What is an Objective and Key Result?

OKR definitions, examples, and more. Learn how you can create and track OKRs in minutes using Alluxo.

What is an OKR?

A framework for setting goals that is visible, transparent, and directly tied to business performance.

Setting Goals with OKRs

Learn how to reach business goals and milestones with OKRs. Uncover the value of objects and key results.

The Value of OKRs

Use objectives and key results to cut through the noise. Create a clear path forward, drive real business results.

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What is an OKR?

Objectives and key results are part of a goal-setting technique used to drive transformational business results. Let's look at a single OKR to understand the structure.

  • Objective Increase Metric by 50% in 6 months
  • Key Result 1: Some measurable, time-bound result
  • Key Result 2: Another measurable, time-bound result
  • Key Result 3: Another measurable, time-bound result

As you can see, the objective works as a broad topic. All of the key results underneath are the methods on how to achieve the objective. Once a key result is reached, you can cross it off. When every key result is achieved, then your objective is achieved as well.

OKRs are powerful because they cut through the noise. For a founder, business owner, or executive, there are thousands of data points and dozens of items constantly asking for their attention. Instead of getting lost in the details, setting bold OKRs can create direction that your whole team can follow.

For example, you can set a goal to increase revenue by 33% this year. After setting this ambitious goal, we recommend sitting down and writing the 2-5 steps required to get there. (These 2-5 items become your key results.)

The next step is to publish 1 or more OKRs on an OKR dashboard. By making the goal public, your team can rally around reaching the same goal. Publishing OKRs also removes any ambiguity – people know exactly where the company stands.

Graphic describing what are objectives and key results

Setting Goals with OKRs

We all have an infinitely long to-do list. The purpose of an OKR is to set a clear business goal. For example, too many teams get stuck working on being "better" or "improving" the customer experience.

While these plans are in the right direction, they lack numbers and a deadline. The ideal OKR is specific, time-bound, and binary. We will explore each of these three features below.

Specific: When we say specific, we mean that the OKR should create a plan forward. For example, if I set a key result to increase prices 10% across the board, this is very easy for someone to implement.

Time-bound: As a business, you need to operate to certain dates. Most companies set monthly, quarterly, and annual goals for short-term, medium-term, and long-term objectives. This framework works well because there is a definite end in sight, and the ability to evaluate your previous results.

Binary: When something is binary, it is either on or off, yes or no, zero or one. The value of a binary objective or key result is huge: It means everyone can agree on whether the goal was met or not! Instead of arguing, people can very clearly understand if a sales, marketing, customer support, or finance OKR was met.

Bringing this all together, an OKR that is specific, time-bound, and binary looks like this.

  • Objective: Reach $100,000 in gross sales for 2018
  • Key Result 1: Launch new website with expanded catalog by March 31, 2018
  • Key Result 2: Increase prices by 10% on average by June 30, 2018
  • Key Result 3: Promote new catalog items to existing customers via email
  • Key Result 4: Implement a bulk discount for people who buy 3 or more items together

The Value of OKRs

Objectives and key results are not designed for "nice to haves". They are also not for small, incremental improvements.

An OKR unlocks organizational value – including generating more revenue, creating a dramatically better customer experience, or launching a new product. These changes allow an organization to have more resources, and to invest those resources in new, exciting initiatives.

The underlying power of the OKRs comes from their ability to build on one another. For example, setting a finance OKR to close your books faster. By doing so, you are able to review your finance metrics faster. After looking at your metrics, you can reinvest in the areas of the business that are working well.

As you can see, business objectives as diverse as increasing revenue, adding more customers, improving your internal processing, hiring the right people, and much more can fit into the OKR framework.

Learn More

Learn more about Finance Objectives & Key Results (OKRs) and our other features:

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