Criteria & Tips for Drafting professional OKRs

Creating quality OKRs can be challenging, and not just in the first few cycles. The quality and value of the framework can only be guaranteed if your teams carefully execute the drafting process each and every time. In this article, we will explain how you can formulate professional OKRs.

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OKR expert Felipe Castro helps companies implement OKR and transforms how organizations understand and work with agile goal management systems. In a guest article from June 2020, he told us he sees the positive impact of these transformations with every new introduction. Functional silos are being replaced with more aligned teams and static yearly goals are being transformed into adaptive and regularly-reviewed sub-goals. At the same time, OKRs are engaging and motivating employees, as they are able to understand the meaning and purpose of their work. Seeing and understanding relevant business metrics from other departments and the company itself in the right context ultimately leads to better collaboration.

Through his mentoring of countless companies, Castro recognized early on the habits that repeatedly led to failed OKRs. While these anti-patterns may seem beneficial at first, they can quickly lead to negative consequences. They can be broken down into three core areas:

• Setting bad OKRs: Oftentimes, OKRs are dealt with like a to-do list. This results in an excessive number of Key Results that are difficult to implement, and the team lacks concrete reference points needed to achieve their goals.
• Creating OKRs in silos: Teams that develop their OKRs without consulting other teams often produce conflicting goals and worse results.
• “Set it and Forget it”: Treating OKRs like New Year’s resolutions will lead to the same results; a list of suppressed and unachievable goals.

The “Set, Align, Achieve” cycle

To successfully apply OKRs, it is important to focus on those challenges that need to be considered when implementing the system. With this in mind, Felipe Castro developed a method that can serve as a guideline for the successful introduction of OKRs: the “Set, Align, Achieve” cycle. 

The cycle is based on two key assumptions:

1. Beyond the mere formulation of goals, successfully working with goals requires coordinating them with the company goals and with the goals of other teams. Subsequently, systematic efforts should be made to achieve them. For this reason, it is important to rethink the communication taking place. People talk about goal setting as if that is all that is needed to succeed. Even the most recognized researchers in this field, Edwin Lock and Gary Latham, referred to their research as simply “the goal setting theory.”
2. It is not possible for a rigid, linear approach to lead to OKR success in a complex and dynamic environment. The ability to adapt and further develop (based on one’s own learning experiences) is the most important requirement for dealing with the uncertainties and challenges of today’s markets. That means an iterative process is necessary to ensure flexibility.

Each individual step for this method is explained in more detail below.

Set

Defining effective, high-quality OKRs is the essential first step. Agile goals should meet the following criteria:

• Valuable: OKRs should create a clear added value for the customer. They should not simply be a list of to-dos. That means the focus should be placed on customer and value-oriented Key Results with clear output.
• Engaging: The process of drafting OKRs should address the creativity and individual perspectives of employees. The goals themselves should be inspiring and not boring.
• Actionable: The team should understand the underlying metrics that can be influenced and recognize the relationships between each goal. A team that does not understand how a Key Result can be executed will not succeed.

Additional concrete quality criteria for Objectives and Key Results can be found at the end of this article.

Align

The traditional approach of cascading goals relies on vertical coordination. All employees simply compare their goals with the ones directly above them. This rigid hierarchical model tends to favor silos. This leads to less communication between teams and horizontal coordination is often neglected.

Cross-team alignment of goals, however, does not just happen overnight. It requires a structured approach that ensures both vertical communication with those higher up and horizontal communication between colleagues. This is addressed in the second step “coordination.” After the initial draft of the OKR sets, each team should consider the following points:

• Mapping interdependencies
• Developing Shared OKRs
• Ensuring vertical and horizontal goal alignment

During the alignment process, each team should discuss the proposed OKRs with its superior. Here, the superior can take on the role of a moderating Coach to encourage and support the team in optimizing their OKRs.

It is also important to review the OKRs following this alignment, as new ideas and insights into dynamics and impact of the goals and their dependencies often emerge. 

For this reason, an iterative process between goal setting and alignment is crucial.

Achieve

Goals and goal agreements are not often seen as a part of the organizational daily work. People generally perceive them as obligations to be completed on top of the actual work. Successful teams view this differently. They perceive OKRs as a crucial part of their daily work, and OKRs become an essential component of their work and organizational model.

In order for this to be successful, teams have to work towards reaching their goals after they have been set and aligned. For this, it is important to continuously discuss them and stay up to date on progress.

‍OKR Check-ins are the core of this process. These are weekly meetings in which OKRs are updated, realigned and weekly tasks prioritized and planned. This operationalizes strategic goals, or OKRs, and connects them with the team’s actual work. Integrating Check-ins into your own process is, therefore, an essential requirement for successful OKRs. In this case, the aim should not be to establish more meetings, but to make existing formats more efficient, data-driven and results oriented. Focus should be on value creation and customer value rather than micromanagement and control.

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1. Inspiring future states

The Objective is a desired condition in the future; an aspirational goal. That means the organization's vision or mission can provide guidance here.

The Objective should be ambitious but also obtainable within an OKR Cycle. To do so, you can shorten the Objective or break it down into multiple phases.

Overly ambitious goals, also known as “stretch or moonshot goals,” should be identified as such by the teams. This has a major impact on expectations. There is no shame in not fully accomplishing stretch goals, and they should not be labeled as failures. Instead, they should be a part of the learning process. If 70 to 80 percent of a stretch goal is achieved, that is a huge accomplishment. 

2. Qualitative

An Objective is qualitative, not measurable and oriented towards the desired value (outcome), not the output. The central question is: Why should a goal be achieved?

It may be tempting to already specify how the goal should be achieved, but the Objective should not contain any such instructions or metrics. This would take away the involved team’s freedom to develop their own solutions and would restrict their autonomy and creativity.

3. Precise and understandable

An Objective should not be cluttered or ambiguous. Instead, it should be as short as possible. The formulation should only contain terms that all stakeholders are familiar with and which are used synonymously throughout the organization. A good Objective is concrete, meaning terms like “improve” or “optimize” would be too vague.

Every stakeholder should be able to understand the Objective without further explanation. This ensures one of the core principles of OKR: transparency.

To formulate a simple sentence, it helps to break the Objective down into its individual components (customer, desired state, benefit).

Not only should the formulation of the Objectives be compact and focused, the number of Objectives should be the same. This guarantees more focus during the cycle. In practice, working with a maximum of three Objectives per organizational unit has proven effective.

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1. Aligned

Your Key Results are the drivers to achieving the goal, and therefore directly related to your Objective. To address every promise you make in your Objective, we suggest you define 2-5 separate Key Results. If you cannot cover your Objective with 2-5 Key Results, you can also shorten the Objective. The Key Results should be as independent of each other as possible, so failing at one does not impact the success of others.

2. Controllable Lead Metrics

Key Results ideally are lead metrics. You should be able to have a direct influence on them and progress should be visible during the cycle. Your Key Results allow you to steer and course-correct. This is why they are a great addition to KPIs. Some Objectives cannot be measured with actual numbers due to their characteristics or their maturity. Sometimes, teams simply don’t have the capabilities to measure the value they are creating either. If so, don’t give up on this, but rather define your Key Results as milestones. Milestones build upon each other and are therefore not independent. However, milestones indicate progress better than binary Key Results. Binary Key Results only tell you if you achieved a goal or not.

3. Results, not tasks

Key Results are not to-do lists. OKRs should drive the strategy forward and not structure day-to-day operational work. In the end, organizations want to visualize their results and effects, not the work behind them. Objectives indicate where the journey is headed, while Key Results show how far away the goal is. An initiative provides information on what needs to be done to get closer to the goal.

Writing 10 articles, for example, is an initiative, not a Key Result. It is a concrete task for something. Reaching 1,000 views on an article is a Key Result. There is no concrete assignment, yet it can still be influenced. It shows whether the initiatives achieved the desired result.

Using the S.M.A.R.T Goal rule can be a good control mechanism for Key Results.

Looking for additional OKR examples? In this article, you can find good OKRs for marketing, sales, product, technology or human resources. Discover the best practices for various functions to get the best out of your OKR draft!

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One of the biggest mistakes teams make when drafting OKRs is thinking in outputs instead of outcomes. What does that mean? An output describes the result of an activity. Based on the output, however, it is not possible to identify the value users or customers will experience. The outcome, on the other hand, is the actual added value the output creates for the target group.

If the team’s entire work revolves around the output, neither the company’s big picture nor each individual’s impact on the overall goal are transparent for all employees. In this way, valuable potential is lost, as the employees are always told what to do instead of simply being told the goal and having the opportunity to find their own way of achieving it.

There are also other mistakes often made in the formulation of Objectives and Key Results:

Objectives should not…

…just be a “nice headline” for the Key Results.

…contain measurable metrics (e.g., revenue).

…be timeless metrics (e.g., improve customer satisfaction), which could generally always be on the agenda and not specifically in the next OKR Cycle.

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Key Results should not…

…be formulated as concrete tasks or initiatives.

…contain more than one metric.

…not (meaning they should! ;-)) consider the S.M.A.R.T Goal rule.

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• Our OKR Drafting Exercise Book helps you become a true OKR drafting expert and formulate outcome instead of output-oriented goals.
• The Team OKR Goal Setting Canvas helps you gather input for your OKRs step by step and draft Objectives and Key Results. 
• Are you planning OKRs in a decentralized team and want to design your drafting virtually? These Miro Board templates are here to help!
• Somehow missing structure? Help your team improve the quality of its OKRs with this checklist.
• You can also find information for OKR drafting in the Workpath OKR Toolbox. Here you’ll find everything from theory to practical examples.

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OKR is no cure-all. Just like any other tool, it can be applied in the wrong way and there is no sure formula for a successful execution. How one develops, formulates and uses OKRs in the most promising way depends largely on the context, or the characteristics of the organization.

Contextually suitable, clear and transparent OKRs will improve an organization’s overall performance. It is, therefore, not advisable to work with OKR examples found online or from past OKR Cycles. It also does not make sense to blindly apply the aforementioned quality criteria to your own OKRs. Instead, we encourage you to treat every drafting session as a practice field and strive for the best-possible quality of OKRs. In the end, there is always room for improvement. 

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How do you draft OKRs?

When formulating Objectives, it is important to adhere to their fundamental characteristics: They are qualitative, the goal achievement is ambitious, and they are directional and achievable within a specific timeframe. When formulating Key Results, on the other hand, it is important that they are measurable, specific, relevant for the respective Objective and process-oriented.

What makes an OKR great?

Great OKRs should fit the context and be clearly and transparently formulated. In addition, team OKRs should be aligned with one another to avoid the formation of silos. Only in this way can the overall performance of the organization increase.

How many OKRs?

Each team and OKR Cycle should have no more than five Objectives. Key Results have a direct impact on the Objective. They cover each of the Objectives’ promises. For this reason, two to five Key Results are recommended. If this is not enough, the Objective can be shortened once more.