Creativity loves constraints. It seems unintuitive — when we picture innovation in action, we likely picture blue-sky thinking and wild new ideas. But actually, most business innovation requires structure and direction to be effective.
One of the most effective ways to give your teams the structure to drive innovation is by using objectives and key results (OKRs). OKRs have been used by many leading companies such as Google and LinkedIn to drive their growth and innovation. OKRs create a framework for teams to effectively set goals and measure their progress. Used the right way, OKRs can inspire creativity, collaboration, and innovation across an organization.
Here, we’ll cover how OKRs contribute to company innovation — and how managers and leadership can leverage OKRs to inspire their teams and drive innovation within their organizations.
What are OKRs?
Coined by Intel’s Andy Grove and later popularized by Google in the late 1990s, OKRs are a goal-setting framework where you break down your goals into objectives (the desired outcome) and key results (the actions that will lead to the desired outcome).
The OKR framework gives a structured approach to goal-setting, enabling individuals, teams, and businesses to define strategic goals and identify the specific metrics for achieving them. They also set out a map to track and measure your progress toward those goals.
Objectives are concise, qualitative statements of what you want to achieve and by when. They might be “roofshots” (challenging but achievable) or “moonshots” (hugely ambitious), but they present a picture of what success will look like.
For example, an organizational objective might be to “achieve Great Place To Work Certification® by the end of the year.”
Key Results are the concrete, quantifiable steps toward achieving those objectives, the measurable outcomes that will demonstrate progress. They are graded on a scale from 0 (no progress) to 1.0 (achieved), and the average score of your key results gives the grade for the corresponding objective.
For example, one key result to contribute to the objective above could be “Increase our average eNPS (employee Net Promoter Score) to 9,” since a high eNPS indicates that you provide a great employee experience.
Put simply, objectives express where you want to go, while key results lay out the roadmap for how you will get there.
How do you write an OKR for innovation?
To drive innovative solutions, your team’s OKRs should be ambitious, transparent, and measurable.
OKRs work most effectively when they align with each other at every level of the organization: company, department, team, and individual. Individual OKRs feed into team OKRs, and team OKRs contribute to department OKRs, which help to achieve the company OKRs.
Whether you’re a product manager in a startup or a leadership team designing a new business model, innovation OKRs help you bridge the gap between where you are now and where you want to be.
Here’s how to approach writing effective OKRs for innovation:
Write your objective: What do you want to see happen?
- Consider how your objective will add value to your organizational goals and priorities in the years ahead, and determine where you need to make progress.
- Ask yourself what change you want to see in your team or business. Picture what the successful result would look like.
- Be ambitious but realistic. For innovation OKRs, you need to set objectives that are not too easy to achieve — but are still achievable.
- It’s wise to make your objectives SMART — specific, measurable, achievable, relevant, and time-bound.
- Write your objective as a single qualitative statement.
Write your key results: What measurable outcomes will make that happen?
- Ask yourself what specific actions you need to take to bridge the gap between your current position and your objective. Aim for 3 to 5 key results for each objective.
- Prioritize actions by using weighted key results. For example, give each result a percentage score for how much it will contribute to the objective.
- Consider the cadence cycle of your OKRs. Quarterly OKRs are the most common, but you may have shorter- or longer-term objectives, where monthly or annual OKRs make sense.
- Again, ensure your key results are SMART.
- Write your key results as quantifiable statements that clearly indicate whether the objective has been achieved.
Digital tools like Lattice can make it easy for teams to set, share, track, and reflect on OKRs. To help write your OKRs effectively, download our workbook on setting meaningful and effective OKRs.
3 Ways OKRs Drive Innovation
You might be tempted to think that if you score a perfect 1.0 on all your OKRs, you’re doing great. However, if you’re getting full marks on all your OKRs, it may be a sign that you’re not pushing yourself to innovate. To be truly innovative, you may need to set more ambitious goals.
That said, OKRs don’t all need to be moonshots. OKRs are most effective when you set stretch goals, pushing your employees and teams to challenge themselves beyond their comfort zones, without overwhelming them. It encourages them to take realistic, worthwhile risks — which can open the door to innovation.
Here are three ways OKRs drive innovation.
1. OKRs get teams aligned.
If your employees aren’t aligned on your team and organizational goals — or on how their daily work contributes to realizing those goals — it creates a disconnect that can hinder innovation. After all, you likely don’t want people innovating wildly in all directions. You’re hoping that they’ll harness their creativity to create new solutions to the problems specifically impacting your market, customers, and prospects.
OKRs get everyone on the same page. They create alignment on what teams are doing, why they’re doing it, and how their work is moving the organization forward.
“[When you educate employees] on the way their OKRs drive toward the bigger picture, the individuals know the why behind the what,” explained Amie Devero, strategy consultant, executive coach, and founder of consultancy Beyond Better. “That ensures they will be aligned and focused.”
Action point: As you’re setting OKRs, keep your managers informed so they understand exactly what they’re working toward and how it connects to the overall business strategy. Check in regularly to ensure teams are still in harmony with each other and their OKRs.
2. OKRs give employees ownership over their work.
Being on the same page is easier if your team members have a part in writing that page.
Ideally, OKRs should emerge collaboratively from the team as a whole. By involving your team in the process of creating OKRs, you give them a sense of ownership over their work. When employees feel in control of their contribution to the organizational goals and understand how their success is measured, they are more invested and more engaged in achieving their objectives.
And when they are trusted with the license to contribute ideas and suggestions and take productive risks, it drives greater performance and, importantly, innovation.
Action point: Invite your teams to contribute to the goal-setting process as much as possible. Hold team meetings to brainstorm effective metrics to measure objectives, and bring those ideas to your leadership team to guide the final OKRs.
Action point: Send a feedback request to your team for their thoughts on effective OKRs ahead of all-hands meetings on company goals. Continue to check in with your team about what’s working, what’s not, and how to optimize the OKRs moving forward.
3. OKRs help break down the big picture.
Some organizations have such an ambitious vision for their company that they forget to focus on the day-to-day operations needed to bring it to life. Others get so bogged down in the minutiae of running a business that they never bother to envision where they want to go or how to move forward.
Neither of those environments is conducive to innovation, which relies on both vision and outputs.
Effective OKRs bridge the gap between big-picture goals and the daily work necessary to achieve them. They break down aspirational visions into tangible, actionable, measurable steps, and set out a roadmap for innovation.
Action point: Structure OKR cadences into high-level annual OKRs, quarterly tactical OKRs, and weekly check-ins to review status and track progress, with each level relating back to the one above.
Innovation OKR Examples
If you’re used to dealing solely with key performance indicators (KPIs), it can be a little tricky to come up with OKRs for the first time. Here are a few examples to get you started:
Company OKRs
A company wants to improve its reputation and loyalty among its customer base.
Objective: Revolutionize the customer experience by the end of 2024
Key Results:
- Improve the Net Promoter Score (NPS) by at least 3 points each quarter with personalized customer journey and improved customer feedback.
- Increase customer retention by 20% by the end of 2024 with a customer loyalty program and customized product recommendations.
- Implement 2 new product features requested by customers by next quarter.
Team OKRs
An HR team wants to establish its reputation as a leader in diversity, equity, inclusion, and belonging (DEIB).
Objective: Achieve a diverse and inclusive HR team by the end of the year.
Key Results:
- Assess existing DEIB levels with team audit and survey in Q1.
- Complete collaborative DEIB strategy by the end of Q2.
- Launch a six-month company-wide campaign promoting inclusive behaviors in Q3.
- All staff complete implicit bias training by the end of Q3.
Start driving innovation in your company with OKRs.
OKRs are a practical tool that can take the complex, intangible idea of ‘innovation’ and make it a reality in your organization. By aligning teams, giving employees a sense of ownership over their work, and breaking down large goals into actionable, measurable strategies, OKRs spark creative thinking and create a clear path to take your company from where it is now to where you want it to go.
With Lattice, it’s easy for teams to set innovative OKRs that can be shared across the whole organization. With Lattice’s menu of integrated tools, you can make your OKRs seamlessly actionable and simple to monitor, so that you can keep your team’s innovation on track.
Request a demo to see how Lattice can help your teams set OKRs that drive innovation. And to learn more about how OKRs can help your team be more successful and drive business results, register for our webinar.
