Are you looking for practical examples of OKRs and possible solutions to implementation problems of the Objective and Key Results method? Keep reading. If, on the other hand, your level of knowledge is basic, I recommend a quick review of my OKR guide for beginners. I’ll wait for you hereafter you have refreshed the subject.
What are the advantages of OKRs in structured companies?
Structured companies, i.e. those with consolidated teams already positioned on the market, face challenges related to:
- Clarity of purpose
- Involvement and responsibility
- Mutual trust between the people inside of the team
Growth – based more and more often on the relocation of the workforce (think of Smart Working) – requires a predefined and shared route. When management is clearly communicated, people take responsibility for the role, and engagement increases as does trust. In the event of an absent or volatile direction, however, the positive elements listed above turn into obstacles.
In summary, a common and resilient corporate culture shields us from sudden and unpredictable market-related changes, especially in highly competitive sectors.
The difference between keeping up with a scalable business model, or ‘floating’ is all here.
OKRs (Objectives Key Results) is a business management methodology that involves benefits associated with the acronym FACTS, identified by the guru John Doerr in an interview with the Harvard Business Review.
- Focus: Concentration is one of the most precious gifts of OKRs because the focus on what is important and strategic has a positive impact on productivity and performance.
- Alignment: team OKRs and individual OKRs are aligned with respect to a higher objective, and all objectives refer to the strategic progress identified by the vision
- Commitment: the commitment that each employee makes is to create value while progressing towards the goal. Every KR (Key Result) Owner knows that milestones must bring continuous improvement. The aim is not to be the best, but to be the best.
- Tracking: Progress tracking is essential for organizations. Measuring what matters allows you to make strategic decisions, such as improving budget allocation.
- Stretching: reaching out towards challenging objectives is the basis of the OKR framework and is what gives the opportunity to identify the learning zone for workgroups and individuals. If you give 100% and you get an improvement in the process, you hit the mark even reaching 70/80% of the goal.
OKRs implementation problems in companies
Medium to large organizations that approach the OKR methodology tends to make some setting errors. In my opinion, the matrix of these errors is attributable to the wrong mindset.
The simplistic and hasty approach proves deleterious.
It takes time to absorb the OKR principles. Only with time and practice do Objectives and Key Results become part of the corporate culture at every level of the organization. This is not possible when:
- You do not know how to identify outcomes of value
- Freeze the communication in top-down mode
- Confuse OKR and KPI (to not do this see below).
The final advice that I allow myself to give to successfully implement OKR in companies is this: work on the portion of corporate culture already prepared for the OKR framework. Start with your strengths. The people and sectors most ready for change will lead the improvement process.
Difference KPI OKR
The difference between OKR and KPI is quite evident for those who have learned to manage Objectives and Key Results. However, sometimes even the most experienced run the risk of confusing them. Let’s fix once and for all the difference between objectives and key results and key performance indicators.
What are KPIs? They are autonomous metrics that indicate whether performance meets expectations or not. They are used for ‘naked and raw’ measurement, but they have no communication quality regarding the path and purpose.
What are OKRs? O (Objective) is the direction and the KRs (Key Results) are the milestones that describe whether you are making progress and to what extent. In practice, they are enhanced KPIs, because they consist of a qualitative element O and a quantitative element (KR).
In summary, they are complementary tools: on the one hand, the KPIs monitor performance and identify areas for improvement; on the other hand, the OKRs improve processes and drive innovation.
Example difference between OKR and KPI
A non-profit association wants to collect data to monitor its cash registers and user participation. To do this, set the following metrics:
KPI 1 = How much are the monthly donations
KPI 2 = How many members participate in charity events
KPI 2 in turn can become an OKR with the aim of increasing the involvement of people:
O = Become a point of reference for our community
KR 1 = Increase the number of registered members by 20% by the next quarter
KR 2 = Organize at least two events open to the public by the end of the third quarter to attract new members/donors.
The OKR declares both what the association wants to achieve and how it intends to get there because the change objectives are combined with time-based measures.
OKR: the Zalando case study
When asked “Which companies use OKRs?” it is usually answered with a trio of aces: Google, Microsoft, and Linkedin. Correct! These are cases of exception of which I have already told you here in detail. But there are also other big companies that can be an example of corporate OKRs.
Like Zalando: leader in digital retail, with a turnover of almost 8 billion euros (in 2020) and more than 10,000 employees. A few years ago, then CPO (Chief Procurement Officer), Christoph Lange, told in an interview how and why Zalando decided to implement the OKR framework. Here is an excerpt of his words.
- OKR Zalando pilot phase
“I visited the Google headquarters in 2013 and received interesting feedback from people using OKRs. In particular, I met Rick Klau, of Google Ventures Startup Lab, who showed me the YouTube video that delves into the power of OKRs.
Before moving on to the pilot phase, we studied the subject, using the available resources.
Then for nine months, we tested the framework in the Brand Solutions department, focusing on the values of commitment, alignment, and vision. We started out using Google’s OKR model but adapted it based on our specific needs. During the mid-quarter reviews, the various teams analyzed the data to make it understandable for everyone.
Currently, at Brand Solutions, we are organizing an end-of-quarter OKR meeting with the entire team, in order to develop a draft of a departmental OKR aimed at 80% of the course “.
- OKRs implementation in Zalando
“The verification of the impact of OKRs on Brand Solutions gave positive results and the framework was extended to the entire organization. The challenge is to align the objectives from top to bottom and between the individual teams. Breaking the silo effect and promoting cooperation is the purpose of OKRs at Zalando.
How was the rollout process possible? The program started at the management level. The company was supported by OKR coach Ben Lamorte, who held the training sessions for executives and leaders. You learned the basic theory of OKRs and how to ask the right questions in brainstorming (I recommend the Canvas Model, editor’s note). Subsequently, to facilitate alignment between the teams, the alignment week was implemented: one week, at the beginning of the Quarter, which aims to verify that the departments and teams are in line in the process towards their respective objectives.
Today in Zalando there is an OKR committee that verifies that sufficient OKRs are proposed in down-bottom mode. The management instead sets the OKR on a quarterly basis. After that, each team becomes the owner of its own goal and related key results. To raise the focus, we have set a maximum of 5 objectives per Quarter with 4 key results, but the possibility of reducing the number of objectives to increase concentration is being studied ”.
What are the benefits of the OKR method for start-ups?
The OKR startup binomial deserves a separate discussion. New companies face more challenges than established companies. You may have read staggering numbers around: 90% of startups are doomed to failure.
This is a ‘pumped’ statistic, but the data is still worthy of attention: the Cambridge Associates study reports that the number is at 60% (out of a sample of over 27,000 startups financed by venture capital).
More than one in two new companies know they won’t be successful. On the other hand, the one destined to have it will have to resort to something more than good luck to:
- Define the corporate mission and values
- Specify the features of the products/services
- Distribute resources efficiently
- Maximize your efforts
The survival of a startup also depends on these factors, without which it is difficult to set goals.
One of the possible answers to the question: “What are OKRs for a startup for” is already here: the Objectives and Key Results method is the ideal tool to navigate through the chaos of the beginning. Startups need to quickly find ways to answer strategic questions, even without a lot of data available:
- Does it make sense what we do?
- What is the added value of our product?
- What do we want to achieve?
- What do we need to achieve it?
OKRs help startups focus on what’s important while ensuring flexibility. They are a scalable and accessible model.
Identifying what it takes to survive and grow is essential for any society at any level of development. However, the process must be intuitive. Compared to Scrum, for example, OKRs have a lower barrier to entry. It means that in a short time, everyone can understand the fundamental points of the organization and how to measure progress towards them. Transparent clarity is an engine for productivity and innovation. If goals are also missed, progress tracking and review provide data for strategic decisions about where to go and what to walk away from.
OKRs are not the panacea for all problems, but they allow the startup to focus, and measure, what at first seems impossible.
Example OKRs startup
Start-up companies have business growth as a priority. Growth depends on various factors, such as: finding channels that generate constant leads over time and finding tools that turn users into leads.
Here is our reference scenario.
SatyPoll is a platform that allows companies to conduct customer satisfaction surveys. The product has already been launched and the first feedbacks are encouraging. The next step is to accelerate growth. They decide to set these OKRs:
O = Push lead generation through the avalanche effect (network effect)
KR 1 = Generate 500 leads through advertising in surveys thanks to users of free plans in the next Quarter
KR 2 = Transform 25% of leads generated by surveys into active users by the end of the third quarter
O = Have sustainable growth for our search engine
KR 1 = 1000 people use our platform every week
KR 2 = Enrollment increases from 25 to 140 each week
KR 3 = The CPA remains below € 25 for the entire reporting period
Operational advice: to ensure that the business remains healthy, it is good practice to add KRs of mutual control. In the case of SatyPoll it might be useful to link key results on costs and retention.
OKRs and Product Marketing
OKRs can be modeled on organizations at different stages of evolution. In the same way, they are able to enhance the effects of impactful activities and emerging roles in new generation companies. This is the case of the Product Marketing Manager (PMM) who is responsible for the success and growth of a product, in relation to the ability to connect customer needs to the value proposition of the product.
Product Marketing lends itself to the implementation of OKRs since it is based on clear and monitorable objectives. The main objectives of Product Marketing can be divided into four macro-categories:
- Go-to-market: strategy of defining your ideal customer, coordinating messages, and positioning the product for the launch.
- Sales qualification: includes practices and activities to optimize sales, from onboarding to tools, up to sales techniques.
- Demand Generation: This is the process of acquiring and managing leads, from contact to transformation into actual customers.
- Product adoption: the transition from knowing the product to using it, i.e. the moment when users, after purchasing it, begin to use your product for their needs.
Each of these categories of strategic objectives can be declined into OKRs having the following reference metrics:
- ARPU (Average Revenue Per User): the average revenue per user that allows you to measure revenue based on the number of users or accounts.
- ARR (Annual Recurring Revenue) / MRR (Monthly Recurring Revenue): they measure the amount of recurring money on an annual or monthly basis. These are metrics used for subscription products.
- CPA (Cost Per Acquisition): it measures how much the company spends to acquire a single customer.
- CPL (Cost Per Lead): is the metric that measures whether your product marketing campaigns are worthwhile in terms of generating new leads. The CPL helps establish a budget to spend on acquiring new customers.
- Churn Rate: the churn rate is one of the most popular metrics in Product Marketing because it identifies how long it takes for a customer to abandon the product/service. On the contrary, the Retention Rate is the loyalty rate that pushes customers to remain loyal to the brand.
- CR (Conversion Rate): the conversion rate is calculated by dividing the number of conversions by the total number of unique visitors and multiplying the result by 100.
- CTR (Click Through Rates): is the value that indicates the ratio between the number of clicks on a specific call to action (CTA) and the number of times the target audience has viewed the ad.
- Win Rate: is the number of successful sales, resulting from the number of won opportunities divided by the total number of opportunities. It means that if a seller has made 50 contracts out of 300 appointments, he has a Win Rate of 17%.
OKR Examples of Product Marketing
Also for Product Marketing, I will bring you some practical examples of OKRs to focus on the concepts just exposed.
Objective = Create high resonance messages that influence our ideal client
KR 1 = Increase from Direct Session to Conversion, minimum trial sign up rate 1.8%
KR 2 = Increase from Paid Session to Conversion, minimum trial subscription rate 3.6%
Objective = Optimize our Social Proof
KR 1 = Raise the average rating on review websites to 4.5 out of 5 stars
KR 2 = Achieve at least 300 reviews on websites
KR 3 = Have at least 3 detailed product reviews from industry influencers
Objective = Improve the product release process
KR 1 = Increase the subscription to the live demo up to 60%
KR 2 = Reduce bugs after release by 45%
KR 3 = Increase the NPS score from 7.3 to 7.9
How do you measure OKRs?
The measurement of OKRs is all in the quantitative elements or the key results that we decide to measure because they are important and functional to growth.
The evaluation of objectives and key results is progressive, although only at the end of the period set for O is it possible to do a complete review. It is an opportunity to understand what went well, what didn’t work, and what to improve for the next OKR cycle.
OKR software provides up-to-date data and scores, in this way each person knows how they are doing and at what point the OKR teams throughout the organization are. Beyond the calculation, it is important to understand what the numbers mean.
“Not everything that can be counted, counts.” (A. Einstein)
Grading OKR
Andy Grove often reminds us that there is no gray area for the KRs: the result is always binary, that is Yes or No. Nothing better than a sports metaphor to clarify the concept.
You are a scout for a Serie A football team. The club is on the hunt for potential ‘crack’ and set this OKR
O = Find the best talents in South America to strengthen our nursery
KR 1 = View potential recruits by participating in at least 25 games in the Quarter
KR 2 = Contact 30 of the best players viewed
KR 3 = Make an appointment with the agents of the 10 best talents
On your OKRs measurement sheet at the end of the mission, write these data:
- Have I participated in 25 matches? No
- Did I contact 30 players? Yup
- Have I made an appointment with the agents of the 10 best talents? No
But what does this data mean? Is the evaluation positive or negative? The answer is in numbers and to translate words into numbers, a scale is used, the OKR grading, which goes from 0 (failure) to 1.0 (100% of the target).
The scale reads like this:
- 0.0 to 0.3 red light = no real progress achieved
- from 0.4 to 0.6 yellow light = we have made progress, but we have not completed the goal
- 0.7 to 1.0 green light = we have delivered and achieved the expected progress
Let’s go back to the example of the football scout.
You have not seen 25 games but only 20, the others have been suspended or were not in unreachable places. A score of 0.8 is more than valid.
You’ve contacted the 30 players expected from KR 2, so you deserve a full 1.0.
You have not made an appointment with 10 agents, as foreseen by KR 3, but with 5 and 0.5 you are in the yellow zone.
The numerical review is now complete, but to make the numbers tell the whole truth you need to proceed with an additional level of analysis. The key result with the lowest value is the number of agents contacted. If among the latter you managed to make an appointment with the attacker’s agent chased by all the other talent scouts, having him signed, then the 0.5 takes on another value.
Quoting John Doerr in the book Measure What Matters: “The focus of the method of objectives and key results is to work all on the right things.“
10 final points on the OKRs
I told you in this guide about how to implement Objectives and Key Results in different organizations. OKRs are simple and flexible and help make progress visible. Once set, they motivate people and align teams towards common goals, raising the level of focus and productivity.
On the other hand, I have never hidden the greatest difficulty related to the OKR method: that of writing challenging objectives, linked to measurable key results that are effective measures of progress and improvement. No online guide will be able to give examples specific enough to be taken as they are, even if they concern a sector present in different companies such as OKR marketing or OKR sales.
To write OKRs correctly you need time and in-depth knowledge of the reference market and internal dynamics.
How do I get started? Here is a list of ten points that can help you in the practical implementation in the company:
- Study all the resources available on the subject well
- It internalizes the principles of OKRs culture
- Initially brainstorm the business vision and identify what’s important to measure
- Involve leaders and management initially
- Proceed unhurriedly with the roll down to all levels of the organization
- Set a small number of related goals and key outcomes (ideal ratio 1: 3)
- Integrate KPI and KR
- Use tools to track the results (no ‘Set and Forget!’)
- Schedule weekly check-ins to check the progress
- Consider seeking the advice of an OKR coach
To clearly define the characteristics of the elements that make up the OKR formula, remember that O is not the classic MBO (Management By Objective) objective. Neither manager performance bonuses nor employee ratings depend on it. Rather, it is something very similar to the BHAG (Big Hairy Audacious Goals) described by James Collins and Jerry Porras in their book “Built to Last: Successful Habits of Visionary Companies”. This is what BHAG is: a business goal that can inspire employees. These are its characteristics:
- Visionary
- Engaging
- Unifying
In practice, what is required of Objective OKR: is to act as a focal point, unify the effort and create a team spirit. The goal is clear, not many explanations are needed. People know they have to ‘stretch’ to reach it and become motivated and focused.
Here are some examples of BHAGS that I like to mention:
- “To become the company that will change the image of Japanese products as being of poor quality globally”. (Sony, the early 1950s).
- “Bring a computer to every desk and every home”. (Microsoft, 1975)
- “Become a $125 billion company by 2000” (Walmart, 1990)
As for the KRs, they are not lists of activities, but key results from which activities and projects can arise. Provided they are aimed at adding value to the process. Value is the true metric of OKR success, not completion in and of itself.
I will return once again to the OKRs topic that I am addressing from various points of view to bring out all aspects of the methodology. In the meantime, if you want to stay updated on the news of the blog and on my activities as a Product Manager and a Business Angel, follow me on LinkedIn.
If you are a professional or a manager and are looking for new solutions to grow your business, contact me. Thanks to the certified skills of my staff and my entrepreneurial know-how, we can accompany you from strategy to action.
