There are many aspects of Objectives and Key Results (OKRs), and goal setting more generally, that are the key drivers behind why the framework works so well. The one that we are focusing on here is OKR measurement which leads to having OKR metrics.
OKR measurement is the process by which specific Key Results success criteria are set or graded to create success thresholds for the Objective.
Frequent OKR updates then ensure that OKR progress measurements and other related reporting metrics can be reported.
How difficult to achieve should a Key Result be?
Is there an optimal level of goal difficulty?
Are hard goals demotivating?
What’s the point of setting goals you know you can’t hit?
All good questions!
How hard you decide to make each Key Result, how you define success and how you measure OKR progress is where OKRs get interesting, especially in an agile working environment.
If a goal is a future desired level of success, the level of difficulty you set is a product of both your ambition, and how safe it is to miss a target.
The conversations that are required to support OKR grading and difficulty, and how progress towards a goal is managed is at the heart of what makes some teams and come companies exceptional places to work.
ZOKRI is the best OKR software for OKR measurement and performance management, and makes grading and OKR scoring easy to do. ZOKRI also makes success boundaries clear, not ambiguous, and a positive part of the planning and execution process.
Forget the framework used for a moment, the science of goal setting is very clear about why setting hard goals matters. Hard goals:
This offers clear advantages over goals that are easy or easier. They have been shown to offer little in the way of value.
When you’ve played an active part in goal discussion you are typically more committed to the goals achievement according to McKinsey. Gone are the days of being given goals to achieve once a year. Quarterly Business Reviews and discussion with departments and teams allow for dynamic alignment and priority setting.
McKinsey also reported that at the use of OKR in a B2B sales organization resulted in 20 percent higher overall targets, because teams and individuals could set their own targets.
“Commitment to goals that you have set is typically stronger than to those set for you. Supporting the need for bottom-up goal setting and OKR.”
Everything here, your Mission, your Strategy, your KPIs, health metrics and OKRs can be added, aligned with, managed, measured, reported on, and kept on-track in ZOKRI. You can try the OKR software for free and make OKRs a core part of your success story.
For a Moonshot Key Result or OKR you might grade 30% progress as a huge win. For the default Hard target it’s typically about 70% and above that is seen as success.
Objectivity when setting Key Result targets is really important. The default for Key Results is the target should be hard. But getting agreement on what ‘hard’ is where historic data, debate, and at worse, gut feel come in. But consensus is needed in order to avoid any potential for biases. Why should targets be hard is explored below.
If Objectives are the call to arms and rally cry. How you measure success and how ambitious you dare to be is defined in the Key Results and their measures and targets. These need to be thought through as you’re going to be asked about them every week for a quarter so they need to be relevant and matter.
There are a number of approaches to OKR grading, which for some causes a large amount of unnecessary confusion. Here are some of the approaches with a recommend approach being shared towards the end.
The business-as-usual target one that you’d expect to hit 100%. Anything other than 100% would be considered failure. Given when we went through earlier about goals being hard, these are the exception not the rule.
Part of the OKR planning process is to agree what a hard stretch target would be.
Hard goals are sometimes called a stretch or committed goal as well. Achieving 100% of the target would be amazing and 70% would be good.
“OKRs are not meant to be safe bets. They are meant to push us to take risks, find new ways of approaching problems or opportunities, and achieve more than we often think we are capable of. This is why it needs to be safe to fail, no matter how much we push ourselves to succeed. We need to know where our limits are. Like with exercise, when we stress our muscles our bodies respond with muscle growth and increased strength, by stressing teams and ourselves, we respond with new knowledge, new ideas, new ways of working and solutions that achieve more.”
The engine room of OKR are conversation and debates around what your Objective should be, what you should measure, and what ‘good’ and ‘amazing’ would look like.
It’s been shown that what are considered ‘visionary’ companies often also set highly aspirational, Big Hairy Audacious Goals, or Moonshots. They are set to inspire greatness, new ways of doing things, new approaches to problems and genuine innovation. You need to choose when and where to set them obviously, but their value is clear. Calibrating the success of a moon-shot is harder but 30% to 100% for many would be seen as great result.
When you’ve watched teams try to set measures and targets that match the 70% or more is success criteria you realize that OKR grading comes with an overhead that for many takes the fun out of goal setting Is there a better, simpler way to grade OKRs and more specifically, Key Results?
Yes, and it is simpler than you think. If you think of Key Results as ‘Measures’ and ‘Targets’ then what we can do is set three numbers:
This can form the basis of your grading. A variable grade can easily be calculated by ZOKRI, and no math is required by the goal creator. Note with ZOKRI you can try any, all or none of these.
The score or grade of your Objective comes from the difficulty of your Key Results by way of a simple average across all of the Key Results. When planning your OKRs, one way of viewing the average score is your level of ambition.
Objective – Average Grade – 0.56
When you’re grading your achievement at the end of your planning period, your score is a measure of your achievement relative to that ambition. This is why calibrating what success looks like is so important and 100% is unlikely to be the answer. This is unlike the type of goals most people have set before as KPIs and SMART both don’t have this concept as a central pillar.
If you get to the end of a quarter and you’ve got a 95% score one concern might be that you’re not being ambitious enough. Google as an example would see the right balance of ambition and success being a final grade of 0.6 to 0.7 or 60% to 70%. And of course scoring lower might mean that your teams are not achieving enough. It’s a fine balancing act that again highlights the importance of good planning conversations.
Remember that OKRs are a commitment to an aspirational future state. The path to achieve the outcomes you want is not known.
Teams are going to work hard to achieve OKRs because they feel connected to them, they have clarity on what needs to be achieved and what can put down or just maintained to get this commitment moving.
With OKRs you can be ambitious and feel comfortable celebrating if you come up short as effort and learning are also a cause for celebration.
The answer depends on the answer to the question: how would failure to hit a target be treated in your company?
Psychologically Safe teams have the ability to imagine what amazing would look like and go for it. They would do their best, communicate openly about progress and treat failure as a learning experience.
For teams where Psychological Safety is high, achieving 60% of a hard goal might not only be an achievement, but what the ambition stimulated from increased focus and improved teamwork and collaboration might be even more important. It created innovation, learning, trust and friendship bonds.
If you need 100% success all of the time you need to turn your back on innovation and new ways of thinking. Innovation is a result of risk, effort and frequent failure.
Let us be pragmatic for a moment. Perhaps you’re not ready for ambition. That can come later because right now it’s too scary to not hit targets and the consequences for failure are grave. Changing culture and rolling-out OKRs at the same time is a big ask, so perhaps it’s best to eat the elephant one mouthful at a time.
OKRs are still a useful framework for achieving clarity on what goals matters most and creating transparency and alignment. You just need to score your targets at a level where targets are not much of a stretch and 100% is the expectation. After all, you don’t want to cause undue stress and anxiety by trying to get the best of both worlds – hard stretch goals that must be hit 100% all of the time.
The opportunity cost low levels of stretch in an unsafe environment will come in the form of innovation and new ways of thinking. Few new ideas for improvements in systems, processes, tactics, methods and all of the other levers on performance.
Either way, ZOKRI’s OKR app allows you to calibrate and communicate success levels that reflect where you are and who you are right now, with one eye on who you want to become.
There is a reason why OKR reporting has comes after the discussion about OKR scoring, grading and the whole ‘stretch goal’ debate.
When setting goals, success is obviously defined upfront when you grade your OKRs both with labels like ‘BAU or Committed’ or ‘Hard or Aspirational’, or even ‘BHAG or Moon Shot’ – don’t forget ZOKRI lets you choose the labels and scores you assign to these. These scores are there for everyone to see and provide context for progress as the weeks roll-on.
When reporting on OKRs during the quarter there are a couple of elements to take note of:
Objective and Key Result Progress and Difficulty
Together the % progress and the level of difficulty show how the goal is progressing.
Where progress looks backwards, confidence levels look forwards and benefit from what you know about the executional side of the goal and the likelihood of making good progress going forward
In ZOKRI you can then report on progress in:
OKRs have a stage in the OKR cycle called a ‘retrospective’. The OKR retrospective is an opportunity to capture the narrative of the OKR and reflect.
For example did you have the time and resources you thought you would have to work on the OKR? What were the blockers?
And on reflection, how you describe the OKRs success? Is 42% progress actually an amazing result? When you can explain and agree why it is, that makes ambition safe, achievement, innovation and learning more likely, not less.
Where do you score / grade goals, report on progress and manage retrospective?
ZOKRI help you manage this whole process and captures the retrospective to you are not limited to a blunt single number view of success or failure.
The real world is nuanced and the details matter. We’ve got you covered on this.
A practical guide for C-Levels to optimize strategy, OKRs, people and company culture to create a step-change in performance.