Introduction

Objectives and Key Results (OKRs) have gained popularity in recent years due to the alignment and focus they bring to companies. Unlike vague goals, OKRs serve as greater sources of motivation, acting as more than just another boring and formal New Year’s resolution. Your organization might aim for ambitious goals like cutting down on operational costs, but do you have a plan to make that vision a reality? Effective and well-written OKRs can transform your organization by providing enhanced clarity, team alignment, focus, and motivation. The power of OKRs is realized only when they are crafted effectively.

Historically, Peter Drucker’s MBOs, or Management by Objectives, have been used as popular tools for measuring the success of teams in fulfilling the objectives set by the organization. This foundational concept of enhancing team performance and alignment was expanded upon by Andy Grove, the CEO of Intel, in the 1970s. Andy introduced the Objectives and Key Results (OKRs) framework to help his own organization and others transparently communicate, manage, and measure the attainment of overarching goals. In the OKR framework, each objective within major goals has specific key results attached to it. The fulfillment of these key results serves as a compass, guiding the team on their journey and ensuring they stay on the right path toward achieving their ultimate aspirations.

The leaders of today are expected to do much more than they were previously, particularly in a pre-COVID world. The increasing trend towards agile and remote teams has presented unique challenges and opportunities. Leadership plays an integral role in ensuring that the team is aligned and focused towards a common goal. The complexities and vagueness of organizational goals can be effectively addressed through the Objectives and Key Results (OKRs), which highlights the framework’s benefits for both team alignment and showcasing leadership capabilities. In this comprehensive guide, we will explore the concept of OKRs in detail and provide practical guidance on how to effectively write OKRs to drive meaningful change within your organization.

Understanding OKRs 

As a rule of thumb, the formula for writing effective OKRs is as follows:

We will _________ as measured by _________.

The first blank in the formula above represents the objective, which is the specific goal you aim to achieve. The second blank is for the key results, which are the measurable milestones that will indicate the achievement of the objective.

In that capacity, the objective is the overarching goal you aim to achieve through the efforts of your team and the organization as whole. The key results are those milestones that contribute to the achievement of the objective that is overarched. Before starting to jot down a myriad of OKRs, it is important to understand the intent behind objectives and key results specifically. 

According to The Product Compass, at least 90% of organizations are not writing their OKRs effectively. The individual terms “objectives” and “key results” can have a variety of interpretations, but to maximize the benefits, it is important to first understand each term.

Objectives 

When it comes to objectives, you should think of them as the goals for your organization where each objective must adhere to a certain domain. You can have a range of objectives for a range of aspects of your business like marketing, operations, and sales. However, it is important to note that objectives are very specific and not general. For instance, marketing is a domain within your organization and ‘increase brand awareness’ is one of the objectives of the marketing department. 

Objectives should not be a mere list of tasks or activities; instead, they should serve as motivational and ambitious milestones for every level within the organization. This includes the organization as a whole, departments, teams, and individuals, each having distinct objectives. We recommend having more than two objectives at different levels to ensure comprehensive coverage. Objectives should be clear, time-bound, concise, and ambitious in order to effectively guide and inspire progress.

Objectives should be set for shorter terms and must lead to fulfillment of the long term goals of your organization. Setting quarterly objectives is an effective way to align teams and progress towards annual objectives. For example, you want to be profitable, sure, but that is a long-term goal. In the absence of guided smaller steps, your team would not be able to circumvent the complexities of the goal of being profitable. Action and execution are facilitated through setting clear objectives which is the first crucial part of OKRs. 

Examples of Objectives

Objectives as a standalone tool are essential for businesses, providing clarity, direction, and effective allocation of resources. They articulate the long-term goals of your organization, offering clarity and direction to teams. The operational efficiency becomes an all time high in the presence of aligned efforts towards achievement of common objectives.

Certain characteristics are essential for an objective to be effective as part of OKRs. These include significance, inspiration, action orientation, and conciseness. Ambiguity in objectives is a common mistake that leads your team nowhere, just like those new year’s resolutions do. Clear, well-defined objectives within OKRs not only foster alignment but also empower teams to channel their efforts towards achieving concrete results.

In order to craft your objectives the right way for effective OKRs, you first need to be clear on what you want to accomplish and why it is important for your organization or team as a whole. Once you have drafted some objectives, you should assess whether they serve the purpose of guiding the efforts of the subjects. 

Now, let’s see some examples of the difference between goals and objectives for better understanding. 

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Example 1

Goal: Improve customer satisfaction ratings.

Objective: Improve Net Promoter Score (NPS) from 50 to 70 by the end of the Q2.

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Example 2

Goal: Expand global market share in the skincare industry. 

Objective: Increase market penetration in the Asia-Pacific region.

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Example 3

Goal: Enhance digital presence and e-commerce capabilities globally.

Objective: Optimize e-commerce platforms for international markets.

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As seen above, objectives can be of varied types such as aspirational objectives, strategic objectives, operational objectives, and marketing objectives. Now that you have enhanced clarity around goals vs. objectives, following are some examples of potential objectives across a variety of domains within the organization: 

• Increase the number of inbound leads through the website. 
• Increase quarterly sales revenue by 25%.
• Foster a culture of innovation by encouraging cross-functional collaboration and idea-sharing.
• Maintain 100% compliance with industry standards. 

Key Results 

Key results are outcomes associated with your objective, distinct from mere tasks. They do not signify the completion of tasks but rather represent specific milestones and achievements that contribute to the larger objective set for a certain domain or specific department within your agency. Each objective should ideally have more than 2 and less than 5 key results that guide your team's progress towards achieving the desired outcome. These key results indicate measurable progress and serve as indicators of success.

The key results in the Objectives and Key Results (OKRs) framework outline the 'HOW' of achieving objectives. They are deliverables, not tasks, and must represent clear efforts or lists of deliverables that contribute to achieving a key result. Key results provide measurable progress, breaking down complex objectives and motivating teams with each step towards completion of the objective.

Examples of Key Results 

Key results in OKRs should embody certain characteristics to ensure effectiveness, including clarity, measurability, and a clear indication of progress. Each key result should specify what needs to be achieved and the metric that will be tracked to measure progress. It is highly recommended to include metrics that are specific and ambitious, providing the team with a clear understanding of the effort required to achieve the objective. This approach not only makes the key results measurable but also ensures they are aligned with the overall goals of the organization, driving focused and impactful actions. 

Key Results (KRs) can often be confused with Key Performance Indicators (KPIs); however, they are two entirely distinct terms. Metrics themselves do not adhere exclusively to KRs or KPIs but serve as measurement tools in both frameworks. KPIs measure the success or progress of specific domains within an organization. In contrast, KRs are associated with objectives and are aspirational milestones that guide teams and individuals toward progress from A to B.

Let’s look at some examples of key results within an organization:

Sell subscription upgrades to 20% of the existing customers.

• Close 5 new retainer clients before the end of Q2. 
• Achieve a Domain Authority (DA) score of 80 on Ahrefs.
• Reduce average response time to customer inquiries by 25%.

Now that you have read these examples, remember that it is often quoted, “It is not a Key Result unless it has a number.

5 Steps for Writing Effective OKRs 

Step #1: Get Clear on Priorities and Goals

There are a variety of departments within an organization, each with its specific areas of focus, which can have various objectives. Furthermore, objectives can be set at organizational, team, and individual levels. Therefore, it's important not to overuse objectives with the aim of maximizing benefits; this approach won't be effective. To write effective OKRs, sit down and start by prioritizing and understanding your goals. Aim to have a minimum of 2 and a maximum of 5 objectives per business area per quarter. This approach will leverage the power of OKRs and enable your team to stay focused and perform at their best.

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Step #2: Focus on Outcomes, Not Tasks

Tasks and key results are not interchangeable terms; they have distinct properties. When writing OKRs, it may seem more communication-effective to focus on tasks. However, the essence of OKRs lies in emphasizing results and outcomes over specific tasks. For example, reducing customer response time by 1 minute is a key result, not a task. Your team will employ various steps and tasks based on their individual strengths to achieve this.

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Step #3: Set Realistic Targets 

Another pitfall in OKRs is setting unrealistic goals in the hope of maximizing the benefits of the Objectives and Key Results framework. For instance, if your organization achieved $100,000 in revenue in Q1, aiming for $1,000,000 profit by the end of Q2 would be unrealistic. Such objectives lack grounding in reality and fail to motivate your team. Companies that set unrealistic goals often experience burnout and high employee turnover due to increased pressure on their teams. It's crucial to set objectives that are realistic—neither too difficult nor too easy.

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Step #4: Be Ambitious 

Being ambitious in OKRs is distinct from being unrealistic. Ambition in OKRs entails setting challenging objectives paired with corresponding key results that motivate your team to excel. Aim to set high goals that keep your organization ahead of competitors. Avoid setting overly simple objectives, such as selling just one product in Q1.

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Step #5: Avoid Unclear Language 

Crafting ambiguous OKRs can lead to misunderstandings and misalignment within your organization. It is crucial for you to foster clarity in your OKRs so as to help everyone understand the goals and stay on track. For example, increasing sales revenue is ambitious but a vague objective and setting the key results would be hard as well. To make this more clear, you have to use language such as - achieve a 15% increase in monthly sales revenue. 

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Examples of OKRs 

Now that we have covered the basics of objectives, key results, and writing objectives and key results (OKRs), we will look at some examples of real-world OKRs. The standard format for writing effective OKRs includes the objective and 3 key results that fall under it. Take a look at the OKR examples below across a some major business functions:

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Example 1

‍Digital and Content Marketing OKR for Increasing Inbound Leads

‍Objective: Increase the number of inbound leads through the website. 

‍Key Result 1: Increase the number of monthly website visitors by 40%.

Key Result 2: Achieve a Domain Authority (DA) score of 80 on Ahrefs.

Key Result 3: Increase the landing page conversion rate by 15%. 

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‍Example 2

‍Sales Revenue Growth OKR

‍Objective: Increase quarterly sales revenue by 25%. 

‍Key Result 1: Close $20,000 in sales through the main product subscription.

Key Result 2: Cut down the customer acquisition cost by 10%. 

Key Result 3: Sell subscription upgrades to 20% of the existing customers.

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‍Example 3

‍Employee Culture and Development OKR

‍Objective: Foster a company culture in which employees can thrive. 

‍Key Result 1: Achieve an employee retention rate of 90%. 

Key Result 2: Conduct 1 employee satisfaction survey per month. 

Key Result 3: Hold 3 professional and personal development sessions for employees every quarter. 

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‍Example 4: Operational Efficiency OKR 

‍Objective: Strengthen operational resilience through enhanced risk management processes.

‍Key Result 1: Reduce downtime due to technical failures by 20% through improved IT infrastructure monitoring.

Key Result 2: Identify and mitigate at least three critical cybersecurity vulnerabilities by implementing enhanced security measures.

Key Result 3: Conduct quarterly audits to assess compliance with updated regulatory standards and industry best practices.

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How NOT to write OKRs?

It's easy to remember the foundations and rules that apply to writing OKRs and understand the individual significance of objectives and key results. However, even the most seasoned leaders can make careless mistakes when crafting their OKRs. Here are common OKR mistakes that you must avoid at all costs:

1. Lack of Quantifiable Metrics: OKRs should include clear metrics to measure success. Without measurable outcomes guiding you from point A to B, they risk becoming nothing more than traditional overarching goals.
2. Absence of Risks or Rewards: OKRs are a chance to set ambitious yet realistic goals. This is your time to be ambitious with your goals, but not overly so. Draw a fine line between ambition and realism.
3. Complex Language: Using overly complex or fancy language can obscure your objectives. Stick to straightforward language that everyone in your team can easily understand.
4. Wrong Tools or Software: Using tools or software that aren't designed for OKRs can lead to confusion and inefficiency. You need to do your research and choose tools that specifically support OKR management and align with your objectives.
5. Lack of Initiative: OKRs should inspire action and initiative. Use proactive language to convey responsibility of execution to your team, such as "become," "create," or similar terms.

Here’s Why Your Organization Needs to Write OKRs

The Objectives and Key Results (OKRs) framework is being deployed by companies across the globe, including notable names like Google, Adobe, and Dell. There are numerous success stories with OKRs, such as the struggle that Adobe was having with people management and how executive Donna Morris steered away from traditional annual reviews and implemented the OKR framework. Since then, the company has seen much higher operational and employee efficiency.

Similarly, it is essential for organizations today to effectively track their progress and objectives so they can address issues promptly. Annual reviews are outdated; instead, there is a need for better systems that facilitate the day-to-day and short-term attainment of objectives within organizations. The three main categories of OKRs—committed, aspirational, and learning OKRs—are also a compelling reason for their implementation. Each category serves a unique purpose and addresses different organizational needs. To elaborate, committed OKRs are the realistic goals that your organization is dedicated to achieving within a specific time frame. Aspirational OKRs are set in order to make your team push boundaries and encourage motivation and innovation within your organization. Lastly,  learning OKRs are meant for exploration of new possibilities and being somewhat flexible in achievements due to new domains.  

If you are aiming for enhanced communication, transparency, alignment, and focus across your organization at all levels, OKRs are your go-to tool.

Conclusion: Quick Overview on Writing Effective OKRs 

Objectives and Key Results (OKRs) have now replaced traditional goal-setting methods and annual reviews due to the transformative power that the framework holds. The accelerated growth and alignment of teams within organizations underscore the benefits of OKRs for modern-day businesses. Roadmaps for success are now easier to create than ever before, provided you truly understand the essence of writing effective OKRs. The objective part—what you want to achieve—when coupled with the key results—how you will achieve it—poses an unbeatable framework for strategic alignment. Enhanced accountability, attention, and focus are all fragments of the extensive benefits that OKRs bring to the table.

OKRs empower organizations to set clear, ambitious goals while providing a structured approach to achieve them. This dynamic framework not only fosters a culture of continuous improvement and innovation but also ensures that every team member is aligned with the company’s vision. By adopting effective OKRs, businesses can break down complex goals into manageable, measurable outcomes, driving performance and ensuring that everyone is moving in the same direction. In the words of Peter Drucker, "What gets measured, gets managed.