the company's current trajectory diverges from its objectives.
This process is essential to pinpoint the specific challenges and opportunities the company must address. It grounds the OKR process in reality, ensuring that objectives are both ambitious and relevant.
Question: What are the primary gaps between our current performance and our long-term goals?
Afternoon: Develop key hypotheses.
In the afternoon, transition into formulating hypotheses that address the identified gaps. These hypotheses should propose potential reasons for the gaps and suggest ways to bridge them. This step is crucial for directing the focus of your strategy. It provides a basis for the 'how might we' questions and subsequent steps, ensuring that the strategy development is hypothesis-driven and targeted.
Question: What hypotheses can we formulate to address these strategic gaps?
Day 2: Define 'How Might We' Questions & Brainstorm Strategic Options
Morning: Transform hypotheses into 'how might we' questions.
Transform the previously developed hypotheses into open-ended 'how might we' questions. This approach promotes creative thinking and opens up a range of potential solutions. These questions should challenge the team to think beyond conventional solutions, fostering innovation and broad strategic thinking.
Question: What 'how might we' questions emerge from our key hypotheses?
Afternoon: Brainstorm WTP/HTW options.
Spend the afternoon brainstorming possible Where-to-Play/How-to-Win (WTP/HTW) choices to address the 'how might we' questions. This session should be expansive, encouraging ideas from all corners of the business. The goal is to explore a wide array of strategic options, ensuring that the final strategy is not only robust but also innovative.
Question: What strategic options can we brainstorm to answer these 'how might we' questions?
Day 3: Determine Barriers & Refine Hypotheses
Morning: Identify barriers for each strategic option.
Identify what could hinder the success of each WTP/HTW option. This involves analyzing potential risks, market conditions, and internal capabilities. Understanding these barriers is key to making informed strategic decisions and anticipating challenges that might arise in the implementation of these strategies.
Question: What are the potential barriers to our strategic choices?
Afternoon: Refine Hypotheses.
Instead of rushing into tests, use these two days to further refine your hypotheses based on initial feedback and deeper analysis. This refinement should involve critical examination of the hypotheses in light of available data, industry trends, and internal capabilities. The aim is to ensure that the hypotheses are not only relevant and testable but also practical and aligned with your strategic goals.
Question: How have we refined our hypotheses based on identified barriers and feedback?
Day 4: Update strategy & Establish KPIs
Morning: Update strategy based on analysis.
Use the insights gained from the morning's analysis to refine your strategy. This may involve selecting specific WTP/HTW options or revising your initial hypotheses. The refinement process is essential for ensuring that the strategy is aligned with the empirical data and is adaptable to the insights gained.
Question: How have we updated our strategy based on the refined hypotheses and barrier analysis?
Afternoon: Establish KPIs.
Begin defining clear Key Performance. This step is vital for setting measurable and specific targets that align with your objectives. This is the constellation of big and small metrics that you’ll be watching or driving in order for the strategy to work, and that will show that it is working.
Question: What KPIs have we established for the updated strategy?
Day 5: Develop Strategic Objectives
Gather key leadership team members to develop 3-5 high-level, company-wide objectives. These should be ambitious, aligning with the company's long-term vision, and should be a direct outcome of the previous days' work. This step is crucial for setting a clear, strategic direction for the entire company.
Question: What are the 3-5 strategic objectives we've developed?
Day 6: Communicate Objectives & Tackle Questions
Morning: Communicate objectives company-wide.
Present the defined objectives to all employees, clearly articulating their significance and how they align with the company's broader vision. Effective communication is key to ensuring buy-in and understanding across the organization, which is essential for successful implementation.
Afternoon: Q&A Sessions
Hold sessions where employees can ask questions to gain clarity and deeper understanding of the company OKRs.
Question: What are the key concerns addressed in the Q&A sessions?
Day 7: Departmental Breakdown of Objectives & Develop Key Results
Morning: Departmental workshops
Each department should hold workshops facilitated by department heads or OKR champions. The aim is to interpret how company OKRs translate into departmental objectives.This step ensures that each department understands its role in achieving the broader objectives, fostering a sense of ownership and clarity of purpose.
Question: How have departments translated company OKRs into departmental objectives?
Afternoon: Develop key results for each department.
Develop 3-5 key results for each departmental objective. These should be quantifiable and challenging, yet attainable. This stage is crucial for creating a clear roadmap for each department, outlining how their efforts contribute to the company's overall objectives.
Question: What key results have departments established?
Day 8: Establish Tracking Mechanism & Mid-Quarter Check-In Planning
Morning: Set up tracking tool and train team members.
Select and implement a tool for tracking progress on key results. Provide training to ensure that all team members can effectively use the tool. This step is essential for maintaining visibility on progress and ensuring accountability.
Question: What tracking tool have we implemented and how was the team trained?
Afternoon: Plan for mid-quarter & end of quarter check-in.
Organize the logistics and agenda for a mid-quarter review meeting. This meeting should be designed to review progress, identify any barriers, and make necessary adjustments. Planning for this check-in is important for keeping the team on track and adapting to any unforeseen challenges. Establish channels for feedback on the OKR process at all levels.
Question: What is our approach for the mid-quarter and end-of-quarter check-ins?
Day 50 (of the quarter): Plan Next Quarter’s OKRs
Begin Setting OKRs for Next Quarter
Start the process of setting objectives and key results for the next quarter, using learnings and feedback from the current quarter. This forward-planning ensures continuous strategic alignment and improvement.
Day 60: Continuous Improvement Session
Conduct a Session to Refine the OKR Process
Gather insights on the OKR process implementation and discuss ways to refine and improve for future cycles. This reflection is crucial for continuous improvement, ensuring that the OKR process remains effective and relevant to the company's evolving needs.
By implementing OKRs, your Startup can not only navigate the challenges of growth more effectively but also instill a sense of purpose and accountability among team members. As you implement OKRs, remember that the journey is as crucial as the destination; adaptability and iteration are key. In doing so, you'll empower your team to reach new heights and sustain long-term success in the dynamic landscape of the business world.