The OKR Formula
The OKR formula, according to John Doerr, is as follows:
- Set an objective. What do you want to accomplish?
- Determine key results. How are you going to accomplish this?
- Measure progress. How will you measure your progress?
Objectives, or goals, are what a company wants to achieve at the various levels:
Objectives need to be:
Establishing an objective, in its most basic form, is what a team or company wants to accomplish within a certain timeframe.
Some examples of objectives are:
- Increase profits by 10%.
- Be the number one online book retailer in the country.
Key results are points of success or progression toward an objective. They’re expressed numerically; they can be quantitatively measured and stored. Key results are often difficult – though not impossible.
Key results can be based upon:
The most important element is success measuring. Key results must be qualitative. For example, OKR results statements should be specific, i.e., “Onboard 15 new sales managers”. In this way, results can be measured and progress towards the overall goal can be tracked.
Generally, there should be no more than 4 key results per objective.
OKRs Put into Practice
OKRs should fit with business goals and enterprise initiatives. Regular check-ins throughout the quarter are critical to measure progress.
Typically, there are 3-5 high-level objectives with 3-5 key measurable results for each. Smaller organizations ought to aim for 3 OKRs, and the biggest organizations should not exceed 5 at a time. The progress of each key result must be tracked individually during the quarter.
When a project comes up, OKRs help determine if it will be added in and take priority over something else or if the project will be nixed.
One company that was able to employ the OKR model exceptionally well was LinkedIn, led by CEO Jeff Weiner. He was able to use the OKR system in a way that greatly contributed to bringing LinkedIn to a $20 billion market capitalization.
Weiner used OKRs to help employees better connect with the collective mission of the company. Cascading OKRs informed how personnel should spend their days and personal and team OKRs were aligned with the organization.
Weiner believes working towards ambitious goals, as opposed to having a stated plan, motivates and pushes employees and teams.
Weiner says OKRs are about “something you want to accomplish over a specific period of time that leans toward a stretch goal rather than a stated plan. It’s something where you want to create greater urgency, greater mindshare.”
Easily achievable objectives create low expectations and usually stall people. He also recognized the importance of regular check-ins and meetings concerning big picture changes and updates.