2021 is less than a month away and I bet you’re already thinking of your New Year’s resolutions. From professional growth goals to personal resolutions, most people fail to accomplish their goals. The reason this happens is because they write a list of wishes only a genie could grant (“make a fortune to prove aunt Gina wrong”) instead of a plan with actionable steps (“increase recurring revenue by 25%”).
If you want to discard wishful thinking altogether and make significant progress towards your goals, use the Objectives and Key Results (OKR) methodology both in your professional and personal life. Here’s a breakdown of it:
OKR Methodology 101
The OKR system, short for “Objectives and Key Results”, is a high-commitment productivity framework that focuses on metrics. Objectives (O) are defined in terms of measurable and actionable key results (KRs) that can be set monthly, quarterly, or yearly.
Think of the objective as your vision or mission, not as a complex task you just need to get done. Your key results are measurable outcomes, again, not something you achieve by just putting in the hours and the effort. So what then can you do? There are the initiatives (tasks) a.k.a. actionable steps towards positive outcomes (KRs) which will eventually lead you to your objective. In a nutshell:
The OKR framework tells you where you want to get to (Objective), how you can get there (Key Results), and what you can do (Initiatives) to reach your destination.
Here are two OKR examples:
As you can see, the OKR framework is not a to-do list because neither the objective nor the key results can be achieved by simply getting to work. KRs such as “raising employee awareness” or “publishing quality articles” entail metrics and variables. So then, what do we mean by “quality” and “what constitutes great content in 2021?” These are great questions to ask which will prompt the team to come up with subsequent initiatives.
How to set OKRs
When coming up with your OKRs, there are a few rules of thumb:
1. Don’t use OKRs as performance indicators, but as professional growth goals. Like Google, aim for a 60-70% completion score.
Wait, does that mean that you shouldn’t achieve your OKRs? As counter-intuitive as it seems, it’s actually extremely beneficial. A 60-70% success rate allows your team to set OKRs tailored for professional growth and innovation. Since it’s okay to fail, they might as well try something innovative or challenging. This way, they will “stretch” themselves cognitively, intellectually, and creatively – stepping outside of their comfort zone – but not too intense that they snap. Beware though:
- If the completion rate is >70% it means that the OKRs were chosen too lightly – a task too easy, too boring, too light, too safe. What are the chances of having a team of overachievers aiming for 99% completion?
- If the completion rate is <60% it means that the OKRs were overly-ambitious – a task too difficult, too complex, too nerve-racking. Chances are the tasks at hand were so daunting that they led your team to mental paralysis and perhaps burnout.
NOTE: Think of OKRs as a means to “mental stretching” – anything that involves stepping outside of your comfort zone, thinking outside the box, or exposing yourself to outlandish ideas.
2. Don’t incentivize OKRs. Be it money, rewards, perks, or awards, the moment you incentivize employee OKR completion score, that’s when your team turns OKRs into a to-do list with safe tasks and easily-achievable objectives. On one hand, this will give you the illusion that deep work is being done (while that might not always be the case). On the other hand, this will also give you a crippling anxiety that everyone else is doing such a great job while you’re here – an imposter who’s failing at it and who should stop trying altogether.
Employees should be compensated for the daily work they do, for their responsibilities. As romantic as it may sound though, empathy, camaraderie, and a sense of purpose are the wheels behind engagement and innovation. Work needs to be meaningful, solve real problems that challenge the status-quo, and fun at the same time to be a tangible motivator in its true sense.
3. Don’t over complicate OKRs. If you’re new to creating goals, it’s best to keep it simple and focused. Start by establishing one at a time while making sure they align with your (company) vision or mission. Still, you should establish KRs that are outside of your comfort zone, so that they reflect the professional growth goals you’ve been meaning to tackle but constantly postponed. Challenge yourself with KRs that are exciting to envision even if you have just a rough idea how to go about it.
4. You don’t need specialized knowledge to do OKRs. Not everyone is good with statistical data, but this shouldn’t deter individuals from setting OKRs. Make your goals as simple as you can, as long as they are measurable and actionable. You don’t have to design a sophisticated XY scatter chart if you don’t understand how that works. Make a line chart instead. Or even better, use intuitive charts to keep track of your progress, such as a waffle chart (that even sounds like fun).
For example, if your KR is to gain 1,000 new blog subscribers by the end of the quarter, then your first Initiative (strategy) might be to produce a newsletter. Finish the initiative, then track the progress using a waffle chart for every 100 new subscribers. Goals you measure by metrics or statistics are called “quantitative”.
5. You don’t necessarily need numbers to do OKRs. “Measurable” does not necessarily mean numbers. You can measure a metric using “success/fail” or “yes/no”. For instance, “Hire new copywriter” is a KR that can still be measured – at the end of the quarter, you either did it or you didn’t. In addition, you can evaluate whether the new hire was a good pick. Goals you measure through observation – and whose quality you analyze – are called “qualitative”.
Why the OKR methodology works
There are a ton of productivity methods, strategies and systems out there, so choosing one is not a matter of variety but of suitability.
What makes the OKR methodology better than most and does it cater to my needs and expectations? Here are three core components to help you decide:
It is a tested method. Objectives and results first came to the spotlight in 1954 when Peter Drucker published Management by Objectives. A decade later, the then-CEO of Intel, Andrew Grove, adapted and refined Drucker’s methodology into the OKR framework used today. During his time at Intel, John Doerr learned the OKR methodology and introduced it to Google’s two founders, Larry Page and Sergey Brin. That is when OKRs started to gain traction. OKR is a tested methodology and the success of giants like Google, Amazon, Microsoft, Intel, Spotify, Netflix (among many) is a good testament of that.
It measures performance. It’s not about finishing another day at work, surviving another quarter, or struggling to go through a list of tasks that will somehow magically bring profit and growth. By employing any kind of objectives and key results, you will be able to review them and track your performance. Even if you fail at them (and it’s okay to fail), you will learn something invaluable, adjust your strategy, and keep trying. You need a trial-and-error mentality for the OKR to work in the long run.
It encourages employee autonomy. By allowing your team to decide on their individual OKRs, you will see increased engagement and personal responsibility due to the sense of ownership and purpose. They will be more likely to see their OKRs through since they chose them themselves. Of course, establishing individual OKRs should be done collaboratively with their managers or superiors. There should be consensus and excitement for the OKR.
Best OKR practices to learn from companies
“Vision is a destination – a fixed point to which we focus all effort. Strategy is a route – an adaptable path to get us where we want to go.” –– Simon Sinek
The best theory is that which is put to practice. Here are some insights on how major companies successfully employ OKRs:
1. GitLab: Value ownership
When you establish OKRs as a team, everyone feels engaged and valuable. Since it is a collaborative process, find consensus and see what works best for you all. Communicate the vision and the goals as often as you can. It will help everyone prioritize and engage in deep work. Also, commit to your OKRs publicly because increased accountability results in less blame-shifting and fault-finding. You will do your best to achieve your OKRs because they are yours, so you won’t blame others so flippantly. Accountability strengthens commitment.
GitLab, a fully-remote company boasting a little over 1,250 remote employees, takes accountability to the next level. At GitLab, decision-makers (executives, managers, team leaders) are called “direct responsible individuals” (DRIs) who have greater autonomy on different levels of ownership (executive, division, department, sector, team). DRIs oversee each OKR and review their progress and status on a monthly basis: “on track”, “needs attention”, and “at risk” – the last label requiring urgent action.
2. LinkedIn: Review regularly
Beginners’ trap when setting OKRs is that after they set OKRs, they review them daily for a short time, only to forget about them later. Know that successful companies that employ the OKR methodology don’t skip the weekly, monthly, quarterly, and yearly reviews. OKR retrospectives are a must! Evaluation requires transparency, and in turn, transparency leads to efficiency. There are so many growth opportunities and lessons to be learned when we collaborate and share what we know. During the OKR cycle, be truthful about your progress, challenges, wins, and even failures. Then your peers can draw inspiration from your experiences and vice-versa.
You probably won’t find successful companies that don’t review their OKRs. LinkedIn stands out thanks to their focus on reviewing their OKRs. CEO of LinkedIn, Jeff Weiner, encourages employees to set stretch goals. He then has a 3-hour meeting with his team every week, and a full-day meeting every six weeks. The retrospectives are long, but positive and encouraging, with employees sharing and celebrating personal victories and professional achievements from their previous week.
3. Amazon: Nested cadences
Resist the temptation to change the OKRs halfway through the quarter. Don’t worry, keep tracking, do your best, fail, review, and plan better for the next quarter. If you change them before you actually hit a snag or bottleneck, you won’t really know how it would’ve panned out. Plus, your team might be confused or take OKRs too lightly if you change or discard them easily. But what if you know for a fact you won’t achieve them? What if you want to test the strategy first before implementing it in the long run? The solution: separate strategic OKRs from tactical ones.
Amazon uses “nested cadences”, where quarterly tactical OKRs are nested in long-term strategic OKRs. As for the strategic OKRs, Jeff Bezos’ advice is to “focus on what won’t change” and to put time and energy in the values you know will still ring true a decade from now. He points out that there should be balance between flexibility (adjusting tactical OKRs) and commitment (sticking to strategic OKRs without changing them). Amazonis not the only company to use nested cadences. Google sets yearly and quarterly OKRs, while Spotify employs 6-month strategic OKRs and 6-week tactical OKRs.
4. Google: Balance “moonshots” with “roofshots”
Remember the 60-70% sweet spot we mentioned earlier? Google Venture’s Rick Klau calls those stretch goals “moonshots”, while difficult but 100% achievable goals are called “roofshots”. At first, moonshots can demotivate the team because people like the sense of achievement that comes with fulfilling their goals. On the flip side, moonshots can dissuade individuals from trying to achieve that goal since it’s “just a stretch goal”, so it’s okay if it doesn’t pan out. Hence, Klau advises teams to set a single moonshot KR and 3-4 roofshot KRs in order to strike a balance between results and growth.
5. Spotify: OKR minimalism
Can you imagine having 4 objectives with 4-5 key results each? Imagine juggling all the KRs, not knowing which one needs attention first, what to reschedule, and what to implement when. If the Eisenhower Matrix framework recommends having maximum 4 important initiatives while prioritizing the other 12, how would you tackle 16-20 important ones while still answering calls, sending out emails, and dealing with your duties, and worse, office interruptions? We urge you not to set too many OKRs.
Spotify went the extra mile and dropped individual OKRs in 2013. Due to the dynamic environment and their fast-changing objectives and because they didn’t want to confuse and consume the individuals’ time and energy, we could say Spotify went minimalist. They decided to discard all the processes that weren’t adding value, and in their particular case, such decluttering meant individual OKRs. Employees may still set individual OKRs, but their goals are not mandatory on a corporate level. Surely, it’s not the only company to drop individual OKRs (see GitLab).
TIP: Prioritize Initiatives and KRs. If every task is labelled “important” and “urgent”, you will never engage in deep work.
Time for action
What’s your resolution after having read about the OKR methodology? I bet you don’t want to be that person who rewrites their New Year’s resolutions unto the next one. So, instead of the New Year’s resolutions, write your professional aspirations and “stretch goals” in the form of OKRs. Share them with the team. Also, strive for out-of-the-comfort zone team OKRs. Track them throughout 2021. This methodology will help increase your thinking capacity, foster innovation, and grow professionally. Be patient – progress takes time. Also, encourage your team members to be proactive, patient, transparent, and accountable.
The bottom line is, whether you are setting individual or team OKRs, be mindful and intentional about each OKR (set maximum 4-5 KRs per O) and review them weekly (or at least monthly). Do this so you won’t face disappointment a few days before next year ends. This is the OKR methodology in a nutshell – now I’m off to write my OKRs for 2021. 😁