Well-known companies like Google use objectives and key results, called OKRs, to align their teams around measurable goals. These don't displace key performance indicators (KPIs). Instead, OKRs serve as more ambitious goals that extend to multiple departments and team members. You can also develop OKRs for yourself as a small business owner and use them to improve your company and see results quarterly
Once you understand the main objectives of your organization, you can develop OKRs that move your company towards the goal line. Below, we'll go over the OKR formula and process, along with the primary benefits of OKR goal setting.
Objectives and key results: definition and formula
OKR is a goal-setting methodology. While initially developed by Andrew Grove, the co-founder of Intel, venture capitalist John Doerr introduced the concept to Google. OKR has two parts: the objective and the key results. The goal should be short and inspirational, followed by two to five quantitative and measurable key results.
Doerr's OKR formula is simple:
I will (objective or what you want to improve) as measured by (this set of key results or how you'll know if you've achieved your goal).
Business owners use the outcome-driven framework to stimulate growth, team engagement and overall improvement. However, Asasa found that "only 16% of knowledge workers" say their company effectively sets and communicates company goals. Therefore, it's essential to define and clearly convey your top-level initiatives.
[Read more: How to Use the SMART Framework to Set Business Goals]
The OKR process of goal setting
OKRs should tie goals to day-to-day work while supporting greater business objectives. Start by reviewing your quarterly or annual goals for yourself and your company. Then brainstorm activities, called "initiatives," which are actionable steps to achieving your desired outcome. Lastly, develop a time frame for check-ins.
The OKR goal-setting technique has a few crucial components, including:
- Company objectives: Create overarching goals focused on areas for improvement.
- Team goals: Outline OKRs that contribute to the successful outcome of company goals.
- Initiatives: Create a list of your plans or projects that will help you reach your goals.
- Weekly check-ins: Monitor progress toward your objective regularly.
- Quarterly improvements: Meet around three outcome-focused OKRs per quarter.
The OKR software provider Ally surveyed U.S.-based adults who use OKRs and found that "95% believe they have an understanding of how their work ties into the company's larger business goals." However, manual check-ins or progress updates can be time-consuming and result in less-than-expected collaboration between teams.
Use project management tools like Asana or a spreadsheet program like Google Sheets to track OKR improvements. Ally found that "90% of OKR users that utilize goal-management software check-in or update progress on their goals at least once a month."
OKRs should tie goals to day-to-day work while supporting greater business objectives.
Examples of OKRs for business
If you want to improve your customer experience, your objective may be to "create a memorable customer experience" or "deliver excellent customer care." Remember, your goal should motivate and inspire team members (or yourself), so personalize it to align with your company's mission.
Your key results for this goal may include increases to your net promoter score (NPS) or repurchase rate. On the other hand, If you want to increase engagement on your digital platforms, you may have key results such as increasing engagement, organic traffic and weekly visits per active user.
Include your current score or rate and use a specific number for your desired result. Your key results add context to your objectives. After all, many companies want to improve customer experience, but they use different tactics to reach that goal.
[Read more: How to Create Long-Term vs. Short-Term Goals]
Benefits of creating OKRs
OKRs increase employee engagement by involving them in the goal-setting process and tying their objectives to a higher purpose in your organization. Regular check-ins for a shared goal foster a collaborative and supportive culture. Plus, the succinct format means less time creating the correct wording for objectives and more time spent working towards achieving them.
There are many advantages to creating OKRs, and the acronym FACTS sums it up:
- Focus: OKRs answer the question, "What is most important for the next three months?" The objectives and key results are short, one-line thoughts.
- Alignment: OKRs align with your company vision and pull your teams together with a purpose while allowing them to concentrate on meeting their key outcomes.
- Commitment: OKRs require dedication at all levels, including adjusting resources to support individuals and teams.
- Tracking: It's easy to monitor OKR progress using the metrics (key results). Pull weekly or monthly reports to assess improvements.
- Stretching: Include at least one stretch goal that challenges your team to go above and beyond. Asana said they "aim to hit 70%" of their objectives.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners’ stories.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
