OKRs: A Process That Built Google

This technique can be used in any business.
This article is about one of the most powerful techniques for ensuring that your business keeps developing and moving forward.

The technique can be used in any business, of any size, and although you can use it if you don’t have any employees it is especially effective at making sure that all of the people in a business are working as one unit. The technique has been used at Google since it was a small business, and it’s called “OKRs” (Objectives and Key Results).

OKRs: a lesson in learning from the best

One lesson that all small businesses can benefit from is this:

All big businesses are simply small businesses that did the right things for the right amount of time.

Whoever the giants of your industry are, they didn’t start out big. They just made good decisions. Once you accept that, it’s easy to imagine that we could take the methods used by the most successful companies and successfully apply them to a small business!

In fact, this is exactly the approach we have used in writing our online training course, The Small Business Multiplier – in the course, we show small business owners how to grow their business by applying the tools and techniques used by the top 1% of businesses.

Modelling is a powerful tool.
Here’s another way to think about this: let’s imagine you’re skilled at cooking and you have a favourite recipe. The fact is that it doesn’t matter how many years you have spent refining your recipe: if someone were to come along and observe you, then document your actions exactly and learn them off by heart, they could produce identical results. This process is called modelling, and it’s one of the most powerful methods for creating a desired outcome.

In this case, the recipe is for extraordinary business growth and the chef is Google. One method that they have used since they were a small business is called OKRs – objectives and key results.

How Objectives and Key Results (OKRs) work

The ideas behind using OKRs to plan work and measure success are clearly explained in this video.

The video is around an hour long, but I highly recommend you watch it if you have time (along with everything else on the Google Ventures website – it’s a great source of knowledge).

For those of you who don’t have time for that at the moment, I’ll explain the essence of the system below!

First of all, this is a quarterly process. Not all businesses think of the year in terms of four quarters (January to March, April to June, July to September, October to December), but all big businesses do. Therefore, it’s time to start thinking that way if you’re not already.

OKRs are a way of planning what you want to happen in each quarter.

So, to begin with, before the start of each quarter you need to plan the major outcomes you would like to see in that quarter. These are your “Objectives”. You should have at most 4 of these. Some examples might be:
  • We will increase our number of active clients by 20%
  • I will reduce my monthly costs by £2000, without reducing quality of products or services
  • I will generate ten ideas for new products or services that my business could offer and launch two of them
If you think you can achieve everything in your OKRs, be more daring!
Each of your objectives should be ambitious, but not impossible.

A good way of judging whether they are appropriate is to look at your list and ask yourself “Do I think I’ll manage to do all of this?” If the answer is yes, then you need to be more daring! Ideally, you should feel as if you can achieve about 70% of what is stated in each objective.

After you’ve got your objectives, it’s time to establish what your “key results” are going to be. These are factors that will contribute to achieving your objectives. For example, let’s say your objective is:

“I will increase the number of active clients by 20%”

You should then come up with some activities that will contribute towards that – no more than five key results per objective. You can be creative here. The only rule is that all of your key results must be measurable.

For example, this would be a bad key result for the above objective:

“I will make our website look better”

Key Results must be measurable goals – you have to know when it’s done.
That’s not measurable! It’s too subjective. In other words, what you come up with might look good from your opinion, but bad from someone else’s.

If you want to improve your website, you should set a measurable goal. For example:

“I will change our website so that 80% of people rate the experience of using the site as 7/10 or better”

That’s totally measurable! You just need to survey a few people and get them to rate the usability of your site out of ten. Then you’ll know if you’ve done a good job.

Obviously, before you set that key result you should do a similar survey to find out what people currently think! If everyone already thinks it’s 9/10 then the key result is pointless.

Remember to be ambitious. As with setting objectives, you should feel like you can probably achieve about 70% of your key results.

Once you’ve set key results for all of your objectives, you should end up with something like this:

Objective: we will increase our number of active clients by 20%
Key result 1: Encourage 10% of our existing customers to recommend us to a friend or family member
Key result 2: Decrease our cost per acquisition, so that on average £50 of marketing spend wins one new customer
Key result 3: Test five new marketing channels and record the results

Objective: I will reduce my monthly costs by £800, without reducing quality of products or services
Key result 1: Using comparison websites, reduce variable costs (including mobile phone bills, vehicle insurance, etc.) by 10%
Key result 2: Renegotiate contracts with current suppliers to include bulk discounts, saving at least £400 per month

Objective: I will generate ten ideas for new products or services that my business could offer and launch two of them
Key result 1: Generate a list of ten new products or services that the business could offer
Key result 2: Conduct a survey of existing customers, to identify which two of the potential new products and services are most attractive to them
Key result 3: Launch two new products/services

Make sure your OKRs are written down somewhere, so that they can be used as a tool to keep you focussed and motivated.

Staying focussed

The greatest benefit of OKRs is that they allow you to focus yourself on the work that is most important to your business.

Having set your OKRs, you have decided what your most important goals will be during a three-month period. When you are about to start a task, you can ask yourself, “Does what I am about to do contribute to my OKRs?”

Reduce your focus down to a few key tasks.
If you’re spending your time on something that doesn’t relate to your objectives, then you have two options:
  • Stop doing it; or
  • If the work is truly important, turn it into an objective and some key results
The goal of all this is to reduce your focus down to a few key tasks and trim out any other jobs that are interesting but not urgent!

In this way, you will achieve high quality outcomes for the objectives that you have chosen to focus on. Anything else can be included in an OKR later on.

Linking multiple people’s OKRs together

In this article, I’ve tried to represent how OKRs can be applied to small businesses.

The video I mention above contains a great explanation of how multiple people’s OKRs should link together. Watch that video for more details if you are running a larger business!