OKRs—the almost mythical goal-setting system used by Google, promising higher performance, alignment between goals and strategy, and highly engaged teams…
…unless you have not yet mastered how to apply it and run into the specific challenges and mistakes involved in implementing the methodology and defining the OKRs themselves. Like any methodology, OKRs come with their own nuances and risks. As with any new skill, learning to define useful OKRs takes time and practice. Without experience and practical guidance, it is easy to become completely confused—and genuinely lost among the many, often contradictory, examples and recommendations.
Over the past year, we have worked with several clients on projects designed to improve their OKR-setting process. In this article, we summarize some of the most common mistakes made when defining goals with the OKR methodology and suggest how to avoid them, helping managers apply the approach successfully and formulate goals that are both meaningful and useful.
ABOUT THE METHODOLOGY
For readers who have not worked with the OKR methodology before, here is a brief introduction. OKR stands for Objectives and Key Results. The methodology asks each company or team to set a small number—usually no more than three—of broadly defined, qualitative Objectives that reflect the key priorities or most important goals for the next period, such as a year or quarter. Each Objective is supported by two to five Key Results: quantitative measures that show whetherthe Objective has been achieved.
To illustrate the structure of OKRs, we will use a well-known example from Measure What Matters by John Doerr, one of the pioneers who developed and popularized the methodology. Doerr describes a football team that wants to win the World Cup:
Objective: Win the World Cup
Key Result 1: Average 2.0 goals scored per match across the tournament
Key Result 2: Average 0.5 goals conceded per match across the tournament
Key Result 3: Maintain 75% possession
TYPICAL MISTAKES AND CHALLENGES WHEN DEFINING OKRs
To illustrate the typical mistakes and challenges involved in defining effective OKRs, we will use a hypothetical example: improving the effectiveness of Ninety Nine newsletter. We will also follow the natural evolution of the process as the wording becomes progressively stronger. Along the way, we will explain the principles of the methodology behind each requirement.
The broadly defined, qualitative goal: the Objective
As the introduction to the example suggests, we want the newsletter to be more effective. Why not simply write that?
Objective: Newsletter effectiveness
MISTAKE #1: The Objective does not state the expected result
This is a mistake we have seen some managers make. When the Objective names only the area in which something should be achieved—for example, “Newsletter effectiveness”—it does not indicate the intended direction of the result. The aim could be to maintain effectiveness, increase it, double it, and so on.
To avoid this mistake, begin the Objective with a verb that signals the expected effect or change: improve, increase, introduce, reduce, and so on. For example:
Objective: Improve the effectiveness of the newsletter
MISTAKE #2: The Objective is not specific
This version meets the requirement for a qualitative, broadly formulated Objective to describe the difference, change, or impact we want to create. At the same time, it remains too general and does not specify the improvement, change, or result. To make it more precise, we can ask: “What exactly do we want to be different about the impact of our newsletter one year from now?” or “What specifically do we want to improve about its impact?” This could lead us to:
Objective: Increase readers’ interest in our newsletter and their perception of its value
MISTAKE #3: The Objective is not motivating or inspiring
The recommendation to use inspiring language reflects a key difference between SMART goals and OKRs. SMART goals should be ambitious but realistic. OKRs are designed to pursue a more ambitious result—one that represents the most desirable future state rather than the most realistic one. Imagine that the Objective above is extremely difficult and has almost a 50% chance of not being achieved. At the same time, it is expressed in formal language that creates no emotional response. Not especially motivating, is it?
There are several ways to address this. First, inspiration is connected to the individual goals, motivations, and values of the people involved. We can therefore ask, “What inspires us as a team?” and “Given who we are, what would genuinely motivate us?”—and build that into the Objective. Another option is to connect the Objective to the company’s broader mission or strategic goal. Because OKRs represent the team’s most important priorities, even apparently mundane Objectives should be linked to a meaningful company goal or mission. Applying these two approaches, we might revise our newsletter Objective as follows:
Objective: Make the Ninety Nine newsletter the most anticipated, useful, and enjoyable email in our subscribers’ inboxes
This formulation also resolves Mistakes #1 and #2 while giving the Objective far greater meaning and value—especially for people whose work is to deliver useful content in an engaging and enjoyable way.
Key Results
MISTAKE #1: The Key Results are tasks, projects, or action-plan steps rather than results
Key Result 1: Include useful, relevant content in every issue and present it in an engaging way
This would certainly help, but producing such content is not direct evidence of the intended effect: greater reader interest. The easiest way to avoid this mistake is to ask, “Is this a result or an input?” and “Is this something I need to do, or something I expect to achieve?” When it is something that must be done, it is probably a task or a step toward the Objective—not a Key Result. By asking, “What do we want to achieve through the content we select and the way we present it?”, we might arrive at:
Key Result 1: Achieve a 75% open rate for every newsletter issue
This is unquestionably a specific, desirable, and ambitious result.
MISTAKE #2: The Key Results are related to the Objective but do not directly demonstrate that it has been achieved
If the broad Objective is “Make the Ninety Nine newsletter the most anticipated, useful, and enjoyable email in our subscribers’ inboxes,” related Key Results that do not directly prove achievement might include:
Key Result 2: Achieve a 2:1 ratio of non-clients to clients among newsletter readers
Key Result 3: Increase newsletter subscribers from 500 to 1,000 by the end of 2021
Given that one purpose of the newsletter is to expand the pool of potential clients, these would certainly be important results and are logically connected to a successful newsletter. Having twice as many non-clients reading it, and doubling the total number of subscribers, may well indicate that the content is stronger and better presented. They are not direct evidence of that, however; they are indirect indicators.
Because these results are important, they should be retained—but as measures of a different qualitative Objective: Build a dramatically larger and more diverse newsletter audience.
Our experience shows that changes like these are common during the OKR-definition process. As we make one Objective more specific, more meaningful measures—and sometimes more important Objectives—often emerge. We strongly recommend approaching OKR definition as a process of discussion and improvement, rather than trying to complete it as quickly as possible or defending previously drafted goals at all costs.
Let us return to our original Objective, which now reads:
Objective: Make the Ninety Nine newsletter the most anticipated, useful, and enjoyable email in our subscribers’ inboxes
Key Result 1: Achieve a 75% open rate for every newsletter issue
We still need a result connected to the word “useful” in our qualitative Objective. We might add:
Key Result 2: Achieve at least a 35% click-through rate on non-promotional newsletter content, as a percentage of opened emails
MISTAKE #3: The Key Result is defined as a minimum threshold
Managers often formulate results as “at least…” or “a minimum of…”—for example, “at least a 20% increase,” “a minimum turnover of 320,000,” or “at least 75% satisfaction.”
This wording can indicate two things. First, the manager allows for—or hopes for—overachievement. In that case, the target does not reflect the OKR principle of being ambitious enough to carry up to a 40% risk of not being achieved; it is set too low. Second, the result becomes difficult to assess unambiguously. If the minimum has been reached, has the target been achieved even though the wording implies an expectation of exceeding it? And how much overachievement would be satisfactory? Finally, when people are asked for a minimum, they are likely to aim for the minimum. The philosophy of OKRs is the opposite: pursue the almost unattainable in order to achieve more than expected. The solution is to set one specific expected level that is ambitious enough to make people think, “It is possible, but we will have to work very hard.” The Key Result should therefore be:
Key Result 2: Achieve a 60% click-through rate on non-promotional newsletter content, as a percentage of opened emails
MISTAKE #4: The result does not depend on the person responsible for the Objective
Consider the third element of our qualitative Objective: “enjoyable.” We might formulate the following measure:
Key Result 3: Five readers share our entertaining feature on their social media channels
The problem is that we have no control—and little direct influence—over this result. At best, our influence is indirect and relatively weak.
An important criterion for a Key Result is that its achievement should depend to a significant extent on the people responsible for the Objective, or that they should have substantial influence over it. In this case, we have neither direct nor significant influence over whether readers share our content. We therefore need to revise the measure:
Key Result 3: 20% of clicks on non-promotional newsletter content are on our entertaining feature
After these revisions, we have arrived at two well-defined OKRs:
- Objective: Make the Ninety Nine newsletter the most anticipated, useful, and enjoyable email in our subscribers’ inboxes
Key Result 1: Achieve a 75% open rate for every newsletter issue
Key Result 2: Achieve a 60% click-through rate on non-promotional newsletter content, as a percentage of opened emails
Key Result 3: 20% of clicks on non-promotional newsletter content are on our entertaining feature
- Objective: Build a dramatically larger and more diverse newsletter audience
Key Result 1: Increase newsletter subscribers from 500 to 1,000 by the end of 2021
Key Result 2: Achieve a 2:1 ratio of non-clients to clients among newsletter readers
Well-defined goals save time, create clarity, and make it easier to assess success and progress. The process of discussing and setting them is equally important: it is an invaluable opportunity to coordinate, collaborate, and build commitment to the success of the team or the company. Even when the process feels difficult, our recommendation is try it. And when you need support or an outside perspective while introducing or refining the methodology, give us a call.
