Why Startups Should Utilize OKRs
Building a startup is very much about getting things off the ground. From getting that initial idea to showing a product or service to the market and getting traction, and all the way to achieving significant growth.
The OKR framework is very focused on numbers and metrics, and on moving them in the right direction. This leaves very little time to focus on non-value-adding tasks and initiatives as they likely won’t move the numbers.
3 Things Startups Should Know About Their OKRs
While it’s great to utilize OKRs in a startup, there are a couple of things that you should remember and make your opinion on before diving head-first.
What is the strategy?
Before you decide on your OKRs and let the other founders and employees work with theirs, figure out some basic level of the company strategy. What are we aiming to be for our customers? How are we reaching them? What is the business model?
Figuring out basic strategic things before deciding to work with OKRs is a must, and since startups are likely those who’ve worked the least with this, it’s even more important for them to remember.
What is the OKR cadence?
The startup world is a chaotic place. Some things are figured out, but most aren’t. It’s important that you decide early on what is the cadence of when you set new OKRs. A rule of thumb: the smaller the company, the shorter the OKR period. This means your OKRs should only last so long that you can make meaningful progress and reach them, but not so long that you’ll risk running out of time or capital to pivot and try something new.
How and when (if even at all) should we pivot?
In business in general, the output of actions compounds over time. As such, it’s a good idea to decide early on what are the signs that you should pivot and maybe try something else. You could have set up goals that require a longer time, but just make sure to decide beforehand.
A great example is that you could have started working with content marketing. But such activity usually requires that you have product/market fit and that you have enough time to let things like engagement, search engines, and lead time do its work. Otherwise, you’ll be tempted to start over just before the results kick in.
Startup OKR Examples
Reach an initial level of product/market fit
Initiate first great demand generation efforts
Achieve a state of successful MVP
Ensure extended runway
These are all examples of startup OKRs, but as you can see, these are just the objectives. Next, you should figure out how you would decide if you reached those goals or not. To see all the corresponding key results, scroll up to the examples above and dig deeper into each of them.
What Startups Should Remember About OKRs
Every Startup OKR should focus on being the following:
Startup OKR Criteria 1: Specific
Your OKR should be specific enough so that when other people within your startup know what you’re working on. No one ever got punished for having an OKR that was a bit too long (as long as it’s clear). Instead, writing fuzzy or unclear OKRs is a definite no-go.
Startup OKR Criteria 2: Measurable
Because OKRs are usually working with specific metrics, it’s a lot easier to check the box that the OKR is measurable. But you’d be surprised to see how often people and teams end up having OKRs that are entirely measured based on opinions and not numbers. A test you can make here is to ensure that whenever you update your OKR, it’s based on a number and related to a metric. If not, then you’re likely playing a game of opinions, which is only fun as long as everyone shares the same one.
Startup OKR Criteria 3: Achievable
It’s important to have achievable OKRs. They should always be ambitious, but nothing is more demotivating than unachievable goals. A rule of thumb is that the chance of achieving a Key Result should be around 50% from the start. If you reach 70% and above, it’s considered a success.
Startup OKR Criteria 4: Results-oriented
Being focused on results is a very important aspect of OKR. It’s so important, that we’ve dedicated an entire section to describing why you should focus on outcomes over outputs below.
Startup OKR Criteria 5: Time-bound
A key part of defining a goal is also defining when you’re expecting it to be met. For OKR, your goals are usually divided into different cycles and your goals should of course be reached within the end of the cycle.