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Overview
Running a business is a lot like piloting a ship; above all, you need to know where you’re going and how you’re getting there. What’s more, you need a crew that knows how to back you up when you need it most.
Objectives and Key Results, or OKRs for short, are a time-tested methodology for ensuring that you and your company have the smoothest sailing possible. They make it easy to set and track company goals so that your entire team knows what needs to be done, how to do it, and why it matters in the larger vision of your business. The OKR framework has helped countless businesses synchronize their teams and realize ambitious goals, launching their companies to new heights.
This guide will walk you through the process of implementing OKRs in your own company, making them a value-driving component of your operating system.
In this guide, we’ll cover the 5 parts of an effective OKR process, including:
- The OKR framework
- Setting annual objectives
- Creating an annualized roadmap
- Quarterly planning
- The “rinse & repeat” cadence
Every step in this generalized guide will apply to the majority of start-ups, but some will benefit from additional frameworks that aren’t included. If you're an M13 portfolio company who wants help navigating this walkthrough and any other supplemental analysis, please reach out.
To get started, make a copy of the OKR framework and worksheet. You may want to refer to the overview on slides 3 and 4 of the deck: How do I use this guide
OKR framework
OKR framework worksheet
Framework and ownership
OKR framework
OKRs have a very specific framework that is integral to the success of the methodology. There are several key components of an OKR process, which will each be explored more deeply later in the lesson. They are:
Annual Objectives. These are the big picture items for your business. They’re your ultimate goals, your guiding light– here at M13, we call them North Stars. Serving to unite a company’s vision and inspire teams, strong Annual Objectives are key to a successful OKR framework.
Key Results are goals that drive progress towards your Annual Objectives. They are more data-focused, including quantifiable metrics that prove your company is on the right course.
Initiatives are the projects and tasks that ladder up towards your Key Results. In other words, Initiatives are the things that need to happen in order to achieve your Key Results.
If your company is a spaceship, your Annual Objectives are the destination. The Key Results are the dials on the console that show your speed and indicate whether you’re on course, and the Initiatives are the actions of the crew and pilot that keep the course steady and the engines burning.It’s important to understand the differences between each piece of the OKR framework, as it can be easy to confuse them in the beginning. Without a strong distinction between each component, it will be much harder to implement your OKR process successfully.
Establishing ownership
A clear ownership structure is vitally important to the OKR framework. Without a dedicated captain, you’ll find yourself wasting resources and letting details fall through the cracks.
We recommend establishing a point person to take top-down control of the OKR process as early as possible. This person should interact closely with leadership and understand the big picture of your business. Operations Managers and Chiefs of Staff are typically good choices for this role.
After years of exploring the farthest corners of the galaxy, Novi decides to start their own rocket-launching company.
Novi is thrilled to be taking this major step in their career, but the job of creating a brand new company from scratch is a daunting one. They find themselves overwhelmed by the number of things that need to be attended to.
Luckily, Novi has a basic understanding of OKRs and how to use them. They begin the process of breaking down their business needs into Annual Objectives, Key Results, and Initiatives.
Annual Objectives
Annual Objectives are the big picture items for your business. They’re ambitious, large-scale goals that you and your team can look to as a reminder of your company’s purpose and direction.
When setting your objectives, ask yourself what will move your company forward and create meaningful change in your business. Which company goals are most pressing? What would you like to see happen in the next year? What core tenants of your model can you expand upon and improve?
Novi decides to create an OKR framework to help them build a world-class rocket-launching company.
They figure writing Annual Objectives should be simple, and after just a few moments they’ve come up with the following:
- Buy some rocket ships.
- Hire the crew needed to service and man the ships.
- Get 20 five-star reviews from customers.
Unbeknownst to Novi, none of these Objectives are constructed very well. It turns out Novi has a lot to learn about setting Annual Objectives!
What makes a good objective?
Creating a good Annual Objective may seem simple at first glance, but it takes a bit of practice to get right. Annual Objectives must have a specific format to function properly in the OKR framework.
Objectives are:
- Big picture goals that relate directly to the most important aspects of your business. They should be doable, but ambitious. There’s nothing wrong with falling a little short–in fact, failing some of your objectives is a sign you’re using them correctly. In a given year, around ⅔ of your Annual Objectives should be completed.
- Clear and concise. An Annual Objective that is more than one sentence long is uncommon. You want a simple, punchy statement that your team will be able to remember easily.
- Strategic and specific to your business. They should set a destination for your company, the path to which will be plotted by other elements of the OKR framework.
As a counterexample, let’s take a look at what you should avoid when creating your objectives.
Objectives are NOT:
- One-off tasks that can be completed quickly. They should be ambitious,relevant for the entire year, and push the limits of what you think your business is capable of achieving.
- KPIs. While Objectives can occasionally contain a measurable output, you should steer away from simply stating a metric as your objective. The goal of your objectives is to define the greater purpose of your work without focusing too heavily on data-based measurements.
- Boring. When you set an Annual Objective, it should tell a compelling story. The best objectives use language that is inspiring and action-based.
After reading a bit more about the OKR process, Novi realizes their current Annual Objectives are far from optimal.
They make the following notes:
- Buy some rocket ships. While this is an important step, it’s not an ambitious goal and isn’t very inspiring for the team.
- Hire the crew needed to service and man the ship. This is heading in the right direction, but Novi should look for a more inspiring way to discuss building their team and company culture.
- Get 20 five-star reviews from customers. Quantitative measurements like this make better Key Results than Annual Objectives.
Novi decides to draft up a new set of Annual Objectives, this time using the lessons they’ve learned.
- Build a fleet of world-class ships to facilitate fast, safe travel
- Foster a collaborative culture that attracts and retains top-tier talent
- Deliver an unmatched space travel experience for customers
These Objectives are much stronger than before. They’re ambitious, inspiring, and focus on the broader goals of the organization.
Magic number 4
When it comes to setting Annual Objectives, 4 is the magic number for many start-ups. Having 4 large goals for the year is the sweet spot between simplicity and granularity, allowing founders to target specific company needs without creating lists upon lists of Annual Objectives.
On tabs 1 and 2 of this worksheet, you’ll find further examples of viable Annual Objectives along with a blank sheet to craft Annual Objectives for your own business. Give it a try!
Annualized Roadmap
What is an Annualized Roadmap?
Once you’ve decided on your Annual Objectives, it’s time to create an actionable plan for achieving them. We at M13 have dubbed this plan the “annualized roadmap”. The goal of the roadmap is to provide you and your team a clear, timebound path to realizing the objectives you’ve set over the coming months.
The roadmap is composed of two distinct components–quarterly Initiatives and Key Results. Just like before, it’s important to understand the qualities of a good Key Result, which are distinct from the qualities of a good Initiative. Understanding how these two items differ from each other, as well as how they differ from Annual Objectives, is critical to a successful OKR framework.
Key Results
With your Objectives set, you now have a clear image of your company’s destination over the next year. If your Objectives are the “where” for your business, your Key Results are the “how”. A good set of Key Results will help determine the quantifiable metrics you can use to gauge progress towards your objective.
With their Annual Objectives set, Novi must now figure out the best way to measure the progress they’re making towards each of their larger goals.
As you read the next lesson, see if you can come up with some Key Results that would suit each of Novi’s 3 Objectives.
Key Results have a distinct role in the OKR framework. They provide a way of measuring progress towards the Annual Objectives we discussed in Lesson 1. Unlike Annual Objectives, Key Results may change quarter-to-quarter as you refine your OKR process.
Key Results are:
- Data-based targets. It should be easy to tell whether or not a Key Result has been completed, as they are highly measurable.
- Stretch goals for you and your team to reach for. While not as lofty as your Annual Objectives, Key Results should still be challenging.
- Specifically created to further the larger goals you’ve set. Key Results are directly linked to your Annual Objectives in their intent and direction.
Just like Annual Objectives in Lesson 1, it’s important to understand what a Key Result is not.
Key Results are NOT:
- Projects or tasks. While they exist on a smaller scale than Annual Objectives, Key Results are still focused on larger goals than the day-to-day operations of the business. They are meant to be an indication of overall progress, not a minor to-do list.
- Broad. Defining a clear, specific, and actionable outcome is crucial when considering your Key Results. Key Results measure progress toward Annual Objectives, and should be built with that function in mind.
- All about financials and bottom lines. While Key Results that address sales, revenue, or market share are important, don’t forget to include Key Results that deal with company culture and customer satisfaction. These measurements are equally vital to the success of many Objectives.
You should aim to have 3-5 Key Results per Objective– this strikes a good balance between oversimplifying your roadmap and cluttering up your goals.
Novi’s goal is to create a thriving rocket-launching company that people and extraterrestrials alike will love.
After carefully considering their larger business goals, Novi comes up with the following quarterly Key Results (KR) for each Annual Objective (AO):
AO: Foster a collaborative culture that attracts and retains top-tier talent
- KR: Hire first recruiter with experience in space travel
AO: Deliver an unmatched space travel experience for customers
- KR: Develop passenger UX journey
AO: Build a fleet of world-class ships to facilitate fast, safe travel
- KR: Acquire 5 ships capable of lightspeed travel
Novi now has concrete, timebound benchmarks against which to measure their progress over the course of the year.
Quarterly Initiatives
Let’s recap: you’ve established your Annual Objectives, which serve as guiding lights for all your team’s efforts. Your Key Results provide a quantifiable way of measuring progress towards those goals. Now, it’s time to think about the tasks and projects that will move the needle for your Key Results. We call these actions Initiatives.
When crafting your Annual Objectives (and, later, when you create your Key Results), you were asked to be ambitious and large-scale. Keep that same ambitious mindset for your quarterly Initiatives, but focus on a much smaller scale. Initiatives should be achievable, project-oriented targets for you and your team.
Good quarterly Initiatives:
- Are specific and time bound. There should be a clear beginning, middle and end to the project, and you should be able to easily tell when it’s finished.
- Have a clear scope and ownership. The smaller projects support the entire OKR structure. Clear scopes of work and well-defined ownership of processes will ensure accountability and completeness over the course of the project.
There is a sweet spot when considering the scale of an Initiative– while they are much smaller goals than, say, your Annual Objectives, they shouldn’t focus on tasks that are considered business as usual (BAU). Initiatives, as the name implies, should initiate new movement within your company, not call for continuation of well-established practices.
Novi is now tasked with determining the projects and tasks that will drive visible progress in their Key Results.
After a bit of thinking, they come up with the following Initiatives for each of the 3 KRs from last section:
KR2: Hire first recruiter with space-related experience
- Initiative: Create a unique job description to attract top talent
- Initiative: Complete company LinkedIn profile
KR3: Develop passenger UX journey
- Initiative: Define goals, expectations, and potential pain points
- Initiative: Research different user personas
KR1: Acquire 5 ships capable of lightspeed travel
- Initiative: Complete fundraise to set spaceship budget
- Initiative: Compile a list of fuel-efficient spacecrafts that fit budget
Each of these Initiatives, when complete, will feed directly into Novi’s Key Results. Novi is confident that these projects will ultimately support their final goal of building a best-in-class space travel company.
Developing your roadmap
Your Key Results and quarterly Initiatives work together to move your company towards your Annual Objectives. The Key Results act as indicators that you’re on the right path, and the Initiatives are the projects that help you achieve your Key Results. In other words, Key Results and Initiatives are the compass and fuel for your business, respectively. The strategy for creating an effective annualized roadmap is simple, and we’ll walk you through each step below. On sheets 3 and 4 of the framework worksheet, you will find an example roadmap and blank worksheets to complete with your team.
Building a roadmap is an exercise that helps a company envision the course of the year ahead. The goal is to gain clarity and develop a bird’s-eye understanding of what your company needs to accomplish. As you move forward with the plans, it’s entirely possible (and even likely) that the Initiatives and Key Results you set forth in this roadmap will change. Don’t feel strictly beholden to the roadmap you set–instead, use it as a directional tool for visualizing and understanding your annual plan.
Begin by creating an exhaustive list of your Key Results and Initiatives with your team. This should cover everything you plan to accomplish in the next year, from Q1 to Q4. In the beginning, don’t worry about being overly prescriptive about which quarter each Initiative and Key Result falls into. The most important thing is to get all your key projects and goals on paper–we’ll go through and clean it up later. Using a collaborative digital document like a Google Sheets is a great way to make sure you’re getting input from every side of your business.
Once you’ve built a list you’re satisfied with, comb through and remove anything that is not mission critical, as well as any steps that are redundant. Be on the lookout for Key Results and Initiatives that don’t fit the criteria we’ve discussed earlier in the lesson. Some of the actions on your list will be better classified as BAU (Business As Usual) items, or perhaps as subtasks that fall under the umbrella of a certain Initiative.
Beyond the key elements mentioned above, we recommend using the SMART goal method to determine if your Key Results and Initiatives are clear and effective. SMART stands for:
- S - Specific
- M - Measurable
- A - Achievable
- R - Relevant
- T - Timebound
If all your Key Results and Initiatives are SMART, you’re in an excellent position! If not, ask yourself what edits you can make to ensure you’re checking every box in the SMART method.
Next, look through your list with your team and define the timing for each Initiative and Key Result. On the right side of the worksheet, you will notice a series of checkboxes that correspond to each of the four quarters. Use this format to determine which Initiatives and Key Results will be relevant for each quarter, and check the boxes accordingly. Note that some may correspond to all four!.
Congratulations! You’ve just built an Annualized Roadmap for your OKRs.
Quarterly planning
Having an Annualized Roadmap is an excellent way to visualize the year ahead. However, the specific needs of a business tend to change from quarter to quarter. In this section, we will describe the process of refining and editing your Initiatives and Key Results on a quarterly basis. The Key Results and Initiatives you’ve already set out in your roadmap will be instrumental in kicking off your quarterly planning process and a helpful reference point throughout the year. Use tabs 5 and 6 of the framework worksheet as a template for your quarterly planning.
OKR framework worksheet
Back in Lesson 1, we established an owner of the OKR process. This might be your Chief of Staff, your Operations Program Manager, or another employee who works closely with leadership. This same point person will be responsible for leading the development of your Initiatives and Key Results for this quarter and beyond.
The first step is to determine which Key Results and Initiatives are most important and align most closely with your company’s priorities for the coming quarter. Most of this work will already be done in your Annualized Roadmap, but we recommend that the OKR process owner get further input from team leaders. This will allow the process owner to refine and finalize the Roadmap’s content for the first quarter. The goal of these quarterly planning sessions is to encourage collaboration across teams, appoint multiple stakeholders, and ultimately unite the vision of the company. Our recommended timeframe for the repeatable quarterly planning process is demonstrated on tab 7 of your worksheet, and will be explained in more detail in the next section.
While your Key Results and Initiatives may change over time, the Annual Objectives they ladder up to will remain the same. Make sure each of your Key Results and Initiatives are clearly oriented around at least one of your Annual Objectives
As the quarter progresses, we recommend using a color coded scale to denote progress on all of your Initiatives and Key Results. Green is used for Initiatives that are on track to be completed by the end of the quarter, while yellow indicates projects experiencing minor lag. Projects experiencing major roadblocks that will prevent timely execution by the end of the quarter should be coded red.
Rinse and repeat cadence
How to establish a cadence
Perhaps the biggest impact of the OKR framework is its ability to lend rhythm and consistency to an otherwise chaotic planning process. Companies that are able to integrate OKR planning into the regular drumbeat of their company will find themselves at a huge strategic advantage. In this lesson, we will share best practices to help your company make the most of a repeating OKR framework. This is what we call the rinse and repeat cadence.
In the final week of the month, the OKR process owner should collect updates (coded red, yellow, or green) on the quarterly OKRs from team leaders. This will provide them with a high level overview of the company’s progress.
In the first week of each month, your point person should create a standing meeting to review OKR statuses with the leadership team. This time should be used to assess the progress of the past month, especially any items marked yellow or red. An hour is generally sufficient time to discuss progress, voice any concerns, and change strategy if needed.
In the final month of each quarter, the quarterly planning process will repeat again. We recommend using the whole month, guaranteeing the OKR owner has enough time to gather inputs from across teams. The goal is to develop a collaborative experience, ensuring all OKRs are set before the new quarter even begins.
For a visualization of this structure, look at sheet 7 of this worksheet. It should be easy to see how the meetings fall into each week, month, and quarter, along with the targets of each meeting.
Novi’s hiring efforts have been a great success!
In record time, Novi was able to hire a recruiter and build a team of skilled and driven astronauts to help support every aspect of their business.
Recall that one of Novi’s Annual Objectives was to “foster a collaborative culture that attracts and retains top-tier talent”. Their quarterly Key Result for this Objective was to hire a recruiter with relevant experience. The Key Result has been achieved after one quarter, but there is still work to be done to achieve Novi’s larger Annual Objective. This is exactly how OKRs are meant to work.
At the end of the first month, Novi calls a meeting with all their new employees to discuss the remaining Key Results and Initiatives of the first quarter. They learn the following about the company’s progress:
The hiring process, as discussed, was very successful. It has accordingly been coded green because it is complete.
The team Novi has assigned to researching user personas, however, has experienced a hiccup. There are many reasons to travel to space– some passengers want to go sightseeing, while others are deep space scientists who travel to perform experiments on passing asteroids. These two users will have very different needs, and catering to both at once is impractical. Novi’s team will need to reevaluate the details of their target market, which will take time. The initiative has been coded yellow, since this delay is significant but not insurmountable.
Novi is optimistic about the company’s ability to solve their target user problem in the coming months and that it will be complete by the end of the quarter.
Unfortunately, it has proved difficult to build the fleet Novi needs. The price of spaceships has skyrocketed (no pun intended) due to increased demand. Finding affordable options has been a larger challenge than anticipated– they simply don’t have the budget for the ships they want. Solving this problem will require a major strategic reevaluation and it is unlikely to be completed this quarter, so this project has been tagged red.
Novi will continue these meetings at the end of each month to check on the progress of their quarterly goals. At the end of the quarter, the status of each Key Result and Initiative will help dictate their OKRs for Q2 and beyond.
Conclusion
As you move forward into the coming year, you’re bound to experience your share of exciting wins and disappointing losses. Both are vitally important to your OKR process. Remember, quarterly OKRs are meant to be stretch goals; if your list was covered in green at the end of each quarter, you are likely not pushing hard enough. If (and when) you come up short of your goals, take it as a chance to identify which steps along the way could be improved. Learn from your failures, and use them to improve your operations and inform your future OKRs. Our EOQ reds can teach us just as much, if not more, than our greens.
At the same time, remember to celebrate your victories by recognizing the teams that orchestrated them. Use your win as an opportunity to foster connections between team members and strengthen your culture of collaboration. Make note of your successes, as they often provide insights into how your company works and what your people are capable of.
You now have everything you need to use OKR processes in your own company. We have found this framework extremely effective for fostering effective collaboration, unifying various teams, and keeping your company focused on the big picture.
In just over a year’s time, Novi and their team of astronauts are at the head of a thriving new company.
Thanks to their consistent use of the OKR framework to encourage company-wide collaboration, every team in the company shares a unified vision and displays remarkable efficiency on their projects. To celebrate their success, Novi has decided to take a vacation to the nearby Alpha Centauri system.
Novi waves to the employees who have gathered to send them off. The rockets engage, and Novi speeds off on their next big adventure!
Overview
Running a business is a lot like piloting a ship; above all, you need to know where you’re going and how you’re getting there. What’s more, you need a crew that knows how to back you up when you need it most.
Objectives and Key Results, or OKRs for short, are a time-tested methodology for ensuring that you and your company have the smoothest sailing possible. They make it easy to set and track company goals so that your entire team knows what needs to be done, how to do it, and why it matters in the larger vision of your business. The OKR framework has helped countless businesses synchronize their teams and realize ambitious goals, launching their companies to new heights.
This guide will walk you through the process of implementing OKRs in your own company, making them a value-driving component of your operating system.
In this guide, we’ll cover the 5 parts of an effective OKR process, including:
- The OKR framework
- Setting annual objectives
- Creating an annualized roadmap
- Quarterly planning
- The “rinse & repeat” cadence
Every step in this generalized guide will apply to the majority of start-ups, but some will benefit from additional frameworks that aren’t included. If you're an M13 portfolio company who wants help navigating this walkthrough and any other supplemental analysis, please reach out.
To get started, make a copy of the OKR framework and worksheet. You may want to refer to the overview on slides 3 and 4 of the deck: How do I use this guide
OKR framework
OKR framework worksheet
Framework and ownership
OKR framework
OKRs have a very specific framework that is integral to the success of the methodology. There are several key components of an OKR process, which will each be explored more deeply later in the lesson. They are:
Annual Objectives. These are the big picture items for your business. They’re your ultimate goals, your guiding light– here at M13, we call them North Stars. Serving to unite a company’s vision and inspire teams, strong Annual Objectives are key to a successful OKR framework.
Key Results are goals that drive progress towards your Annual Objectives. They are more data-focused, including quantifiable metrics that prove your company is on the right course.
Initiatives are the projects and tasks that ladder up towards your Key Results. In other words, Initiatives are the things that need to happen in order to achieve your Key Results.
If your company is a spaceship, your Annual Objectives are the destination. The Key Results are the dials on the console that show your speed and indicate whether you’re on course, and the Initiatives are the actions of the crew and pilot that keep the course steady and the engines burning.It’s important to understand the differences between each piece of the OKR framework, as it can be easy to confuse them in the beginning. Without a strong distinction between each component, it will be much harder to implement your OKR process successfully.
Establishing ownership
A clear ownership structure is vitally important to the OKR framework. Without a dedicated captain, you’ll find yourself wasting resources and letting details fall through the cracks.
We recommend establishing a point person to take top-down control of the OKR process as early as possible. This person should interact closely with leadership and understand the big picture of your business. Operations Managers and Chiefs of Staff are typically good choices for this role.
After years of exploring the farthest corners of the galaxy, Novi decides to start their own rocket-launching company.
Novi is thrilled to be taking this major step in their career, but the job of creating a brand new company from scratch is a daunting one. They find themselves overwhelmed by the number of things that need to be attended to.
Luckily, Novi has a basic understanding of OKRs and how to use them. They begin the process of breaking down their business needs into Annual Objectives, Key Results, and Initiatives.
Annual Objectives
Annual Objectives are the big picture items for your business. They’re ambitious, large-scale goals that you and your team can look to as a reminder of your company’s purpose and direction.
When setting your objectives, ask yourself what will move your company forward and create meaningful change in your business. Which company goals are most pressing? What would you like to see happen in the next year? What core tenants of your model can you expand upon and improve?
Novi decides to create an OKR framework to help them build a world-class rocket-launching company.
They figure writing Annual Objectives should be simple, and after just a few moments they’ve come up with the following:
- Buy some rocket ships.
- Hire the crew needed to service and man the ships.
- Get 20 five-star reviews from customers.
Unbeknownst to Novi, none of these Objectives are constructed very well. It turns out Novi has a lot to learn about setting Annual Objectives!
What makes a good objective?
Creating a good Annual Objective may seem simple at first glance, but it takes a bit of practice to get right. Annual Objectives must have a specific format to function properly in the OKR framework.
Objectives are:
- Big picture goals that relate directly to the most important aspects of your business. They should be doable, but ambitious. There’s nothing wrong with falling a little short–in fact, failing some of your objectives is a sign you’re using them correctly. In a given year, around ⅔ of your Annual Objectives should be completed.
- Clear and concise. An Annual Objective that is more than one sentence long is uncommon. You want a simple, punchy statement that your team will be able to remember easily.
- Strategic and specific to your business. They should set a destination for your company, the path to which will be plotted by other elements of the OKR framework.
As a counterexample, let’s take a look at what you should avoid when creating your objectives.
Objectives are NOT:
- One-off tasks that can be completed quickly. They should be ambitious,relevant for the entire year, and push the limits of what you think your business is capable of achieving.
- KPIs. While Objectives can occasionally contain a measurable output, you should steer away from simply stating a metric as your objective. The goal of your objectives is to define the greater purpose of your work without focusing too heavily on data-based measurements.
- Boring. When you set an Annual Objective, it should tell a compelling story. The best objectives use language that is inspiring and action-based.
After reading a bit more about the OKR process, Novi realizes their current Annual Objectives are far from optimal.
They make the following notes:
- Buy some rocket ships. While this is an important step, it’s not an ambitious goal and isn’t very inspiring for the team.
- Hire the crew needed to service and man the ship. This is heading in the right direction, but Novi should look for a more inspiring way to discuss building their team and company culture.
- Get 20 five-star reviews from customers. Quantitative measurements like this make better Key Results than Annual Objectives.
Novi decides to draft up a new set of Annual Objectives, this time using the lessons they’ve learned.
- Build a fleet of world-class ships to facilitate fast, safe travel
- Foster a collaborative culture that attracts and retains top-tier talent
- Deliver an unmatched space travel experience for customers
These Objectives are much stronger than before. They’re ambitious, inspiring, and focus on the broader goals of the organization.
Magic number 4
When it comes to setting Annual Objectives, 4 is the magic number for many start-ups. Having 4 large goals for the year is the sweet spot between simplicity and granularity, allowing founders to target specific company needs without creating lists upon lists of Annual Objectives.
On tabs 1 and 2 of this worksheet, you’ll find further examples of viable Annual Objectives along with a blank sheet to craft Annual Objectives for your own business. Give it a try!
Annualized Roadmap
What is an Annualized Roadmap?
Once you’ve decided on your Annual Objectives, it’s time to create an actionable plan for achieving them. We at M13 have dubbed this plan the “annualized roadmap”. The goal of the roadmap is to provide you and your team a clear, timebound path to realizing the objectives you’ve set over the coming months.
The roadmap is composed of two distinct components–quarterly Initiatives and Key Results. Just like before, it’s important to understand the qualities of a good Key Result, which are distinct from the qualities of a good Initiative. Understanding how these two items differ from each other, as well as how they differ from Annual Objectives, is critical to a successful OKR framework.
Key Results
With your Objectives set, you now have a clear image of your company’s destination over the next year. If your Objectives are the “where” for your business, your Key Results are the “how”. A good set of Key Results will help determine the quantifiable metrics you can use to gauge progress towards your objective.
With their Annual Objectives set, Novi must now figure out the best way to measure the progress they’re making towards each of their larger goals.
As you read the next lesson, see if you can come up with some Key Results that would suit each of Novi’s 3 Objectives.
Key Results have a distinct role in the OKR framework. They provide a way of measuring progress towards the Annual Objectives we discussed in Lesson 1. Unlike Annual Objectives, Key Results may change quarter-to-quarter as you refine your OKR process.
Key Results are:
- Data-based targets. It should be easy to tell whether or not a Key Result has been completed, as they are highly measurable.
- Stretch goals for you and your team to reach for. While not as lofty as your Annual Objectives, Key Results should still be challenging.
- Specifically created to further the larger goals you’ve set. Key Results are directly linked to your Annual Objectives in their intent and direction.
Just like Annual Objectives in Lesson 1, it’s important to understand what a Key Result is not.
Key Results are NOT:
- Projects or tasks. While they exist on a smaller scale than Annual Objectives, Key Results are still focused on larger goals than the day-to-day operations of the business. They are meant to be an indication of overall progress, not a minor to-do list.
- Broad. Defining a clear, specific, and actionable outcome is crucial when considering your Key Results. Key Results measure progress toward Annual Objectives, and should be built with that function in mind.
- All about financials and bottom lines. While Key Results that address sales, revenue, or market share are important, don’t forget to include Key Results that deal with company culture and customer satisfaction. These measurements are equally vital to the success of many Objectives.
You should aim to have 3-5 Key Results per Objective– this strikes a good balance between oversimplifying your roadmap and cluttering up your goals.
Novi’s goal is to create a thriving rocket-launching company that people and extraterrestrials alike will love.
After carefully considering their larger business goals, Novi comes up with the following quarterly Key Results (KR) for each Annual Objective (AO):
AO: Foster a collaborative culture that attracts and retains top-tier talent
- KR: Hire first recruiter with experience in space travel
AO: Deliver an unmatched space travel experience for customers
- KR: Develop passenger UX journey
AO: Build a fleet of world-class ships to facilitate fast, safe travel
- KR: Acquire 5 ships capable of lightspeed travel
Novi now has concrete, timebound benchmarks against which to measure their progress over the course of the year.
Quarterly Initiatives
Let’s recap: you’ve established your Annual Objectives, which serve as guiding lights for all your team’s efforts. Your Key Results provide a quantifiable way of measuring progress towards those goals. Now, it’s time to think about the tasks and projects that will move the needle for your Key Results. We call these actions Initiatives.
When crafting your Annual Objectives (and, later, when you create your Key Results), you were asked to be ambitious and large-scale. Keep that same ambitious mindset for your quarterly Initiatives, but focus on a much smaller scale. Initiatives should be achievable, project-oriented targets for you and your team.
Good quarterly Initiatives:
- Are specific and time bound. There should be a clear beginning, middle and end to the project, and you should be able to easily tell when it’s finished.
- Have a clear scope and ownership. The smaller projects support the entire OKR structure. Clear scopes of work and well-defined ownership of processes will ensure accountability and completeness over the course of the project.
There is a sweet spot when considering the scale of an Initiative– while they are much smaller goals than, say, your Annual Objectives, they shouldn’t focus on tasks that are considered business as usual (BAU). Initiatives, as the name implies, should initiate new movement within your company, not call for continuation of well-established practices.
Novi is now tasked with determining the projects and tasks that will drive visible progress in their Key Results.
After a bit of thinking, they come up with the following Initiatives for each of the 3 KRs from last section:
KR2: Hire first recruiter with space-related experience
- Initiative: Create a unique job description to attract top talent
- Initiative: Complete company LinkedIn profile
KR3: Develop passenger UX journey
- Initiative: Define goals, expectations, and potential pain points
- Initiative: Research different user personas
KR1: Acquire 5 ships capable of lightspeed travel
- Initiative: Complete fundraise to set spaceship budget
- Initiative: Compile a list of fuel-efficient spacecrafts that fit budget
Each of these Initiatives, when complete, will feed directly into Novi’s Key Results. Novi is confident that these projects will ultimately support their final goal of building a best-in-class space travel company.
Developing your roadmap
Your Key Results and quarterly Initiatives work together to move your company towards your Annual Objectives. The Key Results act as indicators that you’re on the right path, and the Initiatives are the projects that help you achieve your Key Results. In other words, Key Results and Initiatives are the compass and fuel for your business, respectively. The strategy for creating an effective annualized roadmap is simple, and we’ll walk you through each step below. On sheets 3 and 4 of the framework worksheet, you will find an example roadmap and blank worksheets to complete with your team.
Building a roadmap is an exercise that helps a company envision the course of the year ahead. The goal is to gain clarity and develop a bird’s-eye understanding of what your company needs to accomplish. As you move forward with the plans, it’s entirely possible (and even likely) that the Initiatives and Key Results you set forth in this roadmap will change. Don’t feel strictly beholden to the roadmap you set–instead, use it as a directional tool for visualizing and understanding your annual plan.
Begin by creating an exhaustive list of your Key Results and Initiatives with your team. This should cover everything you plan to accomplish in the next year, from Q1 to Q4. In the beginning, don’t worry about being overly prescriptive about which quarter each Initiative and Key Result falls into. The most important thing is to get all your key projects and goals on paper–we’ll go through and clean it up later. Using a collaborative digital document like a Google Sheets is a great way to make sure you’re getting input from every side of your business.
Once you’ve built a list you’re satisfied with, comb through and remove anything that is not mission critical, as well as any steps that are redundant. Be on the lookout for Key Results and Initiatives that don’t fit the criteria we’ve discussed earlier in the lesson. Some of the actions on your list will be better classified as BAU (Business As Usual) items, or perhaps as subtasks that fall under the umbrella of a certain Initiative.
Beyond the key elements mentioned above, we recommend using the SMART goal method to determine if your Key Results and Initiatives are clear and effective. SMART stands for:
- S - Specific
- M - Measurable
- A - Achievable
- R - Relevant
- T - Timebound
If all your Key Results and Initiatives are SMART, you’re in an excellent position! If not, ask yourself what edits you can make to ensure you’re checking every box in the SMART method.
Next, look through your list with your team and define the timing for each Initiative and Key Result. On the right side of the worksheet, you will notice a series of checkboxes that correspond to each of the four quarters. Use this format to determine which Initiatives and Key Results will be relevant for each quarter, and check the boxes accordingly. Note that some may correspond to all four!.
Congratulations! You’ve just built an Annualized Roadmap for your OKRs.
Quarterly planning
Having an Annualized Roadmap is an excellent way to visualize the year ahead. However, the specific needs of a business tend to change from quarter to quarter. In this section, we will describe the process of refining and editing your Initiatives and Key Results on a quarterly basis. The Key Results and Initiatives you’ve already set out in your roadmap will be instrumental in kicking off your quarterly planning process and a helpful reference point throughout the year. Use tabs 5 and 6 of the framework worksheet as a template for your quarterly planning.
OKR framework worksheet
Back in Lesson 1, we established an owner of the OKR process. This might be your Chief of Staff, your Operations Program Manager, or another employee who works closely with leadership. This same point person will be responsible for leading the development of your Initiatives and Key Results for this quarter and beyond.
The first step is to determine which Key Results and Initiatives are most important and align most closely with your company’s priorities for the coming quarter. Most of this work will already be done in your Annualized Roadmap, but we recommend that the OKR process owner get further input from team leaders. This will allow the process owner to refine and finalize the Roadmap’s content for the first quarter. The goal of these quarterly planning sessions is to encourage collaboration across teams, appoint multiple stakeholders, and ultimately unite the vision of the company. Our recommended timeframe for the repeatable quarterly planning process is demonstrated on tab 7 of your worksheet, and will be explained in more detail in the next section.
While your Key Results and Initiatives may change over time, the Annual Objectives they ladder up to will remain the same. Make sure each of your Key Results and Initiatives are clearly oriented around at least one of your Annual Objectives
As the quarter progresses, we recommend using a color coded scale to denote progress on all of your Initiatives and Key Results. Green is used for Initiatives that are on track to be completed by the end of the quarter, while yellow indicates projects experiencing minor lag. Projects experiencing major roadblocks that will prevent timely execution by the end of the quarter should be coded red.
Rinse and repeat cadence
How to establish a cadence
Perhaps the biggest impact of the OKR framework is its ability to lend rhythm and consistency to an otherwise chaotic planning process. Companies that are able to integrate OKR planning into the regular drumbeat of their company will find themselves at a huge strategic advantage. In this lesson, we will share best practices to help your company make the most of a repeating OKR framework. This is what we call the rinse and repeat cadence.
In the final week of the month, the OKR process owner should collect updates (coded red, yellow, or green) on the quarterly OKRs from team leaders. This will provide them with a high level overview of the company’s progress.
In the first week of each month, your point person should create a standing meeting to review OKR statuses with the leadership team. This time should be used to assess the progress of the past month, especially any items marked yellow or red. An hour is generally sufficient time to discuss progress, voice any concerns, and change strategy if needed.
In the final month of each quarter, the quarterly planning process will repeat again. We recommend using the whole month, guaranteeing the OKR owner has enough time to gather inputs from across teams. The goal is to develop a collaborative experience, ensuring all OKRs are set before the new quarter even begins.
For a visualization of this structure, look at sheet 7 of this worksheet. It should be easy to see how the meetings fall into each week, month, and quarter, along with the targets of each meeting.
Novi’s hiring efforts have been a great success!
In record time, Novi was able to hire a recruiter and build a team of skilled and driven astronauts to help support every aspect of their business.
Recall that one of Novi’s Annual Objectives was to “foster a collaborative culture that attracts and retains top-tier talent”. Their quarterly Key Result for this Objective was to hire a recruiter with relevant experience. The Key Result has been achieved after one quarter, but there is still work to be done to achieve Novi’s larger Annual Objective. This is exactly how OKRs are meant to work.
At the end of the first month, Novi calls a meeting with all their new employees to discuss the remaining Key Results and Initiatives of the first quarter. They learn the following about the company’s progress:
The hiring process, as discussed, was very successful. It has accordingly been coded green because it is complete.
The team Novi has assigned to researching user personas, however, has experienced a hiccup. There are many reasons to travel to space– some passengers want to go sightseeing, while others are deep space scientists who travel to perform experiments on passing asteroids. These two users will have very different needs, and catering to both at once is impractical. Novi’s team will need to reevaluate the details of their target market, which will take time. The initiative has been coded yellow, since this delay is significant but not insurmountable.
Novi is optimistic about the company’s ability to solve their target user problem in the coming months and that it will be complete by the end of the quarter.
Unfortunately, it has proved difficult to build the fleet Novi needs. The price of spaceships has skyrocketed (no pun intended) due to increased demand. Finding affordable options has been a larger challenge than anticipated– they simply don’t have the budget for the ships they want. Solving this problem will require a major strategic reevaluation and it is unlikely to be completed this quarter, so this project has been tagged red.
Novi will continue these meetings at the end of each month to check on the progress of their quarterly goals. At the end of the quarter, the status of each Key Result and Initiative will help dictate their OKRs for Q2 and beyond.
Conclusion
As you move forward into the coming year, you’re bound to experience your share of exciting wins and disappointing losses. Both are vitally important to your OKR process. Remember, quarterly OKRs are meant to be stretch goals; if your list was covered in green at the end of each quarter, you are likely not pushing hard enough. If (and when) you come up short of your goals, take it as a chance to identify which steps along the way could be improved. Learn from your failures, and use them to improve your operations and inform your future OKRs. Our EOQ reds can teach us just as much, if not more, than our greens.
At the same time, remember to celebrate your victories by recognizing the teams that orchestrated them. Use your win as an opportunity to foster connections between team members and strengthen your culture of collaboration. Make note of your successes, as they often provide insights into how your company works and what your people are capable of.
You now have everything you need to use OKR processes in your own company. We have found this framework extremely effective for fostering effective collaboration, unifying various teams, and keeping your company focused on the big picture.
In just over a year’s time, Novi and their team of astronauts are at the head of a thriving new company.
Thanks to their consistent use of the OKR framework to encourage company-wide collaboration, every team in the company shares a unified vision and displays remarkable efficiency on their projects. To celebrate their success, Novi has decided to take a vacation to the nearby Alpha Centauri system.
Novi waves to the employees who have gathered to send them off. The rockets engage, and Novi speeds off on their next big adventure!
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