Why use OKRs?
The day-to-day activities at a startup can be pretty chaotic. One moment you're building a feature, next you're on a demo call, 30 minutes later you're writing a blog post.
A goal-setting framework like OKRs can bring a lot of focus to teams that are still in the early-stage of their journey. It's an effective way to communicate priorities, and it can also unlock a lot of creativity by allowing teams to treat projects as bets that we make to achieve our goals.
In this post we'll see how teams can set OKRs for their startup, along with some examples to help you get started
How to write OKRs for Startups
Step 1. Understand the difference between OKRs and Projects
Before jumping into the OKRs process, it is essential to understand the difference between Objectives, Key Results, and projects:
- Objectives: what do we want to achieve next quarter?
- Key Results: how are we going to measure progress?
- Projects: what are our best bets to get there?
Having this set of questions in mind will help you ensure that you're not mistaking projects for Key Results or Objectives.
A good Objective should be inspiring and easy to understand by anyone in your org. You can be more specific in the Key Results, but the Objectives should help every function understand the current focus and how they can contribute.
A good Key Result should follow the rules of the SMART framework. In particular, it should be relevant to its parent Objective, measurable through the quarter, and time-bound. A good test is to ask, "would we do things differently if this KR goes off-track?". If the answer is negative, then you need to refine your OKR.
Finally, your projects are the things that will move the needle on your Key Results. They're bets that you make with the team. Some will work—double down on it. Some will fail, and it should be okay to stop and move on to the next idea.
Step 2. Narrow down your focus
The next step is to pick the right focus. One tool that can help here is the AARRR framework. This framework divides your customer's journey into 5 stages:
- Acquisition: how many people find out that you exist?
- Activation: how many of them sign up for your product and become leads?
- Retention: how many leads come back to use your product again?
- Referral: how many users share your product with others?
- Revenues: how many users end up paying for your product?
Teams that are just getting started should focus on the Retention and Activation stages of the AARRR funnel (in that order).
Are we solving a real pain for our users?
Is our product sticky?
Do we have enough insights from the user?
How easy is it for people to get started?
First, you want to make sure that people stick to your product and come back to it. It's okay if you need to set people up manually at that stage, or if you don't have the best onboarding. It's far more important to know that people are happy with the core product experience first.
Then, you can look at Activation and make sure that it's easy for people to sign up and get started with your product. Don't waste time optimizing your acquisition channels until your product is sticky enough. You'll end up losing a lot of potential users otherwise.
Step 3. Write your plan
Once you've narrowed down your focus, you can start writing your OKRs draft. Agree on 2-3 Objectives before diving into the Key Results. You'll see some examples below, and here's a guide about writing OKRs if you're just getting started.
Some of your objectives will be hard to achieve within a quarter. This is often the case when building core features. So what should you do? The answer is to find leading indicators of success.
You might not be able to charge your customers today, but you can still ask your users if they'd pay for it. You might not be able to onboard users yet, but you can still let people join a waiting list.
Make sure that you're not in the dark for too long. Good OKRs should help you raise your confidence every week.
Examples of Startup OKRs
OKRs to build a successful MVP
You'll notice that the example below do not mention any features. Instead, the MVP OKRs focus on the impact that said features should have. Keeping track of active users and satisfaction is an easy to make sure you'll build the right things.
Build a successful MVP
We have 100 weekly active users
Achieve a NPS score above 40
Secure 5 paid customers
OKRs to get a successful product launch next quarter
It can be hard to write OKRs for something that has yet to be launched. But, you can still think about what would make that launch a success.
Be careful not to turn your KRs into a checklist of things to prepare for a launch. Of course, you can have action items under your Key Results, but your Launch OKRs should focus on the 2-3 things that will raise your confidence for the launch
Be on track for a great launch next quarter
Secure 10 press articles with known publications
Enroll 5 influences to boost our profile on social media on launch day
Build a mailing list of 1,000 people
OKRs to achieve product-market fit
You can use the Product-Market Fit survey as a proxy for success. It's a simple questionnaire that will help you understand how critical your business is for your users. We're also pairing retention and growth metrics together to make sure that we have a healthy growth.
Achieve product-market fit
Get a 40% score on our Product-Market Fit survey
Increase 4-month retention of new users from 10% to 45%
Increase the number of weekly leads from 25 to 100/week
OKRs to secure seed-funding
If you're looking to raise some funding, the best is often to chat to VCs and ask them what metrics they'd like to see. Then you can simply turn these into a set of OKRs for funding. The metrics below come from P9's SaaS funding napkin.
Be on track to secure a seed round
Reach $200k ARR
Show a 3x year-on year revenue growth
Show a 25% month-on-month leads growth
OKRs to turn customers into advocates
Having true fans is a great way to get organic growth through word of mouth. But being in a position where customers recommend your product will take intentional efforts.
Customer advocacy OKRs will help your team understand where to focus their attention.
Our customers are championing us
Get 100 reviews on G2 or Capterra
20 leads/week are coming from our referral program
Publish 10 customers success stories
Tracking your OKRs
Knowing how to write good OKRs is critical, but without good tracking in place, the OKRs will fade away and focus will be lost.
It's not just us saying that:
- Peter Kappus writes that "check-ins are the most important part of OKRs".
- Felipe Castro cautions people not to let their OKRs turn into New Year's resolutions.
- Christina Wodtke tells us that "cadence is probably the single most important thing".
The easier it is for a team to have weekly discussions around the OKRs, the better they'll execute. Here are a few best practices for tracking OKRs.
1. Do weekly check-ins
Quarterly OKRs should be tracked every week to be effective. Without a continuous reflection on progress, your OKRs won't be much different from having KPIs.
The check-ins process can be automated with a platform like Tability that takes care of reminders, and distribute updates to the teams.
2. Keep track of your confidence
Good progress updates should help everyone understand how far we are from our goal, but also how confident we are in achieving it. You can use a simple red/yellow/green color coding to indicate your confidence.
3. Make trends easy to see
Lastly, it's important to look at trends to avoid false positives. It's not rare for a team to have a hot start and then slow down mid quarter. This will be hard to see unless you can look at progress trends for individual Key Results.
What other metrics can you use in your startup?
Now that you've got good Objectives, it's time to pick some key results and finding good metrics that work for your team can be tricky. Lucky for you, we've laid out all the best success metrics for your teams to use.
Here are a few to get you started:
Net Promoter Score (NPS)
NPS is seen as a general indicator of happiness for your customers. It measures how likely your users are to recommend your product.
Product/Market Fit score
The Product/Market Fit survey asks your user how disappointed they would be if your service no longer existed.
Daily/Weekly/Monthly Active Users (DAUs, WAUs, MAUs)
How many people are using your product every day/week/month.
What's the percentage of users that come back to your product every day/week/month.
What's the percentage of leads that turn into successful users?
How do people interact with your content (it can be anything, from visits to specific sections to conversations in Intercom…)?
Monthly Recurring Revenue
How much revenue is generated every month by existing customers?
How many users sign up for your product?
Got an objective in mind, but not sure how to get there?
This AI can create a detailed strategy with all the steps to take to reach your goals.Free trial
Stop wasting your OKRs. Focus on the right work and accomplish your goals.