- Operating System -
Objectives & Key Results (OKRs)
The starting point for translating organizational strategy into reality.
There are so many conflicting opinions on OKRs. We aim to set the record straight, once and for all.
We are building a true Operating System for businesses. We're not an OKR platform. We're not Project Management. We're not Task Management. We're an Operating System for businesses to visibly connect leadership to the rest of the organization.
Here are the three parts of our Operating System.
Objectives & Key Results (OKRs) + Strategic Initiatives (SIs) + Contextual Cadence (CCs)
Another way to think about it:
Strategy + Execution + Engagement
Measurable Priorities + Focused Work + Sharing Learnings
We like to joke that every company on earth uses an Operating System, they just haven’t organized it yet. All organizations measure success and have things they are working on in some sort of collaborative cadence, it’s just not formal. It's often all over the place, in multiple spreadsheets and tools, instead of one centralized "strategic system of record" as we call it. The aim here is to operationalize all three parts above and create true alignment. Endless widget dashboards, excessive meetings, and super silos of data and information are the old way of doing things. The new way is visible alignment with an emphasis on execution, exploration, and experimentation, but in an engaging, efficient, and empowering way.
Let's dig in a bit deeper on each part of the Operating System.
What are Objectives & Key Results (OKRs)?
Objectives & Key Results (OKRs) is a popular strategic goal-setting system used by some of the biggest and best companies on the globe. It’s a methodology which aims to get “teams on the same page” and “speaking the same language.” There’s a lot of conflicting, and often confusing, information about OKRs so our purpose is to simplify it so it’s more useful.
Here are the simple definitions.
- Objectives = What is to be achieved and why.
- Key Results = How success of the Objective is measured.
These are simple definitions, but there are nuances to be understood which we will get into later. At the end of the day, OKRs serve as a system to operate against and create alignment.
Here are some simple consumer examples (we can share business ones as well).
Let’s use baseball!
- Objective: Become a professional baseball player
- Key Result 1: Get drafted to the MLB
- Key Result 2: Sign a paid contract
How about a healthcare one!
- Objective: Get in the best shape of my life
- Key Result 1: Decrease weight from 240 lbs to 200
- Key Result 2: Be able to do 100 straight pushups
- Key Result 3: Run a mile in less than 8 minutes
Getting the picture?
Now, how about a personal finance example?
- Objective: Get debt-free and become financially independent!
- Key Result 1: Decrease credit card debt from $10k to $0
- Key Result 2: Save $1 million
You’re probably thinking… yea, that seems pretty straightforward and easy enough. Well, it is and should be! There are some other factors to consider though. The obvious one is writing the goals is easy. It’s executing against them and actually achieving them that’s hard! From a business standpoint where there are oceans of metrics, data, and things being worked on to varying degrees of quality and competency, it gets messy pretty quickly.
Deeper Dive: What are Objectives?
Objectives provide direction around where you are going, what is to be achieved, and why. In some cases, great Objectives could even replace those confusing mission, vision, and purpose statements that nobody remembers or sees.
Here are five criteria for a good Objective:
The point of the Objective is to be the starting point of operational alignment. If you have one Objective as a business, FANTASTIC! That’s 100% alignment. If you have two Objectives, still good, but now your alignment is split 50/50 probably. If each team in your organization has an Objective, now you likely have 15 different Objectives which means you have messy alignment. We’ll keep explaining more on this one, but keep in mind, less is more.
Deeper Dive: What are Key Results?
Measurements! Behavioral change! Metrics! Leading and lagging indicators! Outcomes you can influence but not control! We would even go as far to say that S.M.A.R.T. goals fit just nicely into the Key Result framework. At the end of the day, Key Results are measurable. It needs to have a number. The tricky part here is ideally the Key Results quantify your Objective, but it’s not a hard and fast rule. The important thing to remember is influence, not control. That’s the easiest way to think about it. If you can directly control it, it’s not a Key Result. It’s likely a task, project, or Strategic Initiative.
Here are five criteria for a good Key Result:
- Measurable outcome
- Leading or lagging indicator
- Influenced, but not controlled
- Trackable over time
- Quantifies volume, quality, or health
Each Objective should have 3-5 Key Results. Balance is critical as a blend of volume, quality, and health-based metrics will ensure checks and balances. You don’t want to generate 100 million leads (volume) if 0% convert to sales (quality). Additionally, even if you generate 100 million leads and 100% convert to sales, you don’t want to have your team burn out (health). An extreme example, but you get the point.
How are OKRs best used?
This may be controversial, but our perspective is OKRs are for leadership, and maybe one level deeper. That’s it. Beyond that, you dilute the impact and will likely confuse the masses. You can run an entire company behind one or two OKRs, but so many first-time implementations tend to create tons of them across all levels of the organization. This is why there is often a high failure rate and resistance, which hinders engagement in the process. We’ve seen it a million times. A new implementation decision is made, and then immediately the leader decides to create 27 different Objectives at 5 levels of the organization, as measured by 261 Key Results (half of which are highly ambiguous, with the other half being tasks). It's more common than you think. The point here is, instead of squabbling over what's the difference between a Key Result and a KPI, or filling up a spreadsheet with 100 rows of nonsense, get your leadership team together and hammer this out! OKRs are NOT useful if you create 481 of them across all people and teams. By doing this, you're creating what we call the “OKR paradox”, in that the perceived benefits of OKRs actually have negative implications due to a poor implementation strategy.
The key to OKRs is simplicity. It shouldn't be a daunting task. Your leadership team should be able to define these areas fairly quickly and share with the rest of the business the strategic priorities and critical measurements of success. Heck, as part of Krezzo's onboarding process, we basically write them for you using a combination of proprietary data and AI. Coming up with OKRs is the easy part. The hard part is execution, but more on this later.
Our recommended approach is to establish your OKRs top-down as a leadership team, and make sure they are tight. From there, empower your teams to create the Strategic Initiatives - the big items to execute against - which connects the bottoms-up.