The best way to set objectives in your startup

“OKR” stands for “Objectives & Key Results”. OKRs are an effective goal setting framework for communicating what you want to accomplish and what milestones you’ll need to meet in order to accomplish it. OKRs help startups have agile working practices and provide clarity on how growth will be delivered. 

OKRs are used by most startups and can be traced back to a framework called Management By Objectives (MBO) by Peter Drucker, which was used in the 1970’s. After that, Andy Grove restructured the concept and created the framework for OKRs. Since then, they’ve become a popular way of setting goals and managing growth with Google being the most famous company that uses the framework.

OKRs are composed by:

• An Objective - describes the mission you want people align to and why

• Key Results - measure the outcomes you are trying to get to using metrics

Benefits of OKRs vs other goal setting methodologies:

• Transparent - are designed to be shared across the whole company and to all teams.

• Frequency of discussions - are designed to be discussed frequently and widely

• Aligned - they are set as company goals and aligned with by teams, both departmental and cross-functional. They have the ability to unite teams and encourage the creation of cross-functional teams. 

Here is an example of a Company Level OKR that could unite and focus a start-up:

“Achieve product market fit”  As measured by these metrics: Churn has reduced from X to Y, MRR increases from X to Y, LTV : CAC Ratio is over 4, NPS is 80+

Teams would be asked to align Objectives with this OKR, so each team has their own objectives that will help the company reach the OKRs. Every Monday the teams propose priorities for the week, share problems, and review related metrics that would support the metrics the OKRs are being measured by. On a Friday, wins are shared. This focused agenda and cadence is what keeps the teams connected to the OKR and helps its achievement.

Try it!