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 templateWhat 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.”
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 templateUnhelpful OKRs: Examples of Mistakes to Avoid
As discussed above, there are plenty of ways to go wrong with OKRs, even with the best of intentions. Thankfully, there are best practices to help product teams steer clear of the most common pitfalls.
To really drive the point home, we’ve included some examples of “bad” OKRs:
1st mistake: Chasing a vanity metric
Objective: Increase product awareness.
Key Result 1: Reach 100,000 followers on social media.
Key Result 2: Increase blog post views by 50%.
Both key results focus on vanity metrics. Blog views and follower counts can rise without necessarily driving meaningful outcomes like increased engagement or conversions. These metrics don’t provide insight into how awareness is translating into actual product adoption or user interest.
2nd mistake: Focusing on outputs instead of outcomes
Objective: Improve user engagement with the mobile app.
Key Result 1: Launch 3 new features by the end of the quarter.
Key Result 2: Redesign the user interface.
Both key results are focused on outputs—what the team is building (features and redesign)—rather than the outcome of improved user engagement. Neither metric guarantees that users will interact with the app more frequently or for better results. It would be better to tie results to metrics that indicate changes in user behavior, such as increasing daily active users or session duration.
3rd mistake: Setting unrealistic Key Results
Objective: Become the leading payroll automation tool for small businesses.
Key Result 1: Capture 80% of the small business market in 6 months.
Key Result 2: Increase monthly active users by 300% within one quarter.
In most cases, these Key Results are unattainable within the given timeframes. Setting such high, unachievable targets can demotivate teams, especially when they are repeatedly missed. It’s important for Key Results to be aspirational and stretch the team’s capabilities but remain within reach based on available resources and market conditions.
Attainable, Aspirational, Actionable: OKRs Are Product Managers’ Secret Weapon
When done well, OKRs provide product managers with a powerful framework to align teams, track progress, and influence without direct authority. By focusing on outcomes rather than outputs, PMs can clearly communicate strategic goals and drive cross-functional teams toward shared success.
From defining objectives to crafting actionable key results, OKRs help product managers guide teams toward measurable outcomes, even when they don't directly manage every stakeholder involved. They help give PMs the ability to influence decision-making across the organization by creating a shared language of priorities, ensuring everyone is working toward the same end goals.
As we've seen, avoiding common pitfalls—such as focusing on vanity metrics or setting unattainable goals—keeps teams motivated and aligned. When OKRs are set thoughtfully, they become more than just a tracking tool—they become a secret weapon for product managers to lead with clarity, transparency, and impact.
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