Objectives & Key Results (OKRs): Ambitious Goal Setting and Extreme Focus
There are many approaches to goal setting and prioritization, but few have the power of Objectives and Key Results (OKRs). They help break up big, bold visions into actionable goals against which progress can be measured.
For an organization to be truly effective, all teams must be aligned and focused on achieving the priority work. For a team to be truly effective, all members need to be pulling in the same direction.
This is no easy task for a team or organization.
OKRs provide an effective means to translate a vision and give direction, to both teams and the organization as a whole.
What is OKR?
OKR (Objective Key Results) is a goal-setting framework that helps companies surface and prioritize their most important work. OKRs help teams communicate, align, and focus on purposefully articulated goals, then measure and track their progress towards achieving those goals.
The Objective is what you want to achieve. Objectives are significant, concrete, action-oriented, inspirational, and concise. They describe the path forward, the future state, the place you want to be. The best objectives are a simple, memorable description of your vision-supporting goal and include a deadline for achieving it.
Key Results are like a roadmap that lets you know whether your team is on the right track to meeting your goals and accurately measure when your objective has been met. They are evidence that helps teams and organizations benchmark and monitor progress toward the objective. Key results Typically, there are 3-5 quantifiable key results per objective that can be evaluated regularly throughout a set timeframe like a quarter.
Effective OKRs are outcome-focused and represent meaningful change, improvement, and growth. Companies all over the world are using OKR to transform how they do goal setting and propel their teams to achieve the most important things.
OKR vs KPI
OKRs are not the same as KPIs (Key Performance Indicator).
OKRs change over time and are focused on outcomes that we want to achieve. KPIs are constant over time and are indicators of quality-of-service standards.
Sometimes we want to focus on a particular KPI or area that really needs improvement, and we may write an OKR about that KPI if we need our teams to focus on that over a specific timeframe (like a quarter). OKRs that introduce a new capability may later become stable KPIs to continue to monitor. KPIs that need a lot of help may become OKRs IF you need to focus on that area.
OKR and Scrum: A Powerful Combination
Both OKR and Scrum begin with a bold vision for a product, service, or a future state. This vision is the north star that guides and inspires the team(s) and organization. The OKR provides the extreme focus and motivation to achieve that big, audacious goal which helps achieve the vision.
While OKRs help to express the most important goals for an organization or team, the Scrum framework equips the team with a process for developing and sustaining complex products or services. The work being done by the Scrum Team(s) should support the shared goal expressed in the OKR.
In other words, Scrum Teams can view OKRs as the goal or direction in which to go, and Sprint Goals and the associated Product Backlog Items as small experiments that will hopefully move the team closer to achieving the bigger goal.
During Sprint Planning, the Scrum Team should try to prioritize Product Backlog Items (PBIs) that they think will have the best chance of moving the needle toward achieving their OKR. If the experiment doesn’t work, and the team doesn’t get closer to their goals, they can take that learning to determine a new hypothesis and update the Product Backlog accordingly.
In this way, OKR and Scrum are a powerful combination.
OKRs and Prioritization
OKRs clearly and measurably define success. This helps teams and organizations prioritize and determine which things to say no to, and how to stay focused as new things inevitably arise.
It also helps teams know if the things they are doing are working or not.
Teams that use OKRs can identify “what to do next” with confidence. Items in a Product Backlog will have varying impacts on a set of Key Results. One approach for ordering a Product Backlog is to calculate potential value through the lens of OKRs, identify value per story point and use that as a reference to prioritize a backlog more effectively.
Outcome vs. Output
Scrum Teams and organizations experience the biggest value from using Objectives and Key Results if they focus their OKRs on outcomes and integrate OKRs into existing tools, practices, and events.
The shift from output to outcome can be difficult and requires effective change management and coaching.
OKRs should demonstrate progress and real impact, not just activity. Outputs do not always lead to outcomes, and often Scrum Teams need time and practice to identify good outcome-focused OKRs.
Some good questions to brainstorm good, outcome-focused objectives include:
- How does your team produce value?
- What can they influence?
- Where are your growth opportunities to serve your customer?
- What are some big deficiencies you have now?
- What problems are you solving and what would be important about achieving them?
Then the Product Owner can focus on how they will know they have achieved the objective and write quantifiable key results to measure progress.
As with any other type of organizational change, some people may be skeptical and reluctant to try OKRs. Piloting OKR with a subset of your organization is a good way to build advocates and champions for applying outcome-focused OKRs throughout the rest of your organization.
OKRs, Sprint Goals, and the Product Backlog
Sprint Goals should be defined to support OKRs. Scrum Teams should create Sprint Goals that align with their Product Goals and OKRs to help stay focused on the most important goals for every Sprint. Sprint goals and the work of the Scrum Team should therefore be centered around achieving the OKRs.
Product Owners should make sure that as many items as possible in their Product Backlog can be associated with an OKR. This helps connect the Scrum Team’s everyday work with the Product Goal(s). OKRs can even be integrated with Agile tools such as JIRA by labeling each Product Backlog Item with the appropriate OKR. This allows teams to have a concise overview of how much work is dedicated to achieving an OKR. Product backlogs should be updated each Sprint based on the progress towards the key results. Learning from the key results should be used to make decisions for each Sprint.
Scrum Events and OKR
Each of the five Scrum Events provides an opportunity to focus (or re-focus) on the OKRs as well as inspect and adapt the work as needed.
Scrum Teams should make sure their OKRs are prominently visible in their shared workspace (virtual or physical). They should refer to their OKRs during backlog refinement and Sprint Planning in order to make informed decisions about the next Sprint and the priority order of the work to be done.
Progress towards the OKRs should be discussed during each Daily Scrum, as should impediments and any cross-team dependencies.
The value of accepting any interrupts (unplanned work) during the Sprint can easily be weighed against the impact the interrupt would have on achieving the OKR. This gives the Product Owner a simple method for evaluating what work to accept and when to say no. Finally, Scrum Teams should review progress toward their OKRs during Sprint Reviews and the process of achieving them at the Sprint Retrospectives.
Overcoming Common OKR Mistakes
Like the Scrum framework, the concepts behind OKRs are simple to understand but can be difficult to master. The best way to overcome common pitfalls or mistakes is to avoid them entirely.
We at Scrum Inc. have helped many clients successfully create and integrate OKRs in their organization. One common mistake we’ve seen is when organizations write KRs that don’t produce customer value. Often Product Owners write key results that are about building a plan or roadmap. Milestones and KRs that talk about defining, developing, designing plans do not produce value for customers.
Another common mistake when writing KRs is to take the features in the Product Backlog and make them OKRs. Key results should not be a list of features. KRs should measure the impact the team will deliver; not describe a new capability or feature.
Other mistakes include:
- Too many OKRs - This creates distractions instead of focus
- Not ambitious enough - OKRs fail when they don't motivate and inspire the team(s) to do great things
- Can’t be accomplished in the timeframe - If they’re not realistic they’re not achievable
- Objective packed with too many items - These lack focus and may create difficulty prioritizing KRs and work
- Not meaningful or impactful - May not bring value to the customer and could demotivate the team(s)
- Not inspiring or motivating - team(s) will not accomplish as much or find as much joy in their work
Even the most compelling vision doesn’t mean much if you can’t measure your progress towards completing it. OKRs are increasingly popular because when done well, they quickly and effectively translate vision into purpose and actionable goals. When organizations combine OKRs and Scrum, they create an overall system where priorities are clear, progress can be measured, and focus and alignment are the norms, not the exception. These shared goals and a well-understood vision not only moves the organization forward, it also unlocks true business agility.