Structured Goal Setting

OKRs

An OKR (objective and key result) is a popular management strategy used to define objectives and track results. The idea is to create alignment and engagement around a measurable set of goals to ensure discipline.

OKRs have two key components: The objective you want to achieve and the key results by which you measure your achievement. According to OKR coach and author Felipe Castro:

Objectives: are memorable, qualitative descriptions of what you want to achieve. Objectives should be short, inspirational, and engaging. An objective should motivate and challenge the team.

Key results: are a set of metrics that measure your progress towards the objective. For each objective, you should have a set of two to five key results. More than that and no one will remember them.

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Difference Between OKRs and KPIs

Note: There is a difference between KPIs and OKRs, which we discussed in the previous section. Because they’re measuring small, important numbers, KPIs are tied to specific departments or individuals. They are often used to measure individual or departmental performance. They can determine whether you receive a bonus or whether a person keeps their job. Those often depend on hitting certain KPIs while ascribing to the company’s core values.

OKRs tend to only apply to people on the management team and are often tied to promotions. They are overarching objectives with key results to measure how successful they are.

KPIs are any quantitative measurement that a company uses to evaluate progress and successfully reach goals. OKRs are built on big-picture goals and targets and designed to motivate employees and push companies forward.

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Defining Objectives

An Integrated Business should set meaningful, achievable goals. In his book The Seven Habits of Highly Successful People, Steven Covey suggested the best way to do this is to “begin with the end in mind.” Or, put more plainly, define the goal you want to achieve.

Once a quarter, the leadership team should get together and ask “What are the important gauges we want to see move?” The objectives should be high-level, qualitative statements. Some objectives might include:

Increase recurring revenue

Improve customer satisfaction

Scale system performance

Increase how many customers are served

For example, you don’t want to set an objective of “be profitable” because it’s nearly impossible to determine how to “be profitable.” Instead, objectives should be framed in terms of “what can we achieve next quarter to helps achieve our long-term goals?” This helps teams focus their efforts on smaller, incremental steps that can be measured and adjusted over time and ensures discipline.

Defining Key Results

The key results in OKRs should be measurable outcomes that can determine whether the objective has been achieved.

Key results are not tasks and they should never be included on a to-do list. Instead, they are the desired outcome after taking a set of actions.

It’s important that key results are leading indicators of your objective rather than lagging indicators. These results should be measured frequently and at regular intervals. And they should always lead to the objective.

For example, if your objective is to increase customer satisfaction, some key results might be:

Increase survey results

Reduce customer turn-over

Increase customer engagement

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