No business owner, executive, or manager wants to leave future success up to chance. But of course, making objectives out of thin air isn’t helpful. Overreaching can strain your budget and employees without getting positive results. They may even be harmful.
That’s where a goal-setting framework like OKR comes in. In this article, we’ll look at the OKR meaning, break down examples, and teach you how to implement it yourself.
The OKR meaning: Objectives and Key Results
What does OKR mean in business? In corporate or startup environments, OKR is a goal-setting framework. It outlines how companies can identify key objectives and set realistic targets — key results — to make them a reality.
It can help you decide on — and stick to — a direction, helping your company evolve. Typically businesses use it for long-term quarterly or annual planning. The objectives should relate to your long-term vision and mission and the key results should lead to concrete actions, as shown below in this OKR diagram below:
In short, OKRs help you make your vision a reality. If you’ve been in business awhile, you’ve likely also heard the term KPI.
What’s the difference between KPI and OKR?
The main difference is that a key performance indicator (KPI) is a metric you use to measure progress, while OKR is a complete method for setting and completing business goals.
A typical KPI could be sales revenue growth or customer retention rates. They can help you judge how well your project’s going. With an OKR, you set a concrete strategic objective and define crucial results. Even if the focus is on sales revenue growth, you specify a target number.
Objective: increase North American sales revenue by 20% in Q1 2021.
Then, you break down that crucial company objective into the key results. Each key result represents a crucial milestone towards making the overall objective a reality.OKR is a method for coming up with a high-level strategy for meeting your ambition. KPIs help measure the progress towards strategic objectives.
On the other hand, a poorly performing KPI can be the inspiration for a new OKR session. For example, if your retention rate falls, just measuring it isn’t going to solve your problem. You need a strategy to solve the problem. Overall, an OKR has more in common with a SMART goal than a KPI.
OKRs, KPIs…is is really necessary to add another acronym for achieving goals? Here’s the short answer: yes.
Why OKRs are important for reaching your business goals
A high-level strategy is an essential tool for reaching your business goals. The OKR methodology can help you identify tactics and measure your progress.
For example, McKinsey analyzed companies trying to utilize data better in a 2018 study. The study found that a good strategy was the largest contributor to success.
Even in a technology and skill-reliant category like data analytics, strategy reigns supreme. And it makes sense.
Your strategy sets the tone for how your entire company will tackle a new goal or challenge.
That’s why you can’t afford to ignore the OKR framework. It’s not just a simple goal-setting tool. Sure, it helps you set ambitious company goals. But above all, it highlights the most logical path forward by outlining high-priority milestones.
So, how do you use OKR?
The first step to using OKR is to break down your overall company mission into concrete objectives.
Let’s take a closer look.
How to set objectives with impact
When trying to identify objectives, the vision should be your guiding light. Break your long-term strategy down into 30 to 90-day goals.
Follow a structured process, with customized questions like:
- What are the most impactful actions we can take to progress towards our vision right now?
- What do we need to change to improve our market share/product/services?
- What does success look like?
- Increase company revenue by 10% by the end of Q1.
The specificity and timeframe are the core differences in an objective vs. a generic goal.
Clear key results help guide your process
Single out a shortlist of 3–5 key results for each objective.
Key results act as milestones or checkpoints and should help guide your progress and motivate your team.
They should be:
- time-bound: achieved by set date or timeline
- specific and measurable
But enough theory.
Let’s look into some practical scenario for using OKRs
The best way to understand OKRs is to see examples of them in action. So we’ve prepared examples from a variety of departments and industries.
Sales OKR example
Our first example is from a sales department that wants to boost annual sales revenue.
The team set the objective as a 25% improvement, basing it on historical performance.
Ambitious goals are great. But if your average sales growth is 5%, don’t try to aim for 50% right off the bat.
Pro tip: you can use a separate stretch goal or “moonshot” to help your team think of high-impact solutions. That kind of focus is a method called “aspirational OKR.” It’s an excellent tool for brainstorming. But it’s not good for morale if you tie bonuses or performance reviews to unrealistic goals.
The objective was then broken down into 3 key results. Each key result leads to an obvious path of action. For example, trying to increase the deal size narrows the focus of your sales reps. They must push the benefits of premium plans or focus on locking in longer deal terms.
Marketing OKR example
The next example is from a marketing department that wants to establish its company blog.
The main quarterly objective is to boost blog traffic by 100%.
Each key result includes a clear goal and timeline to help the marketers estimate progress. If they land more than 5 guest posts by the middle of February, they would be ahead of schedule.
Your overall objective decides which milestones and metrics to emphasize.
Software development OKR example
In software development and engineering, OKR is a little bit different. Instead of focusing on metrics and measurable milestones, you tend to focus on deliverables.
For example, your main goal might be to launch an Android app for your SaaS. To get there, you need wireframe diagrams and design, a prototype, and a functioning beta version.
Customer support OKR example
One tip for customer support OKRs is to tie the objectives to real business objectives. While focusing on customer satisfaction and net promoter score surveys is all well and good, that’s not the finish line.
Improving customer retention and boosting brand loyalty, on the other hand, are great goals. They directly impact the bottom line, and it’s easy to motivate and get other departments on board.
Ready for one final tip for optimizing and creating OKRs that work?
monday.com can take OKRs to the next level
With a Work OS like monday.com, you can easily craft a project management environment that makes full use of OKR. With 100s of integrations, a smart automation builder, and full customizability, you can create a platform that actually helps your team get more work done.
Share and collaborate on an inspiring vision
With monday.com, you can easily create a corporate vision or mission board. It shouldn’t just be vague fluff to try to motivate the lowest common denominator.
You should also include medium-term high-level strategic objectives that will help your company stay on top.
A shared vision board that key stakeholders can contribute to will help your company stay in tune with the marketplace.
Use our ready-made OKR template to get started
You can use the monday.com OKR template to generate a quick overview of your OKRs for each quarter.
You can then connect these boards directly to other team boards and deliverables using automations. For example, you can link the wireframe’s project status to the wireframe item in the OKR board.
Streamline your workflow throughout the whole company
monday.com makes it easy to standardize your processes through custom templates, integrations, and automation. For example, you can easily edit the OKR template to suit your workflow.
To ensure everyone is on the same page, you can use integrations to send automated reminders via Slack or Gmail, based on upcoming OKR deadlines. You can also use the monday.com Apps Framework to build any custom functionality you need.
OKRs and monday.com can help you consistently achieve crucial business goals
In today’s world, companies that don’t continually evolve become obsolete, lose market share, and disappear. That’s why OKR combined with monday.com is such a powerful and essential weapon to have in your management toolbox.
Use our OKR template to transform how you handle long-term planning, and make more of your high-level strategic objectives a reality.