| Category: OKR University.

Entrepreneurs set audacious goals to change the world. They have crazy ideas, throw their money, time, and their life behind those crazy ideas. With their relentless pursuit and persistent effort, they build a solution to a problem and deliver it to the marketplace. But ever wondered how many of them succeed in this pursuit?

According to smallbiztrends.com, only 56% of startups step into their fourth year. Nearly half of the startups are not able to make it to their wood anniversary.

Why do startups fail?

Top reasons why startups fail:

  • Ignoring the importance of idea validating.
  • Over-engineering the minimum viable product
  • Not pivoting at the right time, and
  • Lack of alignment between teams towards the vision.

Most of the time, founders tend to get defocused and stray from their path too often, burning too much cash in the process and bury their startups. This is why startups need OKRs. We’ve already documented the OKR Payoffs, as advocated by John Doerr extensively.

john rohn

Discipline is the bridge between goals and accomplishment.

Jim Rohn

How can startups stay focused using OKRs?

You are supposed to have 3-4 objectives at any point in time with 2-5 key results for each Objective. The OKR methodology is self-regulating and forces you to narrow down your todo list. And not just that. The todo list is not a to do list, but it is a to-accomplish list. There is a subtle difference here. Todo focuses on outputs, whereas to-accomplish focuses on results. OKR allows founders and their teams to forecast outcomes, pursue them, and track them relentlessly.

Pre Revenue


How can OKRs help with validating the idea?

Founders have to validate their idea before they roll up their sleeves and plunge into developing the product. They have to be sure if customers will happily pay for using the product or the service. Ignoring idea validation will lead them to build something that nobody wants. They could burn a lot of cash and spend more energy on developing a solution around the idea, only to find out that no intends to buy.

A simple OKR with key results as below is sufficient to validate the product idea. This OKR is time-bound and will guide the founders to be focused on the metrics and work towards achieving the numbers. It will also cut out the execution of new ideas that will pop up in their mind and focus on what matters to reach the Objective.

validating the Idea

If the founders achieve these key results, then it is they could go to the next step of building their prototype. What if they don’t meet those numbers? They can reiterate with appropriate modifications based on the feedback that is received from the campaign.If they don’t get to their thresholds after multiple iterations, then you can conclude that the market is not ready for the idea and decide that it’s not worth pursuing it.

Do you know that Dropbox didn’t have a real product in the beginning?

Dropbox is a file storage service used to save and share files across different platforms and operating systems. To get this product done, it requires specialized expertise and a vast amount of resources.

Drew Houston, the founder of Dropbox, created a simple video demonstrating Dropbox in action. It showed how seamlessly it works across different operating systems and uploaded the video to the website. It drove thousands and thousands of people to the website, and their beta waiting list went up from 5000 to 75000 overnight. Anyone who watches the video will assume that the video is a product demonstration, while there was no real product in existence.

As you can see, it’s a lot easier & inexpensive to test a concept than a real product.

How can OKRs help you to build the right MVP?

After testing the idea, you create a minimum viable product. MVP is a prototype of the product, built with minimal features to test the product and to see how customers interact with it.

In traditional product development, we tend to pick up any good idea that strikes in our mind. Sometimes these ideas are misconceived to be useful features, and the development team might as well want to incorporate these into the MVP.

This act of adding a new feature out of the blue to the planned modules will push the release dates further away from the scheduled time. If startups consume more time only to produce trivial features, it also gives an edge to the competitors. This position will favor the new entrants in the same niche and puts the original thinker in a position to lose some market share. It takes discipline to narrow down the objectives.

To understand this a little deeper, we must know the Big Rock Theory. This theory suggests that to have significant results, we need to prioritize and give importance to critical activities before dealing with less important activities.

When you use OKRs to develop MVP, you can create a focused list of features and execute them. OKRs can prove very handy for startups at this stage. OKRs can help startups in the following ways:

  • Help all the teams to focus on the customer problem and your solution to that problem.
  • Provide guardrails in the process of creating the prototype with minimal, but completely necessary features
  • Avoid those features that are helpful and useful, but need not make the cut for the MVP. You can easily sell them as roadmap items.

Here we will see how a startup can set up their OKR.

OKR example MVP

This OKR or some version of it will help the team deliver an MVP at the earliest to the marketplace. It will keep the team laser focussed on essentials and avoids doing activities that may arise out of their own perceptions and preferences.

How can OKRs help you pivot at the right time?

The main goal of MVP is to test how the market reacts to your product. You should gauge customers’ behavior and analyze your MVP’s performance and measure the results. MVP results could be measured as:

  • New signups
  • New premium users signup.

Or any other measure through which you can measure the success of the MVP.

Comparing the results against your expectations will provide confidence and direction to your next iteration of the product. It will not only save your startup from building something that nobody requires, but it can actually guide you on the critical path to something that everyone wants, without meandering around and sometimes wander off from this critical path and find yourself at a place, where no one still wants your product.

Measuring outcomes coupled with customer feedback, will help in deciding whether to continue to scale the project or to pivot. Assuming you build your MVP, and pivot at the right times using OKRs, you’ll be well on your way to build your startups in the most effective and efficient way possible.

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