Product OKRs: Driving Outcomes Over Outputs

Updated: October 3, 2024 - 14 min read

OKR stands for Objectives and Key Results. This goal-setting framework keeps both teams and organizations focused on what matters while tracking progress toward an inspiring destination.

OKRs can be thought of as the bridge between the high-level outcomes a company seeks and the on-the-ground work that is being done to achieve this.

One of the first people, if not the very first, to ever talk about OKRs was Andy Grove, CEO of Intel, back in the 70s. Google popularized OKRs in the early 2000s and still uses this framework today. Indeed, folks tend to stick with OKRs once they start! It has proven successful at keeping teams and organizations results-focused, increasing transparency, and driving alignment.

By helping a team connect their work with the strategy or outcome a company seeks, OKRs empowers teams to work automously while helping leaders to keep track of progress.

In this article, we’ll cover:

The definition of OKRs
The difference between OKRs and product vision, strategy, roadmaps, and KPIs
The benefits of using OKRs
How to establish OKRs and common mistakes to avoid
Examples of good and bad OKRs

Product OKR Template

Use this Product OKR template to set and track your OKRs (Objectives and Key Results). Align your team’s daily tasks with product and company strategy!

get free template

What Is an OKR?

The OKR framework is split into 1) Objectives, 2) Key Results, and 3) Initiatives.

Objectives: the outcomes, often qualitative, that you hope to achieve. They answer this question: What value are you driving for the business or users? The objective is usually something that can be accomplished within the the quarter, or at most a year.

Key Results: quantitative product metrics that show the progress you’re making toward your Objectives. There are generally 2-5 KRs per Objective. They connect the operational actions your team takes on the day-to-day to measurable end results.

Initiatives: projects and tasks that help you achieve a Key Result. They didn’t make it into the “OKR” acronym, but they’re still vital to this framework!

What Is NOT an OKR?

What’s the difference between OKRs and product strategy? Key results vs. milestones on a product roadmap? Objectives versus product vision? You can’t really get a handle on OKRs until you understand how it fits into the larger product universe.

Imagine you decide to drive from Toronto, Ontario, to Los Angeles, California.

📍LA is your destination, your product vision.

🛣️ Your route is the product strategy. It’s how you will get from Toronto to LA. Which car will you drive? Will you stay in campgrounds or motels? Will it be a straight shot, or will you backtrack to see Niagara Falls and stop by your Great Aunt’s ostrich farm outside of Phoenix?

🚸 The road signs are your OKRs —they measure how far you’ve gone and how long you have to go (and whether you need to speed things up to make it to your next stop on time).

🗺️ Your trusty roadmap would be the product roadmap (what else?). It’s a physical manifestation of the route, a document that you can reference to orient yourself along the way.

OKR vs. product vision

Think of OKRs as smaller, actionable versions of the product vision. They are narrower in scope, time-boxed (usually quarterly), and focus on what needs to be done in the short term to drive progress toward the product vision and company mission. Both OKRs and the product vision are “aspirational”, in the sense that they push teams forward toward a goal that is not easy to reach unless everyone brings their A game.

OKR vs. product strategy

Product strategy is the high-level plan that outlines how a product will achieve its goals and meet market needs, focusing on direction and long-term objectives. OKRs (Objectives and Key Results) are used to measure progress toward those goals. To go from product strategy to OKRs, product teams need to break down the strategy’s overall approach into short-term, specific goals and the key results needed to track success. Strategy guides; OKRs quantify progress.

OKR vs. product roadmap

A product roadmap is an output-focused planning tool that outlines the deliverables (features, updates, or improvements) that are needed to meet objectives. OKRs and product roadmaps complement each other: the OKRs establish the key results (KRs) needed to meet the objectives; the roadmap plans out the steps needed to meet KRs.

Product management OKR vs. KPI

In Product Management, both OKRs and KPIs are used to measure success. The difference between OKRs and KPIs is that OKRs are focused on a near-term objective, whereas KPIs are constant signals of the health of the business. KPIs are constantly being monitored, whereas KRs identify specific benchmarks that indicate progress toward a time-boxed objective. A KPI for a product like Netflix might be session duration because it indicates the level of user engagement and the effectiveness of Netflix’s content strategy. On the other hand, if Netflix wants to increase user engagement with original content, then a key result might be to boost average viewing hours per user by 15% for original content within the next two quarters.

The Benefits of Using OKRs: Outcomes vs. Outputs

“Being outcome-focused helps you become more customer-focused.”

— Ajay Swamy, Product Leader at Amazon, in Measuring What Matters in Your Product

Outcome-focused means concentrating on the desired results or changes you want to achieve, such as solving customer problems or driving business impact.

On the other hand, focusing on outputs places the emphasis on producing deliverables, features, or completing tasks, regardless of whether they directly contribute to meaningful results or impact.

Product people began shifting their focus from outputs to outcomes in the early 2010s, largely influenced by the rise of agile methodologies, lean startup principles, and customer-centric approaches to product development.

OKRs (Objectives and Key Results) played a pivotal role in the shift toward outcome-focused thinking in product management. Companies like Google and Intel adopted and evangelized OKRs, playing a significant role in spreading the practice across industries.

When product teams adopt OKRs, it encourages a shift toward focusing on the value or impact they create, not just the work they complete. This meant focusing on things like increasing customer satisfaction, growing user engagement, or improving revenue—outcomes that signal success beyond simply launching features.

How to Set OKRs

OKRs will typically be set both at the team level and at the company level. OKRs for a Product organization or Product Team are set by a cross-functional group that delivers Product, sometimes referred to as the ‘triad’ or ‘trio,’ which includes Engineering, Product Management and Product Design.

The Objective should be a ‘reach goal’ that is inspirational, aspirational, something worth getting excited about and perhaps a little scary. The Key Results should be measurable so the team can track and report on progress towards the Objective in a robust way.

Steps for establishing OKRs

Brainstorm objectives. Objectives should be aligned with product vision and high-level goals.
- Ask yourself: Why should we prioritize this objective?
- Narrow the list down to 3-5 objectives
Key results: For each of the 3-5 objectives selected above, set up to 5 KRs. Make sure they are:
- Measurable
- Achievable
- Aligned with the objective
Initiatives: Initiatives are projects and tasks that help you achieve a Key Result. Each KR can have 1-5 associated initiatives. Some initiatives may apply to more than one KR.
For each OKR, create an OKR statement:

Objective #1: I will (Objective) as measured by (Key Results).

Objective #2: I will (Objective) as measured by (Key Results).

OKR Template

The easiest way for Product Managers to set objectives, key results, and initiatives is to use a free OKR template like the one from Product School. It includes:

Common KRs used in Product Management
OKR mistakes and best practices
Objective and Key Result setting
Project progress tracking

The template is here to guide through the complex process of prioritizing objectives, pairing them with the right key reslts, and buying them with helpful iniativies that move the needle.

Product OKR best practices and common mistakes

Like with any ambtious framework, there are plenty of pitfalls that can trip up even the most eager OKR-setters. The table below includes a list of common mistakes along with the best practice that helps you avoid it:

Mistake	Best Practice	Example
Inconsistent scoring framework	Pick the best framework for your needs and stick with it. Make sure everyone understands the framework and what success looks like	There are many possible scoring frameworks. We recommend a simple scoring system called GYOR (Green, Yellow, Orange, Red): Green: 100% of key results achieved Yellow: >= 70% of key results achieved Orange: >= 50% and < 70% of key results achieved Red: < 50% of key results achieved
Setting and forgetting your OKRs. Don’t do all that work for nothing!	Your OKRs are only as valuable as your ability to use them to influence your team’s day-to-day work. Provide weekly updates on your OKRs to keep them top of mind	Include the following in your OKR updates: - % of progress made towards each key result - Confidence of completing each key result by the end of quarter (Completed, High confidence, Medium confidence, Low confidence, Not on track) - Key updates: notable progress made, exceptional circumstances, and roadblocks
Setting vanity metrics	Connect your OKRs to your Product’s North Star to make sure there is a purpose behind your goals	Basecamp’s Product North Star: make project management more of a joy and less of a chore. When creating a progress tracking feature, your team might think about ways to increase simplicity, ease of use, and delighters
Measuring outputs or feature completions instead of outcomes	Outcomes > output! This helps keep you focused on what you really want to achieve.	Stop thinking: We succeeded because we launched 3 new features. Start thinking: We succeeded because we reduced customer churn by 5%.
Seeing OKRs as a top-down activity with no input from their individual contributors	Setting OKRs is a collaborative process	Your data analyst and UX researcher share with you key touchpoints, helping you target critical moments and set realistic goals
Product Teams not aligning their OKRs with other teams	Communicate and collaborate!	You want to work with your User Research Team to interview at least 10 customers who might churn within the next 6 months. Ensure the UX research team has an OKR to support any user research needed)
Taking a goals-first approach instead of a roadmap-first approach	Step back before setting your Outcomes. Look at company OKRs and align your Product OKRs with these	Your Product Team sets a goal to reduce customer churn. BUT company goals deprioritize churn reduction in that they want to improve the product experience not for specific users, but for a specific kind of user
Conflating Key Results and Initiatives	Connect Key Results to a metric instead of to an output	Objective: Get in shape Key Result: Decrease body fat by 5% Initiative 1: Run 5 miles a week Initiative 2: Eat healthy If I run 5 miles every week but have McDonald's for breakfast, lunch, and dinner, I won't achieve my objective. Having multiple initiatives that chip away at a Key Result helps you cover all your bases.

OKR Examples for Product Teams

As we know by now, OKRs make it possible for teams to set focused, actionable objectives and reach specific goals within the quarter or year. To get a better idea of how they work, let’s look at some product management OKR examples:

Product development OKR

Let’s say the vision for a product is to automate payroll for small business owners. One thing you know based on your research is that onboarding has to be simple and straightforward because small business owners don’t have extra time to go deep into learning a new tool. Therefore, an OKR might look like this:

Objective:

Provide an easy onboarding experience.

Key Results:

75% of users fully complete onboarding within the first month after launch.
Fewer than 10% of users require customer support during the onboarding phase.
50% of users engage with core product features within the first 24 hours after onboarding.

Initiatives:

Develop a guided onboarding experience with clear instructions, tooltips, and a progress bar to show users how far along they are to reduce confusion and encourage users finish the full tool training.
Build self-help tools such as FAQs, chatbots, and interactive tutorials within the onboarding process. These features should anticipate common user pain points and offer instant support without needing to contact customer service.
Implement targeted prompts and calls to action immediately after onboarding that direct users to activate key product features. These prompts can guide users to engage with the most critical parts of the product to reduce time to value.

Product marketing OKR

Let’s use the same product we used above, this time focusing on the product marketing aspect, specifically getting potential customers to try out the product and get value from it so that they ultimately convert to paying customers.

Objective:

Drive trial sign-ups among small business owners

Key results:

Increase landing page conversion rate to 20%
Generate 1,000 qualified leads (small business owners who fit the target profile) through organic campaigns
Achieve a 10% Click-Through Rate (CTR) on paid ads

Initiatives:

A/B test the landing page
develop a case study and testimonial campaign focused on payroll automation benefits featuring small business owners who have successfully automated their payroll processes.
run a paid ads campaign focused on specific payroll pain points such as compliance with local tax regulations or manual payroll errors. Each ad should address one specific issue, offering payroll automation as a solution, with a clear call to action like “Try our automated payroll tool for free.”