Goals are a critical part of running a successful business. Achieving them requires careful planning and management, a focused approach, and consistent team collaboration. That’s where OKRs come in extremely handy. Being introduced in 1975 by Andy Groove, OKRs have become one of the most widespread goal management methodologies implemented by giants like Google, Twitter, Netflix, and Dropbox.

What are OKRs and What are the Benefits?

OKRs (Objectives and Key Results) is a simple yet highly efficient goal-setting and management framework designed to help organizations, teams, and individuals set goals with measurable results. Key benefits of using OKRs include:

• Better focus on a company’s strategic objectives
• Increased transparency of the goal setting and management process
• Easier alignment of team and individual goals with the company’s goals
• Enhanced employee engagement
• Greater teamwork and collaboration across the organization
• Improved employee efficiency and productivity

OKRs are often compared to KPIs (Key Performance Indicators). Though both are similar in many ways, there are some significant differences between OKRs and KPIs. OKRs help you set the desired outcomes and identify ways to achieve your goals. KPIs are basically what you use to track the performance of your daily/ weekly/ monthly activities against your goals.

OKR consists of an Objective that sets your desired direction. It is then followed by a series of Key Results that must be achieved to fulfill your Objective, and Initiatives that you need to implement to reach your Key Results:

• Objectives (What is my destination?)
• Key Results (How will I know I am reaching my destination?)
• Initiatives (What do I need to do to reach my destination?)

How to write an effective OKR comes down to using the following formula:

OKR = (Objective) + 3x (Key Results)

Key Characteristics of Effective OKRs

To ensure your OKRs are efficient, drive your business growth, and increase the productivity of your team, pay attention to a few key characteristics when writing OKRs:

• Clear and transparent: OKRs should be very clear and simply stated, concise, straightforward, easily understandable, and transparent to everyone across the entire organization.

• Challenging and inspiring: Objectives should be challenging, ambitious, and inspire your team to think bigger and beyond what seems possible. (‘Deliver an outstanding customer experience’)

• Measurable and verifiable: Key Results should be easily measurable, otherwise it will be hard to track the progress towards the Objective and verify your success. (‘Reduce customer churn from X to Y’)

• Time-bound: While objectives aren’t necessarily time-bound and can roll-over quarter to quarter, key results should have deadlines to ensure the team stays on top of necessary tasks.

How to Write Good OKRs in 7 Simple Steps

Here are some of the basic OKR writing tips and best practices to help you write efficient OKRs in 7 steps:

1. Define your company goals

Before you start writing OKRs, ensure you have a clear understanding of what success looks like for your business and what you want to achieve in the long run. Once you have clarity of your vision and priorities, you can start breaking down your company’s high-level strategic business goals into actionable OKRs. Remember that OKRs shouldn’t be created in isolation. To be efficient, both team OKRs and individual OKRs should be aligned with the company’s strategy and contribute to driving your business success.

2. Identify your Objectives

Most companies typically set OKRs quarterly, so your Objectives should describe your highest priorities for the next 90 days. For smaller teams, it’s recommended to set no more than 3 Objectives. For larger teams, you can stretch up to 5 Objectives. They should be bold, significant, and represent a meaningful change yet realistic and attainable within the timeframe you’ve set them for. There are 3 types of Objectives you can think of:

1. Create: if you are aiming to build something new (‘Create an exceptional user onboarding experience’)
2. Improve: if you want to enhance something that already exists (‘Improve user retention with a smooth onboarding process’)
3. Innovate: if you want to make dramatic changes to something that already exists (‘Reinvent the user onboarding process to make it super effective’)

When it comes to crafting your Objectives, make sure they are short (preferably 7-10 words) and easy to remember so everyone on your team can easily keep them on top of mind. Try to avoid any jargon and buzzwords that could be confusing. Don’t include numbers, percentages, and KPIs. These metrics should be stated in Key Results while Objectives only set the direction you are heading to.

You can also make them sound more inspiring by adding adjectives like best in class, successful, strongest, amazing, etc. (‘Deliver first-class self-service experience to customers’, ‘Make our company one of the best places to work’, ‘Build a high performance sales team’).

3. Set Key Results for each Objective

Once your Objective is clear, you need to set 3 to 5 Key Results that will help you measure your progress towards the Objective. Key Results should be relevant to your Objective and aligned with each other. On top of that, Key Results must be measurable and progress-based. The most common formula for the Key Result looks like this: Verb + What you are going to measure from X to Y (‘Increase gross profit margin from X to Y’, ‘Cut down on operational costs from X to Y’, ‘Increase NPS score from X to Y’).

Key Results should be outcome-focused. In fact, many companies are facing the ‘Outputs vs Outcomes’ challenge when setting Key Results. They simply set a list of action-specific outputs instead of measurable and verifiable outcomes. The key difference is that an output is what you do, while an outcome is a result of what is done. Key Results should describe the outcomes so you can track the progress and success.

4. Plan your Initiatives

The next step in creating OKRs is outlining your Initiatives. These are all the tasks, activities, and outputs that you will need to work on to achieve your Key Results and put your OKRs into action. Initiatives should always be very specific and within your control. They should contain action verbs like launch, establish, create, write, build, release, etc. (‘Publish 2 guest posts with a link to our product page’, ‘Compose a video tutorial on the X feature for the Help Center’, ‘Pick the final 2 candidates for a new Sales Manager position’).

5. Involve your team in the process

When drafting OKRs, get your team members involved in the process to ensure everyone has a shared sense of ownership and responsibility. By conducting brainstorming sessions with your team, you can also gain valuable input into what Key Results and Initiatives would be the most efficient, realistic, inspiring, and can best help you achieve your Objectives.

6. Choose the right tools

Decide on the best way to manage your OKRs. You can use free OKR tools like Google Docs and Google Sheets which are a good way to start in case you are a startup or a small business with a few team members, or if you’d like to implement OKRs within one business unit. For larger businesses with teams of over 10 people, consider using OKR software tools. With OKR management software you can digitalize the process of setting goals, easily align them, manage, and monitor progress.

7. Consistently track and review

OKRs serve as an effective goal-setting and management framework only when you track and review them constantly and consistently. Many business leaders fail at doing it and leave things on autopilot instead. Make sure your OKRs are regularly reviewed so your team knows how they are progressing and what needs to be adjusted to improve the process and obtain better outcomes. That could be reviewing individual and team OKRs weekly, and organizational goals at the end of each quarter.

Common Mistakes When Writing OKRs

When talking about how to write great OKRs, it’s important to mention some of the most critical mistakes that should be avoided:

• Considering OKRs ‘business-as-usual’ goals: OKRs should aim for a significant change and have a growth-oriented nature instead of just being your day-to-day business goals.

• Setting unachievable Objectives: Though OKRs should be ambitious and challenging, Objectives must be realistic and attainable, otherwise they might demotivate your team.

• Cascading OKRs from top to bottom: In a cascading model, the Key Results flow down the chart to become the new Objectives of the level below – it proved to be less efficient.

• Key Results aren’t quantifiable: If Key Results are not quantifiable, you won’t be able to measure the progress and see whether you are moving towards your Objective.

Examples of Effective OKRs

The Bottomline

Writing effective OKRs requires having a clear understanding of your major business goals and priorities that you further break down into smaller, actionable Objectives that will drive your efforts. Objectives are supported by Key Results that you will use to measure the progress towards each Objective. Key Results are then backed up by Initiatives which are specific actions you need to perform to achieve your Key Results. When composing your OKRs make sure the Objectives are meaningful, challenging, and inspiring while Key Results are relevant, time-bound, outcome-based, and easily measurable. With an OKR and performance management platform such as Effortbox, you can set, align, and track all your OKRs in one place.