Are stretch goals motivational and encouraging or overbearing and disheartening?
That is a common debate and there is no easy answer. But, if you try to incorporate stretch goals, using them with OKRs (Objectives and Key Results) is a great approach.
In fact, common applications of OKRs use stretch goals and OKR scoring to keep people motivated to reach higher goals.
“The sweet spot for OKRs is somewhere in the 60-70% range. Scoring lower may mean the organization is not achieving enough of what it could be.
Scoring higher may mean the aspirational goals are not being set high enough. For example, with Google’s 0.0 – 1.0 scale, the expectation is to get an average of 0.6 to 0.7 across all OKRs.
There is a science to setting stretch goals for OKRs. Being too aspirational leads to failed goals, but we’re going to teach you how to keep expectations high but aspirations realistic.
Most companies who try to write OKRs end up failing both at the application and the stretch goals they choose, but this is the name of the game; they wouldn’t be a stretch if they were easily achieved.
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What are OKRs?
We’ve touched on this in a few articles, including how to write OKRs, but we’ll review anyway for the sake of this article.
OKR stands for Objectives and Key Results. It’s a collaborative goal-setting tool to measure challenges and ambitious team goals. OKRs help you track goal progress, align strategies, and encourage team collaboration.
The principles of the OKR framework are:
- Agile and straightforward: Typically, OKRs are set monthly or quarterly to reassess changing conditions within an organization. It defines which part of an organization will meet specific goals and won’t waste the time of employees not involved in the project.
- Clear and aligned: Going along with our last point, OKRs are public and transparent. All departments in an organization align to achieve their specific goals.
- Bidirectional: OKRs don’t go from top to bottom, nor do they go from bottom to top. They are set, and each group or individual builds on them with measurable goals.
- Collaborative: Everyone in an organization has a role to play. OKRs define each role and how the role helps achieve the objective. No one person in the organization can accomplish goals alone and work with other team members.
According to Asana, only 16% of knowledge workers say their company effectively sets and communicates company goals. To increase employee satisfaction, participation, and engagement with goals, try writing OKRs.
OKRs follow an accessible template, malleable to every purpose.
It goes like this
- I will [objective] as measured by [key result].
Remember, the objective is your goal. In Doerr’s Google presentation mentioned above, his goal was to build a planning model for Google. Yours could be “Design social media templates to stay consistent with posts” or “create a Memorial Day Sale campaign.”
The key result is the metric to measure your progress towards your objective. This could be hiring a designer to develop designs for your social media templates or meeting with the Product Manager to decide what products should go on sale for Memorial Day.
This is the basic framework for OKRs.
The History of OKRs
Andy Grove created OKRs at Intel. He taught seminars on the topic, and among his many seminar students through the years was John Doerr. Doerr adapted Grove’s methods and refashioned OKRs for companies like Google and Apple, going on to write the book on the subject, “Measure What Matters.”
Many companies have adopted OKRs, including Shopify’s own Allbirds, and Netflix.
In “Measure What Matters,” Doerr writes about “Management by Objectives” (MBOs). Grove based his theory of OKRs on MBOs, the invention of Peter Drucker. Interestingly, Grove’s original name for OKRs was “iMBOs,” the “i” standing for Intel. However, Grove’s work on objectives demonstrated key differences from MBOs. Grove always mentioned objectives in relation to key results, a term he may have coined himself.
Doerr discovered an appropriate acronym based on Grove’s lexicon, OKRs or objectives, and key results.
A key difference between MBOs and OKRs is that the latter are more frequent, occurring quarterly instead of annually, and divorced from compensation.
As a famous story goes, Doerr introduced OKRs to Google’s founders (Larry Page and Sergey Brin) around a boardroom pingpong table in 1999. He presented the following slide,
Google set its entire company strategy with Doerr’s management framework. Suffice to say, he got the job.
Why Use OKRs?
Objectives and key results promote engaged, productive day-to-day decisions. They bring every collaboration and conversation back to the single-most-important question: Will this step get us closer to our objective?
OKRs are the secret behind aggressive growth at the likes of large companies like Intel and Google. These and other successful companies have made significant strides simply by aligning individual and team goals with company objectives.
Because OKRs are highly specific and measurable, you can quickly evaluate how well your objectives were executed at the end of one work period to make adjustments for the next one.
The more time you spend crafting OKRs, the easier it becomes to define roles and get your entire team in sync. And the more in sync your team becomes, the more aggressive your goals can be.
How to Create OKRs
By the time Larry Page and Sergey Brin invented Google, there were already at least eight popular search engines to come about in the late 1990s. So what turned Google from a scrappy startup into a polished tech giant? It wasn’t just an idea but the execution of the concept.
Larry Page, on Google’s success, “OKRs have helped lead us to 10x growth, many times over,” Page wrote in John Doerr’s 2018 book Measure What Matters. “They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable.”
Andy Grove’s OKRs catapulted Google from a $0 company to a trillion-dollar company.
How to Create OKRs
Step #1: Set Rules
OKRs are meant to be flexible and shouldn’t be carried out rigidly. Failure to deviate from the prescribed process can be a death sentence to your plan.
The following few rules define how goals work within your organization. Consider the elements of cadence, check-in process, and creation.
Cadence: How often do you set goals? OKRs are meant to be quarterly and not based on compensation. Setting goals more frequently allows you to move with the fast-changing nature of your company.
Check-in process: The schedule you set to update and review progress made. The timeline depends on what works for your organization. For example, bi-weekly check-ins may be too much, but quarterly check-ins may be too little. Again, find what works for you and your organization.
Creation: OKRs are top-down strategies with leaders setting objectives and key results. However, perhaps your organization benefits better from a bottom-up strategy where individuals set both objectives and key results or a hybrid strategy where leaders and individuals work together.
Deciding what model works best is a case of trial and error. Try out different methods and discover what works for you.
If you need help, Jell is a great tool to help your teams establish, track, and meet their goals.
Jell’s own OKR software helps you and your team quantify performance, which is vital to achieving OKRs. With it, you can:
- Set goals and goal frequency at every organizational level and see them in one spot.
- Track the progress of each goal and share those results with your team all in one place.
- Avoid setting goals and letting them fall by the wayside side by showing your progress using daily linked tasks, updated metrics, and comments.
- Regularly review your goals and track their results by recording their performance.
Learn how to get started with OKRs in our video below:
Step #2: Create company-wide objectives
Once you have a few basic rules in place, you’re ready to move on to company-wide objectives.
Remember the OKR framework: I will [objective] as measured by [key result].
These company-wide objectives are foundational to your strategy over the next year. They’re top-level activities leading to the success of your goal. One idea? Crowdsource from stakeholders across your organization, then refine them by analysis (why is this the objective? What are its strengths? weaknesses?).
When crowdsourcing, limit your sample size to control output; otherwise, you’ll end up with too many cooks in the kitchen.
Examples of company-wide objectives:
All objectives should be measurable and attainable. At the end of every goal cycle, you should conclude whether or not each objective was met.
Step #3: Company-wide key results
Next, you need to decide how to track your progress toward your goals. These are your key results.
For key results to work, they have to be SMART:
- Specific: Objectives must be highly detailed, right down to percentages, dates, and dollar signs.
- Measurable: OKRs must be rooted in data to measure progress easily.
- Attainable: Objectives should be realistically achievable in the short term—quarterly, not annually.
- Relevant: For OKRs to be successful, they need to apply (and be visible) to every member of your team.
- Timely: If your key results aren’t relevant to weekly (or even daily) discussions, your team is going to have some difficulty working toward a set goal date.
SMART works because it’s precise. Specificity gives you and your team a clear direction to reach your goals on time. Here’s an example of a vague goal versus a SMART goal:
Vague goal: “I want to improve my employee retention.”
Okay, that’s great, but how can we make this more specific?
Specific: Employee turnover will improve by 20% over the next 120 days by putting out surveys for existing employees, creating better training modules, and scheduling one-on-one meetings with each employee to understand their challenges.
Measurable: Employee turnover will improve by 20% over the next 120 days.
Attainable: New training and one-on-one meetings allow new and existing employees to understand better company procedures and policies and air their grievances with me.
Relevant: Outstanding employees will receive a monetary bonus, and below-average employees will be given training for encouragement and learning.
Time-bound: This will happen in the next 120 days.
Both goals are the same, but one is straightforward.
Measure your success once the period is over, and define what success means. Come up with a plan for failure. If you fail this quarter at delivering a goal, what contributed to its failure?
Step #4 Set key results for teams and individuals
OKRs use a top-down approach, so your company objectives must flow down through the organization to guide the work of smaller teams and individuals.
Sometimes, small teams and individuals rarely receive goals or feedback from higher-ups. This leads to frustrations and discontentedness within the lower-level employees. Employees want to come to work and know-how their work contributes to the overall success of an organization.
An easy way to start creating key results for teams and individuals is to use the above hybrid approach where both the top- and bottom-level employees contribute. Top-level teams set the company objectives, and lower-level teams set the key results. Allowing teams to set their key results grants them a deeper understanding of the process.
Step #5 Track and analyze
Identify key programs and projects you and your team will work on to achieve your objectives.
Setting goals focuses priorities across an organization. Teams and individuals know what needs to be done and when it needs to be done. Also, tracking goals shows real-time results of goal progress. If progress is falling short, it allows you to reassess.
That’s where Jell comes in. Jell allows you to set goals at any level of an organization. You can set the cadence: bi-weekly, quarterly, annually, and view them all in one place. Connect your company’s objectives to your key results.
Finally, analyze your processes to improve upon them. Work isn’t finished once a box is ticked off. In Jell, you can quantify a process and view your results.
Review this past cycle: what worked instead of moving on to the next cycle of objectives? What didn’t? What goals were met? Which plans fell short?
Failing to hit all of your KRs isn’t the end of the world. The key is in recovery. Pick yourself up, dust yourself off, and refine your process to breed success in this next cycle.
Now that you understand the tremendous value of OKRs, you can make them work for your team. But unfortunately, you have no idea where to start, so we created a free OKR template.
How to Use Stretch Goals with OKRs
If you plan to incorporate stretch goals into your workflow, using them with OKRs is a great approach. Typical usage of objectives and key results use stretch goals and OKR scoring to keep people motivated to reach higher goals.
As we said in the introduction, the sweet spot for OKRs is 60-70%. Knowing this, how can you make goals stretch?
Setting Stretch Goals
As with any approach to business, you’ll find a suggestion by experts on how to apply their practice to your company, but after testing, you’ll see opportunities to improve within your organization. So you’ll make it your own. This is how it works with stretch goals as well.
Here are two approaches we’ve seen:
Major Stretch Goals: These are lofty, big, and hairy goals that require major improvements, such as Southwest Airlines reducing gate time to 10 minutes when industry-wide it was 60 minutes. This application would be a great example of using OKRs because several key results would contribute to the objective. However, scoring could be an issue, primarily if/when the main goal is not achieved.
This stretch goal would also have to be broken down over several quarters, as it isn’t likely achievable in three months. However, it’s important to note these goals come to mind when people mention stretch goals, though perception and application vary.
If you are interested in creating your own stretch goals like this, HBR has a helpful flowchart for deciding whether stretch goals are a good fit for your company.
OKR Accurate Stretch Goals: These goals work perfectly for use with OKRs because you pick a good goal for OKR scoring 60-80% and use the top goal for your stretch. For example, if you are comfortable getting 700 new users in a quarter, then a bigger goal would be 1050 users. This stretch goal can be derived from a formula of comfortable goal plus 50%. Or 700 + 50%. Again, this is a guideline, and you should apply these in a way that motivates and inspires your team.
Examples of OKR Stretch Goals
- Walmart’s environmental plan to reduce prices for green items. In this example, the goal itself will take years to accomplish. However, since more people shop for greener products to benefit the environment, Walmart will make changes in the products they use to create items and the relationships they depend on to provide the items commonly purchased.
- Aldi, the grocery store chain, promised to remove artificial ingredients from products. This is another example of a widely known company taking consumers’ wishes to heart. It will be an impressive achievement when they can accomplish this, and it will be a significant win for health-conscious shoppers.
Of course, your own stretch goals can be more appropriately created based on the size of your company. For instance, you might want to offer remote work options for everyone at your company, provide better benefits for a wellness push, or go for high growth percentages on user signups. The intriguing aspect of stretch goals is that you can make them as big as you want or keep them realistic for your team.
Either way, we are interested in hearing if you succeed and what you learn because you’ll have a lot to derive from the results no matter which way you go.
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Stretch Goals: Frequently Asked Questions (FAQs)
What does OKR stand for?
It stands for Objectives and Key Results.
What’s the difference between OKRs and KPIs?
KPIs are key performance indicators for team projects and initiatives, whereas OKRs are the framework for setting and achieving goals.
Teams can benefit from both because some KPIs make great KRs (the KR in OKR).
KRs are metrics to measure the progress of the OKR. They can be quantitative, involving numbers, or qualitative, involving quality.
KPIs are quantitative metrics to measure initiatives against results. So, if you have a quantitative KR (“Hire 2 new sales personnel by February”), then you can use KPIs to support that goal, as long as you also connect the goal to your company objectives.
How long can it take to implement OKRs?
It can take two to three quarters before your team familiarizes themselves with this typical goal-setting process. Typically, objectives are set as quarterly goals, but you can adjust the timeframe to better align with your business goals.
Who should lead our OKRs?
Ideally, a product manager or a team lead should lead OKRs.
How do I know when OKRs are successful?
To be considered successful, companies should have at least 70% of their OKRs for the quarter (or whatever period you set). If your company fails all of its goals, chances are they were too complicated. If you achieve all of the goals, they may have been too easy. 70% is the sweet spot.
How do I create OKRs for something that’s not measurable?
OKRs are meant to be measured. If possible, try to create metric-based goals so you can track if the goal was achieved or not.