The first compartment is the objective name. You name an objective using 3 components:
- A verb
- A noun
- Additional context.
We do this to ensure consistency. By doing this, the language of OKR can be standardized. Also, while this is very simple, there is not one single objective that we have come across, that cannot be expressed in this form.
For example, “Increase Market share in North America” has the 3 components:
- Verb – Increase
- Noun – Market Share
- Additional Context – In North America
The next component is the target date. By when do you want to achieve this objective. While the objective is not measurable, you definitely need to define a deadline.
You then set the visibility of the OKR. There are 5 levels of visibility, not necessarily mutually exclusive.
- My Management
- My Directs
- My Team
- Only Myself
You generally want your OKRs to be visible company-wide in the interest of complete transparency. There are certainly reasons to restrict some OKRs to a narrower level of visibility and you decide that based on your circumstances.
A key aspect of OKRs is to ensure alignment. There are 3 types of alignments possible:
- Vertical Alignment – This is essentially aligning with your upper management
- Delegations – This is essentially pushing down your OKRs down your management chain to have them align with you.
- Shares – This is when you want colleagues from other departments/orgs to align with you.
Alignment (Vertical Alignment Upwards)
The fourth component allows you to define Vertical Alignment upwards. Vertical alignment is aligning upwards. You are able to look around for your manager’s OKRs or your manager’s manager’s OKRs and upwards, and align with them.
Delegations (Vertical Alignment Downwards)
Component 5, Delegations allow you to select someone from your team and either ask them to own the OKR going forward or ensure that they create their OKRs that align with this particular OKR.
Shares (Horizontal Alignment)
The sixth and last objective component is shares. Shares are for horizontal alignment. For example, you are working to build a new product. You work with finance for budgets. You work with Marketing to determine pricing and several other things. So, you want them to align with this particular OKR.
An Objective may have 3-5 key results, that show you that you are indeed on track to achieving your objective. They tend to be MECE (Mutually Exclusive and Collectively Exhaustive). The last 5 components of the canvas are dedicated to key results.
The first component of a key result is “Action”.
There are 5 types of actions:
- Increase Something
- Decrease Something
- Maintain Something
- Establish Baseline
- Get something done
The first 4 are for measurables. The last action is for trackables.
A measurable is something you can measure using a metric. Lead times, Revenue, Cost are all measurables.
You may want to increase Revenue and hence will choose “Increase Something” as the action.
Similarly, you want to reduce cost and hence will choose “Decrease Something” as the action.
Sometimes you may want to maintain a certain metric in a range. For example, Employee Training Hours. You may want to maintain that in between 20-30 hours a year. In that case, you will choose “Maintain Something” as the action.
If you don’t know the current value of a metric, you typically go with the “Establish Baseline” action to assess where you are, and then figure out what to do next.
There are other situations where you want to get something done, but that is not something that can be measured. For example, you want to open a new retail store in Manhattan or you want to open a new office in London or you want to hire a new VP of sales for EU. These are not measurable, but certainly trackable using a set of milestones.
What Changes? (Metric or Milestone Sequence)
The next component is to specify what is being acted on. For measurables, you will select the metric you are trying to move. For trackables, you will select the sequence of milestones that you’ll be using to track.
By how much?
Extent of Change
In this component, you’ll define the extent of the change on the metric. For example, when you want to increase CSAT score, you will say, I want to go from 85 to 95.
The next component is the target date. By when do you want to achieve this key result. The deadlines for key results can be different from the objective.
Reporting frequency is to decide how often do you want to report status on a particular key result. Depending on the nature of the metric or milestone, you can report daily, weekly, monthly or even quarterly.
Weekly check-ins are recommended.