Objectives and Key Results (OKRs) Explained

What do Amazon, Google, and Intel all have in common? Though phrases like “market dominance” or “daring leadership” may come to mind, the answer is actually goal setting. That’s right, despite their differences, each of these industry titans uses the OKR goaling method to fast track growth in increasingly saturated markets.

OKRs, which stands for Objectives and Key Results, is used to align high-level business targets to the department, team, and individual outcomes.

Ambitious by nature, this approach to setting goals at work offers a repeatable, scalable process that can positively impact a business’ bottom line through innovation and accountability.

So, if you’re ready to start incorporating OKRs into your monthly or quarterly planning sessions, keep reading to learn:

goal setting worksheet

The History of OKRs

Andy Grove, often referred to as the “Father of OKRs” first developed the goal-setting method while working as the CEO of Intel. Modeled after Peter Drucker’s “Management by Objectives” method from the 1950s, OKRs would go on to inspire venture capitalist and fellow Intel employee John Doerr.

Fascinated by the results he saw at Intel, John Doerr then took OKRs with him to Google, where the top-down approach to goal setting gained worldwide popularity.

In the present day, John Doerr continues to assert the value of OKRs to companies across the globe. He even went as far as to develop a formula to aid companies in establishing their goals.

John Doerr Formula:
I will [Objective] as measured by [Key Results]

What are OKRs?

As we mentioned earlier, OKRs are broken down into two parts: Objectives and Key Results.

Objectives are high-level goals that define where a business wants to go. The best way to think about objectives is as a destination. Where do you want to be when you reach your goal?

Key results then, are the directions you use to reach that destination. Unlike objectives, key results should be quantifiable or measurable in some way. A good rule of thumb is to have 3-5 key results per objective.

Here’s an example of an OKR in action:

example of an OKR

Objective: Build brand awareness
Key results:

  • Target 3 buyer personas with paid social ads on LinkedIn over the next quarter
  • Guest blog for 3 third-party sites with a high DA within our industry
  • Set up at least one paid sponsorship with an industry-leader or influencer in the field

As a reminder, OKRs are designed to be stretch goals that are set and adjusted frequently (generally, hitting 60-70% of an OKR is considered a success). As such, many businesses that use this approach to goaling roll out new OKRs at the end of the quarter and track progress over a three month period to assess whether a goal stills serves the greater company vision.

And because OKRs are inherently difficult to achieve, it’s worth setting proper expectations with your team the first time you create goals together. Particularly for employees who strive for perfection, it’s worth remembering that this approach to goal setting should push us out of our comfort zones and encourage us to think big.

Tips for Setting OKRs

Use Recognition to Fill the Gap

How do you let team members who need to hit 100% of a goal know they’re doing well with the OKR method? It’s simple — you recognize them. OKRs thrive in an environment where recognition is given and received, whether it be recognition from an executive or another coworker. Studies show a whopping 70% of employees say that motivation and morale would improve “massively” if managers said thank you more often.

Remember: OKRs Impact the Bottom-Line

Retail giant Sears held a study to measure the impact of OKRs on their bottom-line. In the study, they asked 20,000 employees to use OKRs to write their goals. The result? For the group who used OKRs, Sears saw an increase in their average sales per hour from $14.44 per hour to $15.67, or an average increase of 8.5%.

Moreover, years of research also supports the theory that goal-setting works — Dr. Gail Matthews, an expert in the field of goal-setting, found that people are 42% more likely to achieve their goals if they simply write them down on a regular basis.

Align Individual, Team, and Company Goals with OKRs

One of the most useful attributes of OKRs is that they help align a company’s goals with team and individual goals. Inc.com breaks them down on a company, team, and individual level as follows:

  • Individual OKRs define what the person is working on
  • Team OKRs define priorities for the team
  • Company OKRs are big picture, a top-level focus for the entire company

Gallup research shows even a 10% improvement in employees’ connection with the mission or purpose of their organization would result in an 8.1% decrease in turnover, and a 4.4% increase in profitability.

OKRs vs. SMART Goals: Which is Better?

SMART goals and OKRs are two of the most used and talked about goal setting methods in modern workplaces. But which one is better? The truth is, each approach serves its own purpose, and they work better in conjunction with one another.

SMART goals are tactical and best used to set achievable, attainable goals (which is what the A stands for!) where the success rate depends on the completion of a goal. On the other hand, OKRs are “out there” stretch goals that push us to innovate.

Recommended Reading: Setting Goals the SMART Way →

A thriving organization uses a blend of SMART goals, OKRs, and other goal-setting techniques to establish goals, but a truly successful business tracks the impact of its goals. Performance management software can help you set and track your goals because the biggest mistake you can make is to “set them and forget them.”

That’s where Kazoo comes in to play.

Kazoo is an all-in-one people management software that offers a Check-In, Feedback, and Goals tool to help you set individual and team goals that tie to bigger company initiatives. The ability to have ongoing conversations in real-time help keep managers and employees on the same page about goal progress and promotes a more productive work environment.