Lesson 1: Why should Product Managers use OKRs? 

If you’re looking to avoid being a feature factory and focus on outcomes, Objectives and Key Results (aka OKRs) are your secret product management weapon.

OKRs provide the boundaries or guard rails around a product roadmap and align the whole team around goals that support progress towards the product vision and ultimately, business success.

The “O” in OKRs stands for “Objectives”. This is the qualitative description of what you’re trying to achieve, for example, “Improve usability” or “Increase adoption”. It’s easy to understand, sets a clear direction, and helps the whole team understand what outcome they’re aiming for. An Objective can be thought of as a destination on a map, it helps answer the question “where do you want to go?”

While objectives are qualitative, Key Results (the “KRs” in our OKRs) are quantitative. They represent metrics with a starting value and target value (so they can be measured) and are timebound. They represent the change that you expect to see if the work you do is having the desired effect. For example, “Increase NPS from 7 to 7.5 by end of Q3” or “Reduce support tickets by 10% in the next 90 days”. Think of OKRs as a signpost with a distance marker. It helps you answer the question “How do I know if I’m getting there?”. 

When evaluating whether a key result is well-written or not, consider whether it is something you can influence, rather than something you do or can control. Defining a Key Result like “Write 10 blog posts” reflects an action you will take, so doesn’t work well as a way of measuring success. Defining something like “Achieve 1000 views of {blog post}” works well, as it’s something that can be influenced, but not directly controlled.

The difference between OKRs and KPIs

The acronyms of OKR and KPI are often used interchangeably, but there’s a big difference between them. While KPIs (key performance indicators) represent the overall performance of a business, OKRs do not – they are shorter-term and used for alignment around a goal, rather than as a way of measuring performance.

KPIs are often higher level and are an evergreen way of determining the success of the business overall – for example, you may have KPIs around revenue, churn, customer numbers, app downloads, or similar. While they are numbers that can change over time, they are not necessarily easy to affect in the short term and don’t reflect how successfully a particular person, department, or product is performing. More often than not, KPIs are lagging indicators and reflect the overall success of the business.

While similar, OKRs represent leading measures that can more easily be affected, with those effects accumulating over time to improve the business KPIs. By focusing on one or more OKRs in a limited period, teams can learn what works/does not work as they iterate, with each OKRs encouraging a sharper focus on a specific opportunity.

Let’s consider an example. A product team is responsible for building a mobile app that includes limited functionality for free and the option of a paid subscription. The overall business KPI is revenue – the more MRR from the app, the better the company is performing.

The product team has identified that users who complete their profile and invite family members are more likely to begin a subscription than those who do not. They define an OKR to align the team around encouraging the related usage patterns, on the assumption that if they can achieve their desired outcome, the overall business performance (measured in MRR) will improve.

In this example, the OKR is not a measure of business performance but does encourage the team to think about how they might encourage behavior that would result in higher revenue (which is the business KPI). There could be other OKRs that would do something similar, but by defining this OKR as the current focus, the team is aligned on a way forward and can work together to achieve it. OKRs should enable a blend of autonomy and alignment across functional teams. Find goals and initiatives that work together to serve a top-level objective.

Roadmaps and OKRs working together

OKRs and roadmaps work together in the best way when an extra element is added: Initiatives. Initiatives are an outline of projects to be undertaken, or problems to solve, where the team works together to make something happen which will, hopefully, affect the success of the OKR. With OKRs outlining the desired outcome, Initiatives reflect the activities which the team thinks will help them reach that outcome. 

Defining Initiatives on a roadmap and linking them to your OKRs helps you communicate how you’ll hit your objectives and solve problems for the business.

How does that work when considering our example? Well, for the product team, there are several options they have, hypotheses, or bets that they can make about how to increase the actions which lead to a subscription. One option might be to reward the relevant behavior. Another might be to highlight the functionality in-app so that it’s more likely to be found. For any given outcome, there are several options on how to achieve it.

This is where the roadmap comes in handy, as it makes it clear to everyone what the desired outcomes might be, and how the team is considering achieving them. If you have an initiative on the roadmap which doesn’t contribute to your OKRs, consider deprioritizing that initiative.With ProdPad, you can link your OKRs directly to your product roadmap, ensuring that you focus on the solving the problems that are most likely to help you achieve your goals. Check out the video below for more information.