Introducing OKRs in your product team

A lot of companies still use OKRs nowadays to align their teams and to create a company-wide focus. When introducing OKRs in the product team, there are some points that you should know about. I have been through my fair share of OKR introductions in product teams. This is why I would like to share some of my experiences paired with theory from books.

Terminology

OKR means “Objectives and Key Results”. It is a tool to create alignment and focus within a company. It has been developed by Andy Grove. He introduced OKRs during his tenure at Intel and also wrote a book about the technique. It’s called high output management, you can order it here if you are interested.

By “product team” I mean a cross-functional, self-organized team which consists of a product manager, product designer, and 4-10 engineers. Marty Cagan also uses this definition in his book INSPIRED – How to create tech products customers love. In my opinion, one of the best books to read for a product manager. If you don’t have it yet, get a copy! Also, Spotify uses a similar concept of product squads. If you haven’t heard yet about the Spotify engineering culture, you should really check it out here.

OKRs

There are a few things that need to be done right on a company level to ensure an efficient introduction of OKRs in the company and later in the product team.

• The objectives should be goal oriented and qualitative
• The key results should be quantitative and measurable
• The measurement of the results should be done in business value and not output. You can literally have 1000 hours and 4 new apps of output but the business value might be 0 USD because none of what you have built is needed by any customer.
• It is important that the product team has a team objective that it focuses on. It can’t be that members of the same product team have goals that contradict each other. This is a bit different than in the rest of the company as other teams don’t act as one agile team that generates releases.
• On a company level you need to agree how often you will set OKRs and review them. In most of the companies where I worked this has been every quarter year.
• It is also important that you regularly review the progress on the OKRs. On a company level, a summary in form of a dashboard is enough. Everyone should be able to update the status on a weekly basis. For example by using red, yellow and green to indicate if you are optimistic, just on track or there is a high risk to fail.
• Within the teams, you should do a quick weekly review where you address issues if you think that an objective can’t be reached.
• If a person or a team failed really badly, someone should hold a retrospective meeting with them. This meeting should not be about blame but about why the outcome was like this. It could be for example that when the objectives and key results were set at the beginning of the quarter, there wasn’t enough data to make a good estimation.

OKRs in the product team

It is important that the OKRs of each product team are contributing to the company OKRs. By defining OKRs per product team you can also check and avoid redundancy. Often product teams act as separate entities that are working on a large part of the whole product and therefore it is important that each team understands how they contribute to the company objectives.

You should avoid that the members of your product team have other goals which are set by their functional area. As mentioned before, a product team consists typically of a product manager, product designer, and engineers. Imagine if those actors would have separate OKRs from their functional role. For example, the engineers are working on increasing test coverage and the designers plan a redesign. This would mean that within the product team you might have conflicting priorities. Because of this, it is important that you focus on the objectives on a product team level.

Examples of good product OKRs

To give you a feeling of how good product OKRs might look like I will make some examples here.

For a fictional company, let’s assume that the company OKRs for the next quarter are:

1. Increase number of registrations (Key result: 10’000 registration per month)
2. Roll out new branding company wide (Key result: 80%< of respondents in a marketing study associate the new branding with the company)
3. Increase average yearly customer value (Key result: Average yearly customer value is 99< USD)

The product OKRs that support the company goals could look like this:

1. Implement referral feature (Key result: 500< completed referrals per month)
2. New branding is implemented in the product (Key result: Less than 20% of users use the “switch back to old design” function)
3. Extend highest available product package or add new package (Key result: 30% of new users or renewals switch to the new package)

In his book “INSPIRED – How to create tech products customers love“, Marty Cagan wrote some useful chapters regarding goal setting. He also offers a lot of advice in other areas of product management. In my opinion, this book is a must-read for every product manager.

Final thoughts

If done right, OKRs are a very powerful technique to create alignment within the company and focus the resources on the important tasks. This can be important for startups that have a certain runway but also big companies can suffer large financial losses because of a lack of focus. Poor implementation of OKRs can cause frustration for the employees and unnecessary bureaucratic overhead. Therefore it is important to take time during the process and really think it through to ensure a successful implementation.

Read our blog post regarding the typical reasons for product failure if you want to know more about what mistakes to avoid in your product organization.