We adopt Objective and Key Results (OKRs) methodology at source{d} because it is an efficient system to improve employee engagement and performance through the combination of clearer focus, alignment and transparency.
It makes organizations shift the focus from output to an outcome-based approach ("I’ve had a demo with a prospect" is an output—a result achieved immediately after implementing an activity—vs. "I’ve closed a customer" is an outcome—a mid-term result).
The OKR framework was developed by John Doerr around the 70's when he worked at Intel. Since then, companies like Google and Amazon use the system to manage goals and implement strategies.
The methodology consists of Objectives, that are the goals to be achieved by the company, and under them are the Key Results, that measures progress towards these goals. Initiatives, that come under the Key Results, describe the proposed actions to achieve a key result. At source{d} we adopt also the concept of Agile Epics to be the tangible and actionable expressions of these proposed Initiatives.
- source{d} OKR methodology
Before diving into source{d}'s particular methodology on implementing OKRs, it is very helpful to understand the background and reasoning behind it.
Here we present curated resources on the principles and applications of OKRs, which set the common ground before the specifics that apply to our case.
- Ownership of the OKR process (OKRs Ambassador): @Fernanda. Responsible for ensuring that everyone who will be using OKR is trained, engaged and has ongoing help and guidance (the "how"). Don't shoot the messenger!
- Ownership of the OKR contents: Management and team leads still own their OKRs (the "what") and other related artifacts. Commitment is key.
Here we present a list of key concepts, their meaning, applications and sample usage.
“Where do I want to go?”
An Objective is a description of a goal to be achieved in the future. An Objective sets a clear direction and provides motivation. An Objective can be thought of like a destination on a map.
An Objective should be ambitious and feel somewhat uncomfortable.
Source: Perdoo
“How do I know if I’m getting there?”
A Key Result is a metric with a starting value and a target value that measures progress towards an Objective. A Key Result is like a signpost with a distance that shows how close you are to your Objective.
A Key Result should be easy to grade with a number and should always be things that you don't do, but you can influence so it can happen.
Source: Perdoo
“What will I do to get there?”
An Initiative is a description of the work you’ll do to influence a Key Result. If an Objective is your destination and a Key Result shows the distance to go, an Initiative describes what you’ll do to get there, (take a car, row a boat, etc.).
Source: Perdoo
- An epic is a large body of work that can be broken down into a number of smaller stories (tasks).
- Epics are on the lower level of the hierarchy (under Initiatives) but on the high level of the tasks.
| Objective | Key Result | Initiative |
|---|---|---|
| Pioneer reusable rockets | Engine tests have a 99% success rate | Design and build a new turbopump |
| Launch the most popular new iPhone App | Get featured by Apple on the App Store | Hire an app store optimization agency |
| Become internationally recognized as an innovator | Gain 3 national newspaper mentions in 10 countries | Run 5 PR campaigns |
Source: Perdoo
Now that you're familiar with the concepts, we'll jump to the practical implementation, covering key aspects of each item.
- Turn your mission and vision into an Ultimate Goal.
- An Ultimate Goal should aim for a point at a considerable distance in the future (theoretically 10, 15 years for large companies, but adaptable to startups).
- They represent the strategy.
- 3 or 4 things your organization aims to achieve in the next 3 months.
- Everyone in the organization should be able to give their input.
- Start with an OKR workshop where all key stakeholders responsible for company strategy give their input for what they think the top priorities should be.
- Key characteristics: aligned, high impact, time bound.
- Aligned to the company objectives.
- Created once Company OKRs have been agreed upon.
- They will have a huge impact on your organization if you achieve them.
- Keep Group Objectives within a short and strict time frame.
- Key characteristics: high impact, specific, within influence.
- If you achieve 70% to 80% of your target, the company will notice.
- They should be focused and have a clearly defined scope.
- Should always be things you measure that you don't do, but you can influence so it can happen.
- Key characteristics: specific and within control.
- Describe the work required to influence Key Results.
- Initiatives are just hypothesis for what work might deliver the biggest impact.
- Initiatives are tasks, projects or similar activities.
(Image: Perdoo)
- Setting objectives that are not ambitious enough.
- Not having a clear understanding of the challenge you want to solve.
- Having more than 3 Key Results per Objective.
- Not involving all the stakeholders on OKRs elaboration.
- Not communicating properly the process throughout the organization.
- Writing poor OKRs (that don't measure customer behavior, but measures features delivery).
- Writing OKRs that fail to scale (not tying into each other and not making sense strategically throughout the organization).
The default timeframe for the OKRs is on a quarterly (3-month period) basis, with a mid-quarter review.
For the OKRs of a given quarter of the year starting at moment T = 0, milestones and processes below are measured in terms of T-t weeks (weeks before the beginning of the quarter):
- source{d} OKRs timeline spreadsheet
- On T-4 weeks: a draft document is started and shared on okrs Slack channel and stored in the OKRs folder on the root team drive.
- From T-4 to T-2 weeks: during these 2 weeks, company-wide and top-down Objectives and Key Results are written with the involvement of top & middle management. Teams and other stakeholders will be consulted over this time on the fit and feasibility of objectives and key results.
- On T-2 weeks: The top-down OKRs Draft is shared again with the company, now with the proposals for Objectives and Key Results.
- From T-2 to T-0: Bottom-up weeks, all team members comment on the draft document, proposing:
- Initiatives to achieve the OKRs proposed. Initiatives can be thought of as groups of Epics that would help us achieving an OKR.
- OKRs and Initiatives that aren't directly linked to one of the company-wide OKRs (or were overlooked), but do provide value to the company.
- Team leads and Product and Engineering management play a key role here, to ensure there are Initiatives for each OKR and Epics (even under a broader definition) to help have a shared common understanding of the problem tackled, refine requirements, preliminary feasibility.
- From T-1 to T-0: OKRs are finalized, Initiatives linked to the respective Epics. This is a key week and commitment is required.
- On T-0: the outcome is published and announced at CWM. The OKRs draft now finalized is merged to the source{d} OKRs repository.
- Discussions with all stakeholders will happen early in every stage of the process.
- Team leads need to be aware of objectives when they are drafted.
- Team leads need to be in the loop, specially during epics definition.
- Acceptance of OKRs by all stakeholders need to happen during the last week, not later!
- On T+7 (mid-quarter): Product and Engineering review OKR progress with all teams and relevant stakeholders and provide and update to the company on the okrs Slack channel and the company-wide meeting. This also serves as input for the beginning of the planning process of the next quarter.
- On T+11 (end-of-quarter): Product and Engineering review OKR progress with all teams and relevant stakeholders and provide and update to the company on the okrs Slack channel and the company-wide meeting, and progress and achievements are merged in the source{d} OKRs repository. This also serves as input for the beginning of the planning process of the next quarter.
- OKRs do not cascade
- You suck at OKRs, here's why
- Outcomes vs Outputs: are you activity or results driven?
Note: We believe the definitions and samples provided by Perdoo* are some of the best available out there and fit our case, thus we are not reinventing the wheel but mostly quoting them here—which also become the ground truth for source{d}.
*Which is a great tool to manage your OKRs, by the way.