Bill Gelbaugh

Unlocking Outhouse’s Potential with OKRs

October 2, 2024
By Bill Gelbaugh

2. Preparing for the OKR Journey

In our first post, we explored why your company might want to adopt OKRs. Now, as we move forward, it’s time to focus on preparation. Just like building a home, laying a solid foundation is crucial before you start raising the walls. The same holds true for OKRs. A little preparation goes a long way in ensuring a successful implementation. And remember, OKRs are a journey, not a one-time event.

This guide is tailored to help home builders, trade contractors, suppliers, architects, engineers, and others in the housing industry adapt OKRs to your unique company culture. Most of us don’t have a Silicon Valley mindset, so adaptation is key. However, there are some basic questions every company should address to get started on the right path:

The Planning Phase

Who Will Champion OKRs?

Every successful OKR implementation starts with a passionate champion. This person, often a senior executive, must be deeply committed to rolling out the OKR strategy. Without this sponsorship, no initiative will survive. Who in your company has the drive and influence to lead this charge? Identify your champion, and make sure they have the backing they need to succeed.

What Is the Most Critical First Step?

Before diving into the nuts and bolts of OKRs, it’s essential to secure buy-in from your team. Everyone needs to be on board with the OKR program. This step isn’t just about understanding the framework, philosophy, and goals—it’s about fostering a collective commitment to the process. By the end of this series, you should feel confident in reviewing OKRs with your team and ready to get them excited about the journey ahead.

What Matters Most?

OKRs aren’t about doing everything; they’re about focusing on what’s most important. The beauty of OKRs lies in their ability to help you isolate the most critical business issues and dedicate your efforts to solving them. What are the fundamental priorities for your company right now? Your OKRs should zero in on these key areas, driving your business forward with purpose.

How Will We Create Transparency?

One of the greatest strengths of OKRs is their transparency. Ideally, OKRs should be visible throughout the organization, allowing everyone to see what’s being measured and provide feedback. This openness not only fuels collaboration but also ensures alignment and strategy execution across all levels of the company.

How Will We Live Our OKRs?

The real magic of OKRs comes from integrating them into the daily life of your company. They aren’t just set and forgotten—they should be part of your daily, weekly, and quarterly routines. From initial planning meetings to status updates and dashboards, OKRs need to be lived and breathed by your entire team.

The Development Phase

Once you’ve answered these foundational questions, it’s time to roll up your sleeves and start developing your first set of OKRs. Here’s how to approach this next phase:

Mission, Vision, and Strategy: Your OKRs should be deeply rooted in your company’s mission, vision, and strategy. These elements are the bedrock of your OKRs, driving the achievement of your long-term goals. Make sure they’re solid before moving forward.
Corporate-Level OKRs: Start at the top by creating OKRs at the corporate level. You might involve a small team, gather input from employees through surveys, or conduct executive interviews. However you approach it, the key is to ensure that these OKRs align with your broader strategy and are communicated clearly to the entire organization.
Presenting OKRs: Don’t just send out an email and call it a day. Use multiple channels to communicate your OKRs—share them electronically, post them on your intranet, and most importantly, discuss them in person. An all-hands meeting, for example, can be a great way to facilitate dialogue and ensure everyone understands the OKRs and the reasons behind them.
OKR Education: While OKRs are simple in theory, they require proper education to implement effectively. Take the time to educate your team not just on the fundamentals, but on why you’re choosing to use OKRs now, success stories from other firms, and what they can expect along the journey.
Monitoring OKRs: OKRs are not a “set it and forget it” tool. You need to monitor them regularly, using an OKR Scorecard and following a quarterly, monthly, or weekly schedule—whatever cadence works best for your organization.
Reporting Results: At the end of each quarter, score your OKRs and communicate the results across the organization. This isn’t just about accountability; it’s about learning and improving as you move forward.

The Strategy Alignment Phase

OKRs should never exist in isolation—they need to reflect your company’s broader purpose, long-term goals, and strategy. Here’s how to ensure alignment:

Company Mission: Your mission statement defines your core purpose—why your company exists. It’s your organization’s guiding light, constantly pursued but never fully achieved. Aligning your OKRs with this mission ensures that the work you do today contributes to your long-term purpose.
Your mission isn’t just a lofty ideal—it’s the compass that guides every decision your company makes. It reflects why your employees show up every day and serves as a reminder of the bigger picture, the greater good your company is striving to achieve. Whether it’s building homes that stand the test of time or creating communities where families thrive, your mission should be the foundation upon which your OKRs are built.
Unlike a vision or a strategy that may evolve over time, your mission remains a constant. It’s the steady north star that ensures every OKR you set is aligned with the core purpose of your organization. When your mission is clear and compelling, it’s much easier to steer the company in the right direction, keeping your OKRs in sync with the ultimate goal.
Long-Term Vision: While your mission defines your company’s purpose, your vision paints a picture of where you want to be in the future. This vision is the bridge between your mission and your strategy—it’s the destination on the horizon that everyone in your organization is working toward.
Your vision statement should be a vivid, concrete picture of your desired future state, whether it’s five, ten, or fifteen years down the line. It’s not just about imagining a better tomorrow; it’s about providing a clear, tangible target that informs your strategy and your OKRs. Without this vision, your team might work hard, but without a clear direction, their efforts could be scattered and less impactful.
When your vision is well-defined, it fuels motivation and aligns your team’s efforts. Every OKR should serve as a stepping stone towards achieving this vision, ensuring that your short-term actions contribute to long-term success. It’s this alignment that transforms a collection of individual goals into a cohesive, strategic push towards a shared future.
Annual Strategy: Your strategy is your game plan for achieving your vision. It’s about making tough decisions—choosing which markets to target, which customers to serve, and which opportunities to pursue or pass on. This is where the power of “No” becomes critical. Not every opportunity is worth chasing, and your strategy helps you focus on what matters most.
An effective strategy clarifies your priorities and sets the stage for your OKRs. It answers the critical questions: What are our preferred markets? Who are our optimal customers? What are their most pressing needs? By addressing these, your strategy guides the creation of OKRs that not only align with your vision but also address the real-world challenges and opportunities your company faces.
When your OKRs are directly tied to your annual strategy, they become a powerful tool for executing that strategy. They provide clarity, focus, and a roadmap for achieving your strategic goals, ensuring that every part of the organization is working in harmony towards the same objectives.
Finally, remember that a great strategy isn’t static—it evolves as your market changes, as new challenges arise, and as you learn from your successes and setbacks. Your OKRs should reflect this dynamism, allowing your company to remain agile and responsive while staying true to your mission and vision.

Ready to start developing your OKRs? With a clear understanding of your most critical objectives and how to adapt OKRs to fit your company’s culture, you’re now ready to take action!

Next up… Crafting Great OKRs – Part 1.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

Managing Effectively With OKRs

October 1, 2024
By Bill Gelbaugh

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs

Summarized by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte, with additional material from Measure What Matters, Lattice OKR 101 and Perdoo.

Creating OKRs and not rapidly sharing and reviewing results is akin to hoping to win the lottery without going to the trouble of buying a ticket. You can’t “set and forget” goals and hope to achieve any of the OKR benefits we’ve been chronicling. The modern business offers countless distractions to divert your attention from what matters most—a hundred fires you can fight every day—but to execute successfully and take your performance to the next level, regular and disciplined reviews of OKR results must become part of your operating rhythm and cadence of your corporate culture.

WEEKLY MEETINGS

Our point of departure is Weekly Meetings. The purpose of the Weekly sessions is threefold: Assessing progress, identifying any potential issues before they blossom into significant problems, and, especially as you begin using OKRs, to ensure your team stays focused on what matters. Here are some topics you may wish to include:

Logistics: Start by simply determining who will be included in the meeting, what time will work best for everyone’s schedule, and where the meeting will be held.

Priorities: What are the key priorities, the things that must get done this week to inch closer to achieving your OKRs? As we alluded to above, it’s easy to get trapped in the whirlwind of pressing and urgent issues swirling about in any business, so ensure the priorities discussed are in fact leading to the achievement of your OKRs.

Status: During the Weekly Meeting, you can gauge the team’s current level of confidence. Has it ratcheted up? Gone down? Either way, the most important question is why. If you’re progressing as planned, you’ll want to put mechanisms in to stay there, but if the team feels momentum is sagging, perhaps it’s time to discuss how you can strategically shift resources to put things back on track.

Engagement: As we’ve noted several times, OKRs should challenge and stimulate people to engage in the breakthrough thinking necessary to reach unprecedented heights. Use the weekly session to gauge the team’s mood. Are they still actively engaged in the pursuit of objectives, or are they merely paying lip service with no real intention to invest the discretionary effort to target demands?

The Big Picture: Earlier we defined a health metric as something the company will frequently monitor because it is representative of successful execution of their strategy. Things should be getting better overall, well-designed OKRs should ultimately propel the success of your overall health metrics.

UPPER RIGHT | Each quarter set a bold, qualitative Objective and three quantitative Results.

The Objective is the inspiration for the quarter, and the Results are what happens if we do the right things. Weekly we look at them, and we ask, are we closer or farther from making these Results? We will start the quarter with each Key Result at fifty percent confidence, a 50/50 (0.5) shot at making it. So, each week, we have a conversation, and say, have we gone up or down? If we are dropping to 20% (0.2) from 80% (0.8), we want to know why. What changed? How are we going to address and improve this KR?

LOWER RIGHT | This is our “health metrics,” we can’t just stop paying attention to everything!

Here, in the lower right, we put “health metrics.” These are things we want to protect while we shoot for the moon up in the upper right. Let’s say we pick an Objective that’s about radical revenue growth. We’re trying to get as many new clients partnering with us as we can, right? Well, we don’t want to forget our current clients in the rush to get new ones. Rate current Customer Satisfaction: green, yellow or red.

UPPER LEFT | Here we write the initiatives we will do this week to advance the OKRs.

Here in the upper left, we write the three to five big initiatives we will do this week to affect the OKRs. We share them, so we can question if we are spending time on the things that will get us our Results. We don’t list everything we’re going do. We list the things that must happen, or we’re not going to make our Objectives. Life always gives you plenty to do. The secret is focusing on the things that matter!

LOWER LEFT | This is the “heads up” quadrant of important things for the next month.

Here in the lower left, is our “heads up.” It’s the pipeline of important things we expect to happen in the next month. That way Marketing, Sales, Operations, Admin don’t get caught flat-footed when something must be supported.

QUARTERLY REVIEWS

The time for sticking a finger in the wind or relying on subjective confidence levels to assess where you are has come to an end, and the moment has arrived to actually grade your performance at the end of the quarter. The two primary components of the review meeting are “what and how.”

The first component, the “what,” comprises the grades (scores) you assign for each of your key results. Based on performance during the quarter, each team (or individual should you connect that far into the organization) will determine their final score, and provide the rationale for that determination to their peers, colleagues, and superiors. This wide sharing of results is yet another benefit of OKRs, as it provides all teams the chance to learn more about their colleagues’ objectives, key results, triumphs, and challenges, what works, and what is ultimately possible when the entire organization is working in alignment. Assuming you’ve been rigorous in holding Weekly Meetings and also conducted a mid-quarter check-in, providing a final grade to OKRs should be a relatively simple, straightforward, process.

While the grades you assign are obviously important, what really stokes the flames of learning are the conversations spawned from a deep investigation of what occurred during the quarter.

The second component of the quarterly review meeting, the “how,” is what will ultimately drive the success of your OKRs program, and your organization’s ability to execute. While the grades you assign are obviously important, what really stokes the flames of learning are the conversations spawned from a deep investigation of what occurred during the quarter. The scores should serve as a launching point for intense discussions that challenge conventional views, unearth assumptions, and test a working hypothesis. In our experience, many organizations struggle with these meetings where candor and honesty should be the order of the day. Although some companies are able to engage in passionate discussions, leaving nothing on the table, the well-worn rules of civility hamper others from reaching a level where actual revelations are found.

Recent research into effective teams backs up this assertion by noting that the psychological safety of participants is a vital enabler of group success. What we are saying is that in order to make the best use of you OKR data (scores), you need to carefully think about how you’ll structure your meeting to ensure learning is maximized as your goal.

Updating OKRs at the End of a Quarter

The actual mechanics of OKRs creation are quite straightforward. At the beginning of each year, the company creates its highest-level set of OKRs. The exercise may include both strategic annual OKRs and more tactical quarterly OKRs. These high-level “corporate” OKRs provide the context for the connecting process we discussed in detail earlier, in which business unites, teams, and perhaps even individuals create their own OKRs which demonstrate their contribution to the overall strategy execution.

At the end of each quarter, OKRs are graded, and new OKRs are then developed throughout the organization. Some OKRs may remain the same for several quarters, especially those identified as particularly critical in light of current strategic or operational challenges. You may also carry forward any OKRs that you did not successfully achieve during the previous quarter, those whose success is of ongoing strategic importance. Any OKRs you did achieve will most likely be eliminated, updated with a new crop that once again stretches the team to deliver its very best.

SCORING THE RESULTS

1.0 Score is achieved!

An extremely ambitious outcome that may appear nearly impossible to achieve. This is where you begin; all key results should be written with a 1.0 goal in mind to foster breakthrough thinking. It may appear to be a shot for the moon if the company has never come close to attaining that level of performance in the past. As this is a stretch goal, if you achieve a 1.0 you may want to consider setting a higher bar next time.

0.6 – 0.7 Score is a success

This level represents progress that is difficult, but ultimately attainable, and what we hope at a minimum to achieve. It’s a lofty number well on the way to our stretch, but achievable based on past results.

0.3 Score is mediocre

We can phrase this the “business as usual” target level. It represents performance we can achieve with standard effort and little or no assistance from other teams. This is considered mediocre, what OKRs are designed to eliminate. If at the end of a quarter a team is only able to reach a 0.3 on a key result you will certainly want to ascertain why!

In our experience, those new to OKRs will tend to encounter one of two outcomes in their initial foray with the framework; either they will in fact have all ones, or at the opposite end of the spectrum, they’re left scratching their heads because, despite their Herculean efforts, their reports are littered with zeros. Eventually, after a few quarters (more or less; every organization is different) your key result grades should begin averaging close to 0.6 to 0.7. Anything higher perhaps your targets are not aggressive enough, meaning you’re unable to take full advantage of the talent and potential your teams have to offer.

In Conclusion

With this discussion on managing effectively with OKRs, our five-part series on Objectives and Key Results comes to a conclusion. Watch your email for the upcoming release of the entire series in a White Paper format. For any questions you may have, contact Bill Gelbaugh at bill.gelbaugh@outhouse.net.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

Driving OKR Alignment

October 1, 2024
By Bill Gelbaugh

CREATING EMPLOYEE ENGAGEMENT

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs.

Summarized by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte, With additional material from Measure What Matters, Lattice OKR 101 and Perdoo.

Having crafted our Objectives & Key Results (OKRs), it is now time for a coordinated approach by teams within your company to accomplish the desired goals. Although a significant amount of autonomy should be given to teams as they develop their OKRs, the key to overall corporate success is connection and alignment. As you communicate your corporate OKRs, it is imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and how they are vital to the company’s success. A well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs.

Illuminating the relationship between what employees do and how those actions lead to overall strategy execution is best accomplished by connecting OKRs from top to bottom in your organization. By connecting, we mean creating sets of OKRs throughout the company that align with your highest-level OKRs (which could be corporate or business unit, depending on where you’re starting) and signals the unique contribution offered by teams and individuals throughout the organization.

When you connect OKRs, you generate learning opportunities in two directions. First, as business units, departments, and individuals develop their OKRs, it provides them the opportunity to showcase their unique role in creating overall value for the company. To do this effectively, they must understand the business’s strategy in order to develop OKRs that align with it. So, as they create OKRs, they learn more about and deepen their understanding of the organization’s purpose and strategy. Simultaneously, as OKR scores are analyzed across the company, leaders benefit from the ability to examine results spanning the entire company.

How Deep to Connect

Ultimately your goal should be to spread the use of OKRs throughout the entire company. The question is one of timing. Do you rush to connect from top to bottom, perhaps in the first year? Alternatively, do you employ a more measured approach, staggering the implementation over a period of years?

OKRs can be a transformative device for your business, sparking new thinking that leads to previously uncontemplated levels of success. To fulfill that potential, the framework must be embraced and used at all levels of the company, allowing you to foster fluency in a new corporate language; that of strategy execution. Obviously, the faster you connect, the faster your employees master this new taxonomy, the sooner results will improve.

We firmly believe in momentum and suggest you move aggressively but thoughtfully in connecting OKRs. That sounds like a contradiction, so we’ll unpack the key terms. Aggressive is self-explanatory, meaning you connect quickly and deeply to all levels of the company. However, we temper that with the word thoughtfully, which in this context implies you have contemplated and can answer to the affirmative, these questions:

Do we have executive support for OKRs?
Do we have a clearly documented strategy that is reflected in our top-level corporate OKRs?
Are we committed to using OKRs, regardless of the initial results, to manage the business?

If you can successfully overcome these hurdles, then rapid rollout may be appropriate.

Preparing your Groups for Connecting

Previously we discussed the importance of a mission statement, which conveys your core purpose as an organization. All business groups that are going to create connected OKRs should create a mission that clearly outlines why they exist and how they add value to the organization.

Armed with their mission statements, each connecting group must then answer this fundamental question: “How do we support the organization’s mission and strategy?” In broad brush strokes, how does this group contribute to the company’s success? As we’ll learn shortly, the concept of influence is the key to connecting, and this question primes groups for the task by having them enumerate, in advance, how they are going to support the company’s overall strategic goals.

As you communicate your corporate OKRs, it’s imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and why they are vital to the company’s success.

The Key to Connecting is Influence

Allowing all groups, even individuals, to show how they influence overall corporate OKRs is the purpose and goal of the connecting exercise. It all begins with the top-level set of OKRs. These are the critical levers of your success, and everyone in the company must possess a deep understanding of them before you begin connecting. We’ll assume you’re starting from the corporate level. If that’s the case, the first actual connection occurs as business units study the corporate OKRs and ask, “Which of these OKRs can we influence the most, and how?”

The goal: a well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs.

Creating Alignment

Ensuring your people are aligned around a common purpose is job number one for any successful corporation. As demonstrated, connecting OKRs provides an outstanding opportunity to drive that alignment through every job and function of your firm. In this upcoming section, we’d like to share the two types of alignment you’ll be fostering during the alignment process: vertical and horizontal.

Vertical Alignment

This is the type of alignment most people think of when considering connecting goals through an enterprise. As the word implies, vertical connecting creates OKRs that flow downward, eventually reaching the individual employee level. However, as we’ve previously noted, it does not mean the executive team dictates a number of obligatory goals that are essentially forced upon lower-level groups regardless of fit or necessity. Instead, vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs? What can we do, and measure, at our level to drive both our and their success?” Again, the process is one of loose coupling. With vertical alignment, we’re attempting to create a direct line of sight from what your group does every day to the group to whom you report and ultimately to the company’s overall aspirations.

Vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs?

Here’s an example of driving vertical alignment: The CEO of a mid-sized company declared that customer retention was their top priority. Traditionally, customer retention had been the sole domain of the customer success team; it managed ongoing client interactions and renewals. Soon after the CEO’s announcement, everyone assumed that the customer success team would work harder to drive customer retention, and other departments would continue to focus on their current priorities. However, with OKRs in place, they could create a culture of alignment across the company.

The product team had traditionally focused on what they felt new customers would want or differentiate them from the competition. However, with the advent of OKRs, the product team now asks the question before approving a new feature request: “How does this product improvement drive customer retention?” The marketing team also shifted its outlook because of the OKR implementation. They took the time at their user conference to interview customers and gather valuable survey data. Finally, even the sales team changed their paradigm thanks to OKRs. They are now taking time to call on their installed base and ask questions around how they can add more value. They do this to build the relationship and emphasize the importance of working together over the long haul. Again, the goal is to help promote and drive customer retention. Each of the teams profiled above is doing something different, something pertinent to the specific function. Still, the common denominator is identifying actions that help them drive the corporate strategy of increasing customer retention. That’s vertical alignment in action.

Horizontal Alignment

We mentioned in the previous section that when it comes to connecting goals, most people are familiar with the concept of vertical alignment or cascading down. This familiarity results from the fact that vertical cascading is widely employed in most organizations, and effectively at that. The deeply entrenched notion that execution hinges on alignment has been accepted for decades (at least as far back as Drucker’s work in the 1950s). Thus, it has been rigorously studied, with best practices shared and widely used throughout the business population. Why is it then, if organizations are aware of the value inherent in alignment and have been utilizing vertical cascading for generations, our strategy execution rates remain so stubbornly low?

Horizontal Alignment entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them.

It turns out that there is a second form of alignment, one that most companies have largely ignored, that may prove even more critical in the quest to execute strategy: horizontal alignment. As shared earlier in the text, much of the work in the modern enterprise involves disparate teams (silos) coming together to solve customer issues or create new value (separately and individually). When one unit can’t depend on another, many damaging events tend to ensue: duplication of effort, missed opportunities, and escalating conflicts that damage the company’s culture. Once again, we believe OKRs can fill this void.

The good news is that creating horizontal alignment is not a complicated endeavor whatsoever. It simply entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them. The resulting OKRs may be unique for each unit, or they may sometimes decide to use “shared OKRs.” These come into play when multiple teams work very closely to achieve a result, and thus it makes sense to share the same OKR. Shared OKRs help avoid situations in which one team may be celebrating because they completed their component of the project, but another is working frantically on their piece (which relies on the first team), and as a result of this lack of cooperation, the company fails to reach its overarching goal.

Confirming the Alignment of Connected OKRs

Creating a set of corporate OKRs that can improve focus on what really matters is one thing. However, the value of an OKR implementation can increase exponentially when you connect, thereby allowing all participants to announce their contribution to the bigger picture. Connecting may be the most essential part of your OKR process; therefore, it is critical to ensure it is done well and serves its purpose. For that reason, once you begin rolling out the program and having lower-level groups develop their OKRs, you can’t take it as an article of faith that those OKRs are, in fact, aligned. You’ve got to check each and every set of OKRs to ensure they are drawing a line of sight back to your strategic goals.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

CRAFTING GREAT OKRs – Part Two

October 1, 2024
By Bill Gelbaugh

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs

Summarized by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte. With additional material from Measure What Matters, Lattice OKR 101 and Perdoo

CRAFTING: THE PROCESS TO CREATE GREAT OKRs

Having discussed characteristics and tips for creating effective OKRs in part one, we are now ready to commence creating great OKRs.

Create
We recommend not using a large brainstorming group to draft your OKRs. Use a small team. A very small team, most likely two or three people. OKR teams are formed to tackle specific business problems, and to discover creative solutions to problems. People require deep, time-consuming concentration on the task. It’s not realistic to expect a group of 20 (or more) to drop everything and spend the time necessary to create a draft set of OKRs. However, for two or three people, despite the inevitable demands on their time, and while it may not be convenient, it is possible. The small team you convene can invest the required time to delve into the background necessary to create your OKR: Your place in the competitive environment, scrutinizing your strategy, determining your core capabilities, and so on. These are the raw materials that lead to effective OKRs, and they must be carefully considered.

Whether it’s the corporate level or department, we suggest your small team document two to three objectives with one to three key results each. They should be written at a stretch level (20%-30% beyond what you feel is achievable) to inspire.

Refine
Once your small team has completed their initial draft set of OKRs, submit to the wider team for review prior to the first actual full team meeting/workshop. In attendance for the workshop, we would expect the leadership team if you are working on your corporate level OKRs, or the team-level leadership group if it’s a team set of OKRs. The purpose of the session is to critically examine what has been prepared, have the small team explain their choices, generate debate (a vigorous debate we hope), and ultimately come to an agreement on the set of OKRs you will use for this next quarter.

Align
Much of the work in modern organizations is cross-functional in nature–teams working together to solve problems or create new modes of working that will benefit multiple areas of the business. OKRs created at the team level must be created with this context front of mind.

The small team or dynamic duo we profiled in the previous steps should take your draft OKRs on a road trip around your organization, discussing dependent OKRs with other team leads. You’ll be liaising with colleagues to discuss how some of your OKRs depend on their best efforts while sharing with other teams how you are uniquely positioned to assist them in meeting their goals.

Scoring will often help you in assessing the level of dependency between you and another team. For example, if you determine that one of your key results is highly dependent on another team’s assistance, your aim in meeting with them is to ensure they acknowledge the dependency and pledge their support, which will then allow you to ratchet up your targets because you’re confident they’ll provide their backing when necessary. The converse is also true; other teams may rely on you to meet their targets and, thus, you’ll work with them to show how you can help.

Finalize
Assuming you’re creating OKRs at the team level, during this step the team lead and partners will confer with their superior (most likely a member of the senior executive team) to receive final approval to use the OKRs in the upcoming quarter. It’s also important to ensure that the executive understands the rationale behind the scoring targets you’ve chosen. The last thing you want when results begin to accumulate is mismatched expectations that lead to confusion and disappointment.

Transmit
There are two components in the final step. First is the fairly rote necessity of loading your OKRs into a software system or whatever product (Google Sheets, Excel, etc.) you deem appropriate to track your results each week. A simple process indeed, but a vital one nonetheless. OKRs must be rigorously and formally cataloged and monitored to insure the integrity of the entire OKR process.

The second task is transmitting the OKRs to your team and beyond. We encourage you to communicate them widely, using a variety of media. One method, sharing them in an in-person venue, such as an all hands or town hall style meeting is strongly recommended for a number of reasons. Chiefly, it provides an opportunity for employees who were not directly involved in OKRs creation to ask questions of those who were there when the critical decisions were made.

THE OKR CRAFTING PROCESS

Following are some practical examples of Objectives, Key Results and Initiatives to help you get started.

For further inspiration, this football team graph is an example of OKRs in action. Starting with OKRs for Head Coach, you can see how objectives and key results for other coaches fall into place to support the overall team objective.

OKR | Football Team Example

HOW MANY OKRs SHOULD WE HAVE?

The late screenwriter Nora Ephron left us with a number of Hollywood classics, including When Harry Met Sally, Sleepless in Seattle, and Silkwood. All three were Academy Award-nominated for writing. Before she turned her talents to the screen, Ephron was a journalist, and perhaps her greatest gift in that world was the ability to capture the essence of a story. She learned the importance of identifying a story’s core early on, at Beverly Hills High School, from her Journalism 101 teacher Charlie Simms. Here’s the enduring lesson Simms passed on to Ephron.

He started the first day of class by explaining the concept of a lead. He explained that a lead (i.e., the leading sentence) contains the why, what, when, and who of the piece. It covers the essential information. Then he gave his students their first assignment; write the lead to a story. He presented the facts of the Story:

Kenneth L Peters, the principal of Beverly Hills High School, announced today that the entire high school faculty will travel to Sacramento next Thursday for a colloquium in new school methods. Among the speakers will be anthropologist Margaret Mead, college president Dr. Robert Maynard Hutchins, and California Governor Edmund “Pat” Brown.

The students then hammered away on their typewriters outlining their lead. Each attempted to summarize the who, what, where, and why as concisely as possible: “Margaret Mead, Maynard Hutchins, and Governor Brown will address the faculty on…”; “Next Thursday, the high school faculty will…” Simms reviewed the students’ leads and put them aside. He then informed them that they were all wrong. The lead, he said, was “There will be no school Thursday!” In that instant, Ephron realized journalism was not just regurgitating facts but about figuring out the point. It wasn’t enough to know the who, what, when and where; you had to understand what it meant. Moreover, why it mattered.

When it comes to how many OKRs you produce, we recommend you adhere to the tried and true aphorism: less is more.

Ephron later noted that what Simms had taught her worked just as well in life as it does in journalism. It also works great for OKRs. The day you set foot in the conference room with your team to debate and decide on your OKRs, you’re searching for the business equivalent of the “lead.” Just think of the universe of possibilities that awaits you when someone says, “Okay, what are our most important objectives?” You have customer concerns, shareholders or partners, employees, competitors, the list is endless. They are the organizational equivalent of the “why, what, when, and who.” Your challenge is to cut through the clutter and pinpoint exactly what is most important to you, what will have the most impact right now.

When it comes to how many OKRs you produce, we recommend you adhere to the tried and true aphorism: less is more. There is a huge opportunity cost to increasing your inventory of OKRs. Primarily, lack of clarity and focus around what the company’s priorities truly are. When you begin your OKR process, we recommend you generate a small number (a handful most likely) of objectives that are crucial to the execution of your strategy for the year. Then change tactical objectives each quarter to move the strategic objective forward.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

3 CRAFTING GREAT OKRs – Part One

October 2, 2024
By Bill Gelbaugh

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs.

by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte. With additional material from Measure What Matters, Lattice OKR 101 and Perdoo.

Having explored the basics of OKRs and prepared for the OKR journey, we are now ready for implementation. Due to the length of this section, we will be covering the crafting of OKRs in two posts – one this week and one the following Monday. OKRs are comprised of three components – 1) Objectives, 2) Key Results, and 3) Initiatives. Where do we begin? We always start with the objective as it is the cornerstone of successful OKRs.

CHARACTERISTICS OF EFFECTIVE OBJECTIVES

An objective is a concise statement outlining a broad qualitative goal designed to propel the organization forward in a desired direction. One challenge faced by those new to OKRs is a lack of context for the exercise. **“What exactly is a good objective?”** you may wonder. To assist you in overcoming this potential barrier, we’ll outline a number of criteria you should keep in mind when constructing your objectives.

Inspirational
A well-written objective is more than a short collection of words that string together to describe a business goal. Your objectives should compel people to a higher standard of performance based on the inspirational power of the message. People should be forced to think differently based on the inherent challenge and inspiration of the objective. It’s not enough to say you want to see 10 percent improvement when you know that’s well within your reach. It means you’ll just keep doing the same things, just working ever so slightly harder. However, if I said to you, I need 50 percent improvement in what you’re doing; you’d probably say, “Gosh, in order to do that, I’d have to completely solve this hard problem,” or “I need to completely rethink how I’m addressing X or Y.” That’s what OKRs are supposed to do.

It’s not enough to say you want to see 10 percent improvement when you know that’s well within your reach.

Qualitative
Objectives should represent what you hope to accomplish, and therefore, be expressed in words and not numbers. The use of numbers will be thoroughly covered with key results.

Attainable
It’s no accident that this item appears directly below our call for inspirational objectives. Finding the balance between inspiration and reality is one of the foremost trials of creating objectives that work. We encourage you to push the limits of employees’ imaginations when setting objectives, but please be cognizant of the fact that limits exist.

Doable in a Quarter
Assuming you’re creating objectives each quarter, you’ll want to advance something that can, indeed, be accomplished during the subsequent three months. If, after drafting an objective, the collective wisdom of the team suspects it will take a year to realize, then perhaps what you’ve developed is closer to a strategy or even a vision.

Controllable by the Team
Whoever drafts the objective, whether it’s at the corporate, business unit, department, team, or individual level, must be able to control the outcome. If, at the conclusion of the quarter, your objective has not been reached and your first temptation is to say, “Well, sales didn’t deliver, so we missed our objective,” you’re missing the spirit of the exercise.

Provide Business Value
Your objectives should be translated from your strategy and directed toward creating tangible value for the enterprise if achieved. If there is no promise of a business benefit at the end of the day, there is little need to expend the resources necessary to accomplish the objective.

TIPS FOR CREATING GREAT OBJECTIVES

Avoid the Status Quo
Your aim is to always identify new objectives that tug at the edges of your capabilities. Therefore, you should avoid those that simply recite what you’re already doing, for example: “Maintain market share” or “Keep training employees.” If you can accomplish an objective with virtually no change in the way you’re working, it is most likely going to prove to be wholly ineffective in moving your business forward.

Use Clarifying Questions
Often, the best way to cut the confusion is to simply and sincerely ask, “What do you mean by…?” If, for example, someone offers that you must “Create value for our customers,” assume the role of an OKR anthropologist and try to ascertain the specifics of that comment. Are they referring to a particular segment of customers? All customers? What does value mean in this context? Escalating from abstractions to specifications will help you unearth the true objective that requires your focus.

Frame Objectives in Positive Language
Ideally, you and your team should feel compelled to work towards achieving the objectives you set. Therefore, you should carefully consider how you frame them. As an example, let’s say you want to improve your eating habits. When designing an objective you have two choices. You could say, “Reduce the amount of junk food I eat.” Alternatively, you might term it this way: “Eat more calories from healthy food.” Choosing the latter will force you to research healthy foods, identify those you’d like to experiment with, and ultimately provide a greater likelihood of success.

Start With a Verb
Very basic advice, but frequently ignored. An objective is a concise statement outlining a broad qualitative goal designed to propel the organization forward in a desired direction. That implies action. Thus it’s crucial that every objective begins with a verb to denote the action and desired direction. Does the company want to maximize loyalty, build loyalty, leverage loyalty? Each of these is quite different and would drive diverse actions. Action verbs are what bring your objectives to life.

What’s Holding You Back?
There is real power in recognizing and overcoming challenges to improve your situation. When considering possible objectives ask yourself what problems are holding you back from executing your strategy. Taking an unvarnished look at the problems that separate you from the successful execution is a great starting point in the creation of objectives.

When considering possible objectives ask yourself what problems are holding you back from executing your strategy.

Use Plain Language
While you don’t want to shy away from using words that accurately convey the essence of the objective, you should err on the side of choosing language that everyone can immediately understand to generate widespread comprehension of the objective and why it’s important. We also suggest sparing use of acronyms. Should you include any, ensure everyone is aware of their meaning.

CHARACTERISTICS OF EFFECTIVE KEY RESULTS

Key results are defined as a quantitative statement that measures the achievement of a given objective. If the objective asks, “What do we want to do?” the key result asks, “How will we know if we’ve met our objective?” Sounds easy enough, especially since tracking results is something that comes almost naturally to most of us now, given the rise of Fitbits and other wearable devices. However, creating effective key results for your business, those that accurately gauge progress on your objectives can prove elusive

Aspirational
The results of years of goal science research are quite clear and compelling: Setting the bar high leads to improved performance and enhanced satisfaction at work. Conversely, should you decide to draft easy to attain results, you can expect achievement, but subsequent motivation and energy levels will most likely fall. So, when drafting your key results we urge you to stretch the limits in order to challenge your teams to think differently. However, ensure the results are ultimately achievable.

Quantitative
Objectives are always qualitative, representing a desired action, while key results are necessarily quantitative so that we can apply numbers to determine whether or not we’ve met the objective. It could be a raw number (number of new visitors to your website), dollar amount (revenue from new products), percentage (percentage of repeat customers), or any other form of quantitative representation. Progress on key results should never be a matter of opinion, that’s why numbers are so powerful.

Specific
Clarifying terms and concepts, and ensuring shared understanding, is critical when writing key results should you hope to foster communication among teams and avoid unnecessary and damaging ambiguity.

Owned
Those responsible for delivering key results must be actively engaged in the process, principally in the creation. You will always be more prepared (and disposed) to execute on something that you helped create, since you molded your intentions based on a common understanding of the desired result, and your willingness to find innovative ways of achieving it.

Progress-Based
Harvard Professor Teresa Amabile has written extensively about what she terms “The Progress Principle.” It suggests that: Of all the things that can boost emotions, motivation, and perceptions during a workday, the single most important is making progress in meaningful work. Moreover, the more frequently people experience that sense of progress, the more likely they are to be creatively productive in the long run.

Vertically and Horizontally Aligned
We would underscore the importance of ensuring your key results are vertically aligned by reviewing them within your team and leadership, and horizontally aligned by sharing and reviewing with teams upon whom you depend, or who depend on you.

Drive the Right Behavior
There are a number of pithy statements relating to measuring performance; perhaps the best-known being, “You get what you measure.” That is often the case. Once you shine a metaphorical light on anything, you will necessarily be drawn to it, and increase the attention paid toward it. We suggest you think carefully about the behavior each key result you generate may engender in people.

TIPS FOR CREATING KEY RESULTS

Key, Not All
This exercise is not an excuse to demonstrate how overworked and overburdened you are by cataloging every conceivable action you’re considering for the next quarter. On the contrary, it’s a strategic endeavor focused on highlighting and maximizing the most critical value drivers of your business. Maintain exclusive emphasis on identifying the key results that denote the most actual progress on your objectives.

This exercise is not an excuse to demonstrate how overworked and overburdened you are by cataloging every conceivable action you’re considering for the next quarter.

Describe Results, Not Tasks
Related to the item above, your goal is to isolate key results, not create a list of tasks or activities. To clarify our terms, when we say task we’re referring to something that can typically be accomplished in a day or two; that would reside comfortably on a to-do list. “E-mail a prospect” or “Meet with the new VP of Sales,” are tasks, not key results. Whereas, “Add twenty-five qualified opportunities to the pipeline” is a key result. To distinguish between a task and key result, look at the verb you assign. If you find yourself using “help,” “participate,” “assess” or other relatively passive verbs (passive in this context at least) you’re most likely offering up tasks rather than key results. If that’s the case, move up the value ladder by asking, “Why are we helping, or participating, or assessing?” What is the outcome? Once you do that, a more solid key result featuring an action-oriented verb is likely to emerge.

Use Positive Language
We shared this advice when discussing how to create objectives and it holds equally well here. Bigger is better with key results. Rather than offering “Lower error rate to 10 percent,” consider the messaging power inherent in: “Increase accuracy to 90 percent.” The positive framing will enhance motivation and increase commitment.

Bigger is better with key results.

Keep Them Simple and Clear
Creating robust key results doesn’t mean you should require a Ph.D. to decipher them.

Be Sure to Assign an Owner
There is a well-known phenomenon in social psychology literature termed diffusion of responsibility. Distilled to its essence, it suggests that people are less likely to take action or assume responsibility when others are present. The quintessential example is someone suffering a heart attack on a busy urban street with nobody stopping to help, because they all assume someone else will. In less dramatic fashion, key results may suffer the same fate if an owner is not assigned (i.e., since no one individual is ultimately responsible for the result, no action is taken and the goal languishes).

CHARACTERISTICS OF EFFECTIVE INITIATIVES

Initiatives are where the rubber meets the road, the fun begins, and the actual work gets done. They are the tasks that move you in a meaningful way towards achieving your Key Results and Objective. The best way to get started is to ask:

“What tasks (initiatives) will accomplish this with the most efficacy?”

Once you have answered this question, a few key steps will have you on your way to creating successful initiatives.

“What tasks (initiatives) will accomplish this with the most efficacy?”

Set a Strategy
Be sure your team is working on the right initiatives, and that there is a direct line of sight with accomplishing your objective. Determine where greater efficiencies can be created, or the steps needed to produce a better result or achieve specific outcomes. Also be sure to discuss obstacles or challenges you might face. If making significant change, consider if the team might benefit from training or a dedicated roundtable discussion.

Secure Buy In
Each team, unit, or group of people should be developing and working on initiatives in a coordinated fashion. All members of the team have a legitimate say in prioritizing initiatives, thereby increasing their level of vested interest in the process. Inclusion and transparency fuel collaboration, alignment, and ultimately the execution of strategy.

Make a Plan
Determine who will be championing individual tasks, if they will need additional team members to support, and the time frame to complete each task, “Who” will do “What” by “When”.

Execute
With strategy, buy in, and plan in hand, your team is now ready to carry out their initiatives. They are the ones who are accountable for executing the plan. Meetings should be set quarterly, monthly, and/or weekly for managers/leaders and teams to review progress and celebrate milestones achieved along the way. There may be a lot to accomplish, but the goal is to foster communication and collaboration, and have fun too. OKRs are designed to be inclusive and inspirational, leading to greater success in achieving your objectives.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.