OKRs are a widely used way of setting goals. OKRs may seem similar to KPIs, and while they both serve a common goal — to establish, plan and measure goals — OKRs are often used for more ambitious goals, like large and new projects.
What are OKRs?
OKRs are a popular goal management framework that helps companies plan and deploy new strategies better. With OKRs, businesses can make achieving goals simpler by building specific and measurable actions and communicating and monitoring progress.
The concept of OKRs was first developed by the former president of Intel, Andy Grove, in the 1970s. The idea became popular when John Doerr — a former colleague of Grove — introduced the concept to Google in the 1990s. Once Google started using OKRs, so did the other tech companies in Silicon Valley and beyond. Today, companies and not-for-profit organisations across all sectors are using the tool.
One thing that distinguishes OKRs from other planning strategies is that objectives are discussed in a circular way between the employees and the directors. It’s good to remember that your employees will be primarily responsible for executing initiatives, so including them in this process can help with transparency and alignment.
How do OKRs work?
OKR is an acronym for Objectives and Key Results. The objective lets us know where we need to go, and the Key Results are the outcomes we need to achieve that objective.
When talking about OKRs, you will also hear the word initiative thrown around. Initiatives are what we call any tasks or projects that need to be completed to help you reach your key results.
Objective: ‘Where do I want to go?’
An Objective describes where you want to go and sets a clear direction. Imagine you’re about to set out on a road trip, the objective would be a pinpoint on a map indicating the destination.
For example: ‘We want to empower our support team to be more self-sufficient.’
Key Result: ‘How do I know if I’m getting there?’
A Key Result shows you how you’re progressing towards your Objective, like a road sign telling us how far we have left to travel. Each objective should have two to five key results to help guide you towards your goal.
In our example, a key result would be a reduction in help ticket escalation.
Initiative: ‘What will I do to get there?’
An Initiative describes how you will achieve your Key Results, like how your sat-nav gives you directions.
An initiative that helps customer support teams become self-sufficient could be creating an FAQ for the most asked questions and commonly escalated queries.
How can you use OKRs in your SMB?
OKRs are supposed to be ambitious enough to drive change within your organisation and are intended to align everyone in the business to work toward the same ambitious goals.
You can use OKRs to set goals for things like:
- Expanding into new markets
- Improving sales
- Improving workplace culture
- Reduce customer service escalations
For each Objective you set, set actionable Key Results that act as incremental steps to achieving those goals.
The Coffee Shop
Let’s imagine we’re opening a coffee shop heading into a highly contested industry. We need to set highly ambitious OKRs to make sure our shop can stand out from the crowd. So what would our OKRs look like?
Objective: Be the preferred way to start every day
- Get 1500 customers to download our new loyalty program app
- Increase same week 5th cup free redemptions to 750
With this OKR, we have established our goal and two key results to help us achieve the objective. We also have our initiative within our key results, a loyalty program that will reward regular customers and create sustainable sales figures.
OKRs can be used for almost any area of your business. Let’s take a look at what an OKR to improve customer satisfaction would look like.
Objective: Our business needs to have the highest customer satisfaction ratings in the industry.
- Collect feedback from 100 top customers via in-depth interviews
- Conduct 200 phone interviews with recently churned customers
- Exceed Net Promoter score (NPS) of over 8.0
Having transparent OKRs can improve customer satisfaction with support teamwork. By setting clear objectives, each team member knows what is expected.
Businesses experiencing high levels of employee turnover can look at creating an OKR that will help rebuild a positive corporate culture and improve employee satisfaction. An objective like this will need to be reviewed regularly, so you could assess your key results on a monthly or quarterly basis to see if any initiatives need to change.
Objective: Improve employee engagement and happiness within the company.
- Plan three team meetings every month focused on motivating staff
- Interview 15 employees to better know their needs, worries, and struggles
- Offer regular group activities to promote team building
- Pass around a satisfaction survey each month and apply suggestions so you can improve satisfaction by 10%
How Workhorse uses OKRs
At Workhorse, we’re always trying to put people first. That includes our team, our customers, and anyone else we’re lucky enough to cross paths with.
We use OKRs as a tool to help us align the entire Workhorse team around common goals. With OKRs, we can help everyone understand what the business is looking to achieve and how they as an individual can help us achieve those goals. This helps us create an autonomous, empowered team and injects energy into everything we’re trying to do.
Learn more SMB tips at the Workhorse blog
Our bread and butter is our fantastic configurable software platform, which allows small businesses to manage their inventory and orders with ease. But our work doesn’t stop there. We want to inspire SMBs and help them achieve their goals. That’s why we have the Workhorse blog, packed full of tricks and tips to help your SMB get to where you want to go.