Last week I gave a quick over view of Objectives and Key Results, or OKRs (Check it out here). In short, OKRs are a way of taking big ideas and goals (the Objective) and reducing it down to a few key measurable benchmarks (the key results). John Doerr describes the formula for OKRs as, "I will do ______, by achieving _____." For example, I will provide customer service, by achieving a repeat purchase rate of 65%. If I achieve that key result, then it means that I'm accomplishing my goal of providing great customer service. OKRs help break big ideas into measurable actionable steps.
This week, I want to take this idea of OKRs and expand on it some more. This week I want talk about Nested OKRs.
Some Objectives that we want our companies want to achieve are big. Really big. And some of our companies are big. We've got multiple departments each made of multiple teams of individuals. How do we translate these grand objectives into day to day activities? That's where nested OKRs come in.
So lets say you and your company have the objective of expanding your customer base. That's a big and fuzzy goal. How do we know if we've achieved it? Our first key result could be "30% of our orders for the next year will be from new customers." Great! Now we've got a measurable result to shoot for. Twelve months from now, we should be able to look at our results and see whether we've made it or not.
Key results help our companies create strategies for achieving them. This is where we start nesting our key results. So if the company wide key result is an increase in first time customers, then we start coming up with strategies to make this happen. One of those could be for the marketing department to expand brand awareness. If you're thinking that sounds like another objective, then you're right on the money.
So we start the OKR process over again. The marketing department's objective is to "expand brand awareness." So they figure out one of their key results would be having increase in traffic to the website by %20 in Q1. The marketing department comes up with strategies to make this happen and one of them is to use social media to drive traffic to the website. This, of course, becomes the next objective for the social media team.
This cycle of Objective to Key Result to Strategy to Objective can be repeated all the way down the the individual. The person working within the social media team could be tasked with the key results of posting five pieces of content to the companies Instagram account every week. This is done to achieve his objective of increasing engagement on Instagram, which helps achieve the social media team's objective, which is nested within the marketing department's objective which is a part of the company's overall objective. It's OKRs inside OKRs inside OKRs.
These sort of nested objectives are really powerful for your team. They help everyone see exactly where the fit in the process of the company's overall direction. They can take big objectives that can look overwhelming and break them into smaller activities that can easily be managed and accomplished.
Nested OKRs are how our companies can take big goals and share them across our entire organization by getting everyone involved.
Next week we'll be, looking at what happens when we achieve our key results, but they don't seem to be helping us obtain our objectives.