How to Set Effective OKRs


As product managers, one of the biggest challenges is knowing how to stay focused and know that we’re succeeding. And we all know that we can’t manage what we can’t measure.

But what happens is we start to gather this huge collection of metrics. Maybe we’re looking at the net promoter score, the average daily or monthly users or revenue. It’s helpful to look at metrics, but metrics are much more useful if we frame them around why they’re worth measuring.


You don’t want to measure a thing to measure it; you want to measure it because it’s meaningful. And OKRs are one way in which teams put meaning behind the measurement.


Historically, OKRs (objective key results) are built on SMART Goals (specific, measurable, attainable, relevant, and time-bound), which are generally five characteristics of a good goal. OKRs started at Intel and were later popularized by Google in the late 90s and early 2000s.

OKRs are great for coordinating your business and team around shared goals. They also provide some meaningful measurements, but they can be tricky when you’re starting.

This article will guide understanding what OKRs are, how to use them, how to set them and how to measure them.

This article is based on a recent conversation between Pragmatic instructor Paul Young and Rebecca Kalogeris, VP of marketing and product strategy at Pragmatic Institute.


Listen to the Conversation:


Setting the Objective

Think of the objective like a mission statement. It can be set at an individual level, team level or even at a company level. You can also think of it as a pyramid where the business has fully adopted a set of OKRs that cascade down to your team or you as an individual.

A good objective is qualitative and inspirational. When the team reads the objective statement, they should want to jump out of bed in the morning to achieve it. And so this is where you might want to use the language of your team. If your team wants to say that our objective is to “own the market” or to “kill it this next quarter,” that’s fine if that’s how your team talks.

Good objectives are also time-bound, just like SMART goals. We want to achieve our objectives somewhere between a month and a quarter to keep it within a reasonable timeframe.

They should also be independently actionable. Meaning that it’s genuinely your objective, and there’s no escape hatch. You want to avoid reflecting on an objective and saying we didn’t hit it because of marketing or IT. It should be an objective that you can take action on yourself.

Lastly, a good objective should be challenging but possible.

Good Objectives:

  1. Launch an awesome new product
  2. Own the market in whatever business we’re in
  3. Be recognized as the voice of our market internally

Bad Objectives

  1. Increase our sales by 30%
  2. Increase our open rate by 10%

These bad examples are not inspirational, they are quantitative, and they are more likely a key result. When you’re crafting objectives, they should be using language that inspires. They are framing devices. They answer the questions like, “what is it we’re trying to accomplish?”


Setting the Key Results

If you know what you’re trying to achieve (objective), the key result is how you will get there. The key result is what we use to quantify the inspirational objective. So, if the objective is qualitative, the key result is quantitative.

Here you’ll start setting up some actual measurements of success for yourself, your team or your organization. The key result answers the question, “how do we know we met our objective?”

When we start talking about metrics, what we’re usually talking about is key results. But we want to ensure we have that objective in place because it’ll help us determine if what we’re measuring is meaningful.

A key result could be based on several different areas. It could be about growth, it could be about engagement, revenue, performance, quality or any of those things. And again, the key results should be challenging but not impossible.

Additionally, more than one metric or key result can be associated with the objective.

Good Key Results:

  1. 40% of our users are logging in more than twice a week
  2. NPS is higher than 60
  3. The email open rate is above 15%

Bad Key Results

  1. Our users are happy
  2. Leadership in the company is pleased with the results
  3. We feel good about the outcome

The bad examples can’t be measured.


Setting OKR Confidence Levels

Setting the OKR is important, but you also have to measure your progress toward achieving that OKR, and there are a couple of strategies you can use.

If our key result is an NPS of over 60, that’s nice, but we either hit that or we don’t.

What if you’re at 50 today and climbing progressively toward that key result of 60, but you’re not there yet? You can still show that you’re making meaningful progress in the right direction.

When we set a key result, we want to set a confidence level. You can use a 1-10 scale where one means it’ll take a miracle and ten means I am 100% confident we’ll reach the goal.

The confidence score, in the beginning, should fall somewhere between the three to seven range. If you’re in the range of 8-10 in confidence at the beginning of the measurement period, that is the sandbag zone. Sandbagging is if you’re already 100% confident before you’ve started doing anything, that key result is probably too easy to achieve. We want to stretch ourselves a little bit.

On the other hand, if you set your confidence level in the 1-3 range at the beginning of the measurement period before you’ve done anything, that is a morale killer because the reality of being able to hit that is low.

After setting a goal with the appropriate confidence level, you should revisit your confidence rating every week or month. You might find that you initially assessed your confidence as a four out of 10, but based on the work done so far, you can raise that to a six.

As you get closer and closer to the end of the quarter, your confidence should go all the way up to 10, or maybe it falls all the way down to zero.

What happens when you don’t reach your OKR?

Just because you fail doesn’t mean that you’re a failure. It means you need to go back and reassess. It’s a learning event.


What’s The Difference Between KPI and Key Result?

KPIs (Key Performance Indicators) are another name for key results. There are others we might use instead of key results, like metrics. Ultimately, we have to measure something, but it’s more meaningful if that measurable thing ties back to an objective.

The nice thing about OKR is they set up the structure, so you can consistently report on your metrics or KPIs in a way that shows value.

Ultimately, if you map every priority to a key result that serves a specific objective, then we get rid of the firefighting by making sure work is framed appropriately. And if you’d ladder your OKRs, then it goes from individual to the team, to the business unit and finally to the company or organization.

Everyone’s in sync. That’s the power of OKRs.


How Many OKRs Should You Have Quarterly?

The answer to this will vary by team. However, typically three OKRs per quarter are usually good. And keep in mind you might have two or three key results for each objective.

If you’re tracking more than five different objectives with three key results each, you’ve got 15 to 20 things on your mind at any time. You want the team to stay focused on one thing to another. You want work to be meaningful and contribute to something that will move the needle for the business.


How to Get Start Setting OKRs for Your Team

If you are the leader of a team, and your organization has yet to adopt OKRs broadly, then you can start off by clearly articulating OKRs for your team. This isn’t something that you should drop on them, but rather make it a collaborative discussion. You want OKRs that get them excited.

Ask them, “Okay, with our understanding of the company and where we’re going, what do we think our team’s three big objectives should be for the quarter?” Then we can have an open discussion about what key results we can use to measure success toward those objectives.


How to Get Start Setting OKRs for Yourself

If you’re an individual contributor, there’s no reason why you can’t use OKRs today. You’re just going to use them at an individual level. And so, you have to assess what is a good objective for your product. What will get you out of bed in the morning and get you excited?

What is inspirational for you, and how can you frame the work that you’re doing in a meaningful way for everybody else? You can bring some proposed objectives to your manager as a conversation starter.

Most good leaders will see that as a positive because they think, “wow, this person takes the initiative.” You can make a significant impact on your career by showing you’re strategic and focused.


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