OKR 101: An introduction to data-driven planning objectives and key results (OKRs)

OKRs have taken corporate planning by storm — and for good reason. As a system for organization-wide goal-setting, OKRs make executive KPIs tangible and actionable, not just for the leaders, but for everyone in the company. They have become increasingly common in all types of businesses because they are simple and effective. For the company’s data champion, they also offer an unparalleled opportunity to get everyone speaking a common language of metrics.

Originally developed at Intel in the 1980s and popularized by Google in the 2000s, the OKR system helps businesses align on clear business objectives, starting from top corporate goals and moving down to each department and every individual contributor. They give units with easily measurable objectives an avenue for communicating their accomplishments out to executive leadership. They also provide teams with more qualitative output, such as design and creative teams, quantifiable performance targets.

Planning begins with company OKRs. The executive leadership team agrees on three or four objectives for the entire business. Each of those objectives has a handful of associated metrics — usually between three and five — that the team will use to measure progress toward the goal. These are the key results. Department heads will then use the company OKRs as a reference to set team OKRs, and individual contributors will align their personal OKRs to the department. Progress is reported up and down the chain, giving everyone in the company a picture not only of company performance, but also how they are personally contributing to that success.

Companies can update objectives — as well as the quantifiable key results to measure progress against those objectives — either quarterly or annually. But once OKRs have been set, they should stay in place unless something happens to radically alter the company’s plans. At the end of the term, the success or failure against the previous term’s performance will factor into the OKRs for the new term.

While philosophies may differ, most companies agree that OKRs should be aspirational. That means that if you’re doing well, you should be hitting about 70% on your OKRs across the board. Aspirational goal-setting can be a tough adjustment for some teams, so it might help to agree on an “expected” or “achievable” goal, then set a stretch goal that gets documented in the OKRs.

For example, say a sales team has an objective to increase average deal size. They believe that they can reasonably upsell 300–400 new prospects on an upgraded feature pack for an additional $1,000. If the expected target is that 350 new closed-won contracts will include the upsell package, they should set a key result to close 500 contracts with the package. If they only hit the 350-contract threshold, they have still done well but the OKR will record 70% progress toward the goal.

The role of data leaders in the OKR process

Data leaders have the unique opportunity to ensure that the OKR planning process is holistic, reflects the business’s objectives across all dimensions, and is easily measured across every department. This is also your chance to ensure that data teams and leaders are fully aligned to larger business objectives. In a very real way, the success of the OKR system depends on you and the relationships you build around the company.

Start by considering your relationship with finance. While everyone participates in OKRs, finance is typically the most critical stakeholder in company OKR planning. They hold the source of truth on top-line revenue, profit, margins, and other data that are key to developing a business’ highest-level objectives. The same way a public company tells investors how to measure their business most accurately, department heads in each line of
business will have to provide insight to finance. As a data leader, you may find yourself on call to provide finance with the records and data they need to inform corporate objectives.

Once the company OKRs have been established, the department heads may need additional help identifying the right KR metrics or establishing a system for reporting on them. You can help them define OKRs that make sense for both the company and the department, which will provide valuable insight across the company.

In short, you are the caretaker of the company’s most valuable asset. Be prepared to keep the lines of information clear and flowing.

Where can OKRs go wrong?

While most companies that adopt the OKR system find it incredibly helpful for planning and goal-setting, there are a few things that can go wrong. If you are introducing OKRs to your company for the first time, watch out for a few common pitfalls:

• Failing to get buy-in first. No one likes to feel like something is being forced on them, even if it will make their work life better in the long run. Every corporate initiative should start with an executive sponsor, solicit input, and incorporate feedback from around the company. Once the program gets going, everyone will be able to see the value — especially once they realize how easily they can use that data to show that value that each team is providing to the entire organization.
• Failing to review at the end of the term. Setting OKRs, communicating them, tracking them, and reporting on them is a lot of work — don’t let it go to waste! At the end of every quarter (or year, if you do annual OKRs), have a company-wide meeting to review performance against the company and department goals. Executive leadership and department heads can take this opportunity to reaffirm alignment on the key objectives and rally the entire staff around the corporate vision.
• Structuring around what can be measured, rather than what’s important. It’s easy to track website traffic. But is that really what matters most? OKRs start with the objective for a reason — this is about focusing on what matters, not what’s easy.
• Setting key results that can’t be measured. Not every person or department works in a way that’s easily quantifiable. But that doesn’t mean they can’t have measurable key results. Look for a proxy metric that can serve as an indicator of performance. For example, a graphic designer with an objective of establishing a new visual brand might have a key objective of reducing the number of brand violations of the corporate website to zero.
• Sticking too literally to the company objectives, even if they don’t apply to the department. Sometimes the priorities for the company don’t make a lot of sense for every department. Instead, look for the tangential ways that you can support those objectives. For example, customer service may not directly generate revenue, but they can set an objective to increase customer satisfaction, knowing that this will reduce churn and contribute to revenue in the long run.

OKRs can be effective with something as simple as shared docs or slide presentations. But there are also products available that specialize in OKRs that include tools for planning, sharing goals, tracking progress, and even upvoting KRs or celebrating success. If individual departments have already launched their own OKR programs, you might have existing access to these tools. Talk to various department heads and HR to see what they’re using to track goals — as well as any best practices they are using that can also apply to a company-wide OKR effort.

For more insight into using data to set organizational goals and measure efforts, check out our related blog post, "KPIs Are a Shortcut to Success — If You Know How to Triage."