What’s the difference between OKRs and outcomes?
This is by far one of the most common questions I get and there are lots of ways to answer it.
Defining the Terms: OKRs vs. Outcomes
Here’s my response: First, an OKR is comprised of an objective and key results.
The objective is a qualitative statement that should inspire you and/or your team.
The key results are quantitative measures that might indicate you’ve reached that objective.
An outcome is the result of some actions. In the product world, we tend to think of outcomes as the impact of what we build. So we are building output X because we think it will result in outcome Y.
However, the real value of an outcome is when we flip this on its head.
Instead of: “We are building output X because we think it will result in outcome Y,” we start with: “We want outcome Y, how might we get there?” The answer is sometimes of the form: “Build X.” But sometimes the answer is: “Build Y or Z.” And sometimes the answer is: “Don’t build Y or Z—or anything at all.”
The real value of starting with an outcome is it helps us focus on value creation rather than just output creation.
The real value of starting with an outcome is it helps us focus on value creation rather than just output creation. – Tweet This
A Closer Look at OKRs
Now let’s return to OKRs.
I like to think of OKRs as a way of expressing an outcome. I can take any outcome X and represent it as an OKR. For example, Product Talk’s outcome is to increase the number of teams who adopt a continuous cadence to their discovery work. I can express this outcome as an OKR.
Objective: Help more teams adopt continuous discovery as a way of working.
To identify key results, I need to ask, “How will I know when I’ve done that?”
Here are some of my answers:
- Key result: Reduce the number of unsold seats in our courses
- Key result: Sell more books
- Key result: Grow membership by X%
As written, these aren’t great key results. To improve them, I’d need to set targets for a designated period of time. For example, I might set a target to sell 10,000 books in a quarter. Or I might set a target of growing our memberships by 100% in a year.
Even with good targets, I’m still not done. This OKR represents business outcomes and we still need to translate it to product outcomes.
Understanding the Relationship Between Business Outcomes and Product Outcomes
Let’s back up. In Continuous Discovery Habits, I distinguish between business outcomes and product outcomes.
Business outcomes measure the health of the business. Product outcomes measure a change in customer behavior. Product teams don’t typically have direct influence over business metrics like increasing revenue. But they do have the ability to directly influence product outcomes—changes in customer behavior—that can ultimately contribute to business outcomes.
Business outcomes measure the health of the business. Product outcomes measure a change in customer behavior. – Tweet This
So what are my product outcomes?
Here are some:
- % of members who interview customers every week
- % of members who run assumption tests every week
- % of members who define clear outcomes every quarter
Notice how these all measure customer behaviors.
And here it is as an OKR.
Objective: Help members invest in their discovery habits.
- Key result: Increase % of members who interview every week
- Key result: Increase % of members who assumption test every week
- Key result: Increase % of members who define outcomes every quarter
Again, I’ll want to assign actual numbers to these key results. The target number might change quarter to quarter as we see improvements. Or what we measure might change quarter to quarter as we better learn what behaviors indicate a team is adopting a continuous cadence to their discovery work.
OKRs Are a Way to Express an Outcome
I can define different product outcomes for each of my products. My product outcomes help me drive my business outcome.
And if I find it helpful, I can express each as an OKR.
So think about OKRs as a way to express an outcome. OKRs can represent business outcomes. But they can also represent product outcomes.
It’s just a format that combines an inspirational objective with some quantitative key results.
OKRs can represent business outcomes. But they can also represent product outcomes. It’s just a format that combines an inspirational objective with some quantitative key results. – Tweet This
The real work is figuring out which outcomes matter. Once you’ve done that, you can represent any outcome as an OKR.
If you need help identifying the right outcomes, check out our course, Defining Outcomes.