Your company’s journey from start-up to a mature, robust, and growing enterprise is like a long road trip. Before you step on the gas, you identify your destination, map out the best way to get there, calculate how long it should take you, and prepare for any roadblocks or mishaps which may slow you down or stand in your way.
Why your company should develop OKR initiatives
In your car, you have your trusty map or GPS, your odometer, your gas gauge, and your clock to keep you advised about your progress. But in your company’s operations and finances, monitoring your forward movement or lack thereof requires that you establish the parameters which will determine whether you are on the road to success or are heading for a ditch. Developing and measuring Objectives and Key Results (OKRs) is a proven way to keep your company on the right track or help you course correct if you fall behind.
What are OKRs
Initially developed at Intel and quickly adopted by other large companies including Google, OKRs can define strategies and goals over a set period and provide quantifiable means of evaluating whether those goals are being met. By disseminating and promoting OKRs throughout your team, you give them a unified, clear, and measurable roadmap for their efforts.
The difference between an “objective” and a “key result” is like the difference on a road trip between the question “Where are we going” and the timeless inquiry every parent has head from the back seat: “Are we there yet?” If you are driving from Chicago to the Cedar Point amusement park, Sandusky, Ohio is your objective, while crossing the Indiana-Ohio border is a key result.
Setting Up OKRs
Establishing and implementing OKRs is simple:
- First, identify three to four big-picture objectives for your company or individual teams or departments within your company and create a time frame (monthly, quarterly, annually, or a specific date) for reaching them. Don’t set too many objectives as that will dilute your ability to achieve any of them. These objectives should be ambitious, even intimidating, for the team charged with achieving
- Examples of OKRs could be:
- Increasing revenues to a specific amount
- Adding a certain number of clients or consummating a particular relationship or transaction
- Bringing a new product to launch
- Reducing churn by a given percentage per month
***View an OKR Worksheet template that your organization can use.
- Next, establish three to five key measurable results for each objective. These results should be aspirational yet realistic and achievable. Team members and supervisors should review these results on a weekly, bi-monthly, or monthly basis and assign a percentage or numerical value (such as 1-10) to how close each is to being completed. If the objective is to increase revenue 20%, key results could be launching an ad campaign, achieving better search rankings, or expanding into new geographic markets or platforms.
- When evaluating results, if you are consistently hitting 100% or 10, consider making the milestones more ambitious. The sweet spot for results is between 70-80%. Also, companies which use OKRs to evaluate their company’s performance typically do not use them to assess individual employee performance.
A well-developed OKR rubric can bring clarity and focus to your employees, promote collaboration, and increase productivity. A great book to help you get started with OKRs is “Measure What Matters” by venture capitalist John Doerr.
If you have questions or concerns about how to establish and measure KPIs for your start-up, please contact us. We welcome the opportunity to assist you.