Setting OKRs can help your team stay aligned and focused on common goals, especially as the organization grows. But formal goal setting can be surprisingly challenging to pull off, and many organizations struggle to get started.
When is the right time for a startup to start setting OKRs?
I don’t think it’s ever too early to set OKRs. A company of one can set OKRs — I actually set OKRs for myself in my personal life, sort of like New Years Resolutions!
Of course, a lot of people are excited by the idea of all the OKRs rolling up into top-line company goals, but when a company is getting started, the most important thing they can do is get into the rhythm of doing the work.
What are the essential first steps to take as you prepare to introduce an OKR program to your team?
There should be someone who is ready to be accountable to OKRs as an initiative in itself. The first quarter or two, there should be a very meta OKR about OKR accountability and an owner for it.
It’s also important to find the sweet spot for rolling out an OKR program — you don’t need to start out with OKRs for every single person. I have seen OKRs introduced 3 times. The first time, we didn’t do it until the company was over 150 people, and it was a major (major!) initiative just to get companywide alignment — it was way too big. Then, at my next company, we tried introducing them at around 50 people, but there was no one with the right level of bandwidth and influence to get buy-in from the teams, that was also too big in that the project was tough to get off the ground until someone could own it.
At my current company, they had tried introducing OKRs once before but it didn’t take off for similar reasons. So, when I joined, we started using OKRs just for the leadership team (about 7 people) and that was just right!
Also, I’ve found that when it’s hard to set at the company-level, if one team takes it on for just their team and finds great success, other teams want to follow along. Grassroots OKR culture really does work; Webflow’s marketing team has actually been using OKRs successfully for a few years now!
Are there any common mistakes that you’ve seen teams make?
Worrying About Perfection
The place I see most team members get stuck is trying to be perfect the first time around. The first quarter a team tries OKRs there isn’t a baseline established, many aren’t quite sure what they are even capable of. I’ve seen teams feel paralyzed and not even set any goal because they don’t know and I’ve seen teams completely undershoot and set too low goals for fear they will be disengaged if they don’t meet their goals.
I’d say to all these teams, the first time might be a mess, and that’s okay! You aren’t shooting for perfection yet, you’re looking to get a baseline out there so in the next quarter you can get better.
Setting Goals Too Low
If the whole point of OKRs is to drive performance, and a person sets a low goal– especially in the beginning (!!)– they aren’t going to find out what they are capable of. I have, when new to a company, 100% overshot and ended with an entirely missed key result in the past, but what’s great is that it taught me what realistic looked like so I could aim for the right challenge the next time around.
The OKR philosophy is that a team who achieves 70% of their goal is successful. As Michelangelo said, “The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”
Setting Too Many OKRs
Another common mistake I see are early teams so excited about OKRs they totally overshoot on how many they set because they don’t have clearly ranked priorities. In the early days, companies have less completed so there is a ton of greenfield opportunity. Not being clear about an exact priority will make it tough for teams to set OKRs in service of a priority.
How would I begin to set reasonable goals without any sort of established baseline? What are some good strategies for figuring out what those first metrics and measurements should be?
For example, if I’m the CEO of the team and my head of marketing shows me data that we have flatline site traffic or modest growth, it might be very easy for them to express fear that the future is unpredictable. I’d use what I call art plus science here- maybe saying, “Hey I see that site traffic had a peak when we launched X product and then sort of flatlined for modest 2% growth over the past 6 months. I hear the fear that this feels unpredictable right now, but what if we were ambitious and aimed this quarter for 15% growth?”
Here’s where the art comes in. There’s no set percent growth benchmark that will be logical in the early days when growth is unpredictable. The key is that if, say, the Objective is “site traffic increases 15% by EOQ”, the team can set KRs that make this objective possible. For example, taking the data we have that traffic spiked when we launched a product we could consider KRs like, “X product launch results in 5+ linked article mentions”.
Ultimately, the team has no baseline and doesn’t know what’s possible, But by using data and adding a layer of ambition, your team can achieve a healthy mix of being nervous while still being committed to the goal.
At the end of the first quarter, it’s important to complete an internal Quarterly Business Review or Retro where these initial OKR results can become the basis for a new (ambitious) baseline.
It’s not uncommon for teams to start out with team-level goals. What are the benefits of setting individual OKRs?
I think it’s 100% fine to set team level OKRs, so long as the KR has a single person as the owner. The big benefit to individual OKRs is accountability. If an OKR is owned in entirety by “sales team” and it’s not met, it becomes very easy to point fingers.
If you want to stick with team level, I suggest making the team leader the owner of the “O” and each team member the owner of a different “KR”. I think the key here is less about the level of the OKRs (at least in the early days when teams are just setting a rhythm and learning the basics) and more about ensuring that accountability is at the individual level.
Should teams do performance reviews and OKR reviews at the same time?
Both cycles are important to company growth for different and connected reasons, but be cautious around process creep. Performance reviews are an opportunity to gain alignment on progress around career growth, whereas OKRs are progress on very specific initiatives, not the human behind them. OKRs are generally set to a quarterly rhythm, and if a company does a very lightweight performance review cycle, then that can align nicely.
However, there is a dynamic I’ve seen where team members never see a break from these cycles and it can become dizzying. Imagine reviewing OKR outcomes in a QBR or retro, setting the next quarter OKRs, and reflecting on your performance all at the same time. Now, imagine doing all of this for a team of 8 and having to guide and coach their processes while writing your own and the reviews of your direct reports. I feel a headache coming on just thinking about it! When does the actual work get done within all of this?
I find that if you can set a rhythm where OKRs are set quarterly, and check-ins happen at a regular cadence where there is opportunity for both manager and direct report to engage in feedback cycles, personal development, and update on an OKR’s status, then it becomes less necessary to line up performance reviews.
Another consideration is that most startups have very early career managers leading teams. Building up that radical candor feedback muscle takes time and practice, so setting some structure and rhythm around the review is still important to make space for these conversations.
Are there any resources you would recommend for teams that want to go deeper on OKRs and other goal-setting methodologies?
There are also a ton of products out there centered on creating OKRs, such as Lattice, Reflektive, and more, and these can be great if you’re trying to create cycles around a mix of OKRs and performance reviews. That said, if you’re early and setting goals but not yet reviews, a Google Sheet will be plenty to get you started.