How can I measure success with OKRs?

How can I measure success with OKRs?

One of the most frequent questions we get asked is how can I measure tech product success with OKRs?

Let’s build up to that answer. Firstly, let’s briefly consider the difference between a target and an outcome.

A target is a singular result. Defined by having a metric against it, once it’s met, it’s met. Often how you get there is unimportant as is what happens afterwards.

An outcome is a set of lasting changes. Many things may contribute to getting there.

An example of a target is “I must lose 10kgs”. An example of an outcome could be “I want to improve my health”.

So why does this matter. Let’s start with this old phrase “Do you want a quarter inch drill, or a quarter inch hole”. The problem that the user has is that they need a hole. A drill is just a tool to get there.

We need to be careful on how we specify a problem, as simple wording can lead to huge differences in what gets done. Consider these two phrases:

A. I want to carry my CDs with me everywhere

B. I want to carry my music with me everywhere

A led to the invention of those horrible vinyl CD cases and B led to the iPod, which went on to lead the charge on disrupting the music industry and change a generation.

A is a very subtle target. And B is a very subtle problem statement. Subtle, but fundamentally different.

An outcome is about behavioural change, then. Something sustainable.  Let’s look at some outcomes. There are a few examples in the table below. Note that every outcome has a benefit and a Key Performance Indicator (KPI) attached to it.

OUTCOME BENEFIT KPI
Faster (slower) Order processing < 1hr each
Fewer (greater) Abandoned baskets One less
Increased (decreased) Conversions (basket to checkout) Up by 70%
Shorter (longer) Queues In-bound calls answered sooner
Reduced (expanded) Fraudulent reviews Zero fake reviews published
Improved Net promoter score Any increase is acceptable

 

The crucial part of the KPI is the ‘I’ bit. The ‘indicator’. All this does is give us some kind of measure that we can use to see if we are having any kind of impact or not. The question is: is the work we are doing to meet the outcome having an effect? If so, what does the data say and what should we do about it?

Objective Key Results are a similar concept.

The objective is what we want to achieve. The Key result is how we are going to measure progress.

The difference in effect they have in behaviour of teams is huge. Instead of just setting a emotion-free target for a team to meet, we set a problem and a way of seeing if we’re solving it. It means the team takes ownership and responsibility for defining the problem and experimenting with solutions. This empowers them to think for themselves, get creative and master their own purpose.

OKRs aren’t just for product teams. Whole businesses can use them to set company direction, with intent behind them being concatenated throughout the business. Some organisations take this to such a level that they even get rid of their appraisal systems as the OKRs can go right down to the personal level.

One last note, OKRs aren’t new. They are based on ‘Management by Objectives’ which was popularised by IBM and then John Doerr helped Google adopt the practice. Doerr was first exposed to them at IBM in the 1970s when it was transitioning from a memory to a micro-processing company, where the concept was attributed somewhat to the success of that change.

 


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