When it comes to goal-setting for organizations, there are many ways you can go about it. A tried-and-true approach is the OKR framework, which helps decision-making in organizations via the setting of high-level objectives supported by several tangible key results.
OK, so you’ve just implemented OKRs. Now, you should just rest and wait for the benefits, right? Wrong!
Unfortunately, it’s totally possible to do ORKs poorly, and many organizations do just that. You see, it’s not enough to use OKRs; you have to make sure you set good objectives, otherwise, you won’t progress at the pace you want.
This post will help you not to fall prey to the most common OKR mistakes. You’ll see examples of bad OKRs and learn how to avoid the most common pitfalls of working with the framework.
Let’s get started.
What Are OKRs? Why Care?
As you’ve seen, OKR stands for Objective and Key Results. OKR is a framework that people and organizations use to create and track goals in a measurable way.
When did this framework appear? It all dates back to the 70s. Andrew Grove, Intel CEO, popularized the concept of OKRs inside the company, having built upon work from Peter Drucker.
So, why care about OKRs? What are you to gain from it?
The main motivations behind adopting OKRs are alignment and focus. By setting objectives that are shared through all levels of your organization, you make sure that everyone’s working towards the same goal. This creates a sense of alignment and purpose and also avoids waste—because people shouldn’t be working at initiatives that contradict the organization’s goals.
With the use of OKRs, you can also foster accountability and motivation for everyone in your organization. An essential part of using the OKR framework is tracking your OKRs to make sure they’re being met, which causes people to feel and act accountable for the work they do.
Common Mistakes In Setting OKRs
You’ve seen the basics of OKRs up to this point. What they are. Why they’re important. Now it’s time to learn what are some of the main mistakes people and organizations make when setting OKRs, so you can learn not to make the same mistakes.
A common tactic for goal setting, in general, is the use of SMART goals—that is, creating goals that are specific, measurable, achievable, relevant, and timely. SMART goals aren’t officially part of the OKR framework, but it’s easy to see how some of the core tenets of both frameworks match really well.
SMART goals are specific, and so should be OKRs. If your objectives—or worse, their key results—are imprecise, you won’t know whether you’ve accomplished them or not. They’ll be harder to measure (another letter from SMART) and to track. Say bye-bye to accountability.
Put care into the wording of your OKRs. They should be concise yet precise, simple yet expressed with the correct level of detail.
Excessively Aggressive Objectives
Stretch goals are a core idea behind OKRs. That is, your target goals should be virtually impossible to accomplish, in order to foster motivation.
However, you can have too much of a good thing. If you aren’t cautious, you run the risk of going overboard and setting goals that are so above what’s realistic that you alienate your people, generating too much anxiety, stress, and demotivation.
Too Many OKRs
Continuing in the same spirit of “too much of a good thing”, setting too many OKRs is also a mistake. Face the facts: there’s just so much your team can do, no matter how productive they are. If you set too many OKRs, your team/organization’s energy and effort will dissipate through these OKRs.
You’ll end up losing the precious focus and alignment that OKRs were supposed to give you in the first place.
What Is a Bad OKR Objective?
Having learned about some of the main OKR mistakes, you’ll now see examples of bad OKRs.
Bad Example #1
Objective: Improve our software
Key result #1: Ship fewer bugs
Key result #2: Ship more features
Key result #3: Generate more revenue
This example shows a terrible OKR. The objective is too simple: it’s vague and lacks context. The key results are fuzzy and impossible to measure/ track since they don’t offer any numbers.
Let’s now fix it:
Objective: Enhance Software Quality and Performance
Key Result #1: Reduce the number of critical bugs reported by 30% over the next quarter.
Key Result #2: Deliver at least two major features requested by our customers with a high satisfaction rating.
Key Result #3: Increase monthly recurring revenue (MRR) from our software subscriptions by 20% within the next six months.
The new version contains an improved objective, with more context and key results that offer values and deadlines, which makes them trackable.
Bad Example #2
Objective: Improve revenue 5x by next fiscal year
Key result #1: Launch 10 new products and achieve at least 1 million in revenue for each one in the first quarter
Key result #2: Generate 80% increase in revenue from existing customers by upselling them
Key result #3: Increase our user base in Latin America by 300% in the next month.
This OKR is bad because it’s laughably ambitious. Even stretch goals have to be reasonable. By setting such utopic goals, you wouldn’t achieve anything except alienate your people and cause psychological distress.
How would we go about fixing it? Here’s an example:
Objective: Increase revenue in a sustainable way for the next fiscal year
Key result #1: Increase revenue by 15% over the upcoming fiscal year via upselling to existing customers and the launch of new products
Key result #2: Increase revenue from the existing customer base by 10% through upselling in the next fiscal year.
Key result #3: Increase our user base in Latin America by 50% over the next fiscal year, achieving that via market campaigns and a strategy of price localization.
Avoiding Bad OKRs
You’ve seen examples of bad OKRs. The first was extremely vague; the second, too ambitious for its own good. How to avoid setting such ineffective OKRs yourself?
First of all, use SMART goals as a guideline. Sure, they’re still two different frameworks, and as such don’t agree on everything. However, some of the tenets of SMART goals can help you in setting OKRs, specially the letters “s” and “m”—that is to say, creating objectives and key results that are specific and measurable is vital.
Here’s a suggestion: since OKRs are meant to, among other things, create alignment across the organization, have people involved during the setting of OKRs. Avoid using a top-down approach when setting OKRs: you risk—again—creating unrealistic goals that will alienate your workforce and be a source of distress instead of alignment.
Finally, keep OKRs flexible and adaptable. Modern world changes too fast for OKRs to be set in stone. They shouldn’t be treated as sacred truths, immutable and eternal, but instead like a compass needle, that changes according to the right direction you need to go.
Goal-setting is essential for organizations and the OKR framework is a great tool to have on your toolbelt. Unfortunately, it’s no silver bullet: setting bad OKRs will cause more harm than good and you need to know how to avoid this.
“Bad OKRs” was exactly what this post was about: what causes them, what they look like, and how to avoid them.
As a next step, take what you’ve learned from this post and apply it to your reality. Review your current OKRs and see if you can spot signs of the problems described in this post. If something is indeed bad, don’t be afraid to change and adapt until the symptoms are no longer there.