Understanding OKR framework

OKR is a popular management strategy used by many large scale companies. It was introduced and popularized by intel in 1970's. Now a lot of famous companies are using the OKR framework.

One of the main advantages of OKR framework is that the employees will be very aligned. The goals of the employees will be more about how they impact the direction and velocity of the company and less on the number of projects they complete.

Here is a short gist of what OKR

OKR stands for Objective Key Results. In the framework, there are three important pieces which make the machine work. Objectives, Key results and Initiatives.

Objectives

An objective is usually slightly vague and subjective. But this is the broad goal which the company/team is chasing.

Objectives are usually broadly divided into two types, Annualized and quarterly. Teams also will have their own set of annualized and quarterly objective. These objectives will drive the key results.

For example, an objective can be: get fit. The objective does not define how fitness can be achieved, but it talks about the goal.

Key results

Key results are the metrics which we can use to track the movement towards objectives. Key results are always numbers the company wants to optimize for.

This is very important to get right. If the key results do not technically impact the objective as expected, then the movement towards key results will be impacted. Imagine as an example, there is a tech company whose objective is to make better developer documentation. If the key result is the "Number of blog posts published", it might be a good key result. But if no one is reading/opening the blog posts, the objective is not being achieved. Maybe a better key result is "Number of page views".

Continuing on the example cited before, if the objective is to be fit. Then the key result could be the "number of calories burnt in a month".

Initiatives

These are the action items. The todo list. Initiatives are the action items which will help us hit the key results and thus impact on the objectives. This is usually at a team level instead of a company level. The team decides what to do to improve the key results.

Again, continuing the example cited before. If the key result is "number of calories burnt". An initiative could be to research for gyms around the area.

Some more examples on OKRs

• Objective: Improve stability of a system
  • Key result: Make sure the system has > 99% uptime
    • Initiative: Have an uptime monitoring system.
    • Initiative: Make sure all the downtime events are carefully recorded and understood.
• Objective: Improve customer satisfaction
  • Key result: >8 NPS score
    • Initiative: Integrate with a vendor who can efficiently collect and manage NPS scores
    • Initiative: Reach out to customers who give us a score less then 8
  • Key result: greater than 4 stars average app store rating
    • Initiative: have an easy way to ask for ratings inside the app
    • Initiative: Actively reach out to customers who are not satisfied
    • Initiative: Make sure people revise reviews once issues of result.

Tracking and measuring progress

There are different perspectives on how progress is measured. One idea is that if the team hits 70% of the key result, it has been a success. There is an argument against it saying that it relaxes the key result framing and that can turn out to be a problem long term.

But since tracking is an inherent property of the framework, tracking is relatively straight forward.

Retrospectives

Retrospectives are when the team gets together and understand how the quarter/year went.

This is a very important piece, understand how the team is performing and understanding why a key result was under hit/over hit and make sure actions are taken to address the issues. For under hitting, there should be a clear understanding on where the mismatch was. And for over hitting, there should be an understanding why there was a mismatch in the prediction.