When to use OKRs and when not to

No matter the initiative you’re working on, clarity on what success looks like is essential. There are multiple ways to achieve that clarity, including objectives and key results (OKRs) and product goals. But when should you use which method?

For a time, I believed OKRs were the solution for every challenge. As I progressed in my career, I learned that isn’t always the case. At times, OKRs can stretch teams too thin, leading to confusion instead of promoting collaboration. As it turns out, OKRs are not a magical solution that always guarantees alignment and clarity on achieving success.

In this guide, we’ll offer some tips to help you suss out whether to use OKRs and product goals for a given scenario and demonstrate how to measure success in either case.

When to use OKRs

I’ve worked with companies of varying sizes, ranging from a handful of employees to several thousands. The larger the organization, the more challenging it becomes to align everyone’s goals. Failure to address this issue will complicate collaboration, with teams often heading in different directions.

At one company I was a part of, we had about 300 employees spread across eight product teams. Before introducing OKRs, each department set its own goals, and product teams adhered to individual feature roadmaps.

Our disparate objectives led us to compete against one another rather than collaborate. As a result:

• Departments were not naturally inclined to collaborate
• Product teams had multiple dependencies but no time to support each other
• Outcomes at the end of the quarter were demotivating, leading to a decline in team morale

A significant shift occurred when management introduced OKRs. The top management would formulate the objectives, explaining their importance to the teams. The teams, in turn, would craft key results for each objective. Initially, this process was tiresome, but it allowed us to align and commit to key results, leading to a spirit of collaboration over competition.

My takeaway from this experience was clear: OKRs can steer teams in the right direction and encourage them to prioritize outcomes over mere outputs. I found this to be true with other similarly sized companies.

Factors that make OKRs effective include:

• The product is already available to consumers
• The business has achieved sustainability
• There are sufficient teams to address various objectives and key results
• The initiative is in the mature or maintenance phase (often referred to as “brownfield”)

When not to use OKRs

I’ve encountered just as many situations where OKRs didn’t work. In my experience with startups, for example, OKRs often fell short. Instead of aiding us, they sometimes caused confusion and hindered learning.

Here’s an illustrative example:

Before launching a product, I attempted to set up OKRs, following all the recommended steps. Along with fellow leaders, we crafted objectives and let teams determine key results.

Despite believing we were on the right track, issues soon emerged:

• Teams were unsure about prioritizing objectives, which led them to operate in isolated silos
• Every team tried tackling multiple key results at once, which stretched resources thin and hampered delivery
• We found ourselves stuck in a cycle of endless meetings in an attempt to align everyone, which only led to more meetings and less actual progress

Clearly, OKRs weren’t assisting us. In the pre-launch phase, the goal isn’t necessarily about clearly defined outcomes — it’s about progress and preparing a product for the market.

Situations where I’d advise against OKRs:

• The product hasn’t launched yet
• The product faces challenges in gaining market traction
• The company has five or fewer product teams
• The initiative is a completely new venture (“greenfield”)

Our solution was to abandon the OKRs. In a startup scenario, especially when aiming to launch a new product, the OKR approach proved too cumbersome. Instead, we set single, clear product goals.

Using product goals as an alternative to OKRs

As we’ve seen, with OKRs, team sometimes struggled with prioritization, leading to more debates and less progress. However, with product goals, our leadership was compelled to define one clear goal achievable within six to 12 weeks.

Our primary objective was straightforward: ensuring our target audience could efficiently operate our product. Leadership narrowed down the target audience to a specific segment, allowing the team to focus on delivering the necessary features.

The product goal approach resulted in:

• Reduced ambiguity
• More team collaboration, with fewer divisions into subgroups
• All team members working toward the most crucial goal

Measuring success with and without OKRs

With OKRs, measuring success is straightforward. You have the key results and can track your progress against them.

Here’s an example from a company I worked with:

Key result: Increase basket size by 15 percent compared to the previous year

However, with Product Goals, the measurement approach can vary. If the goal is outcome-oriented, it’s similar to OKRs. However, if it’s a binary goal (either achieved or not), then it requires some creativity in measurement.

Here’s a product goal from my experience:

Product goal: Allow customers to resell products they previously purchased from our shop.

This goal is binary: either customers can resell or they can’t. So, how do you gauge progress? A useful strategy is to ask: “What needs to happen for this to be successful?” For this specific goal, we determined the following metrics to track our progress:

• Number of customers registering to use the new resale feature
• Amount of products listed for resale
• Number of completed transactions
• Rate of repeat business

By focusing on these metrics, the team could initiate a basic solution, refine it, and eventually identify a broader target audience. Although our initial benchmarks for success were clear, we adapted our metrics as we progressed.

The primary distinction between OKRs and product goals lies in their application. With OKRs, you start with clearly defined objectives and key results. In contrast, product goals are more like objectives without predetermined key results. As you progress, you define the relevant metrics, ensuring flexibility to achieve the overarching product goal.

Key takeaways

• OKRs are more suitable for established and mature environments
• In situations demanding high flexibility, OKRs can introduce confusion rather than guidance
• Product goals may be more effective for products in the pre-launch phase or new projects
• Regardless of your chosen method, it’s vital to find ways to quickly gauge progress
• Stay adaptable. If a particular framework hinders progress, don’t be afraid to abandon it in favor of a more effective approach

Featured image source: IconScout