Goal Setting: Introducing OKRs

OKRs help you and your team clarify and align around top priorities — to measure what truly matters in the chaos of scaling a company. Their purpose is to create transparency in what you’re working on, visibility to how individual work impacts vision & mission, and accountability by defining success and measuring progress over time.

OKRs are a great tool for companies who have reached product-market fit and are ready to or have already started to scale. They can be used pre PMF to identify areas of focus and prioritize, but need to be flexible and lightweight so they don’t create drag on speed and agility.

Here are the fundamentals for introducing and embedding the OKR process within your team.

Quarterly cadence

The most common cadence for OKRs is quarterly. If you are earlier stage (pre PMF) and / or it’s crucial to maintain speed and agility, monthly OKRs may be a better fit.

3X3

For OKRs (Objectives and Key Results), the target is 3 and 3. Three Objectives, with three Key Results for each Objective. When onboarding your team to OKRs, you may want to start with just one or two OKRs to start, get the team into a rhythm, and then expand to three.

Company level → Team level → Individual level

Create OKRs for the company, then for each department (based on the company OKRs), then for each team (based on the department OKRs), then for each individual (based on the team OKRs). A common mistake is to create Department OKRs, without creating Company-level OKRs. This leads to silos and lack of trust.

When first introducing the OKR process, you may want to start with company and team OKRs only. This can simplify the process and allow for faster adoption. Once you’ve been doing company and team level OKRs for a few cycles, then introduce individual OKRs.

The Objective

The Objective (O) answers the question: “Where do we want to go?”

This objective should tell a compelling story. It does not need to be measurable — it can be subjective. But it should be big, bold, and inspiring.

The Key Results

Key Results (KRs) answer the question: “How do we know that we’re getting there?”

KRs should be objectively measurable and quantitative.

Example OKR:

Objective: Massively grow revenue

Key Results:

• $500,000 MRR (Monthly Recurring Revenue)
• Hire 10 additional SDRs
• Hire Sales Ops person to project manage the sales team

Company level OKRs should be broad

Company OKRs should be broad enough that they encompass the whole company. Each department and team should feel their work is contributing to at least one of the company’s priorities.

Example company-level objectives:

• Profits: Massively grow revenues while minimizing expenses
• Product: Delight our customers
• People: Create a positive and transparent environment where we are all inspired to do our best work

OKR creation process

The OKR creation process can be a distracting one. So, it’s important to keep the process short and tight —one week or less if at all possible. Make this an Admin Week, and do all the other required quarterly admin processes (last quarter’s OKR retrospective, performance management, etc) during that same week.

Timeline

Here is a template timeline for OKR creation during planning week. Make sure you tailor the process and timeline to fit your company’s needs.

Day 1. Leadership Team meeting with all department heads for two hours to create company OKRs using structured brainstorming.

Day 2. Each team has a two hour group meeting to create team OKRs. Department heads should check and approve all team OKRs by end of day.

Day 3. Depending on the size of your team, you might also create sub-team OKRs. If you do, team heads should check and approve all sub-team OKRs by end of day.

Day 4. Each individual creates individual OKRs. Managers should check and approve all individual OKRs by end of day.

Day 5. At Leadership Team meeting, CEO checks and approves all OKRs. Depending on the size of your team, it may not make sense to check individual level OKRs. As long as your department heads are aware of and have approved individual OKRs, the CEO can focus on company and team OKR approval. Announce company and team OKRs to company at All Hands.

Cascading communication

Once your leadership team has shared company OKRs in All Hands, have each department head discuss in more depth within their departments, and then at the individual level during one-on-ones.

Buy-in and alignment

The cascading conversations above are meant to clarify understanding and create alignment and buy-in at all levels of the company. When introducing OKRs for the first time, it’s normal to encounter friction, disagreement, tension, and resistance. It takes time to introduce a process like this, and it a champion at the leadership level to guide and drive the process over time to encourage and build adoption.

Individuals who come up with their own OKRs that align with the company’s, rather than having them handed down, are more likely to be invested and bought in to the process.

Tracking

Create an OKR tracking system. Use a third-party tool (15Five, Betterworks) or a traffic-lighted (Green, Yellow, Red) spreadsheet. The system should show, week-by-week, which OKRs are on track (Green), slightly off-track (Yellow) and far off-track (Red).

Prompt the leadership team to update the status of their OKRs (on-track, lagging, poor) as part of regular team meetings and all 1:1s.

For OKRs that are far off-track, require that the DRI (directly responsible individual) create a written issue/solution to get back on track.

Quarterly post mortem

At the end of every cycle, gather the leadership team together to review progress on existing OKRs and collaborate on the coming quarter. Review what worked, what didn’t work, and what you want to carry forward or leave behind from this cycle.

In developing the next cycle’s OKRs, the process that tends to get the best results is to have every leadership team member separately write up what they think the company OKRs should be for the next cycle. Then combine all the ideas into one document and discuss. You’ll see common themes and can then have a healthy debate about the company’s priorities.

Additional Tips

Ensure everyone knows how to do OKRs

Have everyone watch / read the below resources before beginning the process.

• 1 hr overview of OKRS — this video is a great overview in 1hr; highly recommend everyone watches (watch as a team then discuss after)
• A Guide to setting OKRs (Google)
• Measure What Matters has some interesting stories on businesses using OKRs
• Intro to OKRs book
• Scoring OKRS

Enforce standard practices

Actually enforce standards like three Objectives only, each with three key results. Ensure objectives are actually inspirational and rally the team. Ensure key results can truly be measured, and try to make them mutually exclusive and collectively exhaustive (MECE). Figure out your scoring plan. Hold people accountable to committing to the process, especially at the start to drive fast adoption.

Get buy-in from everyone

Everyone needs to do OKRs for them to work. That doesn’t mean you have to do individual OKRs right from the start, but everyone needs to be bought into it as a framework for the company. When you’re getting started, you could do company OKRs, Engineering OKRs, Non-Engineering OKRs; and leave it at that to keep things simple and increase the chance of successful adoption.

Start OKRs from the top

OKRs should start from the leaders of the company. They should clearly articulate what you as a company need to do that cycle.

All team and individual key results should tie back to support one of those objectives. Make sure they’re precise enough to not allow for misinterpretation, but also broad enough that people don’t feel overly restricted. The goal is to define the ‘what’ through company OKRs, and let your team decide the ‘how’ at the team level. All OKRs should tie into the ‘why’ of your company mission and vision.

Operational vs. aspirational OKRs

Generally, OKRs should be ambitious — it may feel like a huge stretch, or even impossible, to reach them. This creates the kind of big thinking and creativity that’s crucial for a scaling startup.

You might only achieve 60–70% of your OKRs. This is an aspirational OKR — a huge stretch goal you may not meet, and where 60–70% is considered success. In contrast, an operational OKR is created with the expectation that you will achieve 100% of the goal. I don’t recommend all operational OKRs for startups because it means you’re not thinking big enough. A combination of a few aspirational with one operational OKR is common. Whether you choose aspirational, operational, or a combination, the most important thing is to ensure everyone is clear on which type of OKR it is and what success means.

Do dependency checks

For each key result, call out dependencies on other teams. Those dependencies should exist as key results for the other teams if the work isn’t done yet. This is one of the most crucial steps at a larger company and is often a primary reason OKRs aren’t achieved.

Have clear owners

Ensure there is a clear listed owner for each key result. You obviously don’t need to do that for individuals’ OKRs, but it’s super important for company and team level.

Make OKRs public

Make sure OKRs are posted in an easily accessible place where people will be reminded of them. Print them out and keep them on your desk. Create a culture of questioning when someone is spending their efforts on something that doesn’t support team/company OKRs.

Learn and iterate

It usually takes two to three quarters to get the company rallied and in the right OKR rhythm, so don’t quit after one quarter. OKRs aren’t meant to introduce waterfall planning. If the plan needs to change, then change the plan. But, use OKRs as a discussion point for why, and document the reasons for change.