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What is OKR? | Objectives and Key Results Guide for 2022
Pandemic situation has had various impacts over our lives and the business. Most of the employees around the world has started working from home. This transformation of the business world have made concepts such as employee motivation and progress tracking much more important. OKR is a framework that helps businesses unite around the company objectives. In this article, we will talk about what OKR is in detail.
A Brief History
Andrew Grove developed and implemented a system called OKR Objectives and Key Results during his CEO tenure at Intel (the overwhelming success of Operation Crush has been attributed to his use of OKRs). In 1975 an Intel employee named John Doerr took a class on OKR taught by Grove. John went on to work for a venture capital firm called Kleiner Perkins, which invested in a startup called Google in 1999. John introduced the idea of OKRs to Google’s founders and they have implemented it throughout the company during its first year. Google grew from 60 employees to 100,000 and still uses OKRs today. John Doerr is published an OKR book which is called "Measure What Matters:How Google, Bono, and the Gates Foundation Rock the World with OKRs" in 2017.
What is an OKR?
The OKR acronym stands for Objectives and Key Results. Objectives can be the broad goals of a company, department or a person. Key results is the success measurement of that objective. Key results should be SMART OKR goals.
The definition of OKR is to set broad objectives for the future and measure those objectives with key metrics (key results). To put it into a perspective, let's go through an OKR example:
Let's assume we want to set an OKR for our sales team for the third quarter of 2020. The objectives can be broad like "Grow sales dramatically". So in order to measure this "dramatic sales increase" we should somehow define what we really mean by that.
One of the things that we may call this dramatic sales increase might be "to increase product sales by 100 % for this quarter". Another factor to define this dramatic sales increase might be "to increase consultancy revenue by 150 % for this quarter". So here we have defined our two so-called key results. So the success of our Objective is determined by our 2 key metrics (key results). As you can see, objectives can be broad, intangible goals. But key results should be specific, measurable, actionable, reachable and time bound (SMART).
As an another definition for OKR, we can say that it a goal-setting tool used by teams, individuals or companies ranging from small startups to large companies to set challenging, ambitious goals with measurable results. Some of those companies which use OKRs are Google, Intel, Amazon. The aim of OKR methodology is to connect company, team and personal goals to measurable results while having all team members and leaders work together in one, unified direction.
Andrew Grove, who had worked with the Intel had carried out the development process that the OKRs have undergone to become the present. Also, people also know him as the father of OKR methodology. John Doerr expressed the main idea of Andrew Grove for OKR as in the following words.
"The key results have to be measurable. But at the end you can look, and without any arguments: Did I do that or did I not do it? Yes or No? Simple. No judgements in it."
The Components of OKRs
As we can see from the name, OKR has two components, Objectives, Key Results and initiatives:
Objective
An objective is a description of a goal to be achieved in the future. It is a step to reach something particular which is taken by an individual or a company. By setting an objective, your organization and team will have one, unified direction. In other words, objectives are milestones that help us to reach our goals.
Objectives are generally broad, meaning that they can be things like "to achieve an outstanding customer satisfaction" or "decreasing the churn rate substantially". One of good benefits of objectives is that it is easy to remember them. So when you have objectives like "improving my communication skills" or "learning a new computer programming language", they are really easy to remember and to focus on.
Let's say you have a make-up franchise and you have over 100 stores across the country. Your objectives can be;
- Increase the number of stores by 20%
- Increase profit by 10%
Key Results
A Key Result is a metric with a starting value and a target value that measures progress towards an objective. Therefore, they make it easier for employees and their leads to monitor progress. The key component here is measurable success. Since the general statements about progress and development are subjective, they are not sufficiently successful in describing the situation of achieving the goal. Unmeasurable Key Results prevent the capacity to be used sufficiently meaning that Key Results have a different meaning for everyone. Key Results must be specific. Organizations that have successfully used OKRs see that they use specific language that is common to all their employees when drafting their objectives and key results. Key results should be specific, measurable, actionable, reachable and time bound, aka SMART.
In today's world, companies such as Linkedin, Twitter, Oracle are using OKRs. Not only it helps to set goals, adapt at the enterprise but also, OKR lets companies to track progress and set goals across the company. In other words, OKR actually provide strategies and targets for organizations and teams in a certain time. As a result, OKR provide a reference to see how well done that they have been in achieving the goals.
If we continue to our example above, your key results can be;
- Select 40 new potential franchisees by March
- Train 30 until June
- Sign the contract with 25 of them until September
- Open 20 stores until December
Initiatives
The OKR initiative comes from the team assembled to achieve the goal.
The team is autonomous, that is to say, it must find, prioritize and implement the initiatives that will have the best chance of success to achieve the defined goal. Failure is acceptable as long as it allows people to bounce back and identify new, successful initiatives.
While you are writing your initiatives, you can ask yourself following questions;
- What do we have to do to show progress in order to realize key results?
- Where should we start?
OKR Meaning /OKR Definition
If we define OKR; it's the acronym for "Objectives and Key Results". It is a management system for defining objectives, breaking them down at all levels and associating key results. These contribute to the success of the objective.
OKRs helps organizations define strategic priorities and structure and prioritize execution into a suite of Objectives and Key Results. OKR is about setting a goal and how to achieve it. It is a tool for structuring, communication and monitoring progress towards the chosen objective.
In brief, it is about defining a major objective and then developing a strategy to achieve it. This strategy will then be broken down into several small tasks, each associated with objectives whose results must be measurable. Each small task performed is a key step which, linked to all the others, achieves the final objective and thus fulfills the company's mission.
OKR's Increased Popularity with Google
It was John Doerr who originally introduced OKRs in Google in 1999 and they have used the methodology so far.In Google, the quarterly objectives are set as high as possible to make people really push for the success. At the same time, each goal have easily measurable key results on a scale from zero to 1.
The first important point about OKR is, if you can achieve %100 of all your OKRs each quarter, you are not aiming high enough. The OKRs must be structured. In Google, each individual and team has it’s own objectives that contribute to a higher level objectives. That helps to make sure that everyone is working for one, unified direction. Google's OKR implementation was a huge success and this motivated the other startups especially in Silicon Valley to start implementing OKR methodology for their companies.
What Are OKRs In Business?
OKR meaning in business is, for an entrepreneur, his time and that of his employees is the most precious resource. The way you decide to use your time is one of the main levers for creating value for a business. It is therefore essential to distribute your time well and focus on the elements that constitute real added value.
The entrepreneur is often preoccupied almost exclusively in operational activities and is not able to take time to think about the prioritization of the strategic and tactical issues allowing to evolve towards the vision of the company.
Fortunately, there is a management methodology whose objective is specifically to avoid this problem: the OKR method. This business management method is largely inspired by the MBO (Management By Objectives) method born in the 1950s from the famous management professor Peter Drucker. Needless to say, the method is now widely used.
The OKRs are to be defined by levels;
- Corporate OKR: This is the vision and / or the "raison d'être" of the company
- Team OKRs: A team's priorities, not a compilation of individual OKRs
- Individual OKR: missions that employees need to focus on
OKRs allow you to align everyone with business goals
OKRs provide a framework that helps set, communicate, and control an organization's goals so that all employees are working in the same direction, toward a common goal.
To ensure that the entire company is working towards a universal goal or set of goals, okr goal setting must be done with the utmost precision.
Benefits of OKR
The OKR approach provides a clear and simple framework for setting goals. When an OKR is prepared, it becomes visible with a line by embodying a target. At the end of the day, the company and its employees can measure their own success, depending on where they stay. Let's take a look at benefits of using OKRs in your company.
Focus
You can determine objectives on the basis of employees, departments and companies. And everyone should be keep objectives in focus. Thus, everyone knows what to do in the specified time interval and regulates their work accordingly.
Agility
Shorter goal cycles allow faster adjustments and better adaptation to change, increasing innovation and reducing risks and waste.
Alignment
The use of shared OKRs improves collaboration among different teams, solving interdependencies and unifying competing initiatives.
Clear Communication
The team will never misunderstand the expectation of the company with a clear and simple goal priority dashboard to as well as how they can contribute.
Engagement and Efficiency
People achieve outstanding results when they engage in the process with a purpose.
Monitoring
Since OKR system is a flexible methodology, the progress achieved is often monitored on a weekly basis.
Transparency
Transparency is one of the most beneficial features of OKRs, providing dialogue and clarifying the objectives of the organization. The target in each level determined takes its place in the real-time dashboard, and thus, can be used for employees at all levels.
OKR Methodology
OKR is a framework for defining and tracking business objectives and their outcomes. Objectives are the destination that organizations want to achieve and key results are metrics with a starting value and a target value that measures progress towards an objective. Key results should describe how you will accomplish the objective and measure whether you are on track, behind, or at risk of not accomplishing an objective.
Before setting your OKRs, company vision, mission and values must be revised. Generally, OKRs must be set quarterly. For the right engagement of employees, weekly check-ins will be a good OKR practice. OKRs mut not be used for employee performance but rather than can be used to motivate them to achieve stretched goals. Generally, firstly company OKRs are set. After that, OKRs can be shared with the other members of the organization. Departments can determine their own OKRs. These OKRs can be strictly aligned with company OKRs or may indirectly support company OKRs.
OKR Alignment
Before you come up with those great OKRs of yours, you should really know the structure of the OKR alignment you want to create. OKRs can be set at 4 levels. These are Company, Department, Team and Individual. At the beginning, you can keep things simple by focusing on just the company and teams level. After that, you can introduce Individual OKRs when everyone is comfortable with the OKR methodology and sort of know what they are doing.
Aligning, Cascading, Linking
The purpose of OKR alignment is to unify the goals of your company.
However, you probably have heard lots of terms serve the same purpose. These are linking and cascading. What’s the difference between linking and cascading?
Cascading only focuses on a top-down approach. Namely, it is a kind of traditional way of management. Linking connects to alignment but is the actual process of directly connection Objectives at different levels.
Linking may be useful for OKR alignment process but is not necessary to have alignment.
OKR Planning
OKRs are a popular methodology used for planning and monitoring execution. This involves setting Objectives along with defining Key Results.
In overall OKR framework, it has 6 parts as follows:
- Mission Statement
- Company Values
- Long-Term Company OKRs
- Short-Term Company OKRs
- Short Term Department OKRs
- Short Term Individual OKRs
Mission Statement
It is a simple statement which outlines the company’s mission to the world. By defining mission statement of your organization, it should make it clear for everyone what the organization wants to achieve. Once articulated it is how employees, customers and partners can know if they are aligning themselves with an organization which is trying to do something they care about.
Here are some examples:
Linkedin: To connect the world’s professionals to make them more productive and succesful.
Facebook: To give people the power to share and make the world more open and connected to each other.
Amazon: To be Earth’s most customer-centric company where customers can find and discover anything they want to buy online.
Once you have decided for a clear mission, everyone can contribute for focusing the organization’s efforts on doing things which will help you to achieve your mission.
Company Values
Company values are the description of the things we value. This outlines our approach to building our company and product.
Long Term ( 3-4 Year) Company OKRs
After defining the organization’s mission and values, it is time to establish what we are trying to do by defining what long term success looks like. If we have a clear idea of where we want to be in 3-4 years, it is much easier to define what success looks like. Here is a set of steps to establish your long-term OKRs:
Narrative: Define a vision of what the company will look like in 3-5 years.
Objectives: Set 3 or 4 Objectives. For example, they can be qualitative descriptions of things the company will be trying to achieve over the medium to long term. Make sure these are consistent with your mission statement and company values.
Key Results: Set your (up to 5) quantitative Key Results for each objective. These Key Results must be SMART. These are the metrics that the company will use to define what success looks like for each objective and therefore how performance can be measured.
Short Term (e.g.1 Year) Company OKRs
After you have decided for long term objectives, you can decide what you need to achieve in the short term in order to be on track to achieve your longer term goals.
Narrative: A vision of what the company will look like in 1 years time after a successful year of execution.
Objectives: Qualitative descriptions of the 3 or 4 things the organization will be trying to achieve over the short term.
Key Results: Set your (up to 5) quantitative Key Results for each objective. These Key Results must be SMART. These are the metrics that the company will use to define what success looks like for each objective and therefore how performance can be measured.
Short Term (Half year, or quarterly) Department OKRs
Each department of the company should set its own short-term OKRs. These department OKRs should map to company’s OKRs. This is how the department can structure its planning while ensuring it is making a meaningful contribution to the success of the overall business.
Objectives: Qualitative description of the 3 or 4 things the department will be trying to achieve over the short term.
Key Results: The quantitative metrics for each objective by which the department will define what success looks like for each objective and therefore how performance of the team can be measured. These Key Results must be SMART.
Short-Term Individual OKRs
At the last point of OKR approach, each employee in a department can set its own OKRs. These individual OKRs should map to department and company’s OKRs. This is the way to keep everyone aligned in one, unified direction.
Objectives: Qualitative description of the 3 or 4 things the individual will be trying to achieve over the short term.
Key Results: Set your (up to 5) quantitative Key Results for each objective. These Key Results must be SMART. These are the metrics that the company will use to define what success looks like for each objective and therefore how performance can be measured.
After defining the OKRs for company, department and individuals, the most important point is to track the progress of your OKRs. To do that, you should check-in your OKRs progress weekly and evaluation meetings should be held in 3-month slices.
How to Set OKRS
Set ambitious goals
The first step in applying the OKR method is to set ambitious goals, that is, goals that challenge us and push us to surpass ourselves.
Achieving 100% of our goals when we apply the OKR method is not a sign of success, rather it shows that we have been too conservative. The philosophy of OKRs is to say that it is better to achieve 60% ambitious goals, rather than 100% realistic goals.
Add between 3 and 5 key results per objective
Each goal you set should have between 3 and 5 key results at most. In other words, we must work on 3 to 5 major strategic axes to achieve a given objective.
Here is an example :
Objective: To increase our sales by 45% within the next 6 months.
Key result: Launch marketing acquisition campaigns
- Create campaigns on Google Ads
- Define the keywords (according to chosen target)
- Create 4 landing pages
- Optimize campaigns every 3 days
Stay flexible
When applying the OKR method, you shouldn't hesitate to remain flexible. We must be able to change our objectives and key results along the way if necessary. If we notice that our approach is not working, that the circumstances have changed or that our goals are too realistic, we have right to change them at any time.
Measure OKRs every 1 to 3 months
To get the most benefit from OKRs, we should review our progress every 1 to 3 months. We must look at the objectives and key results achieved and adjust if necessary.
Definition of team and individual's key results
To get the most out of this methodology, your business goals should be communicated across the organization, and guide the activities of smaller teams and employees.
Improvement of your processes
Rather than immediately moving on to the next cycle, what if your team took the time to assess its results? Everyone should take the initiative to assess the key results for which they are responsible and write a short explanatory note.
In short, to set up the OKR method, several steps must be carried out:
- Define the vision of the company
- Define a strategy to achieve the vision
- Set ambitious, non-quantified goals
- Set key quantified and measurable results
- Set up work teams that can take initiatives
- Measure the achievement
How many OKRs should I set?
There are no exact rule of how many OKR you should set. The important thing is; try not to greater than 10. Keep that in mind that you have to set a number of OKRs that can be possible to achieve over a given time. Amount of goals and key results can be change team to team.
How to Write Good OKRs
In order to write good OKRS, you have to follow the list below;
- Directional beings: They must show the goal to be achieved without specifying the means of achieving it.
- Be clear: If the objectives are difficult to understand, the team will have hard time to move forward. It's essential that the objectives are clear to everyone.
- Temporal beings: To stimulate the whole team, you have to set a deadline.
- Be ambitious and inspiring: In a company, some employees are more comfortable with numbers while others are motivated by a goal that inspires. By defining OKR objectives, each individual finds his account.
OKR Examples
An OKR best practice is to start with top corporate objectives which are then cascaded to department or team OKRs. The resulting department, team, and individual OKRs must be aligned with, in support of, and contribute to the top company priorities.
In an OKR implementation, the objective is qualitative and answers the question of what is to be accomplished. Objectives are supported by key results which monitors whether we achieve the objective or not. Key results should be SMART.
Here are some objectives and key results examples;
Objective:
Research and improve customer satisfaction
Key Results:
- Get 1000 survey responses to annual satisfaction survey
- Conduct 50 phone interviews with top customers
- Conduct 15 phone interviews with recently churned customers
- Present an action plan of 10 improvements for next quarter.
Objective:
Build a great corporate culture (delight our employees)
Key Results:
- Launch an ongoing 2-way closed-loop feedback process
- Achieve a weekly Employee Satisfaction / Pulse Score of 8+
- Celebrate “small wins” and any type of progress every single week
- CEO and SVPs to launch a monthly a questions&answers meeting
Objective:
Launch the New Software Product
Key Results:
- Give 20 prospective buyers 1 month free use
- Use e-mail marketing during pre-pre-launch to get highest click-minimum 35% higher than before
- Finalize feature briefs and sales enablement of the new product and add them to social platforms and website before pre-launch
- The third key result is not based on quantity. To change it to a good key result:
- Finalize at least 70% of feature briefs and sales enablement of the new product and add them to social platforms and website before pre-launch.
Goal Setting Work Examples
Here is some professional goals that it is possible to pursue during a career:
If you are a recent graduate, your professional goal can be learning your skills in the chosen profession and using your fresh academic learning to benefit a business. If you are a management controller, you can write "Objective: to occupy a management controller position in the banking sector in order to support the company in the management and monitoring of performance. "
If you are already there, your professional goal is to climb the hierarchical ladder in your profession. For example, if you are a salesperson, it might be to become a sales manager or director. But it can also mean learning new skills.
If you want to change companies, your professional goal may be to be entrusted with managerial functions.
OKR Template
If you have a business that aims to improve itself, it's better to set objectives and a few key results to reach higher points. Aiming high will make employees discover their real potential. This means the business itself can go further. To organize goals and objectives that have been set and track their progress, OKR templates are used commonly.
What is an OKR Template?
An OKR template is a spreadsheet that helps to visualize your company’s target and summarizes its achievements by percentage.
Why You Should Use an OKR Template?
Professionals have been using several methods to set goals and manage their process. For instance, you can use a paper and a pen to write down your objectives and key results and this method may sound like the easiest. But, what if you have a large number of employees and your employees also have a lot of objectives?
Then, you may think to use an excel worksheet in order to shorten time that will be spent for arranging OKR model for the OKR process. OKR template can also be used as a dashboard for keeping track of each of your team member’s OKRs. Therefore, you can still use paper and printer to print company’s OKR, post them to walls to make the walls speak and encourage to achieve key results.
In conclusion, you should use OKR sample for:
- Keep track for your department’s objective in one place,
- Monitor the progress of each key result for each team member,
- View actual progress at a glance,
- See the total average progress versus desired progress in one single spreadsheet
Objective Key Results Template
OKR Software
Objectives and Key Results, OKRs, is a management methodology used by large companies ranging from Google, Intel to the small startups. It helps you to macromanage your organization rather than micromanage, ensuring organization-wide awareness of your vision and mission.
OKR Software improves overall productivity and employee loyalty. This helps build a culture of transparency and shared achievement helping everyone follow and support the contributions of others in the quest for the organization’s success. Considering all of these together, OKR, which is a popular approach in target management, creates a common framework for employees, departments and the company to realize their strategies to companies.
Key Objective Management (OKR) software helps businesses align and monitor their employees' energy to achieve the main business goals. These tools offer aspects such as dashboards to visualize organizational, team and individual goals; graphs and tables to track the improvement of key results and team communication functions to conduct employee reviews and peer feedback term.
In short, OKR softwares help you manage your goals and objectives better.
With OKR Tool you can;
- Determine your vision and mission
- Set your Company Objectives and Key Results
- Let your departments and individuals set their own OKRs
- OKR Tracking, Evaluate and Set new OKRs every month/quarter/year.
What Is The Best OKR Software?
Looking to integrate OKR management software into your team's project management?
OKR software enables teams to track, communicate and measure business goals. Managers looking to track their goals can easily create and monitor goals for individuals and teams in real time.
You can use Corvisio OKR Software for your teams or your company or startup. Corvisio is a goal management software dedicated to enhancing performance of companies as a whole. Additionally, strategic goal setting, job delegation and tracking the company performance are just some of the highlights of our software.
OKR vs KPI
What does OKR stand for?
OKR stands for Objectives and Key Results. Namely, an objective tells you where to go, and a Key Result will let you know whether you are there or not. An OKR consists of an Objective and up to 5 Key Results.
With OKRs, which can be determined weekly, monthly, or yearly, you can set and monitor your goals and observe the road covered on the way to the destination.
The main purpose of OKR is to achieve measurable results by aligning individual and team objectives with the goals of the company or organization.
What is KPI ?
KPI stands for Key Performance Indicator. It is an indicator of the efforts made for the specified purpose. It guides you in setting goals and what you can do to achieve them. Moreover, KPIs provide control over the road to the goal.
There are two types of KPIs: high-level KPIs and low-level KPIs. While low-level KPIs are related to the departments within the company, high-level KPIs focus on the company’s total performance.
What is the difference between an OKR vs KPI?
Although having common objectives, the two indicators are completely different. KPI objectives are generally used for an action that has already been initiated. The OKR method, on the other hand, must be more daring and must encourage the team to surpass themselves.
KPI goals represent the results of the efforts mad efor the projects currently underway. On the other hand, OKRs should be neither too easy nor unreachable. In other words, they are not easy to achieve, but when the goals are reached, they are the factors that trigger growth by increasing the team and company motivation.
OKR strategy has greater depth than KPI and provides a better framework for taking on new projects, ventures, even new directions for your business.
An OKR vs KPI comparison is as different as chalk and cheese even though they both contain keys, but one is a combination that contains the other. Because of their complementary scope, OKRs KPIs are natural companions.
To illustrate the differences between KPI and OKR, you can think of KPIs as experiences on the road to success. Suppose you have set up a new start-up. You will have to go and try many ways until you reach your desired growth, and of course these roads can lead to success or failure. However, failures are actually the tools that form the basis of success. But of course, they do not bring it directly. In other words, the ultimate growth is achieved with OKRs based on the experiences stored in KPIs.
Hence, as a result, while KPIs are used to monitor the process, OKRs solve problems by providing accurate solutions.
KPIs are therefore more direct and are ideal for projects that are in progress. They are easier to achieve goals. OKRs, on the other hand, aim for a more inspiring goal with a broader vision. They connect your ambition to reality, allowing you to stand out.
Rather, KPIs are used to gauge the quality and success of an ongoing process or campaign. Afterwards, the KPIs that need to be corrected can form a basis for creating an OKR.
FAQ
1) What are Objectives and Key Results (OKR) ?
OKR is a simple process of setting company, department, team, and individual objectives and connecting each objective with 3-5 measurable key results.
2) What are the key benefits of OKR?
The main benefits of OKR are:
- Discipline, Focus, and Prioritization
- Clear communication and alignment within your team or company
- Measuring your success
3) How to Set OKRs?
- Set objectives for the next quarter or year.
- Set measurable and SMART key results.
- Check-in your OKR progress weekly.
- Measure results.
- Give feedback
4) What to avoid when starting out with setting OKRs?
- Listing too many objectives
- Not keeping metrics out of objectives.
- Not including your whole team in the OKR process.
5) What companies already use OKRs?
6) When should I start using OKRs?
After implementing the OKR framework, it is good to use quarterly. It can also be used yearly or monthly if it is necessary.
7) If I use KPIs, can I still use OKRs? How are key results different from KPIs?
If you work with KPIs and want to transfer to OKRs for you it will be times easier that to a company that hasn’t ever worked with KPIs. That’s because KPIs have something in common with KRs. You will just need to adapt your KPIs for OKRs format.
If you have more questions about OKRs, you can check our other frequently asked questions about OKRs article.