“OKR” stands for “Objectives and Key Results.” OKRs are an effective goal-setting and leadership tool for communicating what you want to accomplish and what milestones you’ll need to meet in order to accomplish it. OKRs are used by some of the world’s leading organizations to set and enact their strategies. In this article we’ll define an OKR, look at how they’re used and provide some examples of OKRs.
Great watch on How Google uses OKR’s:
Questions you should ask yourself:
- Does your organization have a well-defined and broadly understood strategy?
- Are the OKRs nested to support the strategies?
- What are the disconnects between the OKRs and the strategy?
- Are the OKRs widely published, understood, and used in the organization?
- Are lower-level metrics based on the OKRs with linkage to support the strategies?
These questions are a great starting point to think about your own company. Use the hedgehog principle to guide all of your big decisions. It is a very effective way to decide if that next big idea is really worth pursuing or not.
Watch this awesome video on the Hedgehog principle:
One idea which I liked out of the posts here was Net Profit per Employee. Since we are in a service business, I just realized that this is our most important economic metric to make sure we keep both revenues and expenses in a balance. We are going on a hiring spree and looking to hire 100 people before the year ends so I want to make sure our expenses don’t outweigh revenue.
So here is what I would write up as OKR’s for my consulting business:
a) Profit$ per Partner: speaks both to leverage ratio (non-partners per partner) and the price point/level of differentiation
b) Proposal Win Rate: ($ won / $ proposed – for set period of time) helps show resonance of value prop and competitiveness of pricing. You can de-average this by client sector, by service type and by ‘new client’ vs. ‘follow-on’ to really understand the economics of your business.
c) Proposal Volume per Month: important metric to show extent to which ‘leads’ actually translate into real proposals. Need to evaluate this in conjunction with “win rate”
d) Partner Billability: effectively an indicator of price realization. Most firms get good billability from junior staff. The “gravy” as it were is shown by the extent to which partner time is billable to clients. This is a ‘good to great’ type metric, not something relevant for firms still trying to achieve ‘good’
For our Software business:
OKR: Growth Customer Client Base
- KR: # New Clients, $ Rev from New Clients, # New Website visitors
OKR: Grow product/features offerings
- KR: # New products offered, $ rev from new products
OKR: Establish thought leadership / brand awareness
- KR: # articles published, # likes, # seminars presented, # Views of our YouTubes, # backlinks
OKR: Enter new markets
- # Clients from new market, $ from new markets
O: Operational Excellence
- KR: Avg billable hours/consultant, Admin hours/consultant, revenue/consultant salary
Leave a Reply