A Leader's Guide to Implementing OKRs: How Executive Teams Align Goals with OKRs

Implementing Objectives and Key Results

John Doerr’s 2018 New York Times bestseller, Measure What Matters, introduced the world to the practice of OKRs (Objectives & Key Results). Adopted by giants like Google, Intel, and Intuit, it has become widely adopted as a core methodology for prioritizing and organizing work within an organization. The subtitle of this book is “OKRs - The Simple Idea That Drives 10X Growth.” And in the forward, Google cofounder, Larry Page, writes “OKRs are a simple process that helps drive varied organizations forward. We have adapted how we use it over the years. Take it as a blueprint and make it yours, based on what you want to see happen.”

So, if it’s such a simple concept, why do so many companies overcomplicate it? We often have new clients join us who are using OKRs in their business and looking for a way to manage them better. They usually have complex OKR spreadsheets with dozens of tabs measuring hundreds of objectives across every department. Eventually, they will have multiple versions of this document living in different folders being updated at different times by different people, leaving no clear source of truth in the company. One CEO told me that through their robust OKR practice, he feels like they have 100 different projects going on at any given time, all tied to an objective in some way, but he has no idea which few are the most critical and whether or not they are on track.

We believe that Rhythm’s Think, Plan, Do methodology is the simplest and most effective way to implement OKRs, and our software is perfectly designed to support that work, lean out the process, and bring it to life in very practical ways. Here are a few best practices we recommend for companies looking for a lean planning process that harnesses the full value of OKRs and supports a high-performing organization.

What is an OKR?

An “OKR” stands for “Objective and Key Results.” It is a way to measure the success of your company, department, or team in achieving its goals. The idea behind it is that you can set specific objectives and track how well each individual on your team achieves them. In the simplest terms, the OKR methodology is a goal-setting technique designed to turn high-level goals into actionable goals and milestones. The OKR framework is made of two parts:

An OBJECTIVE is WHAT is to be achieved. They should be significant, concrete, action-oriented, and inspirational.
A KEY RESULT is HOW we plan to achieve the objective. They are specific, time-bound, aggressive, realistic, measurable, and verifiable. There are usually 3-5 KEY RESULTS attached to each OBJECTIVE.

When done well, OKRs can help an organization surface primary and secondary goals, align cross-functional efforts, provide purpose and unity, and increase employee engagement.

The OKR goal-setting framework is very flexible and can be used in different ways based on an organization's needs. As Larry Page said, “Take it as a blueprint and make it yours.” OKRs can be used at the highest level of a company to operationalize a company’s Purpose or Mission. And they can be used at the lowest level to build an execution plan for a 30-day departmental project at the team level.

How to Create an Effective OKR

First, we use our Think, Plan, Do framework to organize OKRs by time horizon for the best OKR system.

Your BHAG and Core Purpose can produce 10-Year OKRs
Winning Moves are 3-5-year OKRs
Annual Priorities are 1-year OKRs
Quarterly Priorities are 90-day OKRs

In Rhythm’s Quarterly Planning process, identifying your Company’s top 3-5 Quarterly Priorities creates your top-level OBJECTIVES for the quarter. Building the “execution-ready” plan that includes cross-functional Individual and Departmental priorities creates the KEY RESULTS.

Here’s a classic OKR program example that Doerr includes in his book about Intel and what it looks like in the Rhythm strategy execution software.

OBJECTIVE: Demonstrate the 8080’s superior performance as compared to the Motorola 6800

KEY RESULTS

Deliver five benchmarks
Develop a demo
develop sales training material for the field office
Sell three customers to prove the material works

Here are a few things you’ll see that we include in the Rhythm dashboard that are not mentioned in the OKR example above:

One clear owner for the Objective and each of the Key Results
The timeframe for completing the Objective and each Key Result
A definition of success for the Objective and each Key Result

Adding these crucial elements of any successful goal management implementation makes an OKR SMART - Specific, Measurable, Achievable, Relevant, and Time-bound - and gets you one step closer to execution. This is the preferred method of implementing OKRs within your organization and should be included in any organizational OKR implementation. It improves and upgrades the traditional OKR model, and our onboarding team can help you as an OKR coach and how to use OKRs in weekly meetings.

Set Clear SMART OKR Goals

In addition to helping your OKR meet the criteria for a SMART goal, adding Red-Yellow-Green success criteria also helps you begin with the end in mind, clarifies expectations for everyone involved, eliminates drama around success and failure at the end of the quarter, and provides you with an objective scale for the progress of a priority throughout the quarter for the leadership team.

Some of the OKR applications we have encountered suggest statusing progress based on the percent complete throughout the quarter as a measure of OKR performance. For example, the goal may be statused 100% when it is completed or achieved, but the real expectation may be that it will likely end the quarter at only 80% - 90% complete. Here are some problems we see with that method:

Clarity around expectations - what actually is the mark of success?
Sandbagging - Some organizations don’t like it when OKRs hit 100% before the end of the quarter because it indicates the goals were not aggressive enough.
Subjective statusing - Calculating what percent you are complete on an OKR can be tricky and misleading. Your definition of 60% complete and my definition of 60% complete may be very different.
The last 10% matters - 90% complete on some goals is worthless. I have been 90% done writing this guide for six weeks. In this case, my work was not useful until it hits 100%.
When is there a problem - It’s hard to know if something is ahead or behind based on the percent complete. Is 30% complete in week 4 good? Is 75% in week 10 on track? What if the last 25% takes longer than the first 75%?

Using Rhythm’s Red-Yellow-Green success criteria and statusing weekly based on where your project will end the quarter leads to a much higher likelihood of achieving your desired results. However, Rhythm software can also accommodate you if you prefer a different method, like percent complete, on target or off target, or a scale of 1-10.

How to Cascade OKRs to the Organization

One of the promised benefits of OKRs is breaking down high-level goals into bite-sized work that must be completed. In doing this, you will likely create multiple levels of OKRs. Let’s take the Intel example above. The company level OBJECTIVE is to “Demonstrate the 8080’s superior performance,” and one of the KEY RESULTS is “Develop sales training material for the field office.” The Sales Manager may own this Key Result but will likely need their team and other groups' help to get it done. In this case, the company's KEY RESULT may become a departmental OBJECTIVE that looks something like this:

Objective: Develop sales training material for the field office

KEY RESULTS

Determine the content
Create training material
Schedule training days
Deliver the training

Each of these KEY RESULTS may be owned by different team members and possibly others in other groups. In Rhythm, we refer to this as cascading priorities, and it is accomplished by doing departmental planning sessions after the company plan is complete. Rhythm allows you to link cascading OKRs from an individual quarterly goal to a 3-5 year Winning Move.

Implementing The OKR Process

That’s really up to you. Rhythm will support either a top-down or a bottom-up planning process. Still, our recommended approach is to start at the top by identifying the most critical things the Company must achieve, then cascading that to departments and individuals. Rolling it out departments with this process allows for some give-and-take with a circular planning process to narrow in on the most critical factors for success.

Pitfalls of bottom-up planning:

People can find creative ways to link the work they want to do to a company OKR. Sometimes work that is not critical to success can slip in and take energy away from things that are a higher priority.
Critical work may need to be identified. You must look at an OKR in a cross-functional, holistic way to avoid missing essential work pieces.
The number of OKRs in play at any given time can multiply quickly. I think about the CEO who told me they have a hundred different projects happening at all times, and he has no idea which ones are the most important.
Bottom-up planning often becomes very siloed. Sometimes those siloes can even be within departments. When individuals determine their priorities and link them up to a higher level, it can be hard to manage dependencies and coordinate efforts.

Circular Planning - The Rhythm of Work

To overcome these pitfalls, we recommend more of a circular planning process:

Gather information from departments and individuals through pre-work or pre-planning sessions.
Allow that feedback to inform the Executive Team in making Company level decisions about the OKRs for the quarter.
Build out the cascading OKRs to achieve the top-level goals.
Share that plan with departments and teams so they can build their OKRs in a way that is aligned with the company’s OKRs.

What are good OKR examples?

One of the biggest mistakes companies can make using OKRs is to become so narrowly focused on achieving an Objective that you cause mistakes in other areas. A classic example is the story of Ford Pinto’s tragic gas tank recall. The two driving results for this OKR were Cost and Weight. The company became so narrowly focused on these two results that they threw out a one-dollar, one-pound piece of plastic that would have protected the gas tank. The way to avoid this type of blind spot is to add other KEY RESULTS to the OKR as a balance. In this case, Ford could have included Safety and Quality KPIs.

In Rhythm, it’s effortless to review your KPI dashboard designed to ensure the ongoing health of the company and link relevant KPIs like quality, safety, NPS, sales, margin, etc., to your OKR to monitor the overall health and success of an objective and ensure there are no unintended negative consequences associated with that OKR. Rhythm makes it easy to visually differentiate between what you’re doing and the KPIs you’re measuring.

The Four OKR Superpowers

Doerr has identified four ”Superpowers” he believes OKRs provide organizations. These solid advantages or attributes set OKRs apart from other goal-setting systems and help drive a company’s success. Below is a list of the four Superpowers and how Rhythm helps bring them to life.

OKR Superpower #1: Focus and Commit to Priorities

Rhythm’s planning process helps you identify the top 3-5 OKRs every year and each quarter, and the Key Results are linked to each OKR as child OKRs. Rhythm can test your plan to make sure you have the proper focus and energy every quarter.

We also help you track progress every week through our reporting system. This lets you see how well you do against your weekly goals. You can use this information to adjust your priorities or change course if needed.

OKR Superpower #2: Align and Connect for Teamwork

Once the Company OKRs are determined, each department and team can build their OKRs and link them to the Company plan. Rhythm allows for top to bottom alignment as well as horizontal cross-functional alignment.

OKR Superpower #3: Track for Accountability

Rhythm dashboards create a roadmap for execution and allow you to view the status of each OKR weekly throughout the quarter. Red-Yellow-Green success criteria will enable you to know at a glance which parts of the plan are on track and where there might be a problem the team needs to work on.

OKR Superpower #4: Stretch for Amazing

Using Red-Yellow-Green Success Criteria ensures that every OKR is set up with a stretch goal (SuperGreen). This allows teams to align around what is required by the end of each quarter while still striving to achieve even more.

Set company-wide objectives

This step is for managing directors and C-level executives

If you have a clear vision and set some goals for the coming years, you can take things further by translating them into company goals.

Also known as company goals, company-level goals will inform another, more granular level of OKRs (see next step), following a cascading goal methodology that aligns the entire organization. Even when working with quarterly OKRs, parent goals are often set for a whole year. Some common areas to focus on:

Financial Goals
Internal Process Goals and Projects
Customer and Stakeholder Goals
Organizational Capacity (Learning and Growth)

Discuss Department-Specific Contributions

This step is for managing directors/C-level executives, team leaders, and exec team members

It's time to understand the role that each team plays in reaching your company's parent goals. You should now converse with each department's leader to discuss how they can push your vision forward.

For example, your marketing department could support your hiring goals by working with People Ops to launch an improved career page and promote the employee experience across social platforms. This department could support revenue goals by driving more leads to your product or service.

Set a Time Box

Although, as mentioned, it sometimes makes more sense to set a more extended timeframe to reach company-level goals, we recommend working with quarterly cycles for your team-specific OKRs. An OKR needs a time box so that you have a good idea of what you can accomplish in a set amount of time to tell if you are on track or need to adjust to get back on track across teams.

Choose 3-5 OKRs for Quarterly Plan

This step is for department leaders and their team members.

Between three and five objectives for each OKR period is a realistic amount to keep teams stimulated without feeling overwhelmed. With any fewer, goals may feel limiting and not quite motivating. With more, you risk focusing on too much at once and failing to achieve anything.

Break each objective into key results & assign ownership

This step is for department leaders and their teams.

Please look at your team's size, the complexity of your OKR system, and your objective's scope before deciding how many key results to implement. You don't want to set more key results because it looks more challenging. Remember that simplicity is crucial for success, and key results exist to serve you in reaching goals.

Engage your team by asking them how they can contribute to objectives rather than assigning top-down responsibilities to your reports. Ask yourself — and your team — several questions. Is there a need or space for a unique project? Does someone want to tackle a particular aspect of the objective? How can the team and individual contributors push a goal forward?

By asking employees for their input instead of presenting a fixed plan, you encourage stakeholders to take the initiative, nurturing engagement and a sense of purpose. As a result, transparency and trust in your team's capacity give room for thriving OKRs.

And remember: OKRs need to be aligned with the company's goals. Although the department lead and team will scope the OKRs, they must be approved to ensure alignment. A set of OKR objectives for each team member at the departmental level then cascades down into individual OKRs for each employee.

Best practice: besides assigning ownership for team OKRs, you may also want to work with personal OKRs. Those could be, for instance, related to skills that you or a team member would like to develop and would, in turn, support your company's growth and vision and be used in your OKRs review.

Track progress, make adjustments, and celebrate victories

This step is for everyone! Although leaders should always come prepared with a nugget of information to start the discussion.

Keep your OKRs in shape by monitoring progress, making your goals an ongoing conversation, and recognizing every accomplishment. Praising your team for their achievements or considering them for a merit increase — no matter how big or small — is an excellent way to have everyone engaged and keep the potential of OKRs in mind.

A best practice is to schedule an OKR check-in with your team every week at your weekly meeting (or one-on-ones for personal goals.) This way, you can address results and roadblocks, increase accountability, and work on solutions together.

All of these processes can be made much easier with the help of people management and goal-setting software. Thanks to goal dashboards, progress timelines, filters, and powerful analytics, you and your team can be spared from manual work, quickly updating and visualizing progress across your organization. Rhythm strategy execution software is one of the top-ranked OKR software platforms on the market by independent software ranking services.