How to Implement OKRs: A Practical Guide for Growing Teams

Klipfolio's product team has been using a performance management system based on objectives and key results (OKRs) to set goals for our agile teams since early 2018. Within months, we saw so much value in the approach that the entire organization adopted the OKR system.

In this post, we'll share what we've learned about OKRs, the real value they deliver, and practical tips for setting up an OKR system that works for your team.

What are OKRs (Objectives and Key Results)?

We've written extensively about OKRs before—check out our earlier posts on what they are and why they complement agile teams. Here's the quick definition:

OKRs are a performance management tool that sets, communicates, and monitors goals across an organization so all employees work toward the same direction.

The system's strength lies in its simplicity. It provides a practical framework for defining, tracking, and measuring goals—both as aspirational targets and as measurable outcomes. Ambitious objectives motivate teams to push beyond their comfort zone. Measuring key results reveals whether you've reached your goals.

Why is the OKR system useful?

We've identified five distinct advantages to using OKRs:

• Alignment – OKRs ensure all team members pull in the same direction and contribute to what matters most for results.
• Engagement – Teams gain a sense of purpose working toward defined goals, which increases engagement and motivation.
• Focus – OKRs help people prioritize work that matters and eliminate distractions.
• Performance – OKRs encourage employees to go above and beyond, often delivering results that exceed expectations.
• Autonomy – Teams work independently, confident they're contributing to larger organizational goals.

The biggest benefits of using OKRs in product development

Of these five, alignment stands out as the most critical. It's one of the biggest challenges teams face as they grow. OKRs enable alignment while allowing teams to retain their autonomy—a powerful combination.

How we established our OKRs

We integrated OKRs into our planning process across multiple levels. Different parts of the organization set different objectives and measure different key results:

• Company-level: Senior management creates a long-term planning document with objectives and measurable key results spanning three years.
• Quarterly company-wide: We establish company-wide OKRs each quarter that define our next steps toward longer-term goals.
• Product team level: On a quarterly basis, the product leadership team sets high-level product OKRs. These reflect how each team will reach the business OKRs.
• Team level: Finally, each agile team creates quarterly OKRs showing how they'll contribute to the high-level product OKRs.

This hierarchical structure creates clear interdependencies between objectives at each level. It defines each team's purpose and links it directly to the organization's long-term goals. We've found this approach creates unparalleled clarity across the company.

Hierarchy of OKRs helps with alignment and clarity

Our process

We follow a structured quarterly cycle:

A couple of weeks before each quarter begins, the product leadership team drafts high-level product OKRs. Teams then develop their own OKRs informed by these high-level targets. Finally, leadership and all scrum teams meet to review team OKRs. This session allows teams to refine their OKRs based on feedback and identify cross-team dependencies.

The OKR cycle on a quarterly cadence creates an opportunity to adjust the plans

We've run this cycle every quarter since early 2018. The quality of both the process and the OKRs improves each quarter as we learn. We've also increased team autonomy over time.

In our first cycle, teams had pre-defined backlogs and we reverse-engineered OKRs from those backlogs. This approach defeated the purpose of OKRs—giving teams goals and trusting them to find the answers. In recent cycles, teams develop OKRs through brainstorming, using their understanding of how to move the needle and contribute to higher-level objectives.

We maintain a culture of continuous improvement, and the OKR process is no exception. We recently conducted a retrospective with all team leads to identify what's working and what needs adjustment.

A culture of continuous improvement is the key to a team's success

What's been going well?

Since adopting OKRs, we've seen measurable benefits across several areas:

Prioritization, planning, and focus

• OKRs have focused team efforts and clarified priorities.
• They've helped clarify direction—both what to work on and what to skip.
• Sprint planning became easier; if work items don't contribute to OKRs, we deprioritize them.
• OKRs keep our main objectives on track and prevent scope creep.

Alignment, communication, and clarity

• OKRs align objectives across team members.
• Because teams participate in defining OKRs, there's stronger alignment between teams and greater ownership of goals.
• OKRs clarify our work for other teams, making it easier to explain why we can't take on additional requests.
• OKRs highlight where groups depend on each other.
• Communication with the executive team improved significantly.

Measurement and accountability

• A quantitative, metrics-based approach keeps us on track.
• Regular checkpoints create accountability throughout the quarter.
• Clear goals make it easy to spot when we're diverging from the plan.
• The OKR system has fostered deeper research and improved our product development process.
• OKRs help us think about cause and effect (A ? B ? C).

Business impact and autonomy

• OKRs encourage teams to stretch and aim higher.
• It's now clear how our work affects business objectives.
• OKRs have helped us achieve goals we thought were impossible.
• Teams gained more autonomy and flexibility in how they achieve objectives.
• Greater autonomy led teams to develop creative approaches to reaching their goals.

We also used our own product to monitor OKRs. We created a Klip for each team and a dashboard showing real-time progress against OKRs.

How do OKRs help agile teams

Stumbling blocks we encountered

Setting goals and working toward measurable key results wasn't without challenges. We've learned from several pitfalls:

Quarterly planning caused friction

• Planning for three months can be difficult and, at worst, undermines agility.
• Reality changes. Key results that made sense at the start of the quarter may no longer fit.
• Interruptions or timeline shifts can prevent success.
• Missing key results can feel like failure, even when circumstances outside the team's control were responsible.

We didn't make things concrete enough at first

Some objectives were too abstract to define clearly. We also learned the hard way that key results must be measurable:

• Some weren't measurable during the quarter.
• Some key results were high-level products, which are difficult to use as planning guidelines.
• Using confidence levels to measure key results introduced subjectivity and made tracking unreliable.
• Binary key results (yes/no) don't encourage quantitative thinking.

We set too many OKRs

Finding the right number of OKRs is tricky. We learned that too many key results reduce focus. We also discovered the importance of distinguishing between results we aspire to achieve and results we're committed to delivering.

Other issues

• Teams can become siloed if OKRs aren't connected to the broader organization.
• The OKR process must start and finish on schedule to be effective.

Pitfalls to watch for when using OKRs

Best practices: What should we keep doing?

After years of using OKRs, we've identified practices that work. Here's our guide for setting up an effective OKR system:

• Focus on outcomes, not tasks. Don't turn backlog items or implementation details into OKRs. Go one level higher and focus on business outcomes and what needs measuring. "Increase user engagement" works as an objective because it's measurable and doesn't prescribe a solution. "Implement user-centric sharing" doesn't work because it's too prescriptive.
• Invest time upfront. Better OKRs come from thoughtful planning at the start.
• Design OKRs to foster autonomy. Give teams room to find their own path to the goal.
• Get input and stakeholder alignment. Involve people who'll execute the work.
• Make it inclusive, not top-down. Teams that help define OKRs own them more fully.
• Keep the number manageable. Less is more. Aim for no more than three objectives and three to five key results per objective.
• Tie team OKRs to company OKRs. This connection clarifies why the work matters.
• Make each OKR measurable and easy to track. Update numbers regularly. Reference key results in your issue tracker for traceability.
• Use OKRs in sprint planning. They make prioritization discussions straightforward. If a feature doesn't contribute to OKRs, it can be dropped.
• Review OKRs regularly with the team. Continuous reinforcement keeps objectives top of mind.
• Adjust when reality changes. Dropping or adjusting key results is acceptable when circumstances shift. There's no value in tracking something that won't happen or no longer makes sense.
• Watch for cross-team impacts. Pay attention to other teams' OKRs and how they might depend on or affect your work.

Final tips

We've learned a lot about what works and what doesn't with OKRs. We see tremendous value in using this system to create alignment, purpose, and autonomy while pursuing ambitious goals with a focus on outcomes.

Used incorrectly, OKRs add overhead without returning value. Many agile teams become feature factories, executing backlogs without strategic direction. Don't turn your backlogs into OKRs—that defeats the entire purpose.

Keep the number of OKRs reasonable. Two or three objectives with three to five key results each is the right balance in our experience. And don't make the process top-down; let teams participate in defining their own OKRs.

But do use the OKR system. OKRs help everyone align on big objectives and expected measurable outcomes. This alignment allows teams to autonomously develop creative approaches to reaching those goals.

Similar to OKRs, another performance management framework often discussed is key performance indicators (KPIs). Understanding both helps you choose the right tool for your organization's needs.