While speaking at many management conferences, I see that a lot of people struggle with setting OKRs (objectives and key results). The most important part I want to point out is that people often make similar OKR mistakes.
In this article, you find the top 5 mistakes that companies make when setting OKRs and the ways on how to avoid them. If you follow these steps, you will save a lot of time for yourself and for your team in OKRs implementation. And of course, you will bring out the next level of creating an environment that values and emphasizes output.
Topics covered in this article:
- What is OKR?
- What are the obstacles that come with OKR?
- Top 5 OKR mistakes
Before we begin, I want to mention the main benefits of OKRs because it allows you to understand what you should be getting out of them. And no one can tell better about it than John Doerr, who worked with “The Father of OKR”, Andrew Grove. In his book “Measure what matters”, he describes four OKR superpowers:
- Superpower #1 — Focus and Commit to Priorities: High-performance organizations hone in on work that’s important, and are equally clear on what doesn’t matter. OKRs implore leaders to make hard choices. They’re a precision communication tool for departments, teams, and individual contributors. By dispelling confusion, OKRs give us the focus needed to win.
- Superpower #2 — Align and Connect for Teamwork: With OKR transparency, everyone’s goals—from the CEO down—are openly shared. Individuals link their objectives to the company’s game plan, identify cross-dependencies, and coordinate with other teams. By connecting each contributor to the organization’s success, top-down alignment brings meaning to work. By deepening people’s sense of ownership, bottom-up OKRs foster engagement, and innovation.
- Superpower #3 — Track for Accountability: OKRs are driven by data. They are animated by periodic check-ins, objective grading, and continuous reassessment—all in a spirit of no-judgment accountability. An endangered key result triggers action to get it back on track or to revise or replace it if warranted.
- Superpower #4 — Stretch for Amazing: OKRs motivate us to excel by doing more than we’d thought possible. By testing our limits and affording the freedom to fail, they release our most creative, ambitious selves.
Sounds good? Then let’s talk about the definition of Objectives and Key Results and what OKR mistakes teams often make using them.
What is an OKR?
OKR (Objective and Key Results) is a goal-setting method used by Google, Netflix, and many others. If you want to get a key difference between KPI and OKR then think about it as the difference between Waterfall methodology and Agile. I hope it helps ?
To clarify, OKR is a framework for setting ambitious goals that help a company focus on the most important issues. There are no hard commitments and bonuses for achievements. It also doesn’t impact the performance scores. In contrast, OKRs are ambitious, almost unachievable goals that continuously sync the progress.
OKR consists of 2 pieces:
- An objective is an ambitious goal, which motivates and inspires the team. It shows WHAT we should achieve.
- Key results are metrics that measure HOW we get to the objective. Are we in the timeframe? Should we increase the velocity or change the goal? Are we going in the right direction or are we losing focus?
It’s important to understand not only the shape but also OKR principles:
- Publicity and transparency – everyone can see all OKRs.
- Ambitious – some OKRs should be at least 3-10 times higher than usual goals to motivate people on finding new and creative solutions.
- OKRs don’t impact salary or bonuses – people will not set ambitious objectives if they know that they could lose their income.
- Constant tracking – OKR syncing should be at least bi-weekly. However, running weekly updates is a much better way of tracking OKRs. It helps a team be aligned and change initiatives if it’s necessary.
- The fewer objectives and key results are better – it helps to focus on the top priorities and achieve the best outcome instead of trying to complete too many goals and get the worst traction. There should be no more than 5 key results for an objective. Less is more. Also, don’t create more than 5 objectives in a quarter.
- 50/50 or 60/40. OKR is not a top-down goal-setting system like KPI. The exec team sets 40-50% of OKRs and employees create the other goals. It’s the mix of top-down and bottom-up goals that generally settles at around half-and-half.
- The OKR cycle is a quarter. OKRs set clear quarters, but you can change yearly OKRs if it’s necessary. Quarterly OKRs gives you a combination of agile and clarity. On one hand, you can react pretty rapidly to the market’s changes or customers’ demands. On the other hand, you have clarity of the top priorities for the next quarter. During some major forces, like the COVID-19 pandemic, some companies move to monthly cycles to change goals faster in times of ambiguity.
- Key results are only metrics. Sometimes companies use indicators like reference points or tools for employee motivation. In OKRs, we use key results like coordinates in a GPS tracker. It’s only about the current status, not about motivation or bonuses. They help us keep the right of way, adjust the speed, and change the tactics. It’s crucial for a team because they show everyone where we are now and where we are heading. It allows a company to be a united team that can adapt to the environment and different contexts.
We looked at what makes OKRs powerful and what to pay attention to. Now let’s move onto tackling OKR mistakes.
OKRs are hard, but making OKR mistakes are easy
Everything sounds great and makes sense, right? OKRs are great! Then why are you reading an article about avoiding OKR mistakes? When you’re first starting to implement OKRs in a company, problems usually arise. Someone doesn’t want to achieve objectives that don’t correlate to salary, others can’t make the right and ambitious objectives or set useful key results. There are many problems that a team runs into during the first OKR cycle and it is easy to run into these common OKR mistakes.
When a company thinks about using OKRs, they should know that the company’s culture will be changed – such as emotional maturity in the workplace, employee responsibility, communication with colleagues, and feedback skills.
The good news is about the timeframe. Goals can not be achieved in one night. What you can do is implement OKRs and transform your processes and skills sprint by sprint. And the most important thing to do is to analyze the strengths and weaknesses of your company and to create the right OKRs strategy based on these insights.
Instead of a heroic two weeks sprint of OKRs settings, it’s better to implement the new framework wisely with less speed, but more effective. This approach allows OKRs to live in organizations when a founder stops spending too much attention on it.
The best approach is to establish a cross-functional team that will be responsible for OKRs implementation. Usually, the consists of the board of directors and from five to ten leaders from the organization. People from this team should get training on OKRs to properly understand how they work. Afterward, the team makes a step-by-step plan on OKR implementation and starts working on it. It’s important now to avoid those OKR mistakes that hundreds of companies have made before you. Let’s check them out.
5 most common OKR mistakes
OKR mistake #1: Too ambitious or too simple OKRs
One OKR mistakes we see companies make often is where the objectives they set are either too complex or too simple. And we did the same in the first iteration of OKRs. We set the OKR ‘Triple our sales in the quarter‘. It was a pretty ambitious objective, however, we didn’t have appropriate resources at that time to fulfill this goal. At the end of the cycle, we were exhausted as we achieved an objective of less than 10%.
At the same time, we see many cases when companies set simple OKRs like ‘’Create the new website”, which probably is not so ambitious and hard to do.
You should try to avoid setting very simple or very hard objectives. How do you set an ambitious, but not impossible OKR?
Answer these 2 questions:
- Will we achieve X in 3 months in our usual mode? If we understand that it’s achievable then it’s a simple goal. If not then it looks ambitious and we ask the next question.
- Will we achieve X in a year? If we feel that we might do it – it will be hard, but we could achieve it in a year, then it looks like a good candidate on OKRs for a quarter. If we understand that we won’t be able to achieve it in a year, then it’s most likely your setting an impossible OKRs.
Setting the right OKRs is the skill that a team improves step by step from quarter to quarter. Your first OKRs should not be perfect, because trying to do something ideal from the first attempt can take a lot of time and it also directly affects your enthusiasm. Feel free to set good enough OKRs to start using it early and then run an analysis, which will improve your next goals.
Objective: x10 revenue in the next quarter
- Increase traffic on the website from 10,000 up to 50,000
- Increase Visitor-to-Customer conversion rate from 1% to 2%
- Achieve $10,000,000 in revenue
Why is it not a good OKR? On one hand, it’s a pretty ambitious objective and should inspire team leaders. However, there are two issues in the objective. First, the objective is not necessarily a measurable goal. Numbers in the title don’t inspire people in the team because they can think that it’s just boosted indicators. Second, the objective is too ambitious and it’s unrealistic in most cases. Increase revenue up to 10 times in a quarter – do you and your team believe in it? It’s hard to do in a year for most companies. And it’s even more difficult to achieve in a quarter. If your team won’t believe it’s possible then they will delay initiatives because employees often have a lot of tasks to do.
How can we transform this OKR and make it better?
Objective: Achieve a sales record in the next quarter
- Increase traffic on the website from 10,000 up to 50,000
- Increase Visitor-to-Customer conversion rate from 1% to 2%
- Achieve $10,000,000 in revenue
Now, this OKR looks pretty ambitious and we aren’t using numbers in the objective, which is really good for motivation. It’s a significant, concrete, and action-oriented objective that inspires the team.
OKR mistake #2: Too many key results or objectives
Another OKR mistake we see is creating too many key results or objectives. In this scenario, companies lose their focus using the framework that was designed to keep them focus. Less is better.
How can you determine if there are too many OKRs? John Doerr recommends using 3 to 5 key results for an objective. The less is more. We prefer using 3 key results in many cases and set 5 results only if we don’t have another way.
Using too many key results leads to a loss of focus on the most important things because the team will be doing a lot of different stuff. That’s why it’s better to set three or four outcomes to the goal.
Also, teams have similar mistakes with objectives. Some departments have 5 or even more objectives in a quarter. It also brings your team down a level when you are doing so many different things and wasting your attention in different areas.
How many objectives should a team have?
Again, John Doerr recommends 5-7 objectives for a company. We suggest setting 1-3 objectives for each level of your organization.
OKR mistake #3: Using only top-down OKRs
This mistake often is made by autocratic leaders who think that OKR is the same as KPI. They set top-down OKRs for all teams and then it doesn’t get significant outcomes because people don’t believe in these ambitious goals and don’t understand why they should achieve them if it doesn’t correlate with bonuses. As a result, leaders think that OKRs don’tt work.
OKR is not an autocratic top-down goal methodology. It’s all about people participating in this process. Each team thinks about its OKRs. People begin to understand the company’s objectives and how they contribute to the total outcomes, what’s the value they give to the company by their day to day operations.
It helps everyone to see the real value of his or her works. And this is the place where the magic happens. People understand the company’s goals and know how they contribute to it. They set ambitious OKRs for their teams or for themselves. It’s a game-changer for employee engagement.
However, you will not achieve this by highly hierarchical top-down goals. These goals are not connected to people’s views and desires. They might think, “It looks that our management wants us to work hard for achieving these ambitious goals without paying bonuses for it.” Do you think that motivates people? Top-down autocratic goals don’t encourage people to do great.
That’s why it’s crucial to build a culture where top-down goals work with bottom-up objectives. C-Suites determine a company’s OKRs. It’s high-level objectives for the whole organization. At the same time, teams start a discussion about their visions. What value they will put on the table for achieving the company’s goals. In this process, department heads talk with their people to determine the best and the most ambitious goals for them. Afterward, teams present their OKRs to the C-level management and make it public after confirmation.
You see, everyone participates in the goal-setting. It’s not just a management game. People in teams begin to take care of the objectives because they participated in its creation. If you use OKRs only top-down then change it as soon as possible and give your people the opportunities for participation in this process.
OKR mistake #4: Don’t track progress regularly
OKR is not a silver bullet that works after they were identified. You can’t set OKRs and forget about them until the end of the cycle.
People are used to tracking metrics and indicators in both ways – either it was requested or before bonus pay. In OKRs, you should do it regularly at least one time per two weeks. However, weekly updates work much better in most cases. In this case, OKRs fulfill their destination, which is to be the coordinates for your organization and link strategy with tactics.
Let’s imagine that you are going on a journey from San Francisco to Los Angeles. You turn on the GPS navigator to check the status. If you know the road, then you don’t need a GPS navigator. However, it works only for well-known goals that you’ve already done before. But if you don’t know the route and you don’t look on the navigator then each turn in the road could lead you to the wrong place where you are moving further from your way each minute.
That’s why it’s crucial to set the specific day on the week and do weekly (or bi-weekly) OKRs updates.
It doesn’t take a lot of time to do weekly updates. It unites your team across top priorities, which is a very important benefit for everyone.
How can you track OKRs weekly?
- First, you should answer this simple question, “What’re your OKR achievements this week?”. If you didn’t do anything regarding OKRs, then ask yourself why not? You should analyze this issue and take action on how to improve it for next week.
- Second, see who worked on OKRs this week – what’s about your key results? Are they changed? What’s your current status now – are you on track, behind, or at risk? Write everything down that everyone understands total progress. Keep it transparent.
- Third, are there areas for improvement? What can you or your team improve on for next week? Did you achieve any planned outcomes this week? If so, you can probably set a more ambitious goal for the next week. If not, then what were the main blockers? What can you and your team improve in the next sprint?
See, magic is here. Everyone analyzes their OKRs outcomes weekly and gets insights from it. Your team starts thinking about OKRs each week, which means that you are thinking about what matters the most, constantly. It sounds simple, but it’s so powerful.
You can track your OKRs in sheets or in special software like Focus. You need to begin building a habit of weekly retrospectives and creating a transparent culture that values and emphasizes output. Learn more about how to run short scrum meetings in the linked article.
OKR mistake #5: Using results that a team doesn’t know how to measure
Some companies create very ambitious key results like ‘Increase NPS up to 2 times.’ However, sometimes when asking them about what’s the current NPS (Net Promoter Score) you hear silence because they don’t know it.
And how will these teams track their progress and achievements?
In the case of NPS, it’s pretty hard to measure the score in several days. You need time to implement it on websites, newsletters, and so on. Then you should receive the data from customers. It takes time. If you have an OKR with increasing NPS by 50% this quarter and you haven’t implemented an NPS system yet, then you might have some problems with it, because you’ll be spending one or two months just setting up an NPS and receiving your first batch of data. With each weekly update, you will say something like this, ‘We haven’t had data for measuring NPS yet’. That’s why it’s better to set a key result as ‘Implement an NPS system’ and track how many initiatives you will finish for this key result. For example, if implementing an NPS system consists of 30 to-dos and you close 27 that means that you complete this key result at 90%.
When setting a key result, you should think about how it’s measured. Also, remember that they are indicators. Key results should tell a team about progress, so everyone can adjust his or her goals, accordingly.
Phew, those are some big OKR mistakes, right? We gathered the most popular OKR mistakes in this article. However, it’s not all the mistakes companies make during OKRs implementation. That’s why I’d like to finish the article with a check-list that helps you to improve your OKRs. If you want to know more about OKRs, you can read this article on how to set powerful OKRs.
Check that your objectives fit these criteria:
- Objectives have a quarter cycle
- The objective is WHAT we want to achieve
- The objective helps to achieve high-level goals or other teams get value by achieving that objective
- You have 2-5 objectives per team’s level
- 50% or more objectives set bottom-up
- Goals are divided into two types: ambitious and operational
Check-list for key results:
- 50% or more key results set bottom-up
- Key results are measurable and clearly describe achievements of objectives (at least “done/not done”, but it’s better to avoid this version)
- Track progress each week (or, at least, bi-weekly)
We looked at what makes a good OKR, what challenges you can face in your organization, and what common OKR mistakes to avoid. I hope they will help you in setting the right OKRs that will bring your team to the next level. And remember that the main mission of OKRs is to unite your company while making the focus on top priorities and transparent culture.
Finally, I believe that identifying top priorities and consistent focus on it day-to-day is the best way for building high-performing teams. That’s why we created Focus, a tool that keeps teams on top priorities every day. Start working smarter with Focus.