Beware of OKRs. 90% of companies are using them wrong.
I get the impression that OKRs (Objectives and Key Results) became a new cargo cult. Organizations mindlessly adapt them to every possible activity area, likely only because “Google does it.”
In this article, I explain what OKRs are for (the WHY) and how to use them to achieve the expected benefits.
1. Select only one OKR
In every organization, there are countless important things to do. But it’s essential to realize that OKRs are not a list of tasks. Their goal is to create focus on what’s not urgent yet critical for the long-term growth of the business.
Once you define OKR for the organization, every department or team may then define their own child OKR that contributes to the larger, organization’s single Objective (beware of the antipattern: converting KRs into child Objectives).
As a rule of thumb, you can have more OKRs in the case of multiple business models; for example, it might not be a good idea to have a single OKR for Tesla electric vehicles and Tesla solar panels.
2. Plan every quarter
Agile frameworks teach us that having a cadence is critical. It creates good habits and positive behaviors.
I believe periods of focused work and reflection are the best approach to learning new things and growing as professionals. After each cycle, you can review what has happened and decide what to do next.
3. Sequence your OKRs
Some initiatives may take many quarters to complete. In that case, think about the sequence of “Milestone OKRs.”
How can you break a larger objective into chunks?
How would you know you are going in the right direction?
Which OKR should you target first?
4. Combine top-down and bottom-up planning
Even the best CEO is not able to know everything that is happening in the company.
It might be a good idea to start with a survey to get insights and suggestions from different departments.
5. Lead with vision
The Objective must be inspirational; it should speak to people’s hearts (the right cortex of the brain).
The Objective should answer the questions:
What’s our mission for the next three months?
Why is it important?
What value will it create for the customers and the business?
How is it aligned with our strategy?
How will it make people feel part of something bigger?
6. Do not incentivize OKRs
You need numbers to measure and track your progress, but incentivizing employees for OKRs is a terrible idea.
Of course, people need to be paid fair, but what really motivates them is:
Psychological safety (and stable income)
Doing something meaningful
Growing as professional
Intrinsic motivation is a powerful tool. For more information, see Adam Grant’s work, for example, Give and Take.
7. Use health metrics
Having an OKR doesn’t mean you must stop doing other important things. Here come health metrics, which are a balancing practice for OKRs.
Typically we use three colors: green, yellow, and red. If one of the monitored metrics becomes “red,” you need to stop and fix this problem so that you can continue work on OKR.
8. Do not force everyone to use OKRs
Some departments, like Legal or Customer Service, may not need department-specific OKRs. They may continue doing “business as usual.”
Make sure they know the most important thing for the organization to prioritize it when needed.
9. Ask people to define Key Results
As a leader, you lead with vision. At the same time, from my experience, asking others to help you define Key Results will help you build more substantial commitment and will result in better decisions.
Almost every week, I talk to product professionals. I see two main patterns:
Many top-level OKRs + converting Key Results to Objectives for the teams.
3–4 OKRs for each team in the organization, many of them pointing in different directions. People do it in a rush and forget them right after planning. As they do not create a focus on any of the strategic issues, their value is close to zero.
In my opinion, OKRs are simple, but knowing what’s the single most important thing for the organization may be challenging.
Having a clear vision and strategy definitely helps.
This article was inspired by Radical Focus by Christina Wodtke.
Thanks for reading Your Product Compass! Subscribe for free to receive new posts and support my work.