Objective-based product management is a process where a company creates and maintains a product based on specific objectives that the product is meant to achieve. This type of management is often used in companies that make software or other digital products, as it can be more easily amended or updated to meet the specific needs of the customer or user.
Product objectives and key results are a framework for setting measurable goals for a product. OKRs help guide decision-making and measure progress. Product objectives and key results can be tailored to specific products and teams, and can be revised as the product and team evolve.
What is an Objective?
Simply, an objective is the outcome or goal that a company or product team wants to achieve. It is important to make sure that objectives are specific, measurable, achievable, relevant, and time-bound.
- Clarify the specific goal or outcome
- Are concise and tangible
- Are action-oriented
Example: Launch an education series on OKRs to help product managers achieve their goals.
What are Key Results?
Key results are benchmarks toward the objective. They are measurable milestones that indicate progress toward the goal. They can be quantified or qualitatively assessed.
- Provide measurements of success for the objective
- Are often quantifiable product or business metrics (such as revenue, adoption, or retention) – but can be binary completion milestones
- May include specific milestones within the OKR cycle
Objective: Launch an education series on OKRs to help product managers achieve their goals.
Key Result #1: Pre-launch with 100 PMs on the mailing list.
Key Result #2: 40% of PMs complete the series.
Key Result #3: PMs rate satisfaction an average of 4.5/5.
Why is Objective-based Product Management difficult?
Objectives can be hard to adopt and follow because they require a detailed understanding of the product and its goals. They can also be time-consuming to set up and track. They are not a magical fix for teams lacking clarity and context.
Another challenge in Objectives and Key Results (OKRs) is setting the right level of objectives. The objective must be specific enough to be actionable yet broad enough so that the outcome can deliver value. It's a balance between being so prescriptive that the objective is a project, but not being so vague that a team misinterprets the guidance.
The key to making OKRs work is to track them regularly, using a cadence of check-ins. This helps to keep the company focused and make decisions to stay on track when they grow distracted.
There are five main reasons why OKRs can fail:
- Teams forget about their objectives
- Teams change their objectives halfway through the quarter
- Teams set too many objectives,
- Managers use OKRs to micro-manage their employees
- Everyone does their OKRs differently
Where did OKRs originate?
OKRs originated at Intel in the early 1990s and have since been adopted by a number of other organizations, including Google, Airbnb, and Salesforce. They are typically used by organizations in which employees are held accountable for specific results (e.g. sales or product goals).
Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs is a book about performance management system Objectives and Key Results (OKRs). The system is popular in the tech industry, but can be used in any organization.
The book is written by John Doerr, a venture capitalist who helped to introduce OKRs to Google. He describes how using OKRs can help companies measure progress and ensure that everyone is aligned on the team's objectives.
How to get started as a product leader
In order to achieve great things, it is important to set goals that are difficult but not impossible. This will require the team to bring their top performance and push themselves to reach the goal.
If the goal is too hard, the team may burn out and quit. If the goal is too easy, the company may become weak and die.
Identify your objectives
Your objectives are your top priorities. What are the top problems to solve the next quarter, half year, or year? Translate these problems into inspirational outcomes to align the business and team.
Departments and teams come up with their own objectives after you share the company objectives with them. Some teams are likely assigned objectives that product leaders identify as top problems to solve. Here are some tips:
- Every objective – team or department – aligns with the company objectives.
- Focus at each level, narrowing to 3-5 objectives.
- Objectives do not include business as usual work (BAU).
- All objectives are open to all employees.
Identify your key results
Key results are simply what needs to happen to complete the objective, providing a measure for how you will assess progress and impact. Here are tips for creating key results:
- Break the rules: some key results are binary – something just needs to happen in order to complete the objective.
- Assign 3-5 key results to the objective – keep it focused on the most important results and look for ways to merge measures.
- Teams create most of their own key results, reviewing with managers and product leaders.
- Like objectives, key results are open to all employees.
Determine your OKR cycle length
All teams should operate on the same OKR cycle. Most companies typically have two simultaneous OKR cycles: quarterly and annual. Annual cycles for long-term, thematic company guidance, and quarterly cycles are for team goals that adjust to new information or market changes.
Select an OKR SaaS Platform
To effectively share and track your OKRs, the company needs a place to store and share them. A dedicated SaaS Platform for OKRs is best for being transparent and adjustable in real time. You can easily set OKRs in Notion or use a dedicated tool like Productboard.
Nominate the OKR champion
For the OKR system to work, everyone at the company has to take part. Resistance and procrastination are likely to occur. You will need several cycles to build the organization muscle. It's useful to designate someone as the team or organization's keeper of the OKR cycle and update process.
Check in, score, reflect
Check in with teams on a weekly or monthly basis, updating and reassessing their OKRs. At any time, if they're no longer applicable, explicitly decide to modify or remove the OKRs as a team.
At the end of each cycle, score your performance for each OKR. Reflect on how you did and what that means about the goals you set.
What will you and the teams do differently next quarter?
The Power of OKRs
Focus, alignment, and tracking are the three superpowers of OKRs.
- Focus – OKRs drive focus by limiting you to the most important 3-5 objectives at a time. Be clear about your priorities and objectives; by limiting yourself to a few goals at a time, you can focus better on achieving them. Remember that you're making yourself unavailable to commit to anything else every time you decide on a goal, so pick your goals thoughtfully. Once you've decided where your attention should be focused, stick to those goals.
- Align – OKRs create alignment because OKRs are always public and objectives cascade from CEO to individual teams. This enables coordination and cross-team shared goals.
- Track – OKRs are always quantifiable, and at the conclusion of each cycle, you assess them. These ratings assist you in monitoring your progress and showing when you need to intensify a particular objective or reconsider it.
How to Score OKRs
At the conclusion of each OKR cycle, you evaluate and reflect on your OKRs. The wrap-up phase is made up of three parts: objective evaluation, subjective self-assessment, and reflection.
CFRs – Conversations, Feedback, and Recognition – are tools that managers and employees can use to implement a continuous performance management system.
This system allows for feedback to be given regularly, employees to improve throughout the year, and issues to be addressed as they arise.
Assign a score to each objective, combining the completion rates of its key results. Score on a scale ranging from 0.0 to 1.0, with 0.0 indicating no completion and 1.0 indicating completed.
- Green – 0.7-1.0, goal achieved
- Yellow – 0.4-0.6, made progress
- Red – 0.0-0.3, failed
Objective data is helpful, but it doesn’t tell the whole story. Both low and high numbers can conceal what is really happening if the measurement is incorrectly set. Balance objective scores with self-assessments and qualitative customer feedback.
Run reflection workshops as a team, asking:
- Did we achieve the objective(s)?
- What factors drove the success?
- What roadblocks held the team back?
- What learnings are applicable to the next OKRs?
Visualize your company's work on a single "board" to help with big batch planning, goal clarity, and understanding what is important.
A sample board for a startup – Seed to Series C – should have five swim-lanes:
- Revenue goals and business health metrics
- Workplace happiness
- The product roadmap
- Cross-department focus
The cross-department focus lane is where the plan is put into action and the organizational alignment is tested. This lane has one or two high level company OKRs, broken down into smaller chunks for individual teams and groups.