The Ultimate Guide to OKRs: What are They and How to Set Them?

With the right strategies, OKRs can bring people across teams together with your company's overall goals top of mind. Learn more about OKRs, how to use them, and the worst mistakes to avoid.

The Ultimate Guide to OKRs: What are They and How to Set Them?

Collaboration and communication are two of the most important ingredients to business success. As easy as they sound, many companies struggle to maintain an open, collaborative culture that keeps teams aligned toward their business goals. 

That's exactly what OKRs are meant to fix.

With the right strategies, OKRs can bring people across teams together with your company's overall goals top of mind. 

Read on to learn more about OKRs, how to use them, and the worst mistakes to avoid.

What is an OKR (Objective and Key Results)?

OKR stands for "Objectives & Key Results" — a tool for creating and tracking tangible goals. They help every member of your organization align their day-to-day efforts with the company's targets, from frontline employees all the way up to the CEO. 

Right off the bat, it's important to note that using OKRs doesn't follow the traditional, top-to-bottom flow of collaboration. 

Rather, everyone who is expected to take part in setting OKRs to keep everyone on the same page. 

ORKs can also be implemented across your entire organization on different levels:

  • Company OKRs — Broad, big-picture objectives that can guide and direct the company over the long term. 
  • Team OKRs — Narrower objectives tied to a specific team's function as a whole.
  • Individual OKRs — Employee-level objectives that establish expectations from individual team members in line with a team or company OKR. 

Remember, implementing OKRs requires you to move away from an output-focused mindset and toward a more outcome-driven mindset. This simply means that the accomplishment of objectives holds more weight than employee performance metrics.

Dissecting the core components of OKRs

As anyone could've guessed, OKRs are composed of two important parts:

Objectives

An objective is a qualitative description of a goal, which is meant to inspire and motivate everyone in your team. Anywhere between three and five objectives is usually set.

Some examples of objectives are:

  • Increase the company's monthly recurring revenue
  • Boost the company website's monthly traffic 
  • Establish the brand's thought leadership in the space
  • Build a prominent presence in organic search results
  • Reduce the company's monthly operational costs

Remember, objectives in OKRs aren't meant to be measured. Their sole purpose is to set a direction for the team's actions, guide the decision-making process, and help identify the key results that complete the OKR. 

Key results

In contrast to the high-level and qualitative nature of objectives, key results focus on the quantitative side of things. This includes the metrics and Key Performance Indicators (KPIs) that track the team's progress in accomplishing objectives.

Ideally, your team should have up to five key results per OKR. Any more than that and you might compromise your team's efficiency in tracking and accomplishing tasks.

Some examples of key results are:

  • Increase the Average Revenue Per User (ARPU) by 200%
  • Triple the website's monthly traffic from 1,200 per month to 3,600 per month
  • Grow the brand's cumulative follower base from 200,000 to 1,000,000 across all channels
  • Secure the top three positions on Search Engine Results Pages (SERPs) for target keywords
  • Lower monthly expenses from $15,000 to $9,000

In simple terms, key results are tools for mapping out your desired outcomes. That's why they need to have a KPI or metric attached to them, including a target value for tracking OKRs.

How to Set and Track OKRs 

Now that you understand OKRs, it's time to roll up your sleeves and get to work. 

1. Discuss your objectives

First things first, you need to sit down with your team and have a serious conversation about your objectives. 

Start with a simple question: "What do we need to achieve?" 

Make sure everyone in the conversation will answer in full sentences — nothing ambiguous like "branding" or "lead generation." 

Keep in mind that you need your entire team to feel motivated and united. To make this happen, you need your objectives to be well-defined, direct, and complete. 

Here are some tips when discussing objectives with your team:

  • Prepare and share objective drafts. Before finalizing your objectives and moving on to the next step, turn your ideas into drafts and share them with your team. This gives everyone the opportunity to share their feedback and perhaps chip in new objective ideas.
  • Refine your objectives with adjectives. Using adjectives not only makes your objectives more memorable — it also sets a precedent on how teams and individual employees should approach their decision-making. For example, "cost-effective" pushes the need to be more practical and efficient, reminding your team to pick choices that better reflect the organization's direction. 
  • Avoid mentioning numbers for now. Numbers like percentages or dollar amounts have no place in your objectives. While you need to be specific at this stage, you should only use numbers when setting key results.
  • Make objectives relatable across teams. Sometimes, your choice of words can make certain objectives seem siloed into a specific team or department. Avoid this by writing objectives that are relatable to everyone (i.e., writing "build a trusted online brand" instead of "improve customer satisfaction," which appeals specifically to your customer service department).
  • Consider using "stretch goals." In OKRs, a stretch goal is something highly ambitious that borders the unattainable. While they're not meant to be 100% achieved, they can drive up your team's efforts way past their comfort zones.

2. Brainstorm key results 

With your objectives defined, the next step is to identify the key results that will be used to measure them. Around two to five key results should suffice in reliably evaluating progress and outcomes. 

This is where your metrics, KPIs, and benchmarks come in. 

If you know a thing or two about data analytics, it might seem easy to pair objectives with relevant key results. Regardless, it's important to round up your team — especially those involved in your objective — and discuss the best key results to use for your OKR. 

This will enable you to brainstorm more precise metrics that the people involved are more familiar with.

For example, if your objective is to grow an influential social media reach, you can write key results around metrics like follower count and social media engagement rate. Just be sure to add actual, measurable target values to help with the scoring process (to be covered later). 

Some examples are: 

  • Boost follower count on Facebook, LinkedIn, and Instagram by 200%
  • Increase user engagement rate across all platforms by 150%
  • Achieve a rating of 4.5 stars or higher on Facebook

3. Decide your OKR cycle

An OKR cycle is basically the length of time you allot for the completion of the objective. They come in different lengths, depending on the magnitude of your targets. 

For instance, a short-term goal may be achievable in a span of 30-45 days. Whereas, long-term goals may take a quarter or even an entire year to complete. 

Setting cycles gives you the opportunity to reveal weaknesses and inefficiencies that prevent you from hitting your goal. 

4. Create a visual tracker

Next, you can start putting your OKR together into a visual tracker.

Some businesses like to use spreadsheet tools like Google Sheets, which comes with plenty of formatting and visualization features. And, if you've worked with spreadsheets before, you should be able to whip up an OKR tracker in minutes.

A simple strategy is to group objectives and related key results into color-coded rows. Feel free to use font and cell formatting options to make your OKR tracker more readable.

While effective, using a spreadsheet to track OKRs has some drawbacks. 

For one, you need to manually go in and update your metrics from time to time. This is more time-consuming than you think, especially if you rely on multiple data analytics tools to populate your Google Sheets dashboard

As an alternative, you can use a Business Intelligence (BI) tool like Polymer to create interactive OKR trackers that automatically update your key results. 

To create your OKR tracker with Polymer, start by linking all the data sources you plan to use. 

Polymer's visual data manager will guide you through this process. Just click 'Manage Data' from your main dashboard and select 'Add New Data Source.' 

You can easily connect data sources through the built-in connectors for popular platforms, like Jira, Google Analytics, and Shopify. If you can't find the data source you need, you can request a new connector or use another platform like Google Drive or Google Sheets as a medium for moving your data.

With your data ready, click 'New Board' to start piecing your OKR tracker together. 

Polymer lets you start from a blank dashboard or let AI auto-generate data visualizations that match your data. But since an OKR tracker requires a specific layout, go with a blank board for now and select the data sources you need. 

In the dashboard report builder, click 'Add' to view all the visual tools you can use. For OKRs, you can start with a header to state your objective.

In Polymer, headers need a title and description. The title can be anything that will help you spot the right OKR section in your dashboard, whereas the description can contain the actual objective you wrote up. 

For the key results, the best way to highlight important metrics in Polymer dashboards is via the scorecard tool. 

Polymer scorecards not only help track important metrics and KPIs. 

By opening up 'Extra Options,' you can set a target value that reflects your desired outcome. In turn, Polymer will automatically display a progress bar to help you track performance.

Don't forget to modify the scorecard's title to describe the key result you're trying to measure. You're also free to resize and reposition scorecards as you see fit. 

Repeat the steps for all the key results you need to track. With a full stack of key results, here's what your OKR tracker could look like with Polymer: 

As the cherry on top, Polymer makes it easy to share your tracker with everyone involved. You can grant members direct access to your dashboard, embed visualizations into your website, or share a public access link. 

5. Review your results

Normally, companies decide on a scoring system to determine whether the team delivered or not. 

The usual approach is to use a scale of 0 to 1.0 for scoring, which is interpreted as follows:

  • 0.0 to 0.3 — Target missed
  • 0.4 to 0.6 — Progress made
  • 0.7 to 1.0 — Target fully achieved

So, how do you turn your tracker's data into scores?

What you need is to divide your actual key result metric by your target outcome. 

Let's say your goal is to generate $120,000 in monthly sales. If you logged $54,300 in sales by the end of the cycle, you can calculate the score using this formula:

In this example, the OKR score can be evaluated as "progress made." You fell short, but made measurable progress. 

OKR scoring is far easier with a tool like Polymer. 

For one, you don't have to do manual calculations to score performance. By setting a target value in your scorecard, Polymer will automatically show the percentage value of your actual results from your targets.

If you want, you can also create another scorecard with a custom metric that automatically does the scoring. 

By configuring your custom metric like the screenshot above, your scorecard should show the OKR score value you need to track. 

Objectives and Key Results Examples

At this point, you should have a handful of OKR ideas bubbling up in your mind. But if you're still unsure of how to use them, you can borrow inspiration from the OKR examples below:

Objective: Increase website traffic

  • Key Result 1 — Improve search rankings and increase monthly organic traffic by 200% 
  • Key Result 2 — Increase click-through traffic from emails by 500%
  • Key Result 3 — Get more referral traffic from social media from 10,000 to 30,000 a month

Objective: Build an influential brand on social media 

  • Key Result 1 Grow collective followers from 50,000 to 200,000 
  • Key Result 2 — Increase engagement rate from 30% to 70% 
  • Key Result 3 — Increase Facebook group members from 10,000 to 100,000

Objective: Maximize revenue per customer

  • Key Result 1 — Increase average transaction value from $100 to $250
  • Key Result 2 — Reduce Customer Acquisition Cost (CAC) by 50%
  • Key Result 3 — Boost ARPU by 300%

What are the Benefits of Setting OKRs

OKRs are great tools for goal-setting, but their benefits don't stop there. 

Below are a few other advantages of using OKRs to manage your teams:

  • Fosters a more collaborative, tightly-knit work culture. Setting OKRs give teams a clear, big target that every member can work toward. 
  • Give teams a tangible (and measurable) source of motivation. OKRs offer everyone in your organization a clear answer to "why" their tasks are important. 
  • Set clear expectations. OKRs can be set down to an individual-level, ensuring every employee knows and embraces their roles.
  • Encourage communication. Successful OKRs require clear communication between every person from start to finish, putting an exclamation point on the value of teamwork across your organization.
  • Streamline performance analysis. OKRs help business leaders track and evaluate progress without dabbling in the complex landscape of data analytics. 
  • Make sure everyday efforts impact the business's bottom line. Total alignment achieved through OKR ensures everyone's efforts — from the C-suite to frontline employees — contribute to a company's primary business goals. 

Mistakes to Avoid When Setting OKRs

Finally, before we wrap up this guide, let's talk about the common pitfalls businesses make when implementing OKRs.

Keep an eye out for the following mistakes to successfully leverage OKRs for managing and achieving business goals:

  • Intentionally under-promising for the sake of over-delivering. In a practice known as "sandbagging," teams sometimes deliberately set easy targets for key results — effectively curbing their ability to achieve bigger and better outcomes.
  • Setting too many objectives or key results. Having too many objectives or key results might stretch your team's focus too thin, negatively affecting performance and causing confusion.
  • Miscommunicating "stretch goals." When using stretch goals, avoid communicating them as hard, priority targets — setting super unrealistic expectations can only diminish your team's morale. 
  • Ambiguous objectives or key results. Any type of ambiguity in your OKRs can cause misalignment and confusion among members, bottlenecking your team's productivity. 

Stay On Top of OKRs with Polymer

OKRs are powerful tools for channeling your team's focus to unlock their full productivity. 

How else can you maximize efficiency with OKRs? 

Simple — automate the process of tracking and reporting key results. 

Polymer is equipped with everything you need to create visual and interactive OKR trackers that are tailored to your needs. Create visual scorecards, automate your scoring system, and make the information accessible to your team through convenient sharing features.

Try Polymer for free for seven days!

Posted on
May 30, 2024
under Blog
May 30, 2024
Written by
Saif Akhtar
Growth Manager @ Polymer Search. Passionate about all things Startup, RevOps, and Go-to-Market. Ex-VC and startup accelerator who loves hacking MVPs.

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