Definition
OKR (Objectives and Key Results) is a collaborative goal-setting framework invented by Andy Grove at Intel in the 1970s and popularized by John Doerr, who introduced it to Google in 1999. OKRs align organizations around shared priorities through ambitious qualitative objectives and measurable quantitative key results.
The basic structure is:
- Objective: “what” we want to achieve (qualitative, aspirational, time-bound)
- Key Results: “how” we measure success (3-5 quantitative metrics per objective)
Example: Objective: “Become the preferred provider for AI startups”. Key Results: (1) NPS over 70, (2) Customer retention over 90%, (3) 50 published case studies.
Key Components
Objectives
Objectives are qualitative statements describing where we want to go. Characteristics:
- Aspirational: challenging but achievable (stretch goals)
- Qualitative: describe desired outcome, not metric
- Time-bound: typically quarterly (3 months), some annual
- Memorable: formulated to be remembered and inspire
Bad example: “Increase revenue”. Good example: “Win leadership in the European enterprise market”.
Key Results
Key Results measure progress toward the Objective. Characteristics:
- Quantitative: specific number, objective metric
- Outcome-based: focus on result, not activity
- Challenging but achievable: target at 60-70% indicates correct ambition
- Limited: 3-5 per Objective (more than 5 dilutes focus)
Bad KR: “Launch new feature” (output). Good KR: “Increase DAU from 10K to 15K” (outcome).
Cadence and Process
Quarterly cycles: most organizations use 3-month cycles. Allows rapid adaptation while maintaining sufficient focus. Some annual OKRs for long-term strategic objectives.
Setting process:
- Company OKRs: leadership defines 3-5 company-level OKRs
- Team OKRs: each team proposes aligned OKRs (bottom-up), negotiated with management
- Individual OKRs (optional): some individuals define personal OKRs
The process is ~40% top-down (alignment), ~60% bottom-up (ownership).
Check-ins: weekly or biweekly progress reviews. Identify blockers, adapt initiatives.
Retrospective: end of quarter, evaluate achievement (typically 0.0-1.0 score), celebrate successes, analyze failures, define learnings.
Benefits and Adoption
Alignment: everyone in the company sees company OKRs and other teams’ OKRs (total transparency). Reduces duplicated effort and increases cross-functional collaboration.
Focus: limiting to 3-5 OKRs per cycle forces prioritization. “Saying no” becomes easier: if it doesn’t contribute to an OKR, it’s not a priority now.
Stretch thinking: the culture of “60-70% is success” encourages ambition. Consistently achieving 100% means OKRs aren’t challenging enough.
Adoption: used by Google, LinkedIn, Twitter, Zynga, Oracle, Adobe. In 2024 estimated ~30% of Fortune 500 uses some form of OKR.
Differences with Other Frameworks
OKR vs KPI: KPIs (Key Performance Indicators) are business-as-usual metrics (e.g., uptime, revenue, churn). OKRs are stretch goals for improvement. KPIs are “health metrics”, OKRs are “growth targets”.
OKR vs MBO (Management by Objectives): MBO typically annual, top-down, tied to compensation. OKR quarterly, collaborative, decoupled from bonuses.
OKR vs OKC (Objectives, Key Results, Commitments): variant distinguishing “committed OKR” (must-achieve) from “aspirational OKR” (stretch).
Practical Considerations
Decoupling from performance reviews: best practice is NOT to use OKR completion for bonuses or promotions. Incentivizes sandbagging (setting easy goals). OKRs are for alignment and ambition.
Tooling: need tools for visibility and tracking (Lattice, Perdoo, Gtmhub, Ally, or even Google Sheets). What matters is transparency, not sophisticated tools.
Cultural prerequisites: OKRs require psychological safety to work. If failing on OKRs penalizes careers, the system collapses into conservative goals.
Common pitfalls: (1) too many OKRs (dilutes focus), (2) KRs based on activity not outcome, (3) set-and-forget (no check-ins), (4) using for performance evaluation.
Common Misconceptions
”OKRs replace roadmaps and planning”
No. OKRs define “what” and “why”, roadmaps define “how” and “when”. They’re complementary: roadmaps implement OKRs.
”All OKRs must align to company OKRs”
Not necessarily. ~60-70% alignment is healthy. Some team OKRs can be “local” if the team has operational responsibilities not covered by company goals.
”100% OKR achievement is great success”
No. It indicates Objectives weren’t stretch enough. Ideal target: ~70%. Google considers 0.6-0.7 (60-70%) the “sweet spot”.
”OKRs only work for tech companies”
False. Successfully applied in nonprofits, government, education, manufacturing. The principle of alignment and focus is universal.
Related Terms
- Agile Software Development: OKRs integrate with sprint planning
- Scrum: quarterly OKRs guide backlog prioritization
- Psychological Safety: cultural prerequisite for stretch OKRs
Sources
- Doerr, J. (2018). Measure What Matters
- Wodtke, C. (2016). Radical Focus
- Google’s OKR Playbook
- Niven, P. & Lamorte, B. (2016). Objectives and Key Results