When looking at your OKRs, how do you know if you are doing well or not? People differ on what they believe is to be successful in OKRs, but Google famously marked somewhere between 60-70% as the sweet "spot" for Key Results.
Scoring lower may mean the organization is not achieving enough of what it could be. Scoring higher may mean the aspirational goals are not being set high enough. With Google’s 0.0 – 1.0 scale, the expectation is to get an average of 0.6 to 0.7 across all OKRs. For organizations who are new to OKRs, this tolerance for “failure” to hit the uncomfortable goals is itself uncomfortable.
Though there is some logic to the balance between goals being achievable and aspirational, there are some flaws to this approach:
If you're familiar with OKRs, you know there are two datapoints to every Key Result in OKRs. One way is that value progress, and the other is through confidence; usually shown as a rating of green-yellow-red or "On Track", "At Risk" and "Off Track."
Google would suggest that if your progress is at 70% it's on track. Mark it green.
However, the way we look at it, these two values should be separate from one another. There are scenarios where the human input of Confidence can be more informed than just the value of progress. Say if you haven't made progress but you know you have time to make it up, you might be confident in your goal despite lack of progress. Perhaps you are close to the goal, but you know your numbers will drop significantly later. These are things are known, but not reflected in the value alone.
In a sense, Confidence is far more important than actual value progress because it takes into account that value, plus so many other variables that our human input can properly analyze from.
This is why we created a Net Confidence Score (NCS). We borrowed the concept from another metric we track pretty closely for product fit called Net Promoter Score (NPS)–basically, NPS for your OKRs.
What NCS does is it takes an aggregated score of your confidence instead of your progress, so you can get an accurate view of how your team is feeling about the progress.
The forumula: % of Green KRs - % of Red KRs = NCS
This comes out to a scale of -100 to 100. -100 meaning 100% of your Key Results are in the red, 100 meaning everything is green.
As a manager or CEO you don't have time to look through all of your team's OKRs, and decipher a sense of the progress. NCS is automatically calculated and you can calculate the value across any set of Key Results. Now you don't have to evaluate each individual Key Result to see what's at that magical 60-70% range. Now you can see the whole picture in one metric.
This now allows you to scan across multiple teams and departments to see where you need to do that deep dive. The company as a whole also now can be valued at a single confidence level, which can tell you in an instant how confident your company is in achieving the set goals.
At Tability, we like to be a bit more generous about the grading than Google. If you achieve your goals, that's amazing! Go for 100%!
Whether you hit -100 or 100, there are simply lessons to be learned. This is a key aspect of OKRs that seems to slept on. If you're not reaching your goals, there shouldn't be a sense of failure. You simply need to take that information and apply it to future decisions. If your goals are too hard, adjust for bigger next time. Ift they're too easy, raise the bar next quarter.
One of the main values of doing OKRs is that it gives you transparency into your progress. One thing you might see is that you're not ambitious enough! Learning from them and iterating on them is key to growing and improving on your business.
Want to track Net Confidence Score on your OKRs? Use the formula above on any of your OKRs, wherever you're tracking them. The calculations are quite simple.
However, if you're looking for an automated way to track it, Tability is an OKR tool that calculates and tracks your NCS automatically so you don't have to calculate for yourself! Try it for free.