Why is everyone implementing OKRs?
To engage everyone in the responsibility for achieving growth, that’s why.
OKRs, opportunities and key results, have been around for a while but they took off in a big way in the late 90s at Google. But in recent years, almost all big tech companies now cite them as being how they align their teams to achieve their goals and drive growth.
What’s it all the fuss about? Hint: it’s about engagement and results.
What’s an OKR?
- A simple framework in which to transparently define your business goals and how you expect to achieve them
- A way for you to focus on what matters most and get all of your teams engaged and aligned on the outcome
- A practical way to translate any business or product goal into meaningful and manageable objectives
OKRs drive business growth by helping you focus on the goals that matter through the parallel process of defining how you’ll track action and progress.
Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act.
There is no other route to success. — Pablo Picasso
Objectives and key results
An OKR is an objective that is achieved through supporting and aligned key results.
The objective is what you want to achieve. For example, increase the number of trial users converting to paying customers.
The key results are how you are going to achieve the objective. In practice, they are the steps or initiatives that you use to track progress towards the goal. For example:
- Increase the number of users visiting the site from 1,000 per month to 5,000 per month
- Decrease the number of users that don’t sign up for the trial by 50%
- Increase the number of activities trial users can engage with from 2 to 5
- Decrease the number of steps in the paying customer sign up process by 3
Each of these key results is tracked regularly through the team that takes responsibility for it. For example:
- Marketing will own the drive to get more visitors to the site
- The UX team will simplify the trial sign up process
- Product and Dev will make the trial environment more useful to users
- The Payments team will own simplifying the payments process
The relationship between OKRs and KPIs
Each of the key results is likely to be driven by multiple KPIs that the relevant teams can use to track their progress towards the result they are specifically responsible for. Each team will provide input to these KPIs, and they will be empowered to be agile and creative in how they will contribute to achieving the desired result. This ownership leads to engagement and motivation.
As an example, for the ‘Increase the number of users visiting the site from 1,000 per month to 5,000 per month’ key result, the Marketing team KPIs could be:
- Number of new users reached in marketing campaigns
- Campaign landing page conversion rate
- Number of new users visiting the site
- Number of new users signing up for the trial
You can meet your KPIs but still flunk the OKR
It’s worth pointing out that the Marketing team could meet (or even exceed) their three KPIs but not see that the key result to increase visitor numbers from 1,000 to 5,000 has been achieved.
Being empowered and agile, the team can learn from the result and define a different approach with new KPIs.
Why are OKRs good for driving growth?
Principally because they are driven by the direct impact they will have on your business. And if chosen carefully and meaningfully, you will achieve your business goals with full cross-functional alignment. They also directly engage teams by empowering them to be creative in what goals they set themselves in relation to how they will contribute to the OKR. This has a significant positive impact on quality.
OKRs spread the responsibility of achieving the goal amongst disparate teams. So ‘increasing trial user conversion’ is not just a dev or product or marketing or UX or whatever problem. It’s EVERYONE’S problem, and everyone is part of the solution. How’s that for business-wide buy-in!
They typically start at the business level and then cascade down to the department or cross-functional team level. You could also cascade from the business level down to the product and then the team level. Whichever way you do it, alignment of how everyone’s contribution is measured is fundamental to the success of OKRs. To keep on top of progress, you need to set OKRs at the quarterly level.
Executing your OKRs
As with all goal-setting frameworks, tracking progress is about reviewing progress against the KPIs and key results, plans for the next tranche of the project, and addressing issues and blockers. These steps need to be executed for each of the key results and for the objective itself.
OKRs are simply a framework to manage progress towards well-defined goals in a highly transparent and structured way and that engage everyone in your business.
Do it. Your team will thank you. You will grow (quicker).