The Startup Guide To Building Successful OKRs (Examples Included)
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- What does OKR stand for?
- Where does the OKR framework come from?
- Why are OKRs so effective for startups?
- Common OKR Challenges
- Common OKR Mistakes
- When should you start building OKRs?
- OKR Examples
- How to Track OKRs
- OKR Templates
What does OKR stand for?
In order to move forward at a startup, leaders need to be able to measure and improve upon all aspects of the business. Staying focused on near-term goals while working towards a larger company vision is a surefire way to keep everyone aligned. To help with this, more teams are turning to OKRs (objectives and key results).
According to Christina Wodtke, “OKRs comprise an objective—a clearly defined goal—and 3–5 key results—specific measures used to track the achievement of that goal.” Each objective is supported by initiatives — the steps that will help a team achieve the key results. OKRs are made up of 2 major components:
An objective is a clearly defined goal that you would like to achieve by the end of a period. An objective should tie to both the team’s overarching mission or goal as well as the individual’s personal goals.
Key results are the actionable and quantifiable steps you can take to accomplish an objective. Each key result should be measurable and applicable to the objective.
Where does the OKR framework come from?
OKRs are generally believed to be introduced by Peter Drucker, the father of modern management, in the 1950s. Since then they’ve been tweaked, renamed, and made popular by other business leaders. Andrew Grove is regarded as the “Father of OKRs” for introducing OKRs during his time at Intel.
However, OKRs took the startup world by storm when introduced at Google. John Doerr of Kleiner Perkins (VC firm that invested in Google) took the idea to Larry Page and the Google team and the rest is history. As Larry Page put it, “OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
Why are OKRs so effective for startups?
While you may be thinking to yourself, “OKRs are just another acronym,” they have a proven track record and can genuinely help move your business forward.
Larry Page credits OKRs for fueling growth at Google. As Peter Drucker put it, “If you can’t measure it, you can’t improve it.” By having a system in place, like OKRs, to measure and track your efforts, you will greatly improve your odds of improving all aspects of your business.
When implemented correctly, OKRs can be more than a goal-setting framework for a startup. They have the ability to be a communication tool that can help both individuals and the company move forward. As put on “The Fundamentals” blog,
“As a communication tool, OKRs bring two key things to an organization:
- Easily digestible direction such that every member in the organization understands how they contribute to the mission; aka focus
- Expectations amongst teams and their individual members; aka accountability”
Objectives and key results can bring an increased focus to both individual and company-wide goals and missions. For example, if management and leaders have a clear set of OKRs for the organization and individuals across the company set their own OKRs (that tie to the high-level OKRs) everyone will be working towards the same big goal.
Having each individual be able to articulate why their objectives will help towards the greater company mission is a great way to make sure that everyone is focused across the company.
Common OKR Challenges
Implementing a new goal tracking (and communication) framework is naturally a challenge for any startup. Luckily, OKRs have been implemented by large corporations and small startups so the challenges are predictable and well documented.
Lack of Cooperation
Naturally implementing a new goal-setting framework will come with some pushback as daily workflows change. The team at FirstRound Review offered a deep dive into how Swipely uses OKRs. Their CEO, Angus Davis, is a major proponent of using OKRs. As they put it, “Davis checks in on his immediate reports every week, and encourages his leadership to do the same. They believe people should be held publicly accountable for failing to regularly update their OKRs, and Davis even shapes his management meetings around them.”
Having leadership that believes in OKRs is vital to success, which brings us to our next point…
Having the leadership in place to set and monitor OKRs is vital. If management and leadership are passively tracking their objectives chances are the rest of the team will follow suit. Leadership can help cement the importance of OKRs by fitting them into daily workflow and conversation or using them as the talking points of team meetings.
At the end of the day, alignment is a major benefit of OKRs. Being able to document and articulate how individual OKRs are aligned with company OKRs is important to implementation and success. In part of having the right leadership in place, they need to be able to set the values and mission of the company so individuals can easily explain (and see) how their objectives are helping the company move forward as a whole.
Common OKR Mistakes
Building OKRs in a Silo
One of the main benefits of OKRs is to eliminate silos in the workplace. In theory, everyone should be tied to the company’s values and missions. However, implementing OKRs incorrectly can still lead to workplace silos. If leaders and managers are only using their input and analysis to build OKRs, individuals will likely suffer and feel isolated. When building OKRs, make sure to incorporate input from everyone in the organization and allow them to set and tweak their own objectives.
Key Results are Too Aggressive
There is a fine line between making a key result too aggressive and a reasonable stretch goal. As Angus Davis, CEO of Swipely puts it, ““They have to be a stretch.” Most people wouldn’t consider 70% to be a good grade, but for OKRs that’s just about perfect, Davis says. You want your objectives to be ambitious enough to push you beyond your limits. When everyone does this, it forces the tough conversations about what’s truly needed to beat expectations.”
However, you do want to make sure that 70% or more is achievable. If individuals are constantly hovering around 50% or less of their key results, it might be time to re-evaluate and set new key results.
Tracking and measuring are vital for implementing OKRs. If you do not have a system in place to track, measure, and improve your existing OKRs, they will not work. On top of having a system in place, you also need to have a source of truth for where the actual data is coming from. For example, if a key result is measuring new leads, you’ll want to make sure it is coming from the correct source. We share best practices below for tracking your OKRs.
When should you start building OKRs?
Different companies operate their OKR setting and reporting differently. Generally, most companies use a quarterly basis but there are certainly examples of monthly or annual OKR cadences as well.
Ultimately it depends on the needs of your business. If it is fast changing and you are rapidly tweaking and changing things, a monthly or quarterly cadence might work best. If things are solidified and you absolutely know what you need to focus on, a longer cadence might work best.
As we’ve mentioned, OKRs are widely used so we have plenty of examples to pull on. The most famous one being Google.
Google didn’t invent OKRs but they have become synonymous with the goal-setting framework. The team at Google runs OKRs like a well-oiled machine. Rick Klau, previously of Google, breaks down how they used OKRs below:
“Though the video goes into more detail, here are a few keys to what makes OKRs work at Google:
- Objectives are ambitious and should feel somewhat uncomfortable
- Key Results are measurable; they should be easy to grade with a number (at Google we use a 0–1.0 scale to grade each key result at the end of a quarter)
- OKRs are public; everyone in the company should be able to see what everyone else is working on (and how they did in the past)
- The “sweet spot” for an OKR grade is .6 — .7; if someone consistently gets 1.0, their OKRs aren’t ambitious enough. Low grades shouldn’t be punished; see them as data to help refine the next quarter’s OKRs.”
In 2013, Swipely was rapidly scaling and their CEO, Angus Davis, had a feeling their culture and alignment was beginning to suffer. Davis turned to OKRs to improve their productivity, culture, and alignment as they went from 30 to 80 employees.
Since then, OKRs have become an integral part of communication and culture at Swipely. In an article with First Round Review, Angus Davis shares the example below
“Paul, a member of Swipely’s engineering team
Objective: Ship [X] feature to increase engagement.
Description: Our [X] will allow merchants to access Swipely anywhere, increasing engagement, value, and differentiation which will reduce churn and differentiate our offering with an exciting new value proposition.
Alignment: A company-wide objective is to “Become a ‘must-have’ tool merchants love to use,” which has a key result, “Ship [X] product to increase engagement and drive excitement in the sale.” The individual objective to ship [X] is aligned with this company-wide objective.:
- Deliver alpha version to targeted devices for alpha testing feedback from 10 early customers by [date: mm/dd/yyyy].
- Provide screenshots/screencast to support marketing launch of the app by [date: mm/dd/yyyy].
- Release beta version by [date: mm/dd/yyyy].
- Achieve engagement DAU / MAU metric of [X] with beta audience.”\
We love how the team at Swipely encourages individuals to write out their own objective alignment to those of the entire organization.
How to Track OKRs
Being able to measure and track your OKRs is vital to success. Without a system in place to track OKRs, you will never know how to improve.
Track in the Open
OKRs have the opportunity to be a communication system (on top of a goal-setting system). When tracked in the open, it will ensure that everyone in the organization is rallied around their common goals and objectives. It can be an easy way to demonstrate how everyone is impacting the business as a whole.
As the team at Lumeer put it, “Share them with your employees and co-workers so that they can actively participate in achieving them. Make sure that everybody can see the current status and track the OKR.” Check out our Google Sheet & Update Template to share your OKR progress below:
When tracking in the open, make sure to be mindful of the individuals. As OKRs are generally stretch goals, some individuals and teams may miss the mark as they should not be punished. Use this chance as an opportunity to improve goal setting in the future.
As we mentioned earlier, the likelihood of successfully implementing OKRs is improved when leaders and managers actively engage with teams about their OKRs.
If you miss a weekly goal it becomes difficult to achieve your monthly goal which makes it challenging to make up for your quarterly goal. We encourage leaders to check in with their direct reports on a weekly basis to review OKRs. Ideally, this will trickle down throughout the organization.
As we mentioned earlier, OKRs are generally stretch goals. If you miss by a wide margin it is important to reevaluate at the end of the period and see (a) where you missed the mark and (b) how you can improve goal setting for the next period.
We’ve built a free Google Sheet template to help track your objectives and key results here.
Follow the instructions in the first tab of the sheet to start your OKR journey. From here, easily connect the sheet to Visible to automatically chart your key result progress. Check out an example of a Visible Update used to share OKRs here!