The Role of Key Results
The most important role of Key Results is that they force you to specify what you mean by a particular Objective. If you have an Objective to learn Italian, then "Learning Italian" will mean different things to different people. Key Results enable you to specify what it means to you. They answer the question: “What needs to happen in order to successfully achieve the Objective?” In other words, Key Results help you identify what really matters.
A marketing team has created an Objective to "Launch a new website". Their Key Results look like this:
As you can see, all the Key Results are tasks, outputs, things that they needed to do in order to launch the new website. However, were these good Key Results? Looking at the Objective, you could say that the Objective would be achieved when all these “Key Results” were completed. So, I asked the team if they would consider themselves successful when all these “Key Results” have been done. “Yes” was the answer.
However, it is said that when being asked what they were actually expecting from this new website, the Marketing Manager responded that: “It should appeal to our target audience better, so we expect a higher conversion rate and more leads that will be accepted by our Sales team”. This made it clear that the true Objective was not to “Launch a new website”, but to “Launch a higher converting website with high-quality leads”. Now, when we look at the Key Results again and evaluate whether these Key Results were still good measures of success. Obviously, everyone disagreed and new OKRs were created as follows:
In general, when we know our true Objective, it is easy to create Key Results that will measure the things that really matter. Start with a good Objective (i.e.an Objective that is a meaningful step forward for you or your organization) and your Key Results will naturally measure outcomes.
The Anatomy of a Key Result
A Key Result consists of the following elements:
The metric is what makes the Key Result measurable. Popular metrics for product and customer success teams are Net Promoter Score (NPS) and Monthly Active Users (MAU). Software-as-a-Service companies often look at Monthly Recurring Revenue (MRR) and Churn Rate, the rate at which a subscription-based company is losing customers.
The metric for a Key Result is the ingredient some teams struggle with. Some are simply lacking inspiration, others do not yet track the metrics they want to use in their Key Results. Thus, it is important that you are already able to track the metric you want to use before you include it in a Key Result. If it is not, you may run the risk of becoming too busy to put tracking in place meaning that you will not be able to see how you progress.
Start value & target value
The start value is simply the value that your metric has at the start of the quarter or year, and the target value is the value that you want that metric to have at the end of that timeframe.
Setting the right target value can be difficult if you do not have a benchmark yet. If that is the case, you could use the first two weeks of the quarter to collect that benchmark. Of course, you will risk that these few weeks of data will not be significant, but that should not stop you from setting a target value.
You may think that just by looking at the metric, start and target value, you pretty much have all the info you need. However, much of the benefits that OKR offers to organizations, such as increased transparency and improved alignment, require that the OKRs themselves are easily understandable and not ambiguous. That is where the title comes into play: the Key Result title bundles up and communicates in a clear and direct way the result you are looking to achieve.
The title also helps put the values in perspective and make the Key Result more exciting to work on. For instance, your Key Result could be "Double our NPS", where your metric would be "NPS", your start value could be "20" and your target value "40". Of course, your title could also be "Increase our NPS from 20 to 40", this really depends on the personal preference of the people that will be working on it.
Important criteria for Key Results
A Key Result should meet the following must-have criteria for it to qualify as a Key Result.
Your Key Results reflect your ambition, so how ambitious are you? A Key Result that does not make you feel a little uncomfortable, is not ambitious enough. Yet, they should not discourage you, so keep them realistic. A good rule of thumb is to forecast 30% to 40% above what you would deem possible. That way you should be able to get to at least 70% of your target. Remember that it should be achievable before the Objective is due.
Working with OKR creates an environment in which every individual, every team, and the company are challenging themselves and each other. Ambitious Key Results unlock creative thinking and challenge people to try new things.
Being measurable means that a Key Result must have a metric. When it has a metric, you will be able to track progress.
Importantly, make sure your key results focus on outcome, not process. Sometimes key results make people think of actions on a to-do list, like "Get advice", "Help trainee", or "Research new software". The problem with these is that they are continuous and you are unable to pinpoint exactly when you had achieved that key result. But if you use a finite outcome - like "Hold meetings with 2 financial advisors" - you can say with confidence whether you have achieved that key result or not. Also, it is noted that focusing on outcome does not contradict the process, either. In fact, you still have to seek advice, but now you have a clearer vision of how you are going to do that.
Putting it all together
In general, it is difficult to write great Key Results but once you master the skill the difference is dramatic. You can start by looking for a way to measure the objective directly. There is a slim chance you can, but if it is feasible for your objective and your timeframe then go for it. Next, you should think about what observable outcomes you can track that go along with your objective. It is highly recommended to find some metrics that are accessible, easy to understand, and that depend on low-risk assumptions. If all else fails and you cannot find any good outcome-based metrics, then consider what behaviors you can track instead. Finally, you should set reasonable targets for those Key Results and start to track them, but do not forget to share the assumptions you have been making and the ways it could go wrong. The more people looking out for issues the better.