What are OKRs?
Lets start with the basics. OKR stands for Objectives and Key Results. It is a goal-setting framework that helps organizations set clear, measurable goals and track progress towards achieving them. OKRs, done well, can help create a culture of accountability and engagement.
Although the approach seems simple and logical, writing effective OKRs can be tougher than it first appears. This guide aims to simplify the process of designing effective OKRs by giving a robust approach, warning you about the pitfalls and giving you plenty of good OKR examples.
The benefits of OKRs
Good OKRs provide a clear direction for an organization. Once you are up and running, you should find multiple benefits, including...
Simple to explain: Although designing effective OKRs is more complex that they might appear, OKRs and quick and easy to explain and understand, once created.
Help build commitment and motivation: With everyone in the team being clear on what personal success looks like, OKRs nurture engagement and clarity.
Focused and aligned: When done right, OKRs ensure that all activity contribute towards the ultimate goals (every one pulls in the same direction), objectives and strategy of the organization.
Simple to monitor and review: OKRs are quick and simple to review compared with other management methods.
Flexible and adaptable: They can be used by teams of all sizes and in a variety of industries. This makes them a versatile goal-setting tool that can be applied in a wide range of situations.
Support a culture of accountability: By setting specific, measurable goals, you can hold yourself and your team accountable for making progress towards those goals. This can help to create a sense of ownership and responsibility, which can lead to better results and a more engaged team.
Encourage stretch: Unlike 'business as usual' monitoring KPIs, OKRs need to be ambitious, with a serious chance of failure. A culture that encourages ambition will help accelerate performance and progress.
The the 'OKR formula' is:
- Objectives: These are the high-level goals that the organization is working towards. Objectives should be specific, measurable, ambitious, and aligned with the overall goals and strategy of the organization.
- Key Result: These are specific, measurable outcomes, task or actions that help the organization progress towards achieving its objectives. Key results should be linked directly to the corresponding objective, and they should be designed to be specific, measurable (or tangible, in the case of tasks and actions), and time-bound. Typically you will have 2-5 Key Results per Objective.Where you have a numerical result reported by a KPI you will also have...
- Key Result Targets: These are the specific, measurable targets that the organization is working towards for each key result. Targets should be set to be challenging, but achievable, and they should be aligned with the overall Objective and Key Results of the OKR.
What is the difference between an OKR and a KPI?
Imagine I'm a smoker and I'm trying to give up. My objective might be to “Give up smoking cigarettes forever”.
A key result that will help me achieve that might be “To not smoke a cigarette for seven days" and my KPI, for that period would be "number of cigarette smoke", with a KPI target of "zero cigarettes”.
KPIs are just the facts of the situation. Targets, Key Results and Objectives help give those facts context and generate motivation.
What are the characteristics of a good OKR?
Good OKRs should...
- Align with company strategy: OKRs should be aligned with the overall strategy and goals of the organization.
- Specific and measurable: Key results must always be specific and measurable (even if it's just a 'Yes, we have done that'), so that progress can be tracked and evaluated. Objectives themselves do not always have to be directly measurable, but must be a clear outcome of the (measurable) key result(s).
- Challenging (stretch): OKRs should be tough to achieve. A a rule of thumb, you should not expect people and teams to achieve all of their OKRs on plan. If they do, chances are the the agreed OKRs are not challenging enough.
- Actionable: OKRs should be actionable, meaning that there should be clear steps that can be taken to achieve the objective.
- Transparent: OKRs should be transparent, so that everyone in the organization knows what is expected of them and how they can contribute.
- Reviewed regularly: OKRs should be reviewed regularly to ensure that progress is being made and to make any necessary adjustments.
Why SMART goal setting is not enough for designing OKRs
Of all the popular goal management methodologies, 99% of guides on OKRs will start talking about SMART goal setting. In case you have been living under a rock for the last 20 years, here are the criteria for a SMART goal, target or task...
- Targeted/Time bound
The trouble is, SMART is only part of the picture. It is perfectly possible to have objectives and key results which are SMART and still fail.
Why is this? Well, here are some common issues that SMART goal setting, targets and objectives do not address...
8 common SMART OKR design problems
SMART objectives have several benefits, but also some potentially fatal flaws and gaps. Here are some of the most serious risks that come from using just the SMART approach for OKR design...
1. Lack of ambitious goals
Kaizen and continuous improvement have proven that cumulative small wins can be important, but stretch goals are critical too.. Without ambition, OKRs become 'just another management admin task' and quickly fall our of use.
2. Lack of alignment with organizational objectives
It's fairly straightforward to pluck objectives and key results out of thin air in isolation. The real challenge is to make sure they all line up with the overall company objectives.
Every key result and objective must ultimately lead to delivery of one, or more of our corporate objectives. If that’s not the case, they our effort is wasted or our strategy is poorly defined.
3. Targeting a single metric, KPI or measure
Targeting just one key performance indicator or metric can be a highly risky business. If you take the example of a contact centre, just targeting ‘average handling time’ (AHT) can lead to dangerously rapid call handling, persistent unresolved problems and unhappy customers.
We need to have a basket of metrics to ensure that we don't drive extreme and counterproductive behaviours within our team.
4. Poor engagement of the team and stakeholders
It's one thing to write OKRs, it another to build proper stakeholder engagement. Lack of engagement is one of the biggest risks to any form of performance management system, be it OKRs, Balanced Scorecard or any other approach. Our design system needs to include a structured and systematic approach for early, well considered stakeholder communication and engagement.
5. Lack of owner 'agency'
If you took an average middle aged guy and offered him a $100m to jump 3 m (9 feet) in the high jump, it doesn’t matter how much reward you offered him, he’s either going to cheat or kill himself trying. Success is highly unlikely. He does not have the agency to achieve the objective you are setting.
It’s very important that we consider four ingredients of agency when we set our Key Result KPI targets. These ingredients are…
…or STAR, for short. SMART arguably covers this to some extent in the 'Realistic' element of the acronym, but the STAR approach helps us review each element specifically.
6. Arbitrary target and key result values
If we don’t understand how we performed in the past, what ‘best possible’ performance looks like and how practical it is to achieve an outcome, our targets are likely to be arbitrary and potentially unachievable. Historical data and best-observed performance, gives us a fact-based foundation for our key results design, and a powerful argument for their validity.
7. Gaming the system (cheating)
As anyone who has played family board games knows, humans are optimisation machines and often rampantly cheat if they think they can get away with it. People will attempt to achieve the objectives and key results by any means necessary and this often includes gaming the system and rules. Understanding that this happens and that it is predictable and preventable is essential. We need to include steps in our OKR design method to anticipate the nature and intensity of this cheating, and to mitigate it.
8. Poor maintenance
Even the best designed OKRs will fail if they are not regularly reviews, discussed and tuned. Simply creating OKRs is not enough, they need to become part of the 'management control system'. This may sound complex, but in practice it means regular, structured, review sessions with the right people and solid action-management that delivers results.
OKR Design in 10 Logical Steps
Here is an overview of the powerful OKR-DS process, designed to take the guesswork out of OKR design, combine this with KPI selection and avoid common pitfalls...
Let's take a closer look at each of those steps, one at a time...
The OKR-DS 10 Step Method
Step 0: Review
Picking the right objectives is essential. We need to identify or revisit the high-level outcomes that we're looking for. This will involve a review of the existing strategic documentation and possibly the creation of new strategy statements. Head to this post on how to choose strategic objectives for some practical help.
Step 1: Build KPI + OKR Tree
Build your KPI Tree. For much more detail on how to do this, head to How to build powerful KPI Trees. At this stage it is just an KPI Tree, we will add the OKR element in the next step.
Step 2: Brainstorm sort and group
Pull together your core stakeholder group for the brainstorming session. The exact mix of the group will depend on you particular situation, but it can help to include a variety of stakeholders as they will bring different perspectives.
If you are in a meeting room together, unroll a wide-format printout of your KPI Tree. If you are online, use a virtual whiteboard tool (like Miro or Mural).
On your KPI Tree, mark the boxes that will offer a significant boost to the business.
Brainstorm the critical outcomes, results, activities and tasks that will have a positive effect on the KPI Tree boxes you flagged as important.
Run through the stickies (or virtual stickies) and sort them into 'Objectives' or 'Key Results'. Some may fall into both categories, as they are linked and aligned. In that case make as many copies as needed.
Sort and group the Objectives and Key Results into specific draft OKRs. Don't worry about getting the specific target values perfect at this stage, we will revisit them in Step 5.
Add these draft OKRs to your KPI Tree. Use the tree to identify the relevant and related KPIs that will show you if you’re on track for achieving the high-level goal from Step 1 and draft OKRs from this step. KPI Trees are a rich and powerful way of understanding the links between performance and outcome, but they do take time and effort. To find out more about KPI Trees head to our full guide - 'How to build KPI Trees'.
Step 3: Engage with all OKR owners
In this step we identify everyone who can influence the Objectives and Key Results we identified in the previous step. Share the KPI + OKR Tree, invite feedback and input.
For larger organizations a communications plan can also be a good idea.
Use RACI and stakeholder trackers to manage that process.
Step 4: Check Owner Agency
Review the draft OKRs and relevant KPIs to see if the target owners have the necessary agency. Agency is the ability to deliver the target result and includes...
... or STAR for short. If your target owners don't have agency, it needs to be fixed. Setting OKRs for people and teams who don't have full agency is dangerous as it often leads to burnout, rule breaking, and even law breaking.
Step 5: Set Draft Key Result Target Values
Next you draft your initial values and rules for your targets. We need to decide whether we're going to use ‘all or nothing’ targets or perhaps tiered targets where we have different levels. Use historic data wherever possible when you're setting your draft targets; it gives a starting point for assessing what is achievable. Stretch targets work best if there's a bit of science behind them.
Step 6: White Hat Testing
In Step 6, you walk through what should happen if the OKR owners follow the process in the expected way, with no attempt to game or test the target rule set. This is normally a low-drama activity to make sure we have covered everything. Step 7 is where it starts to get interesting...
Step 7: Black Hat Testing
In ‘Black hat testing’ you get a little evil and ask, “In the real world, if we had to achieve these OKRs by any means necessary, how would we do that?” Use reverse brainstorming and to help flush out potential problems and solutions.
Step 8: Fix Problems and Re-test
Once you've identified potential problems using black hat testing, you need to skip back either to Step 2 (Brainstorm, sort and group) or to Step 5 (Set Draft Key Result Target Values), depending on whether you need additional KPIs or to rework KPI targets. Then, work through the subsequent steps in the process until you arrive back at 'Black hat testing'.
If you clear black hat testing with no issues, you are ready to head to our next step — Step 9: Record and Share OKRs.
Step 9: Record and Share OKRs
Once you've tested and tweaked your OKRs, targets and KPIs, you've got your final OKRs and target values and they get through black hat testing unscathed, it's time to record them in an accessible place, to share them, and to manage any post-launch updates and adjustments in a secure and transparent way.
When you come to build your OKRs, I’d recommend printing out the canvas (A2 works really well) and then put them on the wall. The team can write on it, add stickies, and use it as a focal point for workshops. The canvas will also guide you through the questions you need to ask in order to get good quality, effective, robust OKRs.
20 Great OKR examples
Customer Service OKR examples
Objective: Deliver and awesome customer experience
Objective KPI and target - Increase customer satisfaction score by 11% by end of year.
- Implement a c-sat survey and track the results to identify areas for improvement.
- Reduce our support ticket response time by 38%, translates to us responding to support tickets within 12 mins 53 seconds or less time.
- Increase our first-touch resolution rate to 78% or better.
Objective: Reduce customer churn and improve customer retention by 5% in Q3.
- Implement a customer success program to proactively reach out to at-risk customers.
- Achieve 100% completion rate on customer health-check calls by the end of this quarter.
- Implement a customer loyalty program to reward and retain long-term customers.
Sales team OKR example
Objective: Increase revenue by 20% in Q3.
- Increase the number of qualified leads by 30%
- Increase the close rate on qualified leads by 10%
- Increase the average deal size by 15%
Admin OKR example
Objective: Improve document management system efficiency.
- Design, agree and sign off on a document catalogue structure.
- Complete migration of all existing documents to the new system
- Achieve a 0.2% or lower retrieval fail rate on the new system.
Objective: Improve communication and collaboration within the team.
- Implement Microsoft Teams for all users
- Train 100% of the team in optimal use of Teams, Outlook and live meetings
- Create 1 page agendas for all formal meetings
Marketing OKR examples
Here is an example of OKRs for a marketing team:
Objective: Increase brand awareness score by 22% by November
- Launch a multichannel social media campaign targeting our customer demographic
- Increase the number of blog posts published per month by 20 per month
- Partner with 5 industry influencers to promote the brand
- Maintain marketing spend at or below last year's level
Objective: Increase website traffic by 250% in the first half of 2023.
- Complete on-page optimisation of our top 40 site pages, score over 80 for each.
- Increase the number of inbound links, with a DR of 40+, to our main website by 20%
- Achieve 'good' core web vitals on Google Search Console
Design OKR examples
Here is an example of OKRs for a design team:
Objective: Win a Red Dot design award for our Crevice Cleaner.
- Enter our Crevice Cleaner design in to the next Red Dot award
- Gain 5 or more positive industry magazine reviews
- Achieve product placement in Top Gear and Fifth gear TV shows
Objective: Increase design team productivity by 15% in H2
- Produce 3 extra prototypes rated 'good' in blind testing
- Hire two new admin staff for non-design admin tasks
- Commission titanium 3d printer for prototyping
Product marketing OKRs examples
Here is an example of OKRs for a product marketing team:
Objective: Launch our Car Karaoke product successfully in Feb
- Develop a comprehensive launch plan and timeline
- Set up weekly cross-function team timeline reviews
- Execute a dummy launch two months before the real thing
Objective: Increase product Car Crevice Cleaner refill purchases by 30% in Q2.
- Reduce current fill levels by 10%
- Include 50% capacity 'starter' cartridges in new Car Crevice units
- Develop point-of-sale material explaining the better value of the new formulation
Digital marketing OKR examples
Objective: Increase social media engagement by 23% in Q3.
- Implement a new social media content calendar
- Increase the frequency of social media posts by 57%
- Increase the number of user-generated content posts by 28%
HR OKR Examples
Objective: Increase employee satisfaction score and retention by 10% in Q3.
- Implement a weekly team member satisfaction survey and track the results to identify areas for improvement
- Increase the average weekly employee satisfaction score by 5%
- Reduce employee turnover (team member turnover) by 8%
Objective: Reduce the application-to-start hiring process by 75% by July.
- Build role templates for all roles, for rapid advertising
- Introduce AI assisted CV screening to reduce sift process to 1 hour or less
- Set up a SMED (cycle time reduction) team with the HR specialists
Finance OKR examples
Objective: Improve financial forecasting accuracy by 18%, or more, in Q4, in line with our company goals.
- Implement a new financial forecasting tool and train all team members on its use
- Increase the number of data points used in financial forecasting by 44%
- Increase the frequency of financial forecasting updates from quarterly to monthly
Objective: Reduce expenses by 10% in May.
- Introduce our newly agreed approval limits
- Travel freeze, except when approved in writing by a Band 2 or above
- Renegotiate our comms contracts, with a target cost reduction of 30% or greater
IT OKR examples
Objective: Reduce EPOS terminal downtime to 0.01% or lower next year.
- Roll out planned motherboard replacement (QZ7s with ceramic capacitors)
- Procure and install uninteruptable power supplies for all EPOS terminals
- Implement failover backend site servers
Objective: Increase the speed of critical system patches (severity 7 or above) to 12 hours or less in Q3.
- Set up 24 hour central systems operational control room.
- Commission Xod automated patch deployment platform
- Track emergency patch actions activity in ops activity tracker.
Project Management OKR examples
Objective: Increase the success rate of projects by 20% in H1.
- Implement weekly project health review meeting
- Identify key learning points from 5 biggest project failures last year
- Implement project failure key learning points and track impact on project success
Product Management OKR examples
Objective: Launch a new product successfully in Q3.
- Develop a comprehensive product roadmap and timeline
- Collaborate with cross-functional teams to ensure a smooth product launch
- Achieve a 50% conversion rate from product demonstrations to sales
Objective: Increase product usage by 20% in Q3.
- Conduct user research to gather feedback on product features and usage
- Implement changes to the product based on user feedback
- Increase the number of active users by 25%
Engineering Team OKR examples
Objective: Increase productivity of engineering processes by 25% in Q3.
- Identify and prioritize bottlenecks in the engineering process
- Implement new CAD/CAM suite to streamline the engineering process
- Measure and track the results of process improvements to ensure that efficiency targets are met
Net Promoter Score (NPS) OKR example
Here is an example of OKRs that might be used to increase net promoter score (NPS):
Objective: Increase NPS by 10% points in Q1
- Conduct customer surveys to gather feedback on the company's products and services
- Identify 3 priority areas for improvement based on customer feedback
- Implement changes to improve customer satisfaction and increase NPS
Employee engagement OKR examples
Objective: Increase employee engagement by 20% by Q3
- Conduct a survey to gather feedback on employee engagement and identify areas for improvement
- Implement employee engagement initiatives, such as team building activities, leadership development programs, and recognition programs
- Track and measure the results of employee engagement initiatives to ensure that they are effective
ESG OKR Examples: GHG emissions and Diversity
Objective: We reduce our calculated carbon dioxide emissions to the bottom decile for our industry (24,000 tonnes, or lower, per annum)
- Switch our heating to ground source heat pumps powered by green electricity by June 1st
- Migrate half of our fleet to electric vehicles powered by green electricity by end of year.
- Offset 90% of our remaining green house gas emissions by the end of next year
Objective: Deliver a truly diverse team
- Increase women in senior leadership roles (bands 1 and 2) to 48% or greater
- Complete unconscious bias training for 100% of candidate facing team members.
- Increase our recruitment of designated 'under represented groups' to 60% more than our April 2022 level.
Organic website traffic growth OKRs
Objective: Increase organic traffic by 8x within 12 months
KPI: Organic page hits
Target: 10,048 or more hits per day, 7 day average.
- Produce one new optimized cornerstone blog post per week for whole of 2023
- Complete each Surfer SEO optimization action plan for the whole of this year
- Design and roll out a new landing page implementing the CX report of Dec 2022.
- Achieve 'Good' web vitals on Google Web console for site XYZ.com
8 tips for writing OKRs for the first time
- Always keep an eye on your business goals (better still, use a KPI Tree).
- Focus on creating alignment across all of your OKRs using OKR + KPI Trees.
- Setting OKRs for teams will encourage cooperation, as long as the OKRs cross multiple teams are aligned properly.
- Write your OKRs down and review them regularly.
- Make sure your OKRs include stretch goals to challenge the status quo.
- Create OKRs that people agree on and feel passionate about.
- Use a mixture of behavioural and process key results to drive progress.
- Make OKRs become part of day to day work, not a 'special project'.
Remember great OKRs are not just ones that look amazing, they must be used and challenged on a daily basis to effect real change. Your objective and key results must become part of the day to day work, using OKR cycle like this...
...not a 'special project'.
OKR + KPI Frequently Asked Questions
A KPI is a numerical measure of some aspect of performance. A Key Performance Indicator simply shows the magnitude of something relevant to your organisations.
An OKR is a combination of an...
Objective - something you want to to happen, to deliver your strategy and...
Key results, actions, tasks, outcomes or results that will help deliver the Objective.
This is where KPIs and OKRs work well together. A key result can have a KPI and target value associated with it, unless it is an action or task. The KPI element of the mix gives us objective answers to the question 'How are we doing in progressing towards our key results and company's objectives?'.
If we don't measure success once we have set OKRs it's all pretty pointless. Fortunately, it doesn't have to be very complicated. As a minimum, you can have a simple spreadsheet which shows
KPIs and targets
A column for each KPI result per period
Team OKRs are OKRs that are owned by two or more people. At the top level, company OKRs are really a team OKRs, for the entire organization. Creating team OKRs where everyone is doing the same job is quite straightforward.
Where it starts to get tricky is where you have different roles within team to contribute towards the same ultimate outcome. This is where we need to use a KPI tree to allow us to assign KPIs to the various micro, midi and macro results that contribute towards a company objectives.
Using the KPI tree gives us a powerful visual tool for building the alignment that we need for team okay ours. Some elements of the team OKR may be common, but a specific key result may be unique to an individual or a subset of that team.
Absolutely! Shown below is an example of how you can integrate OKRs into a KPI tree. It's not advised for beginners to try this straight after learning the KPI Tree approach, but once you've mastered KPI Trees, then it's a fantastic way of aligning, objectives, targets and measures in one single easy to understand document.
There's a real risk of going a bit 'over the top' when it comes to setting OKRs. Unless you are very experienced and have a clear reason for doing so, you should aim for a maximum of 5 committed OKRs per person. Each OKR should have 3-5 key results. When starting out with OKRs, it is a good idea to start with 3 or fewer objectives.
Generally organisations use a mixture of both team and individual OKRs. It's important that an OKR is relevant to an individual to build motivation and commitment but also aligned with the organization's OKRs. Team OKRs also have a place where you have a group working towards a common team outcome, for example in...
Sales - Typical objectives might cover total sales, profit, number of new customers etc.
Production - Typical objectives might cover plant efficiency, overall yield, warranty claim rate etc.
In fact most organizational function would be expected to have team OKRs and obviously different teams will have different 'local' OKRs that link back to the company OKRs.
Taking the example of the production function. A shift leader might have an OKR for a particular production line, or process, within that plant and might have efficiency and yield OKRs just for that area, but of course these with support the team-based plant-wide OKRs for efficiency and yield.
Example - Sales team OKR...
Objective: Win $5m+ in product sales
Key Result 1: Win 50+ deals worth $100k+
Key Result 2: Generate 213+ qualified leads
This largely comes down to personal preference. As long as you use an alignment method, like KPI Trees, it shouldn't matter to the ultimate outcome.
If you do decide to do 'bottom up' OKRs, then you will still need to thoroughly understand your companies objectives and make sure that your low level OKRs connect with them in a meaningful way. If in doubt, go for top-down, as starting with the bigger picture makes alignment simpler and easier.
Most companies have goals, objectives or ambitions. Those that don't tend not to survive for long. Company goals are the ultimate objective of any activity within the organization. So, anything we do should ultimate contribute to one or more of those objectives, either directly or though some intermediate objective.
The tool to help you achieve this is a KPI Tree. To find out more about KPI Trees head to our full guide - 'How to build KPI Trees'.
For many organisations a simple spreadsheet (Excel or Google Sheets) will be fine for managing OKRs. The advantage of Google Sheets is that it's collaborative nature makes it much easier to store all the OKRs in the same place - a blessing for senior managers looking for an overview.