Since its humble beginnings in the 1970s, objectives and key results (OKRs) have emerged as a relatively universal goal-setting framework used by individuals, teams, and organizations of all sizes.
On the surface, OKRs appear simple. However, truly mastering the art of creating OKRs that drive impactful outcomes remains challenging for many organizations. And the stakes are high when it comes to creating OKRs. The consequences of ineffective OKRs can lead your organization to lackluster performance, misaligned goals, and employee dissatisfaction.
While there is no one-size-fits-all solution to effective OKRs, best practices, and frameworks can help your organization balance big bets versus short-term wins.
But first, let’s take a step back and define objectives and key results.
What are objectives and key results (OKRs)?
There are two components to OKRs—objectives and key results. That’s easy, right?! Let’s break this down further.
Objectives are clearly defined goals. Examples of objectives include:
- Develop a new product vision to help us expand the array of challenges our solution solves
- Launch our new product that satisfies the needs of our customers
- Reduce technical debt by 5% in Q2 to provide a more reliable and delightful customer experience
Key results are measurable success criteria used to track the objective’s progress. Using the first objective example above, key results that align with the objective could include:
- Complete 20 customer interviews with champions in our preferred ICP cohort
- Analyze product usage metrics and compare performance to last year (YTD) to identify three areas of improvement/opportunities
- Conduct market analysis and compile findings into an internal report
Developing OKRs for every level of your organization is a highly collaborative process and will take some time. However, keeping your focus on outcomes is absolutely crucial. Keep reading as we dive into the difference between outputs and outcomes.
Shifting objectives to focus on outcomes rather than outputs
Effective OKRs are highly dependent on the organizational mindset. Seeing whether an objective is making an impact starts with ensuring you are focused on the outcome rather than simply an output.
So what’s the difference?
Prominent OKR trainer Felipe Castro defines outcomes as:
“The measurable beneficial effect on your customers, company, or employees.”
With this focus in mind, objectives must be succinct, easy to understand, easy to remember, and motivational. They must also directly relate to your company’s mission and vision. Objectives should resonate with the very core of your organization’s driving purpose.
Let’s take a look at how we can transform output-focused objectives into ones focused on outcome.
|Launch a referral program||Earn the loyalty of our customers|
|Add error messages||Become a more reliable solution for our customers|
|Build a public API||Simplify our product maintenance, streamline innovation, and increase the stickiness of our solution|
|Build a new support center||Empower our customers to find solutions quickly|
There is a distinct difference in the language used between the output and outcome-focused objectives listed above. Output-driven objectives often feature verbs like “launch,” “create,” or “build,” whereas outcome-driven objectives are characterized by verbs like “improve,” “increase,” and “achieve.”
Measuring progress with outcome-focused key results
Similarly to outcome-driven objectives, key results should mirror progress toward outcomes instead of outputs. A recommended practice sets key results around 30% higher than what you believe can be reached, encouraging your teams to strive for greatness. Christina Wodtke says in her book Radical Focus,
“I know I’ve got the right key results when I am also a little scared you can’t make them.”
So, let’s compare some output-driven and outcome-driven key results based on the objectives featured above.
|Launch a referral program
||Earn the loyalty of our customers
|Add error messages
||Become a reliable solution for our customers
|Build a public API
||Simplify our product maintenance, streamline innovation, and increase the stickiness of our solution
|Redesign the support center
||Empower our customers to find solutions quickly
OKRs are not a set-it-and-forget-it endeavor—they’re a lifestyle
Once your organization has set its objectives and key results, you can pat yourself on the back, call it a day, and never think about them again. Kidding, of course!
OKRs are a dynamic part of your organization. As Felipe Castro puts it:
“It is important to understand that we still need to track the delivery of the initiatives. Without them, we will not achieve our OKRs. But initiatives are just bets and must change if the [key result] numbers aren’t improving.”
Crafting outcome-driven OKRs is both an art and a science, requiring leaders to align their teams’ efforts with profound purpose and quantifiable progress. By instilling a shift from outputs to outcomes, articulating inspiring objectives, and calibrating ambitious key results, leaders can ignite transformative change within their organizations.
Best Practice: Incorporate regularly scheduled meetings every couple weeks or so to review your progress on your OKRs, and make sure you’re still on the right track.
The combination of vision, mission, and impactful action lies at the heart of this process, and with the guidance of effective tools like ProductPlan, navigating this journey becomes easier.
Are you curious to see how ProductPlan’s end-to-end product management platform can support your organization’s OKRs? Request a demo today!