A One-Stop Guide to OKRs for Startups
This is part of a series of posts aimed at providing value and support to early-stage founders to help them succeed and grow their company using principles learned from our experience as operators and founders. Our aim is to provide and make such information free and widely available to everyone. If you have any topics that we would like to better explain or write about, please reach out to barry@metagrove.vc
Objectives and Key Results (OKRs) are now becoming more commonplace in established companies as well as new organisations (startups), and this is certainly not by mistake.
While the OKR framework has been around for a while now, there are still many organisations out there who are either not aware of it or simply have not spent the time and effort in investing in the framework. Understandably, it can sometimes be challenging particularly for new and emerging companies and their founder(s) to fully grasp this concept, but more importantly how to best integrate and utilise this important framework into their company.
The theme of this post will be to leverage our experience and knowledge as operators and founders to provide a straightforward one-stop guide in helping entrepreneurs and leaders. The focus will be for early-stage companies to develop their own OKR framework to learn and execute best practices to position themselves for growth and success.
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What are OKRs?
Objectives and Key Results (OKRs) is a framework that was designed to set and achieve goals using a systematic method of creating ambitious Objectives and balanced with actionable Key Results that are trackable, understandable, and iterable throughout the org’s lifecycle. Don’t worry, if this is still somewhat confusing, some examples will follow.
The concept of OKRs was pioneered by John Doerr; a Venture Capitalist (Kleiner Perkins), but also a former Intel executive who worked with Andy Grove (former Intel CEO) to develop this framework. Since its inception, it’s been used across a number of Silicon Valley companies, including Google, Adobe, Amazon, and many others. For those of you who want to take a deeper dive into its history, we highly recommend you check out John’s Book — Measure What Matters.
The Benefits
OKRs are now becoming more mainstream and pervasive because they have been proven to increase the probability of a company’s success throughout its lifecycle.
Before we get into the thick of it, here’s a quick summary of their benefits and why they’re so useful:
It promotes alignment and facilitates the company’s overall mission.
It promotes focus for the entire organisation which otherwise would not exist or be lacking without it — the mere act of doing this effectively creates milestones that are known to be highly visceral to humans in striving towards such goals.
It promotes accountability for each and every person of the company in achieving these Objectives. Accountability is very potent because it motivates people to not let others and themselves down.
It promotes feedback to make sure if the company is realising its Objectives or not, and if not, enable them to tweak and adjust when needed.
It promotes goal stretching that enables the leadership team to set ambitious Objectives that are far-reaching and audacious. And even if such goal is not entirely reached, the company would have come a long way in any case.
They are agnostic across industries and sectors. This makes them highly flexible for different businesses i.e. B2B SaaS, automotive, logistics, manufacturing, consumer, fintech, health, etc.
They are robust which means they can be used at the very earliest stages of a company’s growth, but can also be incorporated into well-established later-stage multinational organisations.
The O: Objectives
Objectives are designed to be ambitious and over-reaching goals with a time-based component. Their intent is to be challenging to achieve, but not impossible. They are the “What” goals to achieve.
Typically, Objectives should be the ones that will move the needle the most for the business. They have been deemed the highest priorities. Moreover, such goals should have a time frame of between 3-12 months, but this can change depending on the nature of the business.
A few examples;
Expand business into the US West Coast (Company/Annual)
Build out a world-class engineering team (Engineering/Annual)
Develop the first iteration of customer portal/dashboard (Engineering/Quarterly)
It’s best that each Objective is delegated to a specific company level and with a given timeline. This ensures that you’re able to measure between actual and expected results during your review at the right org level.
Don’t be surprised if some of the KRs of the Company Objectives look similar to the Objectives of certain Business Units/departments — it’s by design and should be related in some way for traceability. This does not mean they should cascade down verbatim from one level to the next, but should be deployed across the org appropriately — we’ll speak about this in more detail soon.
The KR: Key Results
Key Results (KRs) are the indicators that inform how the Objectives are to be completed. They are the “How” the goals will be achieved.
KRs can be written in many different ways, but a good rule of thumb is to make them specific, timely, and actionable.
Using one of the aforementioned Objectives, you can see the KRs represent the actions that need to be taken. Each KR should be tagged with an Owner. In this case, it’s the specific BU but could be a person’s name if desired.
Again it’s worth noting that these KRs could and should be the foundation of Objectives for specific teams around the org.
Archetype Examples
For more concrete examples, we’ve included a link to an OKR template you can use for guidance and support — it’s free for everyone. Feel free to modify, add and copy as per your own company’s requirements. The image below is just a snapshot but you can dig deeper by clicking on each of the Objectives.
This list is a living document and various examples will be introduced and refined over time.
Transparency
Transparency is absolutely vital in ensuring the success of your OKRs because it provides visibility to the entire org.
You can create transparency by showcasing the company’s entire OKR roadmap i.e. spreadsheet (or other) in a shared location i.e. Google Drive etc. This promotes inclusiveness across the org and ensures everyone is part of the same mission and journey — sharing is caring!
Sharing updates on OKRs during Town Hall (All Hands) sessions is another positive way to get everyone on the same page.
As a leader, be mindful that transparency can include both positive and negative updates. It’s important, to be honest, and share the truth. Sharing only one-sided updates can indicate you’re hiding something undermining the whole idea of transparency, not to mention a sense of distrust amongst your teams.
Deploying across the Organisation
OKRs should not only be developed at the leadership level, but created at every level of the org. This ensures transparency across all the teams.
This should not be confused with cascading very high-level company OKRs from the top-down, which should be avoided — this can lead to confusion and be very abstract to those in various Business Units trying to strive towards them.
However, instead, create specific OKRs for different teams and at each team level by the respective team members. This gives more power and autonomy to the team members to define their own OKRs but still be aligned with those set on the company level.
Cadence
How frequently you set and review your Objectives and Key Results will dictate what OKRs are defined and set the underlying tone of how the org will achieve them.
Each company will define its own cadence. However, a good rule of thumb is to have two sets; one dedicated to a quarterly cycle and the other is on an annual basis.
Quarterly OKRs provide a company with just the right amount of time and motivation to achieve its Objectives but also review them to make sure they’re on the right track — agile. Moreover, from our experience, this time frame seems to be ideal for startups, since at this stage, the company is very fluid with a lot of moving components, and a chunk of this time is spent figuring out their product and market — things will change over a short time.
Annual OKRs are still very important. They are the overarching goals that consolidate the shorter OKRs, which should both be aligned with each other.
One example might be to include a combination of having OKRs at the company level, and developing quarterly OKRs at the team and/or BU levels. This promotes efficiency in execution on these levels.
Play around with the cadences over time. You’ll eventually find the right fit for you and the company.
Feedback Loops
OKRs are designed to be bidirectional. They need to be revisited and reviewed at the end of each feedback cycle. This cycle is not to be confused with the cadence cycle (mentioned above). Instead, the feedback loop is much tighter.
Feedback loops are important because it enables your company to compare the differences between actual and expected results for each OKR, and hopefully, give you the insight to minimise the delta between the two.
For example; in our experience, for quarterly cadence cycles, review your OKRs every week. For the annual cadence cycle, review your OKRs every month. Doing this will promote you and your team to identify differences quickly and develop the motivation to address them rapidly — consistency is key.
Feedback loops should be done across the entire org at every level. If done consistently, you and your teams will start to see results.
Closing OKRs
OKRs don’t live forever. At some point, they need to retire. But when is the best time and how do you go about it?
The general rule is to close them when they've been achieved. However, sometimes they can close when they’re no longer necessary and so should be removed and/or amended. This is why the review cycle is important — you can identify them!
Closing OKRs can be as simple as tagging them as either completed, deprecated, etc. They should be closed by their respective owner, and most importantly they should be made transparent with the wider team and org so everyone is on the same page. This will contribute to the review process and metrics when it comes time to measure OKR performance and what has been achieved or not.
Additionally, some OKR owners may take the closing process to the next level and with a review of what went wrong vs. right during its execution, including lessons learned. This becomes useful for the next wave of OKRs.
Takeaways
Here are a few takeaways to make sure you’re on the right path in setting up your company for success using this framework.
Be consistent — it’s easy to fall off the wagon way too early. Make sure you set, align and review your OKRs on a periodic basis. Consistency is a virtue of success and will pay dividends if you stick with the plan just like everything in life.
The Goldilocks zone — initially, it can be very exciting to start building out your OKR framework. As such, many founders tend to go overboard and create too many Os and KRs which can become too unwieldy when it comes to actually execute against them. There’s certainly a Goldilocks zone and it’s up to the leadership team to figure out the right amount of OKRs for their org.
Review, review, review — this ties in with the feedback loop to ensure the company periodically understands where they are heading. Keep the review cadence consistent and take action items after each review session.
Experiment — the OKR framework is agnostic and malleable. This means it can fit any organisation of any type and of any size. Be sure to experiment with your implementation to figure out what works and what doesn’t. A lot of the initial issues will come from how you will deploy the OKRs throughout the rest of the org as you try to achieve alignment. Work with your leadership team, department heads, BU heads, etc. to craft a baseline strategy and work from there. You probably won’t get this right the first time, so it’s important to expect tweaks along the way.
Tools
Because OKRs is a framework, it can be implemented in a variety of ways. We’re a big fan of plain old Google / Excel sheets, but there is now a swathe of OKR specific tools out in the market that help you accelerate your OKR planning and implementation.
Google sheets/excel
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