OKRs are a useful tool, but they need to be customized to each company and team. We recommend the use of Strategy Letters, Committed Grading, and DRIs as key constituents of making the process successful. Below are general instructions, and a discussion on each of the three topics mentioned above. Here are additional tips on
We recommend using a tool like Coda that allows for dynamic views of the same underlying data. It is important for all team OKRs to be accessible in one doc with a consistent format, but also to allow teams to add their own custom views or sync/embed in other docs for their own needs.
OKRs are a great tool to drive execution. However, the team must understand the mission and vision of the company (org) and the strategy that, if executed well, will achieve that vision.
We recommend writing an annual or bi-annual strategy letter, that reiterates the company (org)’s vision, and the overall strategy to achieve it.
Further, we recommend writing shorter quarterly strategy letters that lay out each quarter’s focus, that aligns with the annual or bi-annual strategy. While the annual strategy could be vague - because it is often hard to predict things a year out - the quarterly strategy should be concrete and achievable.
The most effective way of communicating this strategy is through a letter. We write this letter at the beginning of the planning process. The exec team (typically CPO or CEO) own the overall strategy letter, with input from the entire company. We wrote the first drafts privately, and then opened them up over the space of two weeks to larger and larger audiences for feedback. This process took place in parallel with bottoms up team planning; the teams had access to a draft version of the strategy letter before they started their planning exercises.
Draft strategy letters also allowed us to find a happy medium between top-down vs. bottoms-up-driven planning.
Give too much top-down specificity at the start of a planning process and teams can feel stifled and disempowered. But kicking off planning with independent team brainstorms and prioritization can lead to thrash and whiplash when leadership needs to reconcile the output with a central strategy and company-level goals.
By kicking off team-level planning with a draft strategy letter (including ‘strong opinions, loosely held’ caveats and draft or placeholder targets), we could set teams up with shared context on what we wanted to focus on and achieve as a company and still give enough space for each team to write and commit to their own goals. Shared early, the draft letter also unblocks supporting teams to set goals even while the detailed product roadmap is in flux.
After team goals are developed, reviewed (see below), and finalized, the leadership team should revise and lock in the strategy letter (move from draft to final). The final strategy letter, along with the OKRs for each team, constitute the end result of the quarterly planning process. Over the quarter, the OKRs get updated as things evolve, the strategy letter is frozen in time.
We did not find value in requiring each team write their own strategy letter. At about a 100 people, we saw diminishing returns on individual team level strategy letters. Instead, most teams found it valuable to maintain their own charter/vision docs (usually updated every few quarters) and their own method of tracking the longer-term feature/idea backlog.
Most companies implement some ceremony to review and finalize team goals at the end of the planning cycle. We built a strong habit of using quarterly live OKR review sessions to strengthen OKRs across the company, ensure cross-functional alignment, and ensure accountability. These meetings involve many team members and are inherently expensive. Here are tactics to ensure they are valuable:
Async reading and written questions/feedback - All leadership team members should commit to reading all team OKRs in advance and to write out any questions, concerns, or suggestions in the Q&A section ahead of time. This allows for team leads to process and prioritize what feedback they want to discuss in the live review meeting.
Moderator to keep discussion on track - Most concerns or suggestions flagged during an OKR review merit a brief discussion before they should be turned into an action item that can be tagged for resolution by the team. If the leadership team spends too much time problem-solving in a live meeting, it is (1) disempowering to the team being reviewed (2) usually a waste of time.
Concentrate reviews into 1-2 days - We were typically able to completely review all team OKRs across our 100+ member team within ~6 hours (either in 1 day or broken over 2 afternoons). This minimizes context-switching and reduces the drag that the planning process can put on the company.
Be thoughtful about attendees - we found this to work: all of our leadership team of ~7 was present for all reviews. Each team lead was responsible for inviting the right team members who were on the hook for delivering their OKRs to their session (e.g., a PM is responsible for inviting their EM, Design lead, Data Scientist, Tech Leads, etc.). The review schedule was also published company-wide, so any team member could choose to join a specific session if relevant to them.
OKRs can use aspirational or committed grading.
Aspirational grading involves setting Big Hairy Audacious Goals (BHAGs) that are seemingly impossible to achieve. Getting to 70% of such a goal is success.
Committed grading pushes for 100% success on a goal; anything below a 1.0 is considered a poor score.
These methodologies have downstream effects: Aspirational grading can (in theory) inspire teams to achieve more than they thought was possible. Committed grading helps drive faith that interdependent teams will deliver what they committed to.
Our recommendation is to use aspirational grading at the company level only (if that), and use committed grading as the default.
In practice, we found that under aspirational grading, teams felt they had a license to miss 30% of their goals. There was no agreement on whether that meant giving up on 3/10 goals or achieving 70% of all goals. Furthermore, other teams would have to do mental gymnastics to figure out if an upstream dependency would be fulfilled or not, leading to thrash in their goals.
Committed grading gets rid of all these problems. Under this method, teams could feel “unambitious”. However, we believe that it is up to the leaders and the executive teams to push teams to be ambitious, and achieve what they said they would achieve, quarter over quarter. We believe companies win through a combination of great vision, great strategy, and great execution; not merely by setting large crazy goals.
DRI stands for Directly Responsible Individual.
Driving accountability is a big part of the OKR process. Everyone in the company should feel some degree of accountability for the success of the company (org). However, recursively creating OKRs all the to the individual level is often a waste of time - more time is spent on dealing with the OKRs and review theatre, than in driving execution.
A good compromise is to have DRIs for each Key Result in the company wide OKR sheet. Not every person in the company should be a DRI - we are not aiming for comprehensiveness. Instead, work backward from the strategy: for every key result that is necessitated by the strategy, who is the person that will make sure that goal is met.
A good DRI is either a tech lead, an aspiring or current manager, or an executive (for larger goals). C-level executives should not be shy of putting themselves as the DRIs for certain goals. For our company level goals, our exec team took direct responsibility, typically for their function (eg. Chief People Officer is the DRI for People team KRs, while individual leaders on their team were DRIs for sub-KRs).