What are OKRs and how can SMEs use them?

Published on 6/2/2022 by Tessa Anaya

Having clear goals and measuring performance against these objectives are vital factors in running a business. This is where goal-setting frameworks like OKRs come into play. In this article we’ll explore what OKRs are and provide some OKR examples.

What are OKRs? Business leaders agreeing upon set goals and targets

There’s a maxim in business that says ‘If you can’t measure it, you can’t manage it.’ 

Small to medium enterprises (SMEs) have no shortage of data in and around their business, but choosing the right metrics to guide growth is the difficult part.

In this article, we look at a business management framework that is growing in popularity and how objectives and key results (OKRs) are replacing key performance indicators (KPIs) in some organizations.

We also explore how SMEs can use OKR software to track and measure business performance.

What are OKRs?

OKRs are a framework for helping organizations set and meet their goals. They define broad objectives and the key results required to meet these objectives. The objective is the goal, and the key results are the things we can measure that tell us whether we have met the goal. 

OKRs can be used at all levels within a business. It’s possible to apply them to an entire company, departments, teams, or individuals.

Sounds simple enough, so let’s look at an example. OKRs are often written using a formula with one objective and 3–5 key results that look something like this:

OKR examples for SMEs

Objective: Make our business more sustainable

– Key result 1: Ensure 80% of packaging is recyclable – Key result 2: Reduce plastic use by 50% – Key result 3: Request data on carbon footprint from all suppliers  – Key result 4: Adjust pricing to account for carbon-neutral last-mile – delivery

Objective: Become the #1 name for high-end car care in our city

– Key result 1: Open three more locations by end of the financial year – Key result 2: Restructure services to focus on premium offerings – Key result 3: Establish partnerships with luxury dealerships

Objective:  Improve our online booking process

– Key result 1: Update website to match current branding – Key result 2: Integrate online booking platform into website – Key result 3: Set up ad campaigns (online and print) – Key result 4: Shift % of bookings to 30% phone, 70% online – Key result 5: Achieve 80% positive feedback on new booking process

The objective sets the direction of travel, and the key results form the measurable milestones that ensure the company sticks to the path and can track its progress.

Why the buzz around OKRs right now?

OKRs have been around in various forms since the 1980s. They first became popular at Intel in the early under its then CEO Andrew Grove. John Doerr, an Intel employee, then took the concept to Google in the late 90s, where they helped the company expand to the giant it is today. Google founder Larry Page has said:

‘OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.’
Larry Page – Google founder

This quote is from the foreword of Doerr’s 2018 book about the subject, Measure What Matters, and since then, many businesses have adopted OKRs in their own teams. In a 2021 article, Gartner Analyst Aapo Markkanen noted that the framework was ‘​​ highly impactful, under the radar, and trending up.’ Indeed, Gartner client enquiries about OKRs increased 900% between 2019 and 2021.

Markkanen highlights aspects of today’s business where OKRs shine, including distributed teams, the rise of agile working practices, and a focus on product. Because OKRs have found so much success in companies that focus around a product (like Google), companies that want to digitally transform have adopted many of the same practices, including OKRs. At the same time, in increasingly agile organizations, OKRs can function as the ‘strategic fabric that allows different departments to respond to changing circumstances faster than they otherwise could’. This extends to the still new world of remote work, where having clearly defined, simply articulated, easy to measure goals provides unity for distributed teams.

How do you measure OKRs?

There are several ways to gauge whether a key result has been achieved. Sometimes the answer will be a simple yes or no, and sometimes there will be a figure attached, so teams can see to what extent they have fallen short of or exceeded a target.

Failing to hit an objective is not the end of the world. In fact, OKRs are designed to stretch an organization beyond business as usual, and if a team were meeting 100% of its OKRs, that would suggest the OKRs aren’t ambitious enough. A success rate of around 70% is considered a good benchmark.

Organizations often apply a traffic light system to their OKR scoring. 0-30% indicates a failure, 30-60% shows progress but again shows a failure to complete a result, and 70% or above shows success.

How does OKR software work?

Even small businesses that embrace OKRs may have multiple different objectives in place at a given time. To ensure that these support each other, don’t overlap, and are accurately set and monitored, a business may want to consider OKR software.

These tools include features such as customizable templates, strategic planning tools, and goal setting. They can integrate with other solutions like accounting software, project management software, and HR software so that the OKRs are informed by the vital information in your business. OKR solutions also include dashboards, reporting functions, and alerts so that managers can keep track of progress and ensure that their teams are all working towards their various OKRs.

Why are OKRs a good fit for SMEs?

OKRs work in organizations of any size, from giant enterprises to single-person startups. People can even use them in their personal lives, too. However, there are a few good reasons why SMEs might find them beneficial:

  • Simplicity. OKRs are expressed in plain language and can be measured in a way everyone understands. In a small organization, employees often have to fulfill multiple roles, so management and HR functions get squeezed in alongside the day-to-day. OKRs make it easy for people to stay focused on the direction of the business while keeping on top of their job.
  • A sense of direction. For some small to medium businesses, simply existing is considered a success. Once they survive their first year, it can be hard to know what to do next. OKRs help businesses understand their purpose and provide the impetus to grow.
  • Everyone on the same page. Even within small organizations, it can be easy for individuals to go off on a tangent. Often, this is because the company’s direction isn’t clear. If organizational objectives are transparently communicated through OKRs, there can be no excuses.

SMEs can start small with OKRs, applying the framework to individual projects or teams to test the approach. If it works, it’s not difficult to expand it to other parts of the business.

Looking for OKR software? Browse our catalogue.

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

Tessa is a Content Analyst for Capterra, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.

Tessa is a Content Analyst for Capterra, delivering software-related insights to local SMEs. She was featured in the Globe and Mail, La Presse, the Financial Post, and Yahoo.