Article

Why Your Business Needs OKRs

January 6, 2022

Jump to a section
Share it!
Sign up for our newsletter
You're all signed up! Look out for the next edition of The Manual Weekly coming Wednesday am!
Oops! Something went wrong while submitting the form.
This is some text inside of a div block.

Setting goals is a key component for any successful business. Because every business wants to achieve something. Whether it’s to become the next tech unicorn or find the most efficient way to serve local customers.

The best way to reach your goals: adopt a proven goal-setting system. But the problem is a lot of companies tend to “set and forget.” Meaning, a lot of the focus goes into setting goals, but not a lot into achieving them. 

That’s where objectives and key results (OKRs) come in.

“Set and forget is the single most dangerous thing we can do,” shared Christina Wodtke, author of Radical Focus. “And OKRs gives you this rhythm that reminds you over and over again, that in the chaos…you can actually still do the thing that really matters to you.” 

With her expertise in management systems, Christina has helped grow many Silicon Valley companies, including LinkedIn and Yahoo. Her book, Radical Focus, teaches people how to use OKRs to achieve their most important goals. 

In her episode of Organize Chaos, Christina sat down with Trainual CEO Chris Ronzio to talk all about OKRs, how they differ from KPIs, and how to implement them in your business.

So, what are OKRs?

OKR stands for Objectives and Key Results. It’s a popular goal-setting technique used by companies like Google, Amazon, and Meta. OKRs are mainly used to facilitate growth, improvement, and innovation.

Leaders develop OKRs by setting objectives (e.g. improve relationships with customers) that are quantified by key results or metrics (e.g. increase email response rate by 10%). Under each objective, there should be 2-5 key results that teams can work towards achieving.

The idea behind OKRs is to set goals that are ambitious. The goal has to drive change within an organization and focus on improving the system as a whole. So, with this method, it’s not about maintaining business as usual. It’s about aligning everyone to work towards something greater.

OKR vs KPI: What’s the difference?

You may have heard of something called a KPI, or key performance indicator. And while OKRs and KPIs can sound similar, they focus on different aspects of improving your business’s performance.

A KPI is a measurement of how well you're meeting your business goals or targets. They can measure the output, input, and performance numbers that give you a measurable account of how your business is doing.

The difference between these two metrics is that KPIs help with evaluating results, while OKRs use those results to define larger, overarching goals. And because KPIs are about measurable results, they can be used as metric tools for the key results of your OKRs. 

So, in a way, OKRs can build upon your KPIs to really jumpstart the push to reach your business’s main objectives.

What are the benefits of having OKRs?

OKRs allow businesses to aim for more ambitious goals by providing a clear direction and aligning everyone’s efforts toward achieving whatever the company has set out to do. Using OKRs helps increase employee engagement and fosters a more proactive company culture.

“The ‘objective’ is very inspiring language. It’s like a mission statement for three months, and that’s really there to motivate the people who are very mission-driven.”
<blockquoteauthor>Christina Wodtke, author of Radical Focus<blockquoteauthor>

The OKR framework is also unique in that it encourages teams to take ownership and think about how they can contribute to the company’s objective. 

Setting OKRs is an opportunity to work collaboratively. It helps individuals understand what they're working towards, which leads them to take on more ownership in their roles within the company.

How do you set OKRs?

The first thing you need to do is to determine the area of improvement or opportunity you want to work towards. That’s your “objective” - it should be qualitative, not quantitative. It’s like a mission statement.

“A really good objective needs to inspire you,” Christina summarized.

Under each objective, write 2-5 “key results”. These are numerical, measurable outcomes that tell you whether you’re making progress towards the objective. (Hint: As we mentioned before, these key results can be informed by your business’s KPIs.)

But keep this in mind: “the key results should never, ever be tasks,” said Christina. 

Key results should be real-life outcomes that you expect to see when you achieve the main objective. Don’t think of them as tasks to check off a list, but rather, the results of all the work you put into reaching your objective.

Not sure what to use for key results? “Acquisition, conversion, and revenue. Those make really good key results,” Christina shared.

If you’re still unsure how to go about setting an OKR, here’s an example. Let’s say you’ve got a business that’s just getting off the ground. Starting with a handful of employees, you want to take the business as far as you can. So, you set up this OKR:

Objective: Grow the business

Key Results:

  • Grow revenue to $2M
  • Hire 5 more employees
  • Launch the new product

With this OKR in place, you now have a goal in mind. And you’ve got measurable results to track your progress.

How do you get your team involved with OKRs?

As important as OKRs can be to your business’s success, they won’t do much for you if your team isn’t involved. And the best way to get your employees’ support? 

“With larger companies, I usually say, take one of your strongest teams and introduce them to the concept of OKRs,” said Christina.

It's important not to rush when you're just starting out with OKRs. Try it out with one team first. Help them define an objective for the coming quarter and develop key results to reach that objective.

Do weekly check-ins to keep accountability and make sure everyone is headed in the same direction.

"Retrospectives are a really good baby step. I think if you do one thing, do a weekly retro and say what went well and what didn’t go well," Christina shared. "That’s the beginning of starting this learning cycle."

If something's not working, don't get caught up in the specifics. With OKRs, you can be more flexible, just as long as you're making progress towards your objective.

"When something’s not working, you can pull it and switch the result," Christina said. "You know what the results are that you want, but you can swap out your efforts."

And once the quarter is over, take your team’s feedback about the process of building that OKR and how you can help facilitate their success in fulfilling their objective. Use their comments to refine your OKR development process.

After you’ve defined a good system for using OKRs within your business, then introduce the goal-setting tool to other teams. Slowly build them into your company culture. 

Once you incorporate OKRs into your organization, you’ll notice that reaching your goals becomes more streamlined and focused. You won’t have a problem with “setting and forgetting” your objectives. OKRs will make your goals a part of your business’s success.

Share it!
Sign up for our newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Article

Why Your Business Needs OKRs

January 6, 2022

Jump to a section
Share it!
Sign up for our newsletter
You're all signed up! Look out for the next edition of The Manual Weekly coming Wednesday am!
Oops! Something went wrong while submitting the form.

Setting goals is a key component for any successful business. Because every business wants to achieve something. Whether it’s to become the next tech unicorn or find the most efficient way to serve local customers.

The best way to reach your goals: adopt a proven goal-setting system. But the problem is a lot of companies tend to “set and forget.” Meaning, a lot of the focus goes into setting goals, but not a lot into achieving them. 

That’s where objectives and key results (OKRs) come in.

“Set and forget is the single most dangerous thing we can do,” shared Christina Wodtke, author of Radical Focus. “And OKRs gives you this rhythm that reminds you over and over again, that in the chaos…you can actually still do the thing that really matters to you.” 

With her expertise in management systems, Christina has helped grow many Silicon Valley companies, including LinkedIn and Yahoo. Her book, Radical Focus, teaches people how to use OKRs to achieve their most important goals. 

In her episode of Organize Chaos, Christina sat down with Trainual CEO Chris Ronzio to talk all about OKRs, how they differ from KPIs, and how to implement them in your business.

So, what are OKRs?

OKR stands for Objectives and Key Results. It’s a popular goal-setting technique used by companies like Google, Amazon, and Meta. OKRs are mainly used to facilitate growth, improvement, and innovation.

Leaders develop OKRs by setting objectives (e.g. improve relationships with customers) that are quantified by key results or metrics (e.g. increase email response rate by 10%). Under each objective, there should be 2-5 key results that teams can work towards achieving.

The idea behind OKRs is to set goals that are ambitious. The goal has to drive change within an organization and focus on improving the system as a whole. So, with this method, it’s not about maintaining business as usual. It’s about aligning everyone to work towards something greater.

OKR vs KPI: What’s the difference?

You may have heard of something called a KPI, or key performance indicator. And while OKRs and KPIs can sound similar, they focus on different aspects of improving your business’s performance.

A KPI is a measurement of how well you're meeting your business goals or targets. They can measure the output, input, and performance numbers that give you a measurable account of how your business is doing.

The difference between these two metrics is that KPIs help with evaluating results, while OKRs use those results to define larger, overarching goals. And because KPIs are about measurable results, they can be used as metric tools for the key results of your OKRs. 

So, in a way, OKRs can build upon your KPIs to really jumpstart the push to reach your business’s main objectives.

What are the benefits of having OKRs?

OKRs allow businesses to aim for more ambitious goals by providing a clear direction and aligning everyone’s efforts toward achieving whatever the company has set out to do. Using OKRs helps increase employee engagement and fosters a more proactive company culture.

“The ‘objective’ is very inspiring language. It’s like a mission statement for three months, and that’s really there to motivate the people who are very mission-driven.”
<blockquoteauthor>Christina Wodtke, author of Radical Focus<blockquoteauthor>

The OKR framework is also unique in that it encourages teams to take ownership and think about how they can contribute to the company’s objective. 

Setting OKRs is an opportunity to work collaboratively. It helps individuals understand what they're working towards, which leads them to take on more ownership in their roles within the company.

How do you set OKRs?

The first thing you need to do is to determine the area of improvement or opportunity you want to work towards. That’s your “objective” - it should be qualitative, not quantitative. It’s like a mission statement.

“A really good objective needs to inspire you,” Christina summarized.

Under each objective, write 2-5 “key results”. These are numerical, measurable outcomes that tell you whether you’re making progress towards the objective. (Hint: As we mentioned before, these key results can be informed by your business’s KPIs.)

But keep this in mind: “the key results should never, ever be tasks,” said Christina. 

Key results should be real-life outcomes that you expect to see when you achieve the main objective. Don’t think of them as tasks to check off a list, but rather, the results of all the work you put into reaching your objective.

Not sure what to use for key results? “Acquisition, conversion, and revenue. Those make really good key results,” Christina shared.

If you’re still unsure how to go about setting an OKR, here’s an example. Let’s say you’ve got a business that’s just getting off the ground. Starting with a handful of employees, you want to take the business as far as you can. So, you set up this OKR:

Objective: Grow the business

Key Results:

  • Grow revenue to $2M
  • Hire 5 more employees
  • Launch the new product

With this OKR in place, you now have a goal in mind. And you’ve got measurable results to track your progress.

How do you get your team involved with OKRs?

As important as OKRs can be to your business’s success, they won’t do much for you if your team isn’t involved. And the best way to get your employees’ support? 

“With larger companies, I usually say, take one of your strongest teams and introduce them to the concept of OKRs,” said Christina.

It's important not to rush when you're just starting out with OKRs. Try it out with one team first. Help them define an objective for the coming quarter and develop key results to reach that objective.

Do weekly check-ins to keep accountability and make sure everyone is headed in the same direction.

"Retrospectives are a really good baby step. I think if you do one thing, do a weekly retro and say what went well and what didn’t go well," Christina shared. "That’s the beginning of starting this learning cycle."

If something's not working, don't get caught up in the specifics. With OKRs, you can be more flexible, just as long as you're making progress towards your objective.

"When something’s not working, you can pull it and switch the result," Christina said. "You know what the results are that you want, but you can swap out your efforts."

And once the quarter is over, take your team’s feedback about the process of building that OKR and how you can help facilitate their success in fulfilling their objective. Use their comments to refine your OKR development process.

After you’ve defined a good system for using OKRs within your business, then introduce the goal-setting tool to other teams. Slowly build them into your company culture. 

Once you incorporate OKRs into your organization, you’ll notice that reaching your goals becomes more streamlined and focused. You won’t have a problem with “setting and forgetting” your objectives. OKRs will make your goals a part of your business’s success.

Article

Why Your Business Needs OKRs

January 6, 2022

S
E

Organize the chaos
of your small business

No items found.
No items found.