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Issue #7 | OKR 101 - How to write great OKRs that leads to high growth (2/3)
Hello to my lovely subscribers, I hope you all are doing well and are having an amazing start to your week!
Some of you might have noticed, the newsletter is going through some changes such as change to the newsletter name to “The Epic Growth” because in the end that is what we all want right?! To learn and grow everyday little by little and eventually it creates a compounding effect that leads to epic growth, not just professionally but also in your personal life.
Content-wise the newsletter will grow into other spaces such as productivity, no-code, psychological concepts for building products etc. as they are also super interesting topics to explore, understand and apply in day to day life.
Now, let’s jump right into our topic for discussion today. In the first part (1/3) of OKR 101, we discussed the basics of OKR framework, and why this can be a game changer for any organisation and,
In this edition of the newsletter part (2/3) of OKR 101, we will look into how to write great OKRs that will lead to high business impact and growth.
As discussed in the previous article the importance of having OKR framework and how it benefits any organization, therefore it then becomes quite imperative that quality OKRs are formulated which can guide us in the right direction in the next quarter.
Let’s do a quick recap to OKRs, as we tend to forget almost 90% of what we read after one week as per the research done on Forgetting Curve (It’s crazy right?! But True)
Let’s see,
Objectives -> Where do you want to go??
Key Results -> What are the results that you need to achieve in order to get there?
Initiatives -> What do I need to do to achieve those results? (Not exactly part of OKRs framework but important for execution)
Alright! So now we have brushen up our memories a little bit, let’s move to the topic of writing quality OKRs.
To create high quality OKRs, there are some rule or set guidelines to follow to leverage the full power and effectiveness of OKRs
One golden rule that is applicable for both Objectives as well as Key results in order to write high quality OKRs is to always start the sentence with the action verb. Action verb at the start of the sentence grabs the attention of the reader and making it clear what needs to be done.
For eg. Start the sentence with action verbs like “create”, “reduce”, “increase”, “improve” etc. rather than using the object.
Now we will structure it in two parts starting with writing quality Objectives and then moving to Key results as defining objectives first sets the direction or foundation for the Key results.
How to write quality Objectives?
Aligned with the overall company goal and vision:
First and foremost, objectives needs to be aligned with the company goals or mission. The ultimate goal of OKRs is to drive everyone in the same direction towards company’s goals. So objectives that are set has to push the needle in that direction and propel you closer to the ultimate goal otherwise the work would be in vain
For eg. If the companies goal for the year is to be the best in class for providing excellant customer experience then creating an objective like reducing the customer care cases will push the organisation towards that goal.
Objectives needs to be ambitious and qualitative in nature
OKRs represents meaningful changes or improvements that you want to see in your teams or organisation so in order to achieve that writing OKRs that are easily achievable is a No-Go. OKRs have to be ambitious enough that makes you feel uncomfortable at first but shouldn’t be stupidly far fetched as well.
Example of a far fetched objective -> In a mature market with mature product, having an objective like “Increase the revenue of the product by more than 2X ” is a badly set Objectives because it is not realistic at all.
In addition, objectives should be qualitative most of the times otherwise it will restrict the possibilities of over-achieving or crazy growth. When we attach a number to the objectives, we are restricting the scope of the outcome.
Number of Objectives to be 3-5 per quarter
You do not want to be either underwhelmed or overwhelmed by the number of objectives being set. It’s not about quantity, rather it is the quality and the appropriate number of objectives that doesn’t hamper the quality of outcome is found to be in between 3 to 5.
Crystal clear Objectives
Objectives, may not be specific but needs to be absolutely clear and understandable to everyone in the team and the organization.
Go with this rule: If you have to explain it to someone within your team then it’s probably not clear enough
You can choose different routes to reach the destination but you need to know the destination exactly. When you set an objective like “Increase the revenue of Product X”, it is clear to everyone. No discrepancies whatsoever!
To contrast, if you write for eg. “Improve the quality of Product X”, you would need to explain what quality means here exactly. It is not clear here which leads to different interpretations and that should be avoided.
Time-Bound Objectives
If quaterly OKRs are set, then the objectives needs to be at least 70% achievable in that quarter. In case the set objective is too big for one quarter, then it has to be chopped into multiple pieces so that it is achievable in one quarter.
For eg. You are planning to launch big feature, that would need more than a quarter to bring it to life then you can divide it into concept phase and implementation phase. In one quarter you can understand the customer problem, design prototypes and test it on customers. In the next quarter, you can develop the best solution, test it and then release it in the end.
How to write quality Key Results?
Quanitfiable and Measurable
Unlike Objectives, Key results have to be quantifiable as it is critical to check whether you have moved towards the destination or not.
Imagine the scenario that you are walking in an unknown area and using google maps to find your way. You entered the destination (Objective) in Google maps and are moving towards the destination. If the Google Maps doesn’t tell you how much you still have to walk (-> Walk 8mins), which basically is your Key Result, then you wouldn’t know whether you have reached your destination or not right?
Examples of quantifiable KRs, “Onboard 50 new clients, reduce the customer churn from 15% to 10%”
You also need a system or tools to measure the KRs as well, that’s why either set only those KRs for which you can already measure their progress or first create those measuring systems and then set those KRs.
Number of Key Results in between 3-5 per quarter
Similar to objectives, number of KRs should also be in the range of 3-5 which leads to focus execution resulting in higher impact and growth.
Black and white
KRs should be highly objective eliminating the scope of any ambiguity. More precisely you write you KRs, more will be the chances of achieving it.
Unlike objectives which don’t have any boundaries of imagination or scope, Key results should be very precise.
Let’s look at some examples of great OKRs together:
Make our company go viral
Generate 100,000 views on our youtube channel
Get 10,000 new followers on instagram
Increase organic search traffic to our website by 20%
Improve the Onboarding experience for our product
Create 5 video tutorials explaining how to use product
Get 1 feedback or review per client within first 2 weeks of onboarding
Reduce the number of steps from 5 to 3 in the sign up process
Bad example as well,
Design and create new product
Interview possible customers
Design the prototype for the product
Show all the possible customers the prototype
Now you have got a good understanding what separates a great OKR with the bad ones and how to approach writing OKRs perfectly.
Keep in mind, you won’t write perfect OKRs from the start, it will be an iterative process. You reflect, learn from the previous mistakes and improve next time
In the next part (3/3) and final edition of the OKR 101 newsletter series, we will explore how to implement OKR framework with your team step by step. In the end it boils down to execution and how you should go about it.
I hope you enjoyed reading this and found something interesting. If you learned something from it then it would be great if you could like and share it to someone who is very new to PM and might find it useful. Also please comment below if you have any suggestions for improvement. That would be awesome, Really! 😁
Stay heatlhy and stay curious! See you next week 😃
Other interesting stuff that i wrote which you might useful, do check them out 🤓