FREQUENTLY ASKED QUESTIONS ABOUT OKRs

“In our every-day work as OKR implementation Coaches, we encounter many similar questions, which we have decided to compile in these FAQs. This way, we hope to make the OKR consultation more efficient so we can focus on questions that are unique to the company.”

Theoretical leadership models often sound good, but they can be very challenging to adapt to individual companies and specific situations. One will often find that there is room for interpretation in the rules. The same applies to the OKR model.

The following questions and answers about OKRs should provide guidance for a more secure use of the model. As often the case, essentially there is no "right" and "wrong". But one can get much more out of the model with best practice examples. The article is also intended to stimulate discussion, and furthermore, to raise and discuss new issues on the subject - so please don't hesitate to use the comment function!

HOW DO YOU FORMULATE A GOAL WITH TRACTION?

This is one of the most difficult tasks in the entire OKR process. Essentially, just about everything in a company can be optimized, enhanced, or defined. So, the important thing is, that the objective describes a state to be reached and isn't merely used as a header for an issue which has to be dealt with.

In the field of customer care, for example, it is good to take care of the issue of availability. Improving availability sounds like a target, but the possibility of evaluation at the end of the period is limited. "No caller waits for more than a minute" on the other hand, gives a very concrete image of the state to be achieved, as it sets the bar that has to be crossed.

DO YOU ALWAYS NEED EXACTLY 5 GOALS?

Interestingly, the issue of the exact number of objectives and key results always comes up during the workshop on definitions of quarterly targets. The discussion is often re-instigated in each department. This is where the true magic behind the system lies: imposing a virtual boundary on oneself. The restriction to a maximum of five goals, each with four sub-items is used to set priorities and to establish the right focus.

Thus the model is not negotiable in one direction: more. More objectives or more key results destroy the advantage of artificial scarcity and open the floodgates for fragmentation. If you absolutely must diverge from the model, then at the very most you must diverge by reducing the amount of objectives. If you end up with only one or two objectives though, you should ask yourself, whether the formulation of the goals is grippy and concrete enough or whether one of the objectives can be split up and made more concrete as to achieve more goal descriptions.

Especially in discussions among various departments, the restriction proves to be a strong driver of prioritization. When a colleague brings up an objective that has an impact on the resources of his department after the five "O's" were agreed upon, negotiations begin! The new goal must be discussed. This process decides, whether it is important enough to drop another goal from it, even of one’s own department in its favor.

ARE METRIC GOALS OR KPIs ALSO ALLOWED IN THE OBJECTIVES?

Usually, they are to be avoided. The objective is supposed to describe a state you want to achieve in the future and not merely be a header, or simply determine thematic area.

The more striking and accessible a goal is in its formulation, the better. However, not all objectives can be described in a simple and easy to grasp manner. Especially when it comes to the differentiation of an "ongoing" process which, by definition, occurs permanently in the company or which is simply too large for one OKR cycle, the quantification of objectives is a good method, as it allows the goals to be sectioned off into smaller more achievable parts.

Revenue goals are, in general, the most frequent of business goals. From a company's perspective, they are particularly useful to assess overall performance. But beware: revenue is not an end in itself, and therefore is not a good objective! It is usually generated to contribute to a larger goal. It is not realized because a company wants to make revenue, but because it offers services for which customers are willing to pay. Therefore, it is worth thinking about what goals are actually being pursued with the generated revenue, and which measures are taken in order to reach this revenue. "Securing jobs by achieving a certain contribution margin" is a much better objective. Also the customers' perspective can be translated into key results, what will lead to increased revenue. The metrics then meaningfully describe individual key results.

SHOULD DAILY BUSINESS BE SEPARATED FROM THE OKRs?

The answer is clear: absolutely not! The so-called day-to-day operations generally consume the majority of an employee's available time. Therefore, his job seems to consist of completing tasks that recur often. A separation of his main tasks and additional tasks in form of OKRs hinders the goal setting system to be fully experienced! It can be compared to a full schedule and a packed to-do list: Taking on the to-do list for that day, which constitutes a full day's work, when one already has a busy schedule with no connection to the to-do list, will eventually lead to frustration at the end of the day when seemingly nothing was accomplished.

In any case, the day-to-day operations must represent one of the biggest task bundles in the individual goals. So the challenge lies in identifying the drivers of success, which are to be influenced positively, in order to simultaneously progress and improve day-to-day operations. Lead time, absolute number of processes in day-to-day operations, improvement of interfaces, error reduction, and the like are all good examples for this. It is particularly exciting when common goals such as process optimization arise through linkage with the goals of other departments.

IS THERE A REFERENCE MODEL SUCH AS A BUSINESSPLAN? 

A business plan is regarded as the ultimate planning tool in most businesses. However, the plan only describes the result. The numbers are the desired outcome when various factors and actions play out as expected. But the actual actions are not mentioned.

It is obligatory that the business plan is anchored in the OKRs. There is no other way of fulfilling it! The plan's values are a wonderful tool when used as references. They provide some of the KPI's that must go into the Key Results. Again: they provide some of the KPI's, but not all of them. It is worth to formulate OKRs based on the values from the business plan. With actual success drivers and based on past experience, they become realistic objectives. If we had found out that one out of a hundred customers we call buys and in average generates one hundred euro in sales, then it would be a better goal to call 5000 customers, than to generate 5000 euro in sales.

DO SERVICE BRANCHES, FOR EXAMPLE, HAVE THEIR OWN GOALS, OR DO THEIR GOALS DEPEND ENTIRELY ON THE GOALS OF OTHER DEPARTMENTS?

Of course, each department has its own goals, even though they are not always easy to identify. IT, accounting or customer care are dependent on the alignment of requirements with other departments. For them it is even more important, to have their own, clear agenda, in order to deliver solid work, maintain clean processes and ensure a reliable quality of service.

When formulating goals, it helps to think about "how" rather than to think about "what". The accounting department didn't necessarily do a better job if they processed 1200 logs instead of 1000 logs in the account books this month. But it still makes sense to reduce factors like queries per case, processing times or even escalations or errors. In addition, there are, for example, maintenance, renewals of processes or software etc., which would fall by the wayside if the department hadn’t an agenda of it's own and didn’t keep resources free to fulfil it.

SHOULD THE BUSINESS GOALS ALSO CHANGE QUARTERYLY OR DO THEY STAY FIXED FOR THE YEAR?

The current belief is that there should not be yearly goals, but rather a strong vision and a clear mission from which a roadmap can be derived that contains individual key results. It cannot be limited to a twelve month period - and certainly not to a calendar year.

So it makes sense to transfer the "annual planning" of objectives to the level of the roadmap and to make it a rolling forecast. However, one should be able to describe the period from now to twelve months in the future quite specifically and concretely. Key results that lie further in the future may be less concrete and maybe cannot be associated with specific timings yet. In the more distant future, the roadmap serves as a sort of backlog, where valuable options for the future can be gathered.

As is the case with any planning, a certain agility is required. If, after the first quarter one realizes, on the basis of experience gained so far, that the business goals (= roadmap) are untenable, then it would be downright negligent not to adjust them.

DOES THE HEAD OF A DEPARTMENT HAVE HIS OWN OKRs OR ARE THE TEAM GOALS ALSO HIS INDIVIDUAL GOALS?

Setting one’s own objectives helps to break down the team goals and to assign them to individual members of the team. Obviously, everyone contributes to the team goals. However, if the department's head had no personal goals, blank spots would appear in the documentation of task distribution. The head of department can operationally take care of certain topics, whose derivations then appear in his personal OKRs. 

HOW IS THIS MODEL BEST INTEGRATED IN EVERYDAY LIFE?

Excellent results can be obtained with a kind of "daily mantra". The OKRs are not only visually ubiquitous but also regularly addressed in the appropriate meetings. The employees are trained to review the OKRs at the start of each day in order to assess on which objectives and key results they can achieve concrete progress that day. In addition, the OKRs are discussed in one-on-one talks with superiors and serve as a structured opening for regular team meetings.

WHAT HAPPENS AT THE END OF AN OKR PERIOD?

The objectives are reviewed and assessed according to a goal accomplishment scale. Goals completed to at least 70% are considered as completed and can be seen as ‘done’.

All OKRs with lower achievement scores need to be reviewed and discussed with the team and the superior level, in order to find out the reasons for the poor performance. This is not about finding faults and finger pointing. It is about finding where there is potential for improvement.

After that, the remaining goals must be evaluated in order to decide whether or not to continue pursuing them. In this discussion, the crucial decision is whether already allocated resources are “wasted” when a goal is no longer deemed viable. Like in a classical portfolio assessment, keeping a keen eye on the future is always useful. The question about the future benefits one expects from achieving the goal must be answered. For the evaluation, the resources invested on achieving it are not relevant.

WHICH TOOL IS BEST USED FOR THE IMPLEMENTATION?

A special tool or an OKR software is not mandatory, as it actually boils down to twenty lines of text. A simple table to update the targets is sufficient. The Key Results can be updated in a simple traffic light system, which clearly indicates the current status of each key result.

Regular confrontation with the goals is crucial. Therefore, the OKRs should be integrated in a living system, and not stored away in a file somewhere on a server. An intranet (for example: Confluence) is perfectly suitable for the implementation. The overarching objectives are stored centrally together with vision, mission and strategy. Each team has a team page that begins with the team OKRs. Another advantage of an intranet solution is, that projects, including all their details, can be linked directly from the objectives.

HOW IS THE OKR METHOD BEST INTRODUCED TO SEVERAL HUNDRED OR SEVERAL THOUSAND EMPLOYEES?

Luckily, we're dealing with OKRs, which is a comparatively simple management method. Compared to other management methods, this one is quite easy to explain. However, it is important that each employee feels addressed, when the model is introduced to the company.

In addition to a corresponding kick off event by top management, two ways have proven very helpful. First, the system must be cascaded through the entire company from top to bottom through the supervisory chain. The executives talk about the implementation of the new system and the requirements for the formulation of goals in their direct reports. Then, in addition to seminars and internal training sessions on OKRs, there is also the possibility of sharing the know-how with the entire company through a video seminar so that each employee can be made familiar with the method in about 45 minutes. We produced such individual OKR video trainings for some customers and can provide examples on request.

HOW DO YOU DEAL WITH GOALS THAT SPAN LONGER THAN THREE MONTHS?

Important goals often cannot be achieved within three months, because necessary Key Results require an effort that can’t be realized with the available resources in that time.

To formulate an easy to grasp objective for the next three months, one needs to identify the proper range for a goal first. In case of dealing with a so-called evergreen goal - one that is always good to improve - the underlying core drivers must be identified and formulated as objectives. A good example of an evergreen goal is customer satisfaction, which can’t be achieved on a short-term and which will basically never be completed as an objective. A goal like customer satisfaction can be broken down into its core components, such as product quality and service quality. During the following three months the focus should lie on the most important of those core components so that very clear and concrete objectives are provided for everybody involved. Assuming that action has already been taken in order to improve product quality, but that the effects will only show after at least three months, then the OKRs for the current quarter should focus on improving the quality of service and to deal with the returns process in particular. Customers who buy products of sub-optimal quality and thus encounter problems should at least be convinced by the quality of service during the returns process so that they remain loyal to the company and can even function as an advocate for the company when a new product is released.

Whether an intended goal really is an "Objective" or more of a "Project" should be double-checked! Projects can usually be described in the form of several goals. In their course, projects may develop a certain dynamic, which can distract the participants from the project’s original goals. Therefore, it is very advisable to break a project down into sub-goals and to keep the main goal in sight. Having a breaking point after three months is a useful side effect of the OKR system, and allows to evaluate weather work on the project should be continued or not. Thus the decision is no longer whether to attack a project as a whole: After having invested significant resources in each new OKR cycle, one must get the feeling, that the remaining investment of resources and the already achieved results will lead to a tangible output.

A good, frequently recurring, example of a long-lasting project is the re-launch of a website. In order to formulate a proper objective one has to evaluate, which Objectives and Key Results drive the project and how they can be positively influenced over the next three months. The re-launch is not an end in itself. One hypothesis for example would be that traffic is shifting more and more towards mobile, but the company's website is not engineered for mobile sales. In addition, the system architecture at some point won’t be able to handle the increased traffic load. So the decision for a re-launch of the website had been made.

Derived therefrom, the goal for the first three months is to define a new system architecture, which can map a modern user experience and handle the expected growth of the coming years. Key Results could be to define the requirements for the mobile website, to identify suitable systems, to validate them with tests and to establish an growth forecast for the next few years in order to make a sound investment decisions.

In the following quarter, you can implement the defined concept in the established systems. In the third quarter you can then perform a friction-free move from the old system to the new one.

HOW CAN WE REACH OUR OKRs IF WE ARE BUSY PURSUING SALES TARGETS FROM THE BUSINESS PLAN AND TAKING CARE OF DAY TO DAY OPERATIONS?

The answer is very simple. You don't reach your sales targets despite having OKRs, but because of your OKRs. 

If this question appears, it indicates that the Objectives and Key Results system has not yet been fully internalized! There must not be a parallel target system, such as a business plan, in addition to the OKRs!

The Objectives must contain anything that needs to be done over the coming months. This includes, above all, everything related to sales. Furthermore, "day-to-day operations" are also described in the OKR set. The conclusion is thus drawn that everything that one had planned to do has been detailed and everything else will not be done. Consequently, achieving the OKRs with the aspired Key Results (KRs) must lead to the sales that had been predicted in the sales forecast!

To ensure that no key points were overlooked during planning, the OKR set and the business plan for the next three months should be coordinated and checked, whether the formulated measures, considering human and financial resources, will lead to the desired turnover. In case of discrepancies, either the OKRs or the business plan should be adjusted accordingly. Should the planning process follow a top-down approach and result in a pile of budget figures rather than a realistic revenue forecast, then it's recommended to escalate accordingly and to review the actual planning process rather than not being able to achieve the anticipated results.

DOES EVERY SINGLE EMPLOYEE REALLY GET OKRs OR DOES ONE SET SUFFICE FOR THE WHOLE TEAM?

Basically all teams should use the OKR system, in order to avoid coordination problems between teams. Those result from some teams managing their goals outside the OKR system, which thus can’t coordinate properly with other teams.

Within a team, it's not mandatory that each employee has his own set of OKRs, breaking down the team's goals even further. The decision about how the sets are broken down within a team should be left to the team leader.

The classical exceptions for teams where sets are not broken down further are IT and other departments with recurring tasks, such as production, storage or financial accounting. The IT team usually works with an agile approach such as Scrum, so that the OKR sets in IT can very successfully be translated into individual Scrum sprints. In production departments, the goals can usually be broken down onto smaller teams so that individual team leaders can take responsibility for a set, but are then free to transfer them to their respective employees in production.