January 8, 2019

Using OKRs to Drive Results

What do Andy Grove, John Doer and Eric Schmitt (among others) know that you don’t know?  Probably a great deal.  But one of the most important factors is how to set objectives and then accomplish those objectives through OKRs, which stands for Objectives and Key Results.  OKRs have been around a while and have been successfully utilized by some of the best companies in the world, like Google to help them achieve their success.

But entrepreneurs, in general, often struggle with properly setting objectives, set the wrong objectives or do not have a realistic plan to achieve objectives in a stated time frame.  They just don’t.  And it is one of the leading reasons companies stagnate and never achieve their growth potential.  Often, entrepreneurs are afraid (yes, that’s the right word), to publicly state their objectives and publicly state how they will achieve those objectives in the next 3, 6, or 12 months and then refuse to hold themselves and their teams (if they have teams) accountable for those objectives.  Their companies will continue to simply wander.

Enter OKRs.  OKRs are very simple.  Here are the definitions:

Objectives: What you want to accomplish

Key Results: How you are going to accomplish the objective and how you will measure your success

So, to begin you need to ask yourself:

  • What is holding you back?  What are the real controllable obstacles in your way (and you can’t simply say funding)?
  • What are your top 3 to 5 objectives that you need to accomplish within the next 12 months that will truly impact your business?
  • What quantifiable key results do you need to accomplish that will definitively get you to your stated objectives and in what time frame do you need to achieve those key results?

Another way to think of this is “I will (Objective) as measured by (Key Result).”  The controllable obstacle will help you determine whether your objectives are meaningful to your challenges.

Objectives: Memorable, qualitative descriptions of what you want to accomplish in a given time-frame (monthly, quarterly, annually).  Objectives should be ambitious and feel uncomfortable.  They should also be brief, inspirational and public.

Key Results: A set of 2-5 metrics that measure your progress towards the Objective.  They should describe an outcome, not an activity.  Once they are all completed, the objective is necessarily achieved.  Be careful not to use terms like “help”, “consult” or “analyze”.

The Objectives must be stretch goals but achievable.

Key Results MUST be quantifiable and time-bound.  They must be measurable.  They must directly correlate to the objectives that you set.

If sales is your main obstacle (and in what business is it not?), you must state precisely where you want to be in the future.  Now, what quantifiable things impact sales?  Well, sales is a function of the number of opportunities that you compete in times your win/loss ratio times the average value of your sale.  So your key results should include these factors and need to be measurable.  You can’t say that you are going to improve your sales presentation.  That is not measurable.  You have to say that you are going to increase your win/loss ratio to 30% in the next 90 days by improving your sales skills, building a structured sales process and improving your product demonstration.  You need to say that you are going to improve the number of sales opportunities that you compete in by doing 3 webinars during the next 4 months that each get 5 new active prospects, going to 2 industry conferences during the next 6 months that generate 5 new sales respects and sending out 2 new eBooks on relevant topics that increase your brand awareness over the next 6 months that each generate 5 new prospects.

This is hard because you are committing to results that will help you achieve your goals and people are generally reluctant to commit to results.  There is ALWAYs an excuse like “I don’t know how many leads a webinar will get.  What if no one comes?”  Well, that’s the point.  You have to build a webinar that people will want to attend, market it sufficiently to get attendance and have it relevant enough to generate the required 5 leads.  If you just say “I am going to do a webinar, you can achieve the results but it may not do anything to help you achieve your objective.  And, THIS HAPPENS ALL THE TIME.

The OKRs need to cascade down the organization (if you have one).  You need to publicly state what your company objectives and key results are.  Then the people who work in your organization should then determine what their objectives and key results are that support yours.  This is how you help achieve goal congruence.  If you don’t create the company OKR or make it public, there is much room for people to focus on divergent and irrelevant goals.

Poorly done/managed OKRs are a waste of time but well-done OKRs are motivational and help make it clear to people what’s important, what to focus on and what not to do.  Objectives and the what.  They express goals and intentions, are aggressive yet realistic, must be tangible, objective and unambiguous.  It should be obvious to an observer whether the objective has been achieved.  Key Results are the “Hows”.  They express measurable milestones, which, if achieved will advance objectives, must describe outcomes, not activities, must include evidence of completion.  This evidence must be available, credible and easily discoverable.

Also, cross-team OKRs are important and often essential.  So sometimes different departments will work in conjunction on their OKRs and sometimes they may require dependencies from one team to the next.  However, dependencies often lead to finger-pointing and blame.  You want to avoid this.

Scoring OKRs is also critical.  Organizations will score their OKRs on a 0 to 1 scale.  A .7 is considered acceptable.  Since the Objectives should be stretch objectives, you want to make sure that you are not scoring a 1.0 on all objectives.  If you are, your objectives were not set high enough.  There are two kinds of objectives.  These are “committed” and “aspirational”.  Committed OKRs are ones that we agree must be achieved and we are willing to adjust resources and schedules to achieve them completely.  You expect a score of 1.0 on these.  Aspirational OKRs are how we wish the world would look.  These are the ones where it is acceptable to get a score of .7.



We will double our ARR business in 2019 to $5.0M

Key Results (pick 3-4):

  • Increase our lead generation to a minimum of 50 new qualified opportunities/month from March – December
  • Increase our win rate to 40% of new leads generated by May
  • Increase the average ARR contract value to $25,000 by June
  • Shorten our sales cycle from 6 months to 4 months by June
  • Renew 95% of existing customer contracts for the year
  • Increase existing customer contract value by 20% on average over the course of 2019

Then departmental OKRs follow and flow down.  You get the idea.  Pick stretch Objectives and make sure the Key Results are quantitative

Common Mistakes Implementing OKRs:

  • Failing to differentiate between committed and aspirational OKRs
  • Setting business-as-usual OKRs
  • Setting timid aspirational OKRs
  • Sandbagging
  • Setting Low Value Objectives (setting the wrong objectives for your business)
  • Setting insufficient Key Results for Objectives

Remember to start with the three questions:

  • What is holding you back?  What are the real controllable obstacles in your way?
  • What are your top 3 to 5 objectives that you need to accomplish within the next 12 months that will truly impact your business and its valuation?
  • What quantifiable key results do you need to accomplish that will definitively get you to your stated objectives and in what time frame do you need to achieve those key results?

Share if you agree.  Contact us for details about how to implement this process for your company.  Early-stage companies need to implement OKRs as much, or more, than larger companies.