The critical difference that makes Objectives & Key Results different from current goal-setting frameworks is that the key results must be outcomes. Outcomes are measurable changes in human behavior. These quantifiable metrics might get messy from time to time but, without them, OKRs are effectively neutered and nothing more than a new name for old ways of working. In the past, I’ve written explicitly about the various levels at which you can and should write your OKRs. One thing I haven’t discussed in detail is what kind of number your key result should be. In essence we have two choices: absolute numbers or percentages. Let’s take a look at each one.
Percentages require a baseline
Percentages are ratios or rates. Their main benefit is they tell us how we are trending towards our key results. They make it easy for us to compare our progress against other, similar quantities of time in the past. Using percentages also gives us a sense of how much more we can likely expect to squeeze out of the current target. The main constraint of using percentages is that they require a baseline. We need something to compare them against.
If you’re going to use percentages as your key results it’s important to check that you have access to the current baseline metric for the behavior change you’re trying to influence. Once that’s established you can begin to set a desired increase or decrease from the baseline. Remember to choose a target that’s both meaningful to the business and aggressive. If you choose a key result percentage that isn’t a meaningful leading indicator for the business your work may not get funded or it may simply get ignored.
Examples of a key results using percentages:
- 35% increase in successful logins
- 90% reduction in calls to the customer service about lost passwords
- 300% increase in in-system communications between users
Absolute numbers provide a baseline, and not much more
In contrast, absolute numbers provide a seemingly concrete destination for our team goals. For example, we may set a goal to onboard 5 new customers this quarter. This is a specific, clear goal that teams can aspire to and very clearly say whether or not they’ve achieved it. The problem with absolute numbers is they don’t give you a sense of direction. Are 5 new customers good? Is it more than last quarter? How does it compare to the number of customers we onboarded last year at this time?
Now, for a B2B company, onboarding 5 new customers might be a huge win in one quarter. If you’re a B2C retail company, however, 5 new customers means you’ll be out of business very soon. Absolute numbers as key results require the context of your industry to make sense. In general though they should be used as an initial target for your team – especially in the absence of a baseline. For example if you’re launching into a new market or deploying a brand new product you may set an absolute number as a goal. For example, we may want to get at least 1000 new user accounts on the new platform within the first quarter. After that though, any growth we target should be relative to that initial baseline.
Default to percentages
Based on these differences the default position for most teams should be percentages. The value in understanding behavior trends, not just the absolute number of times it’s happened is more valuable to making product prioritization decisions. Even if you do start off with absolute numbers, consider moving off of them as soon as you’ve established that initial baseline metric.