HOW TO WRITE

GREAT OKRS
Everything you need to know when setting
I S ED
Objectives & Key Results. REV ION
EDIT

By Henrik-Jan van der Pol

Copyright 2021 by Henrik-Jan van der Pol

All rights reserved. No part of this book may be reproduced or used

in any matter without prior written permission of the copyright owner,
except for the use of quotations in a book review.

First edition: 10 October 2016

Second edition: 20 March 2021

Published by Perdoo GmbH

www.perdoo.com
Contents
Introduction 4

How to read this book 5

What is OKR and what’s it for? 6

The difference between OKRs and KPIs 6
When implementing OKR, get your KPIs in place first 7

What are Objectives, Key Results, and Initiatives? 9

A metaphor 10
Outcomes vs. outputs 11

Picking the right objectives 13

Types of Objectives 13
Tips to help you pick the right Objectives 17
Important criteria for Objectives 21
Frequently Asked Questions 25

Setting Key Results 27

Key Result should measure what matters 28
The anatomy of a Key Result 32
Important criteria for Key Results 36
Frequently Asked Questions 38

Creating Initiatives 49
Important criteria for Initiatives 49
Frequently Asked Questions 50

OKR Checklist 52

About Perdoo 52
Introduction
This eBook is meant to be a simple but thorough guide to help you,
and everyone else in your organization, become great at setting OKRs.
It covers everything you need to know when crafting Objectives & Key
Results.

OKR has become one of the most effective and most popular goal
management methodologies. The beauty of OKR lies in its simplicity;
it’s a set of best practices from over 75 years, bundled together and
radically simplified.

The modern workplace is complex, often resulting in low employee

engagement, strategies disconnected from execution and organizations
struggling to unify teams behind bold missions & visions. Problems that
stifle innovation, harm growth and prevent people from living meaningful
lives.

OKR is well-equipped to fix these problems. This guide will help you
pick the right OKRs and set them up in a way that will lead to success.
If you’re still left with questions after reading this book, feel free to
connect with us via email: [email protected]

​Henrik-Jan van der Pol

Founder & CEO of Perdoo

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How to read this book
This eBook is the ideal foundational resource for all OKR experience
levels.

If you’re new to OKR, have been struggling to implement OKR, or want to

bring your OKR program to the next level, read this eBook from start to
finish.

If you already have some experience, it’s important to first agree and
clarify what Objectives, Key Results, and Initiatives really are (see What
are Objectives, Key Results and Initiatives?), after which you can freely
jump to the sections most relevant to you and your organization.

At the very end of the eBook, you’ll find an OKR Checklist that
summarizes the most important concepts and can be used as a handy
takeaway each time you and your team craft your OKRs.

This book is supported by the Perdoo software: a simple but powerful

goal management platform that helps organizations turn great strategies
into amazing results. Signup for a free account on perdoo.com and
immediately put theory into practice!

Get your free Perdoo account

5
What is OKR, and what’s it for?
The acronym OKR stands for Objectives and Key Results, a popular goal
management framework that helps companies implement and execute
strategy.

If implemented well, the benefits of the framework include a better focus

on results that matter, increased transparency, and better (strategic)
alignment. OKR achieves this by organizing employees and the work
they do around achieving common Objectives.

An OKR consists of an Objective, which tells you where to go, and

several Key Results, which are the results you need to achieve to get to
your Objective. Initiatives are all the projects and tasks that will help you
achieve your Key Results.

The difference between OKRs and KPIs

KPIs and OKRs are different types of goals.

Imagine your organization is a car, and you’re driving your car toward
a destination. That destination is your organization’s ultimate goal (the
mission & vision), and your OKRs build your roadmap toward it. But, as
you’re driving your car toward your destination, you also need to keep an
eye on your car’s dashboard to make sure, for example, that the engine
is functioning well and that you’re not running out of gas.

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The things you’ll find on your car’s dashboard are the things that you
always need to watch — regardless where you are on your roadmap.
Hence, the things that you’ll find on your car’s dashboard translate to
business as usual for your business. Business as usual is best measured
through KPIs: simple indicators that immediately tell you if something is
performing well or not — just like the indicators on a car’s dashboard.

When implementing OKR, get your KPIs in place first

There are 3 reasons why you should get your KPIs in place before
implementing OKR.

1. You can’t drive without a dashboard

The analogy above also helps us explain why you need to get your KPIs
in place first, before implementing OKR.

Would you feel comfortable driving a car without a dashboard? You

wouldn’t be able to see the oil pressure and risk breaking your engine.
You wouldn’t be able to see the fuel level and risk running out of gas.

Your KPIs help you keep the engine running. Without having them in
place first, you’ll almost certainly get stranded somewhere on your
journey toward your ultimate goal.

2. KPIs provide important input when setting OKRs

Once you have your KPIs in place, and once you have set the desired
target values for your KPIs, you can then see which KPIs are healthy and
which aren’t. This is important input when setting OKRs. When a KPI is
unhealthy, you should make it a priority to fix it: you should create an
OKR to fix your KPI.

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3. It helps everyone understand what OKRs are for

Lots of teams that are new to OKR struggle to understand what OKRs
are for. We’ve developed a simple model to address this: build, improve,
or innovate. In short, that model explains that OKRs are designed to help
you break out of the status quo and realize your ambitions.

Yet teams that are new to OKR are often working on OKRs that reflect
their business as usual. You’ll quickly notice that is the case when your
OKRs are pretty much the same each quarter. When your OKRs are
reflecting your business as usual, your OKRs won’t help you see what
deserves priority right now, and they won’t help you understand how
particular problems are being addressed.

When introducing KPIs and OKRs at the same time, you tackle this
problem from the start. As you identify what’s most important to work
on, you can naturally designate whether the goal is best represented
as a KPI or as an OKR. Ask yourself, are we doing anything differently
(OKR), or is this already an established process (KPI)? Are we building,
improving or innovating (OKR), or will we continue to do what we already
do (KPI)?

I guarantee that you will end up with much better goals this way.

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What are Objectives,
Key Results, and Initiatives?
Before we dive into how to write great OKRs, let’s first have a quick look
at the different components (Objectives, Key Results, and Initiatives),
what they mean, and how they work together.

Objectives, Key Results, and Initiatives answer three straightforward

questions:

1. Where do you need to go?

The answer is the Objective. It should set a clear direction, like

a destination does, such as New York.

Examples​:

Beat last quarter’s revenue growth

Provide an awesome customer experience

2. How will you know you’re getting there?

The answers are Key Results. See them as a GPS device. They
tell you if you are getting closer to your Objective.

Examples​:

Close €1 million in new bookings

NPS at 80

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3. What will you do to get there?

The answers are Initiatives, the key things that you will do to
achieve your Objective.

Examples​:

Host 3 webinars on OKR

Implement in-app live chat

A metaphor
To get a better understanding, consider this metaphor:

Imagine you’re in London (UK). You need to go to New York (USA).

“New York” is your Objective (question 1).

To reach your Objective, you’ve decided to buy a yacht and sail west
for 8 days. That is likely to get you closer to your Objective.

“Buy a yacht” and “Sail west for 8 days” are your Initiatives (question
3).

Without a navigation system, like GPS, it will be impossible for you to

know whether you are getting closer to your destination.

Your Key Results are your GPS device, which tells you if you’re
heading in the right direction (question 2).

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Buying a yacht and starting to sail west isn’t the smartest thing to do if
you don’t have a destination (Objective) yet. A famous quote from Lewis
Carroll (Alice in Wonderland) reads: “If you don’t know where you’re
going, any road will take you there”. It’s, therefore, best to always start
with an Objective.

Key Results can be difficult to create, but they are necessary to get
feedback on whether your Initiatives have the desired effect.

Outcomes vs. outputs

A big benefit of OKR is that it helps you differentiate between outcomes

and outputs.

An output is something you do, an outcome is something that happens

as a consequence of what you do. “I’ve had a demo with a prospect” is
an output, “I’ve closed a customer” is an outcome. Most people naturally
focus on outputs. It’s relatively easy to come up with a list for what you
need to do today, this week and this month. However, as Stephen Covey
explains in his book The 7 habits of highly effective people, outputs
always come last. In order to be successful, you should start with the
end in mind.

At Perdoo, we’ve developed a simple process that you can follow which
ensures that you always start with the end in mind:

1. Where do I want to go?

2. What are the results that I need to achieve in order to get there?

3. What do I need to do to achieve those results?

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In OKR terms:

1. Objective

2. Key Results

3. Initiatives (an Initiative can be any output from a task or todo to a

project or deliverable)

Starting with outputs (i.e. Initiatives) is impossible unless you don’t care
what these outputs should accomplish. When Alice asked the Cheshire
Cat in Alice in Wonderland: “Which way do I ought to go from here?”, the
Cat replies “That depends on where you want to get to”. Alice then says
“I don’t much care”, upon which the Cat concludes that it then doesn’t
matter which way you go.

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Picking the right Objectives
Picking the right Objectives is harder than you might think. Setting the
right Objective at the right time is even more difficult.

Types of Objectives
Although it sounds like a no-brainer, it’s not always clear to teams
brainstorming their Objectives what an Objective can be used for.

To get more clarity on this, you should first understand that an Objective
is always designed to get you out of your status quo. That means that
if you’re completely satisfied with how things are going at the moment,
you may not have the need for an Objective.

When you’d like to move forward and get out of your status quo, there
are 3 different types of Objectives you can use:

Typically, these 3 types of Objectives are used in the order they are
displayed above. For example, you can’t improve something that hasn’t
been built yet.

Let’s have a closer look at these 3 different types of Objectives.

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Build

A build Objective creates things that didn’t exist before. When we

started investing in customer success at Perdoo, we found it important
to first focus on the onboarding experience for new customers, which is
the first 3 months of a customer’s journey with us.

Our Coaching Team, therefore, created the following OKR for Q3 2020:

Improve

Everything that you do to make something better that already exists,

falls into the category of an Improve Objective. You can improve for
different reasons, such as to improve the quality or performance of
something or to deliver the same quality or performance at a lower cost.

Back to our example at Perdoo: once we had a well-performing

onboarding experience in place, we focused on the post-onboarding
process in the following quarter. Once that was covered as well, we
decided to revisit our new customer onboarding and further improve it.
We primarily needed to make sure that our onboarding program, which
was still functioning well, became more time-efficient.

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For Q2 2021, our Coaching Team created the OKR:

Innovate

Sometimes improvement isn’t enough, and something more drastic

is required: innovation. You can innovate your product, parts of your
product, and even your organization’s management (e.g. by introducing
OKRs).

If our Coaching Team had learned that our customers’ needs had
changed, or if it was a priority to automate our new customer
onboarding to make it more scalable, we could have created an
Objective to Reinvent our onboarding program to make it more scalable.

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Putting it all together: a metaphor

To explain the 3 different categories, I’ve used a real-world example

from our own Coaching Team at Perdoo. To make it easier for you to
apply this logic to your own team or company, let’s use a metaphor.

When you’re building a car from the ground up, most of your work will
fall into the build category. It’s impossible to improve the engine if you
haven’t even built the engine yet. Neither is it possible to innovate the
driving experience if you don’t have a chassis.

Once you have your basic car, you might want to improve different parts
of it. You could improve the engine for higher performance. You could
also improve the manufacturing process so that you can build an engine
with similar quality at a lower cost.

Sometimes you have to reinvent yourself, and if you don’t, others will.
If you see that your customers don’t want to drive a car themselves
anymore, you’ll have to innovate to make autonomous driving possible.

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Tips to help you pick the right Objectives
Although it sounds like a no-brainer, it’s not always clear to teams
brainstorming their Objectives what an Objective can be used for.

Orientate first

Typically, Objectives drive the organization forward. Directly or

indirectly, they should get you closer to your organization’s ultimate goal.
Therefore, the most important thing to do when crafting Objectives is
to orientate. With the proper context, everyone understands where they
can best focus their efforts, and they can make sure that their OKRs
support the high-level goals and strategy of the organization.

Visualizing that context is crucial, so everyone can see how their work
fits into the bigger picture. That’s why Perdoo lets you map out your
Strategic Pillars to join the dots between your organization’s strategy
and the goals that’ll deliver it. You can then quickly build out and re-align
your OKRs while viewing that full alignment..

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Timing

Objectives are like destinations that you set out for your organization or
team. They should inspire everyone working on them, and your teams
and employees ideally buy into them. In the ideal scenario, you all agree
that these are indeed the right things to focus on at this moment. I made
at this moment italic, because timing is key.

Imagine, for instance, a company with an Objective for Q4 to become

a great place to work. A Key Result could be to get certified by
greatplacetowork.com. Even though it would be a great Objective,
it’s probably hard to buy into for employees if employee turnover is
skyrocketing. A better idea would be to fix the turnover problem first:
create an Objective for Q4 to Fix the employee turnover problem (an
ambitious key result would be to reduce it by 50%). Once that problem is
fixed, you can focus on becoming a great place to work.

Look at your KPIs

Your KPIs tell you how key areas of your business are performing. Are
your KPIs revealing certain problems that need to be solved? If so, what
could you do to positively influence those KPIs? If you’re using Perdoo,
you can create an OKR to get an unhealthy KPI back on track.

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At the end of the day, OKRs really only tell half the story of what each
area of your business is working toward. Take your Marketing team,
they likely have KPIs as well as OKRs – two different types of goals,
with different purposes. If you’re serious about transparency, you’ll need
to track these goals alongside each other to get a complete view of
Marketing’s priorities. And Perdoo let’s your team see all those priorities
in seconds on your Marketing page.

Close and review OKRs from the previous timeframe

Always review your OKRs when the timeframe is about to end. This
exercise will tell you whether you need to port over any OKRs to the
following timeframe, significantly impacting your available bandwidth for
the future.

To get the most out of closing OKRs, check out this article.

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Check the purpose of your team

Why have you been hired? What’s the purpose of your team and your
position? Are you living up to these expectations? The Objectives that
you’ve set for yourself, are they in-line with what is expected of you?

Crowdsource the knowledge of your people

In the Industrial Age, the manager was often seen as the person who
knew everything and was best equipped to make decisions. Those days
are over. It’s the people closer to the ball who have unique insights into
what’s going on, either within the business or in the market. Use this
knowledge!

With modern tools, it’s easy to collect input. Ask your team to suggest
1 or 2 Objectives for the upcoming period. Discuss the most popular
suggestions with management and try to make at least one of them a
company or team-level Objective.

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Important criteria for Objectives
To make working with OKR more practical, we split up the criteria for
Objectives by must-haves and nice-to-haves. An Objective should meet
the must-have criteria for it to qualify as an Objective.

The nice-to-haves are often communicated as mandatory by other

people or organizations, but we believe they’re optional. Especially when
new to OKR, it could help to keep things simple and not be too strict on
those.

Must-haves:

Directional
Objectives tell you where to go, so make sure the Objective sets a
clear direction. Having a direction also helps you to focus your efforts.
Things that fall outside of the scope of the Objectives, should be said
no to. Directional can result in the Objective being a bit vague, that’s
ok. Remember: the Key Results will specify it.

Being directional, also means that the Objective should help move
the company out of the status quo. Consequently, there is no need
to reflect business as usual in your OKRs. As an example, Achieve an
incredible revenue growth is directional, Sell our product to customers isn’t.

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Aligned
Once your Objective sets a clear direction, it is important to align it.
This ensures you are moving in the right direction. It’s a great and
easy way to ensure your Objective provides business value. You have
four main options:

Directly support the company’s strategy.

In Perdoo you’ll align your Objective to one of the company’s Strategic

Pillars. This is ideal for long-term, company OKRs.

Improve a KPI.

If the conversion rate on your website has dropped, your Marketing

team could create a quarterly OKR to fix this unhealthy KPI.

Support another OKR.

With annual company OKRs defined, the different teams or departments

in your organization can decide how to best support these long-term
Objectives, often through quarterly OKRs.

Don’t align the OKR.

This could be a red flag that your OKR isn’t going to provide business
value. Personal development goals formulated as OKRs could fit in this
category.

Alignment kills two birds with one stone as it will also boost employee
engagement, letting everyone working on the Objective see how their
work fits into the bigger picture.

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Impact
Once your Objective is directional and strategically aligned, you can
be sure you are moving in the right direction with that Objective. You
should now make sure it will be a substantial step in that direction. As
you should only have 3 or 4 Objectives, each one of them must have
a real impact. Fast forward to the end date of the Objective. Imagine
you’ve accomplished it, would it have made a difference?

Within circle of influence

The Objective ideally is inside the circle of influence for the owner.
That means that the owner is actually able to influence the area of
the Objective. Making an engineer the owner of an Objective that’s
about bringing on board new customers makes no sense since it’s
outside their circle of influence.

Time-bound
Every Objective should be limited in time and therefore needs a
horizon. If you set OKRs on a quarterly cadence, the deadline is
usually the end of a quarter. Objectives can, however, be due before
or after the end of the quarter.

No-metrics
An Objective cannot contain any metrics. Leave the metrics for the
Key Results.

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Nice-to-haves:

Inspirational
Some people in your company are motivated by numbers. Others
need a more inspiring goal. Use inspiring language for your Objective
and leave the numbers for the Key Results. Some of our customers
use internal rules that state an Objective should be so inspiring that
everyone working on it should want to put it on their resume. An
easy way to make Objectives more inspiring is to include adverbs and
adjectives such as successful, awesome, best, strongest, steepest,
etc.

Understandable
Objectives drive your day-to-day work and should be present every
time you make a decision. Simple information is easier to remember,
so Objectives should be written down in the language of the
organization. Try to avoid jargon specific to your position or team and
keep descriptions as short as possible, without diminishing the quality
of the Objective. Simple, short language allows for others to connect
with it and keep it top of mind.

Writing guru Ann Wylie found that when a sentence length is max. 14 words,

readers understand 90% of what they’re reading. This drops to 10% if the

number of words is around 40. Other studies show that sentences with 11

words are considered easy to read, and those with 21+ words difficult.

Not too many

There is so much you can do in a year or quarter, OKR forces you
to pick the 3 or 4 Objectives that matter the most. Setting too
many Objectives usually reveals an inability to focus on what’s most
important, but it could also mean the impact of each Objective is too
small. Many Objectives with small impacts don’t provide a clear focus
and are probably not inspiring. Less is more.
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Frequently asked questions
Do I need Objectives to reflect day-to-day work?

Not as long as your day-to-day work is business as usual. When it

becomes not ‘usual’ anymore, you may need OKRs. This is where OKRs
and KPIs can perfectly work together. Imagine for instance you’re a
support manager, your day-to-day work would consist mainly out of
answering incoming support tickets, it’s business as usual. To measure
performance, you would have KPIs like Average Reply Time and
Customer Satisfaction Score (CSAT). As long as these KPIs indicate
healthy values, you’re good. But now imagine your CSAT dropped and
your Average Reply Time went up. You could create an Objective to
improve customer satisfaction.

OKR is not about measuring and tracking all activities in your

organization, that’s what KPIs do. OKR is about moving forward and
realizing your own, your team’s, and your organization’s ambitions.

What if I can’t align my Objective to anything?

This does not necessarily mean it is a bad Objective. It means that what
you or your team has decided to focus on falls outside of the scope set
out by the company. This is worthy of healthy discussion. Why did you
come up with this Objective? Why do you believe it is important right
now? Talk to the leadership team to see where and how your opinion
differs. Considering that you will probably spend the next 3 months
working on the Objective, these are exactly the type of discussions you
should have beforehand.

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How is progress for parent Objectives calculated?

The Objective tells us where we want to go, and Key Results let us know
if we’ve got there. In fact, they are the only way to know if we’ve got
there. Aligned Objectives are simply another qualitative outcome that
is supporting (but not affecting the progress) of your parent Objective.
This aligned Objective will have its own set of Key Results, and they will
measure progress on its outcome set out in the Objective title. This then
helps you to diagnose issues in your parent Objective’s progress. If it’s
Key Results aren’t progressing, but progress on its aligned OKRs is great,
you might have picked the wrong aligned OKRs to work on.

If you’re using Perdoo, you get complete flexibility in how you

measure success and are able to quickly diagnose issues on long-
term Objectives. Your Roadmap shows not only the progress of the
Objective’s Key Results, but also the progress of its aligned Objectives.

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Setting Key Results
Now that your Objectives are set, it is important to agree—with your
manager, team and everyone working on each Objective—what the
appropriate Key Results would be.

Key Results are feedback mechanisms telling you whether you’re getting
closer to your Objective or not. A result—as you probably know—is an
outcome of something. If a Key Result is a real result (ie, outcome), you
can iterate your Initiatives until the needle moves for your Key Result.
Initiatives — eg, projects or tasks — drive results. When you have
Initiatives as Key Results, you’re finding yourself locked into achieving
them, even if you later find out it’s the wrong approach to drive certain
metrics.

The Objective is directional and often contains adverbs and adjectives,

which can be vague or ambiguous. If you have, for instance, words like
successful or awesome in your Objective, then different people will have
different interpretations of those. At Perdoo, we’ve seen this first-hand
with some of our customers. One of our customers had a company-level
Objective to Become the no. 1 startup in the UK. When others started to
create their own OKRs based on this, it became clear that HR and the
leadership team (who created the Objective) had completely different
interpretations of this: leadership was thinking about becoming the
fastest-growing startup, HR about becoming the best place to work.

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Key Results take away such ambiguity. Only by looking at the Key
Results can someone know exactly what is meant with the Objective. If
your Objective is about achieving ridiculously steep growth, then that
could still mean many different things. If the Key Result indicates a
quarter-over-quarter growth of 50%, you could easily conclude that is
quite ambitious. Only by looking at the Key Result(s) you can see just
how ambitious the Objective was intended to be.

Key Result should measure what matters

In Why OKRs outclass regular goals, I explained why OKRs are such
a powerful way to structure your goals: they help you identify what
really matters. In Outcomes vs. Outputs, I emphasized the importance
of having Key Results that measure outcomes, because outcomes—not
outputs—are usually the things that really matter.

These articles have sparked much debate, but the importance of

outcomes seems to be widely embraced nowadays. Nonetheless, many
people still struggle to understand what good Key Results are, and why
measuring outcomes is so important. I’ll try to answer this question once
and for all.

First things first: the role of Key Results

The most important role of Key Results is that they force you to specify
what you mean by a particular Objective. If you have an Objective to
learn Italian, then ‘learning Italian’ will mean different things to different
people. Key Results enable you to specify what it means to you. They
answer the question: what needs to happen in order to successfully
achieve the Objective?

In other words: Key Results help you identify what really matters.

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‘What matters’ is never a means to an end

When you set yourself the Objective of learning Italian, most people
start thinking about all the things they could or should do to learn that
language. You could listen to an Italian podcast every day, watch a TV
show in Italian, or complete an Italian language course. Because these
are the first things that come to mind, it’s very tempting to add those as
your Key Results—which is also what most people would do.

It’s tempting to think these are good Key Results because there seems
to be a clear relationship between these tasks and your Objective. You
can easily see how listening to a podcast and completing an Italian
language course would help you realize your Objective of learning Italian.
However, for most people, all these tasks are actually a means to an
end (“something that is not valued or important in itself but is useful in
achieving an aim”).

Imagine you’ve listened to an Italian podcast for 30 days in a row and

you’ve completed an Italian language course, but when on holiday in
Italy you still cannot order a pizza in Italian. Would you consider yourself
successful? Would you say that you speak Italian now? Probably not.

That what really matters to you is almost never a means to an end. What
you really care about is the end itself. So you have to make sure that
each Key Result is never a means to an end, but an end itself.

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Example:

Launch a new website

I was consulting a company in Berlin not too long ago. Their Marketing
team had created an Objective to launch a new website. Their Key
Results were things like (i) create a new design, (ii) find a website
developer, and (iii) release the new website.

As you can see, all the Key Results are tasks, outputs, things that they
needed to do in order to launch the new website. It’s definitely important
to keep track of such activities, which is why we allow you to track
those as well in Perdoo (read how).

Were these good Key Results? Looking at the Objective, you could say
that the Objective would be achieved when all these “Key Results” were
completed. So I asked the team if they would consider themselves
successful when all these “Key Results” have been done. “Yes” was the
answer.

Then I asked what they were actually expecting from this new website.
The Marketing Manager responded: “It should appeal to our target
audience better, so we expect a higher conversion rate and more leads
that will be accepted by our Sales team”. That made it clear that the
true Objective wasn’t to Launch a new website, but to Launch a higher-
converting website that attracts more high quality leads. The team agreed
that that was a better way to name the Objective.

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I asked them to look at the Key Results again and evaluate whether
these Key Results were still good measures of success. Obviously,
everyone disagreed. Now that we knew our true Objective, it was
easy to create Key Results that were measuring the things that really
mattered: improve (i) visitor-to-lead conversion rate, and (ii) percentage
of leads that are accepted by Sales.

As you can see, being able to successfully identify what matters

depends on the Objective. Start with a good Objective (i.e. an Objective
that is a meaningful step forward for you or your organization) and your
Key Results will naturally measure outcomes.

The benefit of measuring outcomes

Imagine Team A that works on the Before OKR, and Team B that works
on the After OKR.

Team A will just be driven by activities (outputs). They’ll have zero

insight into how their new website is performing. For all they know it
could actually worsen conversion.

Team B will be driven by results (outcomes). They’ll be able to see if the

new website is actually driving value for the business. The OKR enables
them to iterate and tweak until they achieve the results they desire.

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I’d find it much more exciting to work on the After OKR. I’d like to see
that what I do is actually making a difference. As an investor, I’d also
place my bets on the organization that is focusing on results. The
activity driven organization might be lucky and launch a website with
amazing conversion rates. And they might be lucky again. But building
successful businesses does not depend on luck. Team B has a system in
place that will lead to success, time and time again.

The anatomy of a Key Result

Because Key Results are a little more complicated than Objectives and
Initiatives, I’ll spend a bit more time explaining what constitutes a (good)
Key Result.

The components of a Key Result

A Key Result consists of the following elements:

Metric

Start value

Target value

Title

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Metric

The metric is what makes the Key Result “measurable.” Popular metrics
for product and customer success teams are Net Promoter Score (NPS)
and Monthly Active Users (MAU). Software-as-a-Service companies
often look at Monthly Recurring Revenue (MRR) and Churn Rate, the rate
at which a subscription-based company is losing customers. In contrast,
factories and producers use a lot of operational metrics.

The metric for a Key Result is the ingredient some teams struggle with.
Some are simply lacking inspiration (in which case our Example OKR
Guides can help), others don’t yet track the metrics they want to use in
their Key Results.

It’s important that you are already able to track the metric you want to
use before you include it in a Key Result. If it isn’t you run the risk of
becoming too busy to put tracking in place meaning that you won’t be
able to see how you progress.

Start value & target value

The start value and target value require little explanation. The former is
simply the value that your metric has at the start of the quarter or year,
and the latter is the value that you want that metric to have at the end
of that timeframe.

Setting the right target value can be difficult if you don’t have a
benchmark yet. If that’s the case, you could use the first two weeks of
the quarter to collect that benchmark. Of course, you’ll risk that these
few weeks of data will not be significant, but that shouldn’t stop you
from setting a target value.

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Title

You may think that just by looking at the metric, start and target
value, you pretty much have all the info you need. However, much
of the benefits that OKR offers to organizations, such as increased
transparency and improved alignment, require that the OKRs themselves
are easily understandable and not ambiguous. That’s where the title
comes into play: the Key Result title bundles up and communicates in a
clear and direct way the result you’re looking to achieve.

The title also helps put the values in perspective and make the Key
Result more exciting to work on. For instance, your Key Result could be
“Double our NPS,” where you metric would be “NPS,” your start value
could be “20” and your target value “40.” Of course, your title could also
be “Increase our NPS from 20 to 40,” this really depends on the personal
preference of the people that will be working on it.

2 mistakes you should avoid

It’s crucial that you set up your Key Results in a way that they are
challenging, and that everyone working on it will be able to progress
toward the target. This may sound obvious, yet this is where it often
goes wrong.

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Mistake 1: Avoid words like “at least” or “above”

As most people know, Key Results should be challenging. If you

use phrases like “at least” or “above” in your Key Result title, you’re
basically saying you expect people to reach at least the target value.
That is either not setting a challenging target for yourself, or risking to
demotivate your team by setting a challenging target and labeling that
the bare minimum.

Let’s say your “at least”-target value is not really challenging. We can
then assume that that target will be hit before the quarter is out. What
will happen next? Progress will already be at 100%. Do you expect
people to stretch themselves further? It’s probably not going to happen.
The whole idea behind the 70% rule is that you deem it feasible to get to
70% progress, and 100% is a stretch. So remove phrases like “at least”
from your Key Result title, and increase your target value instead.

Mistake 2: Avoid saying “have less than” or “have maximum”

Sounds simple? I’ve seen it all too often that people set up a Key Result
like “Have less than 4 customers cancel their subscription this quarter”
or “Have a maximum 10% unsubscribe rate for our newsletter.” Imagine
what this does. For the cancellation example, progress at the start of
the quarter will be 100%. You may lose 1, 2, or 3 customers through the
entire quarter, and progress would still show 100%. Just by looking at
progress, everyone would think you are doing fine on that Key Result.
Then in the last week of that quarter, a fourth customer cancels. Now all
of a sudden progress drops to 0%. That’s bad, and what’s even worse is
that there is no way for you to fix that progress. You should avoid this at
all times.

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Important criteria for Key Results
Again, we’ll be splitting those up by must-haves and nice-to-haves. A
Key Result should meet the must-have criteria for it to qualify as a Key
Result.

The nice-to-haves are often communicated as mandatory by other

people or organizations, but we believe they’re optional. Especially when
new to OKR, it could help to keep things simple and not be too strict on
those.

Must-haves:

Make the Objective achievable

Imagine you have achieved all your Key Results, have you then also
achieved the Objective? Remember: an Objective tells you where to
go, Key Results tell you how to get there. When creating Key Results
for an Objective, you’re answering the question “How will I know
I am getting to my Objective?”. We are talking about Key Results:
those results that will be absolutely key to getting you closer to your
Objective.

Measurable

Being measurable means that a Key Result must have a metric. When
it has a metric, you’ll be able to track progress.

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Nice-to-haves:

Ambitious

Your Key Results reflect your ambition, so how ambitious are you? A
Key Result that doesn’t make you feel a little uncomfortable, is not
ambitious enough. Yet, they should not discourage you, so keep them
realistic. A good rule of thumb is to forecast 30% to 40% above what
you would deem possible. That way you should be able to get to
at least 70% of your target. Remember that it should be achievable
before the Objective is due.

Working with OKR creates an environment in which every individual,

every team, and the company are challenging themselves and each
other. Ambitious Key Results unlock creative thinking and challenge
people to try new things to achieve those results.

While many people believe OKR is all about setting ambitious goals, we believe

this is not a core component of the framework. Read this blog post to learn

more about why we’re allowing you to switch off stretch goals inPerdoo.

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Frequently asked questions
How many Key Results should an OKR have?

If Objectives tell you where to go, Key Results are what you need to
achieve to get there. Key Results are like a GPS that you follow in order
to navigate to where you want to be. Where a GPS needs 3 satellites to
accurately pinpoint your location, an Objective requires 3 Key Results to
accurately let you know whether or not you’ve accomplished it.

However, every company and team is unique, and the challenges that
they face can vary greatly. Sometimes this means that 6 Key Results
are required for an Objective, which is totally fine. It can sometimes
also be the case that you only need 1 or 2 Key Results for an Objective.
Again, not a problem. What really matters is that you don’t end up with
too many Key Results overall, when you take all your Objectives for the
quarter into account.

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One of the primary motivations for organizations choosing OKR is to
increase focus. Focus means that you have to say no to things. If you
have 2 Objectives with 6 Key Results each, you’ll have 12 Key Results in
total. If you have 4 Objective with 3 Key Results each, you’ll also have
12 Key Results. Since teams typically set OKRs every quarter, 12 Key
Results more or less means your team has only 1 week to deliver a Key
Result. Any more than 12 and you risk losing focus. We have seen that
12 is the maximum a team is able to achieve consistently. If you have
more than 12, you either struggle to focus or Key Results have become
too granular.

Instead of focusing on the number of Key Results for an Objective, I

believe it’s better to be pragmatic and focus on the total number of Key
Results that you end up with for a quarter. Moreover, make sure that the
Key Results you set truly are truly representative of a measure of what
you want to accomplish. Key Results should always show you whether
your Objective was actually achieved. The maximum number of Key
Results for your team depends on how much time you’ll have to work on
your OKRs. In most circumstances, 12 Key Results per quarter would be
the absolute maximum.

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Can I have Key Results without Objectives?

No. First of all, not everyone is as driven by numbers as you might

be. Many people are more motivated by the inspiring language of the
Objective. Second, a Key Result without an Objective is even worse than
an Objective without a Key Result. Objectives are the focus points that
provide everyone with a sense of direction. They help them understand
what the priorities for the organization and/or team are at any point in
time. They also give a sense of purpose, as the Objective answers the
‘why’ for each Key Result. The power of why is perfectly explained by
Simon Sinek in his book and TED talk The Power of Why. Does your Key
Result tell you to increase your Net Promoter Score from 70 to 90? Why?
Because we want to have the happiest customers in the world.

Can my Key Result become someone else’s Objective?

When a Key Result contains a metric, you don’t get to define progress
for the Key Result yourself anymore.

Let’s say you have an Objective to Improve customer happiness. A Key

Result could then be to Increase NPS from 30 to 50. In this case, NPS is
your metric, and you’d have to look at your current NPS score to see
what the correct value is for your Key Result.

There are lots of things that you can do to increase NPS. You could
squash bugs in your product, hire extra support agents to bring down
your response time, build highly requested features, and so on. But
doing these things won’t automatically mean NPS will go up. NPS will
only go up if more of your users give you a high NPS score and become
promoters.

In other words, only the (current value for your) metric can and will
define progress for your Key Result.

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What happens if a Key Result becomes an Objective?

Everyone agrees that Key Results drive progress for an Objective.

If I assign my Key Result to Increase NPS from 30 to 50 to you and I want

it to become an Objective for you, your Objective will be: Increase NPS
from 30 to 50.

Your Objective now contains a metric (NPS). If you decide to create Key
Results for this Objective, these Key Results cannot drive progress for
the Objective. When an Objective or Key Result (or any other goal for
that matter) contains a metric, it’s the metric that will define its progress.

So we’re stuck: you have an Objective for which you cannot create Key
Results anymore. What’s been the point of the Key Result becoming an
Objective for you?

A better approach

A much cleaner and simpler approach would have been to assign the
Key Result Increase NPS from 30 to 50 to you without it becoming an
Objective for you.

By assigning the Key Result to you, I make you responsible for achieving
it. This isn’t easy. There are a number of things you could do. The
project and tasks that you’ll initiate to achieve this Key Result are what
we call Initiatives at Perdoo. Initiatives don’t impact an Objective’s
progress.

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As you complete your Initiatives, you’ll now be able to see if they move
the needle for your Key Result. If they do, awesome — you’re on the
right track. If not, you may need to try other Initiatives.

By differentiating between Key Results and Initiatives, and by tracking

them in the same place, you’re all of a sudden able to see how the
things you’re doing are helping you achieve the (key) results you desire!.

Is a Key Result the same as a KPI?

KPI is an abbreviation for Key Performance Indicator. Whilst setting your

KPIs, you are defining what the key areas of your business are, and you
are using a metric (as well as a target value) to indicate how that key
area is performing.

A KPI is consists of similar elements a Key Result:

Metric

Current value

Target value

Title

Metric and Current value

These are already explained above. If you are a Perdoo user, I

recommend you to store the formula for the current value on the KPI
itself (read how).

Target value

The target value is the minimum or maximum value that you want that
metric to have.

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Title

The title should consist of the metric and the target value. Right above
the title, you can then display the current value, and that’s all the
information someone needs to see what the KPI is and if the KPI is
healthy or not.

Here is how the Perdoo Sales Team have set up their KPIs in Perdoo:

For more information about the anatomy of a KPI, check out this article.

As you see, a Key Result is anatomically a bit different from a KPI. Also,
a KPI and a Key Result each serve a different purpose. It, therefore, is
important that you don’t mix up these terms. It can happen that the
metric used in a KPI is also used in a Key Result, for instance when the
KPI is above or below its target value. This article further explains how
KPIs and key Results can work together.

My Key Result won’t progress until the end, now what?

This can happen with migrations, new product launches, and building
new processes or skills. I often get asked, “How then can I show progress
for these during the quarter?” Yes, you’ll be working on Initiatives, but the
Objective progress is dependent only on the Key Results. The Objective
will then be 0% achieved, usually for the entire time period, until it’s
possible to observe any change in the metrics.

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Introducing lead metrics

The good news is that there usually are leading metrics that you can use
for your Key Results. While lag metrics are usually the best indicators of
success for your Objective, lead metrics make sure you’re headed in the
right direction.

For example, when you’re learning to drive a car, the best measurement
of success would be of course the Key Result “Drivers license achieved”.
This contains, however, a lag metric (you will only get feedback after
your drivers exam). To keep you on track throughout the quarter, you
can create an additional Key Result with a metric such as “Number of
interventions per lesson ≤ 2”, which contains a lead metric (you get
feedback directly after each driving lesson).

Lead metrics kill two birds with one stone. On the one hand, they
make sure you’re headed in the right direction, and prevent you from
discovering at the end of the quarter that you’re not going to achieve
your Objective. On the other hand, they enable you to see actual
progress throughout the quarter, which is highly motivating for the
people working on the OKR.

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Examples

Here are a few examples of how you can show progress using lead
metrics in your Key Results:

Test results

Competency testing

I often see goals that aim to teach a team a new process or skill. Say
for instance, you’re the only person who can execute a certain task and
this creates a backlog that slows down the process. You plan to create
documentation and deliver a presentation, but those are Initiatives.
Ideally, you’ll want the Key Result to measure the increased efficiency of
having others able to do the task. It can take a while to actually observe
a real world situation, so give a mock task or test to validate that the
information delivered was understood. You can have a leading Key
Result for the pass rate. Then, as the team has the opportunity to work
on a real task, you can measure if distributing the ability has decreased
the turnaround time.

O: Our team can wear more hats

KR: 100% team pass test (leading)

KR: Reduce time to complete task from 1 week to 2 days

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Product testing

Often launching a new product or completing a migration has clear

intentions. It takes time though to get to the opportunity to see if
the product or migration made the intended impact. For example, the
Engineering team is releasing a Recommendations Engine. We won’t
know until after this new functionality is released if it’s truly amazing
based on the client feedback and use of the recommendations. These
are great Key Results, but you can’t measure them until the end of the
quarter. To demonstrate progress, you can have a Key Result for some
of the interim testing results. For example, results during beta testing will
signal whether or not the feature is ready to move on to the next step.

O: Release an amazing Recommendations Engine

KR: X% reliability during beta testing (leading)

KR: X% positive client feedback

KR: X% clicks on recommendations

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Third-party buy-in

Some goals require approvals along the way from an outside source. For
instance, there’s a lot of due diligence that needs to happen before you
can acquire a new company. Signed contracts and regulatory approvals
are a good way to validate this progress. While they might not be the
end goal, they are required to move along and involve a third party to
sign. Use the accepted offer and regulatory approval as leading Key
Results, with the ultimate Key Result of acquiring the company.

O: Expand our footprint through acquisition

KR: Offer accepted (leading)

KR: Regulatory approval (leading)

KR: Acquire 1 company

Here’s another example. You’re currently selling your shirts online, direct
to your customers. You’d like to expand your reach by selling your shirts
in brick and mortar stores. The first step is to get stores to agree to
carry your merchandise. Without their approval, you won’t have the
opportunity to offer your shirts to their customers. Their agreement
indicates that they also think your shirts could be a good fit, so it’s
a good leading Key Result to provide that initial validation that you’re
on the right track. Once your shirts are offered in their stores, you’ll
ultimately know if this channel is successful if their customers are buying
your merchandise.

O: Retail is a viable channel for our shirts

KR: Get our shirts into 3 stores (leading)

KR: Sell 80% of our first order in the 1st week

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It’s not always easy to find the perfect Key Results. Keep the final,
desired outcome in mind – it’s what will give you the ultimate
confirmation of success. Adding incremental Key Results will also help
communicate that progress is being made during the quarter.

What if I can’t come up with a Key Result for my Objective?

In that case, we have a problem. Key Results specify what is meant

by the Objective and are feedback mechanisms that will let every
contributor know whether they are actually achieving the Objective. How
will they be able to figure out how best to contribute to the Objective?
How will they know their work has the desired effect?

We acknowledge that it can sometimes be difficult to find appropriate

Key Results. But we encourage you to put time and effort into finding
one. The benefits definitely make it worth it. Find the answer to the
question How will I know I’m getting to my Objective?. If you are
achieving your Objective, what would happen in the outside world that
you could observe and measure?

When new to OKR, this will often mean measuring things for the first
time. That’s a good thing. These measurements will let everyone know
what really is working and what isn’t. This is highly motivating and
dramatically increases your learning curve. When measuring things
for the first time, you’re probably guessing where to put the target for
your Key Result. That’s fine, while continuing to work with OKR you will
quickly learn what your capabilities are.

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Creating Initiatives
Your Objective tells you where to go, the Key Results are the results that
you need to achieve to get to your Objective, and the Initiatives are all
the projects and tasks that will help you achieve your Key Results.

Initiatives are your hypothesis on how to make it happen. You can be

very successful completing your Initiatives, but if they don’t move the
needle for your OKRs, you’re not getting what you were aiming for.

If your Initiatives don’t have the desired effect, change them. When you
have no idea what Initiatives could drive your OKRs, do the smallest
possible thing first. Similarly, in a constantly changing environment, you
should constantly try new things. Measure its effect and — if successful
— multiply your efforts.

Important criteria for Initiatives

Specific

An Initiative should always be specific. In an ideal scenario, its scope

is clearly defined, and the owner of the Initiative should know what to
do. It cannot be vague like an Objective can be. An Initiative should,
therefore, contain verbs which are unambiguous, such as establish,
write, launch, visit, release, etc. Objectives can contain less specific
verbs, such as improve, increase, and so on.

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 Within control

You should have full control over your Initiatives, which means that it
will be in your power to complete them. This means there should be
no dependencies on something or someone else. It also means that
you can be held accountable for not completing your Initiatives, it will
be more difficult to hold someone accountable for not achieving his
or her OKRs (as they will not have full control over the latter)

Frequently asked questions

How does the ‘Circle of influence’ relate to ‘Within control’?

We all face problems, challenges, and opportunities. The circle of

influence encompasses those challenges and opportunities that we
can actually do something about. An engineer will have little influence
on bringing onboard new customers, whereas a marketeer will have
no influence on areas like code quality or accounting. For owners of
Objectives, Key Results or Initiatives, it is important that the OKR and
Initiatives fall within their circle of influence.

”Within control” really means something different. It means that it is

within your full power to complete them. This goes further than the
circle of influence and only indicates you have some influence on the
topic. Initiatives should always be within your control, Objectives and
Key Result don’t. As a result, you can always be held accountable for not
completing your Initiatives.

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How “big” should my Initiatives be?

An Initiative can be as big as a project and as small as a list of tasks.

Most things you are working on can be endlessly split up into smaller
tasks. People that have a lot of experience with task management
software are probably already familiar with this problem. So to what level
of granularity do you split up your Initiatives?

Within Perdoo, Initiatives need to be split up to such an extent that

it is still relevant for the owners of the Initiatives, and everyone else
looking at it. Initiatives shouldn’t be single tasks, and you should be able
to progress through them. Initiatives with productivity software, that’s
where you can further split them up and manage your tasks on micro-
level.

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OKR
Checklist
Objective Key Result Initiative
Where do you need How will you know What will you do go get
to go? you’re getting there? there?

Directional

Aligned

High Impact

Ambitious

Measurable

Inspirational

Understandable

Specific

Within circle of influence

Within control

Time-bound

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About Perdoo
Perdoo is a simple but powerful goal management platform that helps
ambitious organizations turn great strategies into amazing results.
Thousands of companies across the world use Perdoo to boost
transparency and alignment by combining their strategy and all their
goals (OKRs and KPIs) in one place. And you can start for free!

Get started for free

At Perdoo, we believe in truly democratizing the concept of OKR
and want to liberate companies from the hassle of tracking OKRs in
spreadsheets. We already offer most of our content for free. Now we’ve
decided to go even a step further and offer our software for free as well.

Go to perdoo.com to sign up for a free account!

Our free account includes all core functionality and allows you to track
an unlimited number of goals.

Get your free Perdoo account

Questions?
Contact us via [email protected] and we’ll get back to you asap.

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