A Manager's Guide to Building OKRs

OKRs are one of those things that seem to be everywhere, but each team tends to do them slightly differently. Sometimes they’re strictly enforced, sometimes they’re a checkbox exercise that never gets looked at again.

In this post, we’re going to take a look at what OKRs mean for you as a manager, and how you can help your reports build OKRs that benefit both the business, and them as an individual.

OKRs: A brief refresher

You might be thinking “you’ve said OKR a lot, but what does that actually mean?”. OKR is short for Objective and Key Results. It’s a goal setting methodology for gaining alignment across a business.

In short, it’s a fancy way for us to answer the questions:

• What are we going to do? (Objective)
• How will we know when we get there? (Key Result)

Add in a time frame (typically around 3-6 months) and you’ve got everything you need to build your first OKR.

For a deeper dive into what OKRs are, see a talk I gave at a You Got This event "WTF are OKRs":

OKRs for managers

You’ve got a tough role as a manager. You’re accountable not only to the business, but to your reports too. It’s your responsibility to ensure that what the team commits to moves the business metrics in the right direction, whilst also ensuring that your people are happy and growing. It’s not an easy task.

Let’s take a look at four things that might make your life a little easier.

1. Identify priorities

One of the great things about OKRs is that they lead to expectations being written down explicitly. They make it easy to identify mismatched expectations between different parts of the org.

Use this to your advantage when planning what to do next. There will always be requests for help from external teams. Filter these through your OKRs to understand if you should support the project, or if it’s a distraction from your main goals.

You can also take a look at the list of projects that your team has and work out which are aligned to the OKRs that the business has set. You were already planning to do these things at some point, but are there any that make sense to do now whilst you can align them to a business need? It’s much easier to drive things to completion if you can point to an executive team goal and say “it enables us to meet this goal”.

Finally, OKRs bring focus. If you’re anything like me, the list of team projects has at least 20 items on it. You may have heard Warren Buffett’s advice on identifying your top 5 goals that you absolutely want to get done, and then throwing away the other 15 so that you don’t get tempted to work on them. OKRs are great for bringing clarity on what you really want to work on.

2. Outcomes > Outputs

Once OKRs make it to the teams that are doing the day to day work, key results tend to be focused on shipping something. I’ve seen all kinds of variations of this:

• Ship the new onboarding flow
• Build sales battle cards
• Launch new FAQ section

These key results focus on the output - what did we ship - rather than the outcome - what impact did it have?

If we keep asking “what are we going to build?”, our teams are going to come back with a list of tasks to accomplish in service of an objective. Instead, we need to be asking “what will people do differently if we succeed?” Thinking about the behaviours you want to change in your target audience leads to more impactful work.

Let’s take a look at the above key results and try and rebuild them to be focused on the outcome rather than the output.

• Ship the new onboarding flow becomes 70% of users make their first API request successfully within 7 days
• Build sales battle cards becomes Increase won deals against Competitor X by 10%
• Launch new FAQ section becomes Reduce support tickets for the top 5 use cases by 80%”

3. OKRs vs KPIs

Another three letter word that helps when setting OKRs is KPIs - Key Performance Indicators. You can be forgiven for thinking that OKRs are the same thing, but with different names. They’re all about measuring success against a goal, right? Well, kind of.

OKRs are very much focused on the future. They’re designed to get you from here to there, and to push you to achieve your ambitious goals.

KPIs on the other hand, are about goals that you’ve already achieved. They show what your current metrics are, and serve as a kind of “health overview” to make sure that you’re not negatively impacting the existing experience by chasing after your new OKR.

You can think of KPIs as OKRs that have grown up and graduated, and are now just a part of business as usual.

As always, these things are easier to understand with a concrete example:

> Imagine you work for a company that ships a new version of your application every 12 months. Leadership is seeing that your market share is decreasing due to competitors shipping new features more regularly and appearing more agile.<br><br> So, you have a company-wide objective to deliver value to customers faster. The team sets a key result of one release every 2 weeks. You’re mostly successful, and end up releasing once per month rather than once per year after 12 months of concerted effort.

Congratulations, you almost hit a huge goal, and were successful in changing company behaviour! However, there was a downside. Although you’re shipping much more frequently, the number of bugs in each release is much higher than it should be.

To fix this, you set a new objective - ship reliable software, and an associated key result - fewer than 2 bugs per release. In a business without KPIs, you could go back to your old once-per-year release schedule with a heavy QA component.

Luckily for you, once your OKR was achieved it became a KPI and is measured to understand the overall health of the company. If your releases drop in frequency, your shipping velocity KPI would become unhealthy and indicate that something bad is happening.

OKRs and KPIs go hand in hand - one helps drive you forwards and one makes sure that you’re not sacrificing any existing behaviours in order to achieve it.

4. Performance management

Last but not least, OKRs help with performance management. Talking about performance is a key management responsibility, but unfortunately it is rarely done well. Everyone has different views on what “good” looks like, leading to a mismatch in expectations. Even if everyone’s aligned on the goal, what achieving those goals looks like is likely different between each person.

OKRs force explicit conversations about performance. They ensure that everyone knows what our company and team objectives are, and how success is going to be measured.

I should be totally explicit here: Missing an OKR is not a signal that someone is underperforming. OKRs are stretch goals, and we’re not expected to hit them all.

However, they are a good indicator of what we believe is possible. Using an example from earlier; if we have an objective to release every two weeks and we only manage to reduce the cycle time from every 12 months to every 9 months, that’s an indicator that a hard conversation needs to happen.

OKRs make the implicit explicit, and that includes understanding if an issue exists due to organisational problems or due to individual capabilities.

OKRs for individuals

If you think creating OKRs is tough as a manager, you should try doing it as one of your reports! Lofty objectives come down from the top and go through multiple levels of refinement before they’re asked to build OKRs for themselves - usually without any support.

This is where you come in. Hopefully you’ve helped define not only your team’s objectives, but your bosses objectives too. You understand what the expected outcome is, and how you’re aiming to achieve that. This makes you uniquely qualified to help your reports build OKRs that help support their personal development in addition to the business.

Working towards promotions

If you have a team member looking to progress in their career, helping them identify projects that are aligned to the top company goals puts them on the fast-track to promotion.

Instead of allocating them a key result, let them take ownership of your whole team objective. If they can demonstrate that they understand the objective, and can build key results and help the team be successful at achieving them, they’re well on the way to operating at the next level.

The visibility from working cross-functionally will be a big benefit to them too. Hopefully you’ve got a job architecture to help understand the requirements for each role, but the truth is that a lot of promotions are still done on “gut feel”. If your boss is interacting regularly with your report on projects that are aligned to business success, you’ve pre-wired the gut feel decision and made it easy to get the promotion approved.

Tying in personal goals

Life isn’t all about work, and we should be conscious when setting goals to incorporate aspects of our personal life. There’s no way to get “run 10km in under 50 minutes” in to a work OKR, but saying “Default to asynchronous working” is a very valid business goal.

The knock on effect is that people don’t need to be at their desk for 9am until 5pm. They can start earlier/later or take a longer lunch. This gives them the time to achieve their training goals.

I previously worked on a team that grew rapidly, and as the leader I was still too involved in the day-to-day activities as I had a lot of the historical context. I was also expecting a child and intended to take a month off work. By pairing my personal objective (Take a month off work without checking in) with a business objective (Reduce single points of failure within the team), we managed to enable my personal goal whilst still improving things for the business. As a knock-on effect, when I left the business later the impact was much lower than it could have been had we not actively addressed me being a single point of failure earlier.

Find out what your team are looking to do in their personal lives, and think creatively about how you can enable that whilst still achieving something useful for the business.

Conclusion

Hopefully you now have a better understanding of what OKRs mean for you as a manager. They can be used to help prioritise a never-ending stream of work and help build alignment between your team and the rest of the business.

By focusing on outcomes rather than outputs, your team will be thinking about what you’re trying to achieve in the long run, rather than treating the work as a checklist of items to be completed. This leads to more engagement between the team and company, and makes promoting your team easier.

Finally, work goals and personal goals aren’t mutually exclusive. By focusing on objectives that model behaviours that we think are important for success, we can find a way to integrate personal goals that also benefit the business.

If you have any questions (or suggestions!), I’d love to hear them. You can find me on Twitter at @mheap or read some other things I’ve written at michaelheap.com.