Objectives are more often than not aspirational & qualitative in nature. They tend to answer the question – What do we want to achieve?
By themselves, objectives do not inspire action. Looking at them one can always wonder what the next steps should be in order to achieve them. This ambiguity is what leading to the decline of traditional goal setting.
Example – Build a number one OKR app for teams using Jira
Key results are the definitions of success & failures for the objectives they are defined against. In context of the objective, ask the question – How do we know we’ve achieved the objective?
Defining key results is one of the most daunting tasks when it comes to OKR adoption. Same objective, for two different teams can have completely different key results. Process of finalising key results refines the thinking process & can reveal different approaches to achieve the same objective. More importantly, key results will also make strategies abundantly clear to all the stakeholders.
For the objective mentioned above ‘Build a number one OKR app for teams using Jira’, couple of key results could be.
Example – 1. Highest number of active customers in the Atlassian ecosystem
2. 1milliion objectives graded & closed every quarter
There could be a few more key results. If you noticed, 1st key result talks about highest number of active customers in context to the objective ‘build a number one OKR app‘. For another company, definition of being number one could be ‘Highest revenue on the Atlassian marketplace‘. This is where OKRs become handy in communicating strategies by way of key results.
Key performance indicators or KPIs is a measurable value that demonstrates how effectively a company is achieving key business objectives. (source – klipfolio)
How are OKRs different from KPIs? – one question you would definitely hear sooner than later.
Answer – OKRs contain KPIs, but they are not the same. For example, ‘Customer lifetime value‘ is a KPI tracked by most marketing departments. This KPI can be used in a key result as following – Increase customer lifetime value from 2500$ to 2800$.
Key results can not only be KPIs but also milestones. Thus KPIs can be said to play an important part in OKRs.
One of the key aspects of OKRs is its agility. Recommendation is, design-execute-assess your OKRs on a quarterly frequency. This frequency tends to be efficient for most companies. Of course, if there are reasons to make changes to this frequency you are free to do so.
This frequency is referred to as cadence.
UpRaise does not have any kind of cadence for company OKRs. From our experience, majority of companies have their strategic goals as company OKRs. And they have larger durations, than a quarter. Typically one year or even more. Thus, team & individual OKRs which are more tactical in nature are contained in what we call ‘objective cycle’. By default these objective cycles are quarterly, but can be modified to meet your needs.
Alignment refers to the process of linking company, team & individual OKRs. This differs from the traditional sense of cascading. Cascading typically refers to the process of creation & assignment of sub-goals to the team members from the goal of their manager. In fact in some cases, cascading also refers to assigning same goals to the team members.
OKR alignment differs significantly in following ways:
Its not necessary that you support OKRs of your manager
As long as there is direct or indirect support from your individual OKRs to either team or company OKRs, you are good
Blindly copy pasting the same goals across different individuals is a definite no-no
We’ll deep dive into these details, in a dedicated section for Alignment.
Progress roll up
When different levels of OKRs are aligned with each other, progress on OKRs at the bottom can automatically keep the progress updated for higher level OKRs in the alignment. This act of automatically rolling up progress from the lower levels to the upper levels of OKRs is termed as ‘progress roll up’.
For example, consider following alignment structure (overly simplified for the sake of this discussion).
Increase revenue from the software product line by 30 million dollars (company objective) ← SaaS sales team expands in APAC & brings in 10 million dollars more revenue (team objective) ← Amanda (VP of sales for APAC) closes deals worth 5 million dollars with new clients (individual objective).
Now as Amanda updates her objective as she keeps on closing new clients, the progress can be rolled up to the corresponding team & ultimately company objective.
While we will address this point of progress roll up in more detail well into the course, it is important to note that – progress SHOULD NOT roll up ALWAYS. In some cases it does make sense, in others it doesn’t.
Once the due date of the OKRs is reached, they are supposed to be graded on a scale from 1 to 10. Some OKR coaches suggest different scales for grading, but the essence remains same. Average grade on key results becomes assessed grade at the objective level.
Through the process of grading, one should objectively assess the efforts that went into those OKRs & inform upcoming OKRs accordingly. This is exactly similar to retrospectives in agile software development.
Cross functional collaboration
OKRs are meant to foster collaboration among different teams. Traditionally, each team had its own set of private goals that the other teams didn’t know of. OKRs recommend setting all goals public. This is to avoid redundancy of efforts & to enhance collaboration of different roles & functions.
The OKR alignment is never strictly based on the organisation hierarchy. Rather, it is prescribed to be more collaborative in nature.
For example, if generating revenue from a new product is one of the OKRs for the sales team it definitely is going to need supporting role from the product & product marketing teams. If each others’ goals are known to them right at the outset, achieving them becomes easy through cross functional collaboration.