Objectives and Key Results

Objectives and Key Results (OKR) is a popular framework for setting goals to align teams and drive towards common outcomes. It’s based on a hierarchical breakdown of higher level goals (objectives) into component activities (key results), which become objectives on the next level of the hierarchy. In that way, company-wide objectives can be connected through several levels of metrics hierarchies to key results for a team or even an individual contributor.

The method originated at Intel, under the leadership of Andy Grove (who documented his approach in High Output Management. The book Measure What Matters by John Doerr renewed the interest in it and popularised it to to the modern audience, leading to a surge in new tools, methods and techniques that use OKRs.

OKRs are, according to Grove, a “cooperative social contract” that helps to establish priorities and helps to define how to measure progress.

Defining good OKRs

In Measure What Matters, Doerr suggests that an objective needs to be significant, concrete, action-oriented and ideally inspirational. It should be focused on what needs to be achieved. Key results are benchmarks that help monitor how the objective is being achieved. According to Doerr, effective key results should be specific, time-bound, measurable and verifiable. Doerr quotes Marissa Mayer saying “It’s not a key result unless it has a number”. The criteria for key results should make it clear if the result was achieved or not, without any gray area or room for doubt.

With an emphasis on quantitative results, there is risk of local optimisations that can damage long-term outcomes. Grove suggests pairing key results to measure “both effect an counter-effect”, effectively introducing guardrail metrics.

OKRs are usually set in business cycles. In Evidence Guided, Itamar Gilad suggests that it’s usual to set company-level OKRs annually, and lower-level OKRs quarterly.

Quoting Grove, Doerr suggests that at the top level of a company there should be “no more than three to five objectives per cycle”, and that each objective should be “tied to five or fewer key results”. Key results tend to be short-lived and evolve as the work progresses (Doerr mentiones a quarter as a typical life-span of a key result). Objectives tend to be longer-lived, especially at the higher levels of a company.

Doerr also suggests that the goals should be set “from the bottom up”, with teams and individuals setting roughly half of their own OKRs, “in consultation with managers”. On the other hand, people should set “most or all” of their key results. In effect, at each level of the hierarchy, what needs to be achieved is set together with the higher level of the hierarchy, but how it will be achieved is set by the people actually doing the work.

Gilad suggests adding a third component to OKRs, an optional context. The context should explain why the goal is important, provide relevant supporting evidence, and any additional information that can help the people working to achieve the key results.

Committed and aspirational goals

Both Grove and Doerr suggest that some objectives should be intentionally aspirational, and would not be expected to be fully achieved. Doerr provides an example from Google, where objectives are divided into two categories: committed goals and aspirational goals (or “stretch goals”).

Committed objectives are tied to key short and mid-term product metrics such as sales, revenue, product releases and similar, and they are usually set by the company management. Committed objectives need to be achieved fully within the set time.

Aspirational objectives are tied to longer company goals and bigger-picture ideas. They are usually more challenging to achieve, and can come from any level of the organizational hierarchy. Aspirational goals are not expected to fully materialize within the set time frame, and Doerr suggests that at Google the failure rate of around 40% is acceptable and expected. Even not fully achieving an aspirational goal often still produces valuable results (Doerr quotes Larry Page saying that “If you set a crazy, ambitious goal and miss it, you’ll still achieve something remarkable”).

Although aspirational objectives may not be expected to be fully achieved, they are not moon-shots. Doerr suggests that “stretch goals can be crushing if people don’t believe they’re achievable”, and that”employee commitment is essential” to pursue high-effort, high-risk goals.

Scoring and reporting on OKRs

OKRs support iterative delivery by helping to track progress and reflect on the current trajectory. Doerr suggests applying both objective scoring and subjective self-assessment for OKRs. Low scores should trigger reassessing the objectives, for example evaluating if they are still worth pursuing, and if so, how to adjust the plans to make better progress.

For scoring, Doerr suggests averaging the percentage of completion rates of the key results (which should ideally have specific numeric targets), then assigning objectives into three buckets:

  1. Green (“we delivered”) are the objectives with higher than 70% completion rate.
  2. Yellow (“we made progress, but have not delivered yet”) are objectives with a completion rate between 40 and 60%.
  3. Red (“We failed to make real progress”) are objectives with a completion rate below 30%.

To complement the discrete numerical nature of OKR scores, it’s useful to explain the progress for each key result with a more subjective judgement by the person who set the objectives. This helps to facilitate the discussion about potential adjustments to the plan. “In the end, the numbers are probably less important than contextual feedback and a broader discussion within the team”, suggests Doer, also pointing out that Doerr points out that self-assessment feedback should be used “as guides, not as grades”.

Downsides of OKRs

When OKRs are tied to personal bonuses or salaries, they can lead to the setting of low-risk, easily achievable goals rather than ambitious objectives. This encourages gaming the system, where employees focus on hitting targets rather than driving real value, undermining the purpose of the framework.

OKRs tend to focus on quantifiable results, which can lead to neglecting important, yet less tangible aspects of work such as team culture, innovation, and long-term strategic initiatives. This focus on what’s easily measurable may cause organizations to overlook critical but harder-to-quantify contributions.

The quarterly cycle of OKRs can lead to a short-term mindset, where teams focus on immediate results at the expense of long-term planning and sustainability. This can result in chasing quick wins rather than investing in foundational work that yields benefits over time.

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