Making a great start with OKRs

Roger Longden is an experienced OKR coach and consultant. He has supported over 20  companies on their journey to implement OKRs, among them Catena Media, Bede Gaming and a number of business accelerators like Techstars in Berlin. He first got excited about OKRs when introduced to (his now mentor) Brett Knowles who is one of the world’s leading authorities on the execution and measurement of strategy. We asked Roger how a company can make a great start with OKRs.

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A company is getting started with OKRs. What do you advise this company to focus on when first introducing OKRs?

The leadership team needs to get started by defining the core business priorities for at least the next twelve months. Ideally you should have a three year forward looking business plan, from which the leadership team derives the top three to four priorities for the next twelve months. These priorities are then articulated as the annual company OKRs. Often these might include one objective on revenue, one on product and one on people/ organization.  I usually call these the “strategic” OKRs.

The leadership team then needs to break these annual company OKRs down and define what needs to happen in the next 90 days to move the company closer to its annual objectives. This process generates up to four quarterly company OKRs which I refer to as “tactical” OKRs. A company could choose other OKR cycles such as biannual or tertiary, however quarterly OKRs is the most common OKR period I experience.

Each objective should be phrased as the ambitious outcome you are aiming for. Key results then are clearly defined, measurable results that impact the set objective. Each objective should not have more than three key results and be owned by a member of the senior team.

Formulating good OKRs takes practice. The tricky part is calibrating them right, so that they are challenging enough but not completely overwhelming. However, it is important to get started somewhere so don’t overthink them, just get going! It takes practice to craft good OKRs and the learning process can take a number of cycles (quarters).

After the tactical company OKRs are defined top-down, each team is asked what they can contribute to in achieving them. Each team defines one to three team OKRs that set the team’s priorities for the next quarter and are owned by the team leader. Quarterly team OKRs are aligned to quarterly company tactical OKRs. The process of defining the OKRs is both top-down and also bottom-up. Settling on the final team OKRs usually involves a bit of discussion and negotiation back and forth on objectives and how to achieve them between team members and the leadership team.

It is important to allow these discussions as they usually surface important questions that need to be addressed. At the same time the leadership team needs to ensure that the discussion doesn’t get out of hand. It is important to set good OKRs; but it is equally important not to get paralyzed by trying to set “perfect” OKRs. In my experience it is a learning process and OKRs get better quarter by quarter as the company learns.

Individual OKRs can then be defined similarly to team OKRs in a top-down and bottom-up process. Individual OKRs should always be aligned to a team OKR. They may align to a Company tactical OKR as an exception – eg. a special project. Every individual contributor suggests what he/ she can achieve to contribute to team and company OKRs. Individual OKRs help individuals to focus and prioritize.

I am a strong advocate of clear OKR ownership. Every company and team OKR should always be owned by at least one person. This doesn’t mean that only this person contributes, but alongside other contributors there should always be at least one defined owner. EG:

1. 12 month “strategic” OKRs – either the CEO or senior team member
2. 3 month “tactical” OKRs – relevant senior team member
3. 3 month team OKRs – relevant team manager (if there is this management level)
4. 3 month individual OKRs – those who can contribute towards growth, innovation and/or change

I believe a default-to-transparency approach is best so that all OKRs are visible to everybody, but leaving the option to make one confidential if there is justification to do so. Managing OKRs in a spreadsheet is a way to get started but I always see companies outgrow that approach very quickly. I find most companies outgrow that model in the first two quarters.  Using a system to track and manage OKRs means your going to provide transparency and be able to track and report on progress.

OKRs are not going to see the needle move until they receive regular focus. It is important to define the regular routines and check-ins for OKRs early on. Tools help to build the positive habits and routines to make an OKR system successful. Sprint methodologies are a powerful approach to managing OKRs. In bi-weekly Sprint meetings each team prioritizes activities for the next two weeks that will move particular OKRs forward. The team also uses these meetings to conduct a retrospective on what worked well and what could have worked better in the last two weeks. In addition to the bi-weekly team sprints it is important to also have monthly senior leadership meetings to align the company across teams on OKR progress and confidence.

A good way to get started with regular OKR checkins is to not only track OKR progress but also track confidence level. Every week the owner of an OKR asks: how confident are we/ am I that we will reach this OKR by the end of the OKR period? For simplicity, this value can then be tracked by a flag (on track, needs attention, off track) or a traffic light (green, orange, red). This confidence helps focus priorities, meetings or discussions. Tracking confidence helps to focus the attention and generally triggers the right discussions and actions.

At the end of each OKR period an OKR review needs to take place. The senior leadership team then reviews all (or at least all team and company) OKRs. In addition to reviewing OKRs it is worth also conducting a retrospective on the OKR process at the end of each OKR period to decide if some fine tuning on the process is needed. This OKR review and retrospective is usually done in the third monthly meeting of each OKR period. The new OKRs should however always be finalized by the first day of the OKR period. Reviews and retrospectives are a core piece of the OKR process, as they allow learning from the previous period to then set better OKRs for the next period.

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