Objectives and Key Results
Objectives and Key Results (OKRs) are objectives that, if achieved, will bring measurable improvements to your product, service, company or organization. Each objective is divided into key results which make it easier for teams to assess their progress as they attempt to achieve their objective. Read on to see some real life OKR examples which may help you as you write your own.
The concept of OKRs is that the company sets the top level objectives, often called the North Star(s), and then teams work together to decide how they can help contribute to the goal(s).
This is vastly different than the old school way of doing management, where you think of management setting goals for each team and micromanaging progress.
When used correctly, OKRs can help you improve your product management process by acting as a tool for tracking progress towards goals, allowing your team to achieve more than one goal at a time.
It means that that it’s using the knowledge of the whole team to set goals, which means gaps are more naturally spotted and filled. The team can work more autonomously, and isn’t held up by limitations in knowledge or time by middle or top management. No single person is responsible for the north star, but together the whole team makes it happen.
What’s in a name?
Whether you call them OKRs, KPIs, Key Performance Indicators or something else, what’s important is that they all help to measure the progress of an organization towards a goal. Give it a few years, there will be some new cool acronym floating around, doing the same job these tools were meant to do. With that in mind, don’t get too caught up in the names, but consider the purpose of what OKRs do.
Keep aligned with your vision
OKRs help eliminate ambiguity in setting short-term goals and long-term objectives by promoting transparency between leadership, managers, and general employees about what individuals need to accomplish. It’s important that objectives and key results are specific, clear, and measureable to hit the objectives for quarterly objectives so this transparency keeps everyone on track with objectives while holding them accountable to the strategy.
How do I set Objectives?
Think about your biggest challenge right now. What is one problem you need to solve? Pick an objective that solves this issue – it should be specific enough that its measurable, but broad enough for multiple projects or initiatives within the team. Ask yourself if this initiative leads somewhere else, e.g., can this project lead to increased revenue; more engaged customers; or a better employee experience? If so, that’s a good sign objectives are tied to the vision and objectives.
Examples of OKRs
Apple Inc.’s objectives for 2016 were released in June 2015 and included “Increase number of retail stores by 15%” and “Double the active install base from 1 billion to 2 billion devices”.
Apple inc’s OKRs aligned with its product strategy (creating opportunities that would drive revenue) by tying their objectives back to products (installs). They also focused on increasing customer satisfaction both through in person products and existing customers. The objectives were also organized in a way that objectives from the same year could be grouped and assessed against each other.
In the SaaS world, there are a variety of common OKRs that can be used
If your product is focused entirely on turning around online sales, you might want to consider these OKRs
- Conversion rate
- Average order value
- Shopping cart abandonment rate
- New vs returning customers
- Repeat order rate
If you’re focused on using content to encourage engagement and sales, these might work for you.
- Page views
- Paywall conversion rate
- Ad Click Through Rates (CTRs)
- Time on site
- Bounce rate
- Article engagement
When managing a customer funnel, you might want to use Pirate metrics. They’re called that because they make the AAARRR noise with the first letters of each word, but it’s really looking at the customer journey funnel, from when they are acquired as a user, activated into a paying customer, retained and renewed, how referrals to other customers is measured, and how revenue from the customer, such as upsells and downgrades, are measured.
- Lead generation
- Cost per acquisition
- Research and Development
- Enterprise / Advanced usage
How to write your OKRs
It helps to write objectives as if your company is solving an issue or doing something new. It’s important for objectives to focus on customer success, value growth, increasing employees (and customer) satisfaction, etc., but that they are specific enough so they can be measured.
Objectives should be written in a way that explains qualitatively what improvement is needed. When combined with Key Results, Objectives keep teams focused on work that will have a material effect on the needs of the organization they work for. They can be used to clarify what you want to accomplish and help to create a product strategy.
Objectives like Apple’s 2016 objectives used organizational themes such as “more great products.” These work better than blank statements like “be the best.” Objectives should be set with shared objectives; objectives that encourage participation from everyone.
Objectives shouldn’t be subjective – for example, “be the best” is a poor objective as it’s too vague and difficult to measure. By tying objectives to a strategy, objectives can be made specific and measurable which makes the goals more realistic. For example, objectives may look more like “Reduce the time taken to onboard a new user” or “Decrease support tickets for Module X”. When accompanied by one or more key results (like “Average new user onboarding time below 7 days by end of Q3” or “Reduce support tickets from 100 to 75 by end of Q2”), objectives become specific and measurable.
You probably want 3-5 objectives max, per product team. Any more than that, and you’re not really giving instruction on what’s successful, because basically everything is.
Tracking and evaluating your OKRs
OKRs are often tracked quarterly, although you might choose a longer period for something that’s difficult to affect, or a shorter period if you think movement could be achieved quickly. Whatever the frequency, it’s important to record progress and review success or failure in order to learn.
OKRs can be used to communicate objectives to your team as a form of prioritization that puts everything in context. It also makes it easier to shoot down ideas if they are unlikely to affect the change that’s needed.
What’s the difference between company and product OKRs?
These can be at the company level, or at the product level.
If your company basically is a product, then they might be essentially the same, but for the product people in the room, there might be other objectives outside your remit, say for the services side of the business.
And there might be objectives that are specific to your product or business type.