What Are OKR? Definition, History, Key Benefits, and Examples

Many employees feel adrift in the workplace environment. They show up to work, spend most hours of the day at the office, and try to do their best. However, sometimes they feel like a hamster on a wheel: they work tirelessly for no tangible results. Your staff will soon start to feel unhappy, frustrated, and disengaged.

A key reason for their discontent is that they don’t spend enough time thinking about their objectives and setting themselves goals. 

Let’s be honest: would you embark on a long-waited-and-planned journey with no real idea of your destination? Probably not!

1.    Introduction

Each business has a vision and bold strategies to achieve it. However, their current processes may be inefficient, mainly due to low alignment, lack of accountability, and focus across the company.

The OKR framework helps your team set its objectives by approaching all these three challenges:

  • Alignment: How can you ensure everyone in your team aligns with the organization’s overall vision?
  • Accountability: Do your team members meet their goals and deadlines efficiently?
  • Focus: Are your employees focused on achieving the desired outcomes?

2.    OKR definition

OKR (acronym for Objectives and Key Results) is an effective goal-setting and leadership tool that helps you and your team establish goals with measurable results.

The OKR framework provides a common language for communicating what you want to accomplish and how to measure your strategy. It helps you define, align, and track the progress of the desired outcomes while encouraging engagement around measurable goals.

Essentially, OKR is an excellent opportunity to share your objectives and how to measure the milestones on the path to achieving them. At the same time, OKR is a cohesive strategy ensuring that all business areas are unilaterally working towards the same result.  

3. A brief history of OKRs

Step 1: The beginning of OKR can be traced back to 1954, when Peter Drucker – the father of modern management, published The Practice of Management. 

In his book, Peter Drucker approaches management as a stand-alone responsibility. He was the first theoretician who understood that managers can get so caught up in what they do that they forget why they are doing it. To avoid this “activity trap,” he introduced a simple yet powerful tool: Management by Objectives (MBO).

Step 2: Fourteen years later, in 1968, Andy Grove – CEO at Intel, took Druker’s MBO idea and developed it into the iMBOs (Intel Management by Objectives). Whenever he mentioned Objectives, Grove would always coin them with Key Results. Thus, Andy Grove is the father of the OKR framework as we know it today.

Same as MBO, OKR is both simple and brilliant. 

Besides clearly defining the desired outcomes, OKR identifies the metrics that ensure the team is heading in the right direction. 

Key Results help you measure and achieve the Objective.

Step 3: In 1974, John Doerr joined Intel. During his time there, he learned and simplified the OKR formula to: 

“I will [objective] as measured by [key result].”

Later, in 1999, John Doerr became an advisor to Google and helped Larry Page and Sergey Brin introduce OKR to the entire team (30 people at that time). 

Ever since OKR has become a crucial part of Google’s culture and has taken Google to unimaginable heights. John, Larry, and Sergey credit the OKRs framework for Google’s growth, countless innovations, high-collaborative teams, and excellent employee morale.

"OKRs have helped lead us to 10x growth many times over. They’ve helped make our crazily bold mission of “organizing the world’s information” perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most."

Larry Page, co-founder of Google

OKR nowadays

The growth of Google propagated the concept of OKRs. Google launched a resource re:Work to share its OKR principles. John Doerr wrote Measure What Matters – a must-read for everyone motivated to improve themselves and their teams.

4. The key benefits of OKR

The OKR model is a powerful and transparent way to express and align your team’s goals with the company's mission and vision.

In an interview for Harvard Business Review, John Doerr identified the five superpowers of OKR.

These five key benefits spell out the acronym “F. ACTS”.

When you start using the OKRs model, you can say that OKRs give you “the F. ACTS.” 

I. Focus

OKR helps you and your team focus and be result-oriented. When you set your OKRs, keep it as simple as possible. Establish no more than three Objectives. Trust me: fewer is better. 

Describe your goals simply and concisely. For each objective, you should define 3-5 Key Results.

An OKRs cycle should start with the question: What do I want to achieve for the next three months? You can think of six or twelve months, but three is the optimum time to deliver valuable outcomes. Reviewing and adjusting your OKR every quarter helps you remain focused and quickly adapt to the changes in the work environment.

II. Alignment

After setting your top-line Objectives, you can start the actual work. Once you shift from planning personal and team OKRs to their execution, you and your team members can tie the daily activities to the company-wide vision. You shouldn't underestimate the value of alignment. 

According to a Harvard Business Review report, employees’ alignment on shared vision is key to high performance (...), and companies with aligned, high-performing employees are 2.2 times more likely to be top performers compared with the competition.

III. Commitment

The next OKR superpower, after focus and alignment, is employees’ commitment to delivering the agreed OKR, schedules, and resources. Whether using a Google sheet or an OKR software tool, you must provide a transparent tracking process. Each team member must record their performance and progress toward their OKR. Regardless of the hiccups, they remain committed to achieving their objectives.

IV. Tracking

Tracking is what makes the OKR method so efficient and popular. Regularly reviewing your OKR via the established metrics lets, you understand your progress and see what is falling behind. While OKRs don’t require daily tracking, weekly check-ups enable you to adapt to changes and avoid the problem of forgetting your OKRs.

It is crucial to avoid using the OKR tracking system to micromanage your team members and hold them accountable if they are falling behind.

V. Stretching 

Stretching is the last, but not the least, superpower. Every goal should require a little stretch, pushing you and your team to achieve more than before. The most ambitious stretch goals are high-effort, high-risk, and “are often assumed to be impossible until a goal becomes possible,” says Andy Grove.

Setting a stretch goal into your OKRs looks like describing the ideal outcome. But a stretch goal is still a goal. When aiming high, failing can result in substantial advancements and learning opportunities. 

"Larry Page of Google is the high priest of 10x-ing everything, stretching further. He’ll say, ‘I’d rather have the objective be to go to Mars, and if we fall short, we’ll get to the moon. This is how you make moonshots.’”

John Doerr

5. OKR vs. KPI

Measuring employee performance is key to the success and growth of every business.

OKRs and KPIs are both methods of tracking and managing performance, but they can help you reach your goals differently. OKRs are a goal-setting framework, while KPIs track goal performance. They are often seen as alternative concepts, but they combine well, especially when measuring and improving specific areas of a company’s performance. 


6. How to write good OKRs?

Writing clear, transparent, efficient, and collaborative OKRs takes time, practice, and critical thinking. Once you master this skill, setting OKR becomes one of the most straightforward tools for you and your team.

Understand your company mission and goals

Before writing your effective OKRs, you need to understand the organizational goals. Once you have a clear vision, you can start setting personal and team actionable OKRs that align with those higher-level goals.

Remember, writing goals is not an isolated activity. Sit down with your team members and encourage them to share meaningful details about the goals they want to achieve. Collectively answering the questions “What?”, “How?” and “Why?” is the engine that drives your team forward.

Involve the entire team

For the OKRs to be truly efficient for your team, they must be bi-directional, not top-down. You can’t write them in a silo and expect your staff to accept and understand the reasoning behind the objectives. It is crucial to bring everyone together for discussions. Motivating each team member to have personal input into OKRs leads to a shared sense of power and accountability on your team.

After brainstorming and tailoring the OKRs, remember to keep everyone in the loop and share the team’s progress.

Write ambitious Objectives

Your objectives should get you closer to the ultimate company’s goals. Thus, objectives must be achievable while inspiring and motivating your team to approach them. It can be tempting to start with the description of results but make no mistake: the objective guides the key results!

Describe your objectives in one clear sentence, and set no more than three challenging goals for you and your team.

Develop Key Results

Now that you know your destination, you must set up a map to get you there. Key results help you define how you will measure your progress toward the objective. The most effective Key Results are specific, time-bound, measurable, and relevant.

Remember: Key Results are itemized and trackable outcomes, so you must include numeric values when defining them.

Track them constantly

You may have the best intention regarding OKRs: involve the entire team, write down ambitious objectives in great templates, and develop relevant key results. Yet, if you forget about them, all your work is in vain.

Find ways to review your OKRs at a regular cadence. Tracking OKR is the best method to ensure progress and review real-time accomplishments. Set weekly or even daily meetings (depending on your timelines) to discuss your OKRs as a team.

Celebrate success

The best OKRs are hard to reach; you must leave your comfort area to achieve them. However, they should inspire, not demotivate, your team. It is crucial to celebrate success, even if you don’t hit 100% of the key results.

The sweet spot for OKRs is in the 60-70% range. Scoring lower may mean the organization is not achieving enough of what it could be. Scoring higher may mean the aspirational goals are not being set high enough.

7. OKR examples

Now that you know how to write effective OKRs. If you need help, check the following examples to level up your learning.

We have included both company and team-specific OKR examples. Let’s dive in!

OKR for companies

Example 1

Objective: Increase profitability and become cash-flow positive

Key result 1: Increase cash collection to $50k after tax

Key result 2: Reduce expenses with $50k

Key result 3: Quarterly growth at 25%

Example 2

Objective: Become the most desirable workplace in our industry 

Key result 1: Conduct one-on-one feedback sessions with 90%+ of our employees

Key result 2: Implement +60% of employees’ proposals

Key result 3: Enhance compensation and benefits package to reach a 30%+ market average.

Key result 4: Implement five work-life balance improvement initiatives

Example 3

Objective: Build an excellent company culture

Key result 1: Implement the OKR framework to provide transparency to company goals by having 90%+ users submit their inputs within four weeks

Key result 2: Achieve a monthly employee satisfaction >80%

Key result 3: Celebrate at least three “small wins” in every meeting

Key result 4: CEO and team leaders to complete weekly town hall and open Q&A meeting with employees

OKR for different teams

Marketing Team

Objective: Increase the number of promotional channels to generate more interest in our brand

Key result 1: Increase email marketing from 150 to 200

Key result 2: Increase AdWords from 85 to 100

Key result 3: Design marketing activities to increase targeting from 40% to 60%

Production Team

Objective: Increase the production volume from 1000 pieces to 3000 pieces per month

Key result 1: Reduce the manufacturing time from 2h to 1h

Key result 2: Improve the production capacity by adding three new lines

Key result 3: Increase manpower by hiring ten employees

Key result 4: Decrease the in-process rejections by 90%

Sales Team

Objective: Increase monthly revenue by 10%

Key result 1: Record $10,000 in sales for our new product

Key result 2: Upsell our main product to 15% of new customers

Key result 3: Increase the average time spent on selling activities by 10%

IT Department

Objective: Improve maintenance of hardware assets and installations

Key result 1: Dispose of 95% of the unused, redundant, and outdated hardware

Key result 2: Increase the number of authentications modes for access from 1 to 2 

Key result 3: Hire five new professionals in hardware installation and maintenance 

Customer Support

Objective: Implement a customer feedback follow-up

Key result 1: Achieve a 700% response rate for customer feedback requests

Key result 2: Reduce the average number of follow-up inquiries by 20%

Key result 3: Implement at least three changes based on customer feedback per quarter

HR Department

Objective: Increase employee engagement and motivation

Key result 1: Increase each team member’s engagement score from 80% to 95%

Key result 2: 95%+ of employees complete the Engagement survey

Key result 3: Reduce attrition rate to <5%

Final thoughts

OKRs are the best method to align your employees around organizational shared objectives. They ensure the company’s growth in a positive and collaborative environment. 

Adopting and tracking OKRs as a team can keep employees more invested and engaged in high-level company objectives, so they can devote their daily efforts to the work that matters most.