Growth hacking is all the rage with startups nowadays. I’d be the first to admit it’s easy to get carried away with the latest trick to double your customer base or increase your blog traffic by 400%. But moving beyond one-time tips and tricks, what does it take to cultivate continuous, aggressive growth?
Say hello to your new best friend, objectives and key results (OKRs) - a framework to help you set, track, and execute aggressive goals. Invented at Intel and popularized by Google, OKRs are the secret weapon of sustainable growth. When implemented properly, objectives and key results create a singular focus within a business, stretch the limits of what’s possible, and keep every employee accountable for company growth.OKRs are the secret weapon of sustainable growth.
Why Objectives and Key Results?
Our recent survey shows businesses are twice as likely to hit their targets if they set and track key metrics. It sounds obvious in hindsight, but surprisingly few companies - only 1 in 10 SMBs in the US - set growth targets.
If you don’t set objectives and goals, you’re less likely to grow. It’s that simple. It doesn’t matter how many brilliant people you have on your team or how revolutionary your product is. You must set clearly defined business objectives if you want to reach your goals as a company.
What are OKRs, exactly?
Objectives and key results are broken into two sections and answer the following questions:
- What are you trying to achieve? (Objective)
- How will you achieve it? (Key results)
Objectives are the outcomes you wish to achieve over a certain period of time (usually monthly or quarterly). Each objective should be a clear goal so you know when you’ve accomplished it. Objectives are strategic and intended to stretch your team.
An example objective for a SaaS marketing director might be “accelerate monthly recurring revenue growth by building a pipeline.”
Key results are metric-based indicators of success or progress toward your objectives. Since key results are all about measuring progress or success, the important part is having a numeric value associated with each one. And like objectives, key results are time-bound and set for the same frequency - either monthly or quarterly.
Continuing with the objective example above, a key result example for the same SaaS marketing director might be “generate X trial signups.”
Note that OKRs are NOT performance reviews and should not replace employee performance evaluations. OKRs are specifically designed to measure and improve company growth, not individual performance.
As you begin thinking about OKRs, first determine what time frame you’ll be measuring against. Three months is the industry standard since it’s long enough to see significant results with a lower administrative overhead but not too long in case you need to change course.
One of the reasons objectives and key results work so well is because the framework is part planning, part communication. OKRs are designed to be made public within an organization. When everyone knows and understands the OKRs, the entire company becomes focused and accountable for achieving the goals.
As you’re setting your OKRs, I recommend starting at the top of the organization or team. Once the broadest objectives and key results have been defined, you can cascade the objectives to teams and then to individuals.
While the specific OKRs will vary for every organization, there are a few universal principles to keep in mind as you set your objectives and key results.
Principles for Setting Objectives:
- Focus on growth - This might seem obvious, but remember the purpose for using this framework is to cultivate continuous, aggressive growth. If you want aggressive growth, set aggressive goals. This means objectives should be ambitious and even make you uncomfortable.
- Collaborate with your team - Setting business goals should be a group effort. Not that everyone has equal say, but that each employee is involved in the process and can voice ideas, suggestions, and concerns. Collaboration is imperative for gaining buy-in from the entire team.
- Take the necessary time - Choosing your objectives is one of the most critical and challenging steps in using OKRs well. Spend as much time as necessary to figure out what you should be achieving (your objectives). Significant growth requires significant planning and research. The better you understand your business and customers, the better your objectives will be aligned for growth since you’ll have a deeper understanding of revenue drivers and other important metrics.
Principles for Setting Key Results:
- Keep results measurable - It’s worth repeating that key results work because they’re measurable. Be sure every single key result has number associated with it. We’ll discuss later in this post how we use the metrics from our key results to grade the success of our objectives.
- Collaborate with your team - Once again, working together to identify the best ways to achieve your objectives is essential. The team members responsible for achieving the objectives should know which key metrics will be most impactful. And they’ll also be more motivated to work toward the key result if it’s their idea.
- Choose several key results - Since there are typically several ways to achieve a given objective, it’s best to select several (3-5) key results per one objective. Also, remember that your objectives should be big enough to require several steps to achieve them.
Example OKRs and a template
Here are some example OKRs and what it looks like to cascade them from team or departments to individuals.
Example Marketing and Sales OKRs (Team)
Objective: Accelerate monthly recurring revenue growth by building pipeline
- Key Result: Grow MRR 15% in Q3 to $X
- Key Result: Generate X% increase in trial signups vs Q2
- Key Result: Deliver X% increase in demo requests vs Q2
- Key Result: Gain X% increase in sessions on the marketing site vs Q2
Example Content Marketing Manager OKRs (Individual)
Objective: Continue blog regularity and organic traffic growth
- Key Result: Write X blog posts on topic A, topic B, and topic C
- Key Result: 65% growth in organic search sessions vs Q2
- Key Result: 70% increase in new trial sign-ups from organic vs Q2
- Key Result: 20,000 pageviews on [specific content pages]
Remember, objectives and key results should be tailored for your organization, your audience/customers, and your product/service. A helpful OKRs template was created by a Google employee and is available for anyone to copy and adapt for their own company or team.
Tracking and Grading OKRs
Another reason OKRs work is because they’re tracked and graded. You don’t just set business objectives and hope for the best. Instead, actively monitor your progress and then assign a grade for each key result at the end of the designated time period (often a quarter).
We’ve established that objectives and key results should be communicated throughout your organization, but tracking OKRs goes beyond the initial announcement. OKRs are most effective when reviewed on a consistent basis through either one-on-one meetings, team meetings, or on a TV dashboard.
We recommend scheduling a 15-minute weekly calendar event to review your own OKRs. Determining what works for you and your organization requires tracking your key results consistently.
While you can set up your own grading system, typically OKRs are graded on a scale of 0 to 1.0. Since objectives are intentionally ambitious, the sweet spot is around 0.6-0.7. If you’re achieving 1.0 on your key results, you’re not setting big enough objectives.
If your key results are less than 0.6, you’ve done an excellent job of dreaming big, but you may need to consider either splitting an objective into two smaller objectives or, adjusting your key results. Thankfully, OKRs enable you to learn and iterate based on data.OKRs enable you to learn and iterate based on data.
Go big or go home
If you’re serious about seeing aggressive growth, you must be relentless in implementing and executing your OKRs. A half-hearted attempt will only backfire. Make sure your entire team and/or organization is on board with this framework for defining and measuring business objectives. Go big or go home.
You can get started today with this goals and objectives template.