Tips & tricks from the experts!
Objective and Key Results (OKRs) are only a powerful tool to drive growth and success if they are implemented correctly, here are a few best practices we've come to rely on.
The purpose of vision & mission statements
The vision & mission statements define an organisation in two sentences, where
Vision: Is the future reality of the world once the organisation has achieved its mission.
Mission: Is the purpose for existing, what the organisation seeks to accomplish on a daily basis.
In practice, the vision & mission statements set the tone of the organisation and communicate to the world why an organisation exists and where it’s going, and a powerful factor in why people will choose to work and will keep working for that organisation.
Internally, the vision & mission statements also play a key role in the OKR process by being the root from which all OKRs will be derived.
To illustrate, lets take the example of Virgin Atlantic, who's vision and mission are as follows:
Vision: "To be the most loved travel company."
Mission: "To grow a profitable airline, that people love to fly and where people love to work."
Here both statements —we could say— are extremely utilitarian in nature, speaking directly to the shareholders on the organisational priorities in protecting their investment under three key themes:
To grow a profitable airline: Revenue and commercial growth
That people love to fly: Customer satisfaction
Where people love to work: Employee satisfaction
Consequently, for the organisation's top level OKRs to support it's mission in achieving the ultimate vision of "becoming the most loved travel company", would be derived directly from these three themes.
Chanel, as a contrasting example, focuses their vision & mission statements on the heritage the brand creates and the legacy it bestows onto the world:
Vision: "to be timeless and sophisticated"
Mission: "to be the Ultimate House of Luxury, defining style and creating desire, now and forever"
Both statements speak directly to the shareholders on how their investment is contributing to shaping style and culture for generations, and internally defining the key themes of focus:
Be the Ultimate House of Luxury: Defining the brand's market positioning, price point and targetted customer segment.
Defining style and creating desire: The sophistication and aspirational nature of their products, and the status it brings to their consumers.
Now and forever: The timelessness, heritage, legacy and cultural relevance of the brand
Consequently setting the tone of the OKRs that will derive from them.
Phrasing good OKR statements
For many, OKR statements are merely a formality, notes to self on what is important, on what to achieve. However written correctly, OKRs become a powerful tool to communicate the scope of impact, the remit and the roles & responsibilities of its owner within an organisation.
As such correctly phrasing OKR statements is key, here are formulas to validate the "goodness" of OKR statements
The role of the Objective statement is to define the ambitious contribution to a specific Key Result belonging to their parent's OKRs, to provide a clear path to be undertaken while also providing motivation.
Formula: How will I contribute to "PARENT KEY RESULT"? By "OBJECTIVE".
Example: How will the sales team contribute to "making the organisation EBITDA positive by May 1"? By "improving our sales performance across the whole team".
Key Results determine the strategic metric by which the success of an objective's success will be evaluated, and stake the scale by which it will be met.
Formula: How will I know I "OBJECTIVE"? When I have "KEY RESULT".
Example: How will we know we’ve "improved our sales performance across the whole team"? When we have "increased the average close rate from 22% to 27%".
The Initiative statement defines the tasks, or undertaking, that will contribute to achieving a key result.
Formula: How will I "KEY RESULT"? By "INITIATIVE".
Example: How will we "increase the average close rate from 22% to 27%"? By "increasing scheduled calls per sales rep from 3 per week to 6 per week".
Here's a template to write your OKRs
The difference between a Key Result and an Initiative
The difference between key results and initiatives is subtle, but immensely important to the measurability, and attribution, of a successful outcome.
In a nutshell:
Initiatives are the things you do that are under your direct control and that can be achieved independently of their success, for example: "Visit 20 prospective customers"
Key results is evidence out of your direct control that prove you are doing good work, for example: "Secure 5 first orders of S$50K+"
The difference is in the nature of the verb used in the statement, visit vs secure in the above example, where the verbs used to formulate initiatives are "active", such as: visit, do, make, organise, create, etc, while the verbs used to describe key results are "demonstrative", such as: secure, achieve, gain, average, grow, close, etc.
Going beyond grammar and semantics to include the spirit of the OKR effort, we like to say "key results can’t be bought they're earned".
To illustrate the concept of spirit of the objective, let's imagine a fitness objective along the lines of "becoming fit and healthy", where one might perhaps measure their success and valiant effort by "going to the gym 5 times a week" —like everyone's new year's resolution—.
If we were to follow the above active vs demonstrative rule, we would conclude that as "go" is an active verb, and a good key result statement needs a demonstrative verb, it should be rephrased to "achieve an average gym attendance of 5 out 7 days a week" to be valid, especially as "achieve an average" is a true measures of success as it is purely evidence based.
But we must also consider that one can go to the gym to simply say "hello" to the staff and leave right after! This is what we mean by "buying the key result". Yes, the Key Result of going 5 times a week has been met, however it did not contribute to becoming fitter or healthier,
A Key Result statement in line with the spirit of the objectives would be to “achieve X% body fat” or “increase muscle mass to Y%”, or something else fitness-y.
Structuring OKRs in a multi-level organisation
Lets consider a tree. In a tree, leaves execute vital functions such as: photosynthesis, respiration and transpiration (to name a few), of which output provide the necessary —let's call it— lambda to ensure growth. Every year, some twigs become branches, who then sprout new twigs that will ultimately grow sufficient leaves to cumulatively output sufficient lambda to attain the year's growth objectives.
Organisations are no different, in an organisation: most people are leaves, some are twigs (i.e. team leaders and managers), fewer are branches (i.e. business unit owners) and only a handful of individuals represent the trunk of the organisation.
Consequently, Objective and Key Results (OKRs) mirror this arborescence perfectly, to which effect we can consider a given organisation's tree to be composed of two types of OKRs:
Collective OKRs, the branching points (or nodes) in a tree, represent the collective work-product of all it's dependants, illustrated by the beige boxes in the diagram below, and are defined by both Objectives and Key Results.
Individual OKRs (aka. work plans), are the leaves of a tree, representing the individual contribution to the Collective OKRs the belong to, illustrated by the colourful boxes in the diagram below, which are defined by not only Objectives and Key Results, but also includes the initiatives that will be undertaken to achieve them.
In practice, the combined Individual OKRs align to meet the Collective OKRs they belong to, in turn these Collective OKRs align to meet the Collective OKRs they belong, and so on until the company top level OKRs are met in full.
In many organisations, the OKRs of team leaders, manager, directors, and other "node roles", are those of the node itself, and this is possible provided the scope of this individual is purely managing, guiding and enabling others, with no clear deliverables solely attributed to themselves. However is said individual also has work product responsibilities then this individual should also have their own individual OKRs to distinguish their success from that of their team.
This said, if a node is composed of a single individual, then that node's OKRs is that individual's OKRs.
Continuous progress monitoring and strategic adjustment of deliverables
The value OKRs bring to organisation is the clarity of the objectives and the innate measurability of the progress in achieving them.
In common practice, OKRs are set on an annual cycle to define the deliverables to achieve over a full calendar year. This said, as Objectives and Key Results are the testimony to good work being done, one does not set out on January 1st to deliver on December 31st deliverables directly, intermediate steps and milestones are expected along the way as rallying points of assessment and adjustments.
Let's call these periods of times: OKR cycles, and they can be set on a quarterly, trimestrial, semestral or any other length of time that best suit the specifics of the organisation implementing them.
These shorter OKR cycles also have their own ORKs, derived from the annual OKRs. However it is important to note that these shorter OKRs are not simply pro-rated or scaled down versions of the annual OKRs their contribute to, they are in themselves new OKRs defining the intermediate value being created during these shorter time periods, for example product requirements need to be finalised (Q1), before a product can designed (Q2), made (Q3) and finally sold (Q4).
To maximise the likelihood of success throughout these OKR cycles, periodic check-in with one's line manager and teammates are expected, even recommended. Our best practice is to have:
Weekly check ins to update one's line-manager on any progress made and on any challenges faced during the execution of initiatives, providing the opportunity to pre-empt any potential hurdles preventing the delivery of objectives.
Monthly OKR team parties to update one's team-mates on progress made and share where help or support is needed,
End of OKR cycle town halls to analyse one's wins & losses and to understand what prevented or derailed one from delivering or achieving on their objectives, and providing the perspective to adjust the next cycle accordingly.
It is important to remember, that while an organisation set annual OKRs, they are not fixed and immovable throughout that year; they can be strategically adjusted along the way, especially as new information is revealed, disruptors appear or the organisation's reality changes; and the same apply to the key result that measures their success and the initiatives undertaken to achieve them.
Focussing OKRs for maximum impact
If you reached this point in the website, you're likely to agree that OKRs are fantastic, and can be made to set any objectives and measure any key result. However is it important to maintain strict focus on what is most important to the organisation.
As such, at the organisation level, we recommend setting:
One top level OKR, a single objective with supporting key results that represent the organisation's apex priority.
Three to five functional OKRs, defining the expectations and success metrics of the major "business units" within the organisation, to serve as their top level OKR from which functional OKRs will be derived from.
Similarly, at the individual level, one will derive their OKRs from the functional OKRs of the "node" they are contributing to, to which all functional OKRs roll up to meet the associate top level OKR.
Throughout this exercise, it is important to focus on what is most important and only what is critical in fulfilling the mission and achieving the vision of the organisation. Not to say that other objectives are trivial, but that they are insufficiently strategic to publish in a public forum and to diligently monitor and track.