05 What Kind of ‘O’ Should Be Recognized by Leaders #

In the previous section, I introduced the rules for generating OKRs at different levels within an organization. By following these rules, we can align our OKRs with the organization’s strategy and support the organization’s development through additional self-driven directions. So, when it comes to specific OKRs, is there a pattern or “universal formula” to help us write KRs more efficiently, and to select valuable objectives for the organization? That’s the question I’m going to help you solve next.

First, let’s look at a case study from Kuaishou, a popular Chinese online platform. When analyzing the case study, pay attention to the structured expression of O+KR and the characteristics of the KRs, which will give you a general understanding of how OKRs are written.

On June 18, 2019, a campaign called “K3” was officially launched internally at Kuaishou. Founder Hua Su and CEO Cheng Yixiao expressed their dissatisfaction with the company’s current situation in an internal memo and set a clear goal for the “battle”: reaching 300 million daily active users (DAU) by the Chinese New Year in 2020. Subsequently, Kuaishou took a series of actions to achieve the K3 goal. If we were to translate Kuaishou’s K3 goal into an OKR format, it would be as follows:

O: Through the “K3” campaign, Kuaishou aims to reach 300 million DAU by the Chinese New Year in 2020. KR1: With the help of the “Extreme Version” app, achieve a peak DAU of over 300 million before the Chinese New Year. KR2: Maintain user retention and ensure that the DAU peaks at over 300 million before the Chinese New Year through practices such as enriching content in different categories, signing contracts with MCNs (Multi-Channel Networks), planning and operating activities, and providing traffic support. KR3: With the help of the Spring Festival red envelopes, maintain an average DAU of 300 million for the three months after the Chinese New Year.

This is a typical way of writing OKRs: use O to describe what you want to achieve and then support it with three specific KRs. I believe that those who watched the 2020 Spring Festival Gala would know that Kuaishou indeed collaborated with the gala by distributing red envelopes, which helped recruit a large number of new users. This was the realization of KR3.

Now, let’s focus on the writing principles and patterns for O and KR. When it comes to objectives, it’s rare for most people to have a clear understanding right from the start. Usually, the goal becomes clearer as we work on it. This is the basic attribute of O: its iterative nature.

The Iterative Nature of O #

Next, let me explain the iterative nature of O by listing three different ways I described an O for a specific quarter (Q1, Q2, and Q3) in 2020.

Q1 O description: Implement and execute the JD OKR framework to help all departments achieve business goals with high quality. Q2 O description: Implement and execute the JD OKR framework, achieve business goals with high quality, and flexibly manage organizational performance. Q3 O description: Implement and execute the JD OKR framework, achieve business goals with high quality, flexibly manage organizational performance, and activate individuals within the organization.

These three O descriptions actually represent the same objective: helping the organization implement the OKR framework. However, you’ll notice that the description changes with each quarter. As time goes on and my understanding of OKR practices deepens, I discover more value in this direction, leading to an iterative upgrade of the O description.

When setting goals for Q1 in late 2019, my expectation was to use the OKR framework to encourage departments to focus on achieving goals and key results, and to help the entire department better achieve business goals. This is the basic value of OKRs. Thus, the Q1 description was formed.

As I gained practical experience and a deeper understanding of OKRs throughout Q1, I realized that OKRs not only help manage established business goals but also provide flexibility for performance management when goals need to be changed or new goals are added. This additional understanding resulted in an iterative upgrade of the direction, leading me to include the phrase “flexibly manage organizational performance” when setting the O for Q2.

In Q3, I added “activate individuals within the organization” to the O for this direction, because the drive and challenge advocated by OKRs led to some individuals in the Q2 team contributing more to the organization and unleashing their potential, thus activating individuals within the organization.

Therefore, when writing an O, we don’t need to worry about making it perfect from the beginning. As we continuously practice and understand a particular work direction, our perception of the value and significance of that direction will iteratively evolve. We can then update and improve the O description to make it gradually more accurate. This is the iterative nature of writing O. As for when to iterate and adjust the description, it can be done immediately, such as making changes as soon as the thought arises, or periodically, such as making iterative modifications to the O on a weekly or monthly basis.

Of course, aside from the iterative nature of O, there are also some principles to follow in order to write good O descriptions.

4 Principles to Follow when Writing an O #

When writing an Objective (O) in an OKR, there are 4 principles that should be followed: vertical and horizontal alignment, feasibility within the current quarter, focus, and incorporating self-drive and challenge.

1. Vertical and Horizontal Alignment #

As mentioned in the section on “Rules for Generating OKRs”, an O needs to align with the strategic direction of the organization or department when broken down from top to bottom. I refer to the consistency between hierarchical directions as “vertical alignment”. Vertical alignment is essential for the implementation of organizational strategies and the formation of organizational synergy.

Furthermore, in our individual work, there are many things that require external support. I refer to this external dependency and support as “horizontal alignment” when formulating OKRs. For example, when setting my own OKRs, I think about how I can align with the efficiency improvement direction of the department’s strategy (vertical alignment), and also consider if there are any training-related directions where I can provide support to other departments (horizontal alignment). This is what we need to pay attention to when writing the O - vertical and horizontal alignment.

2. Feasibility within the Current Quarter #

In terms of the OKR setting rhythm, most organizations in China, including JD.com, follow a quarterly framework. Therefore, the O written within each quarter should be executable within that quarter. Anything that cannot be executed should not be included. For example, if the company sets a challenge goal of one billion yuan in annual sales, when setting the OKRs for the first quarter, it should be broken down into achievable goals for Q1 and included in the OKRs, rather than directly setting one billion as the Q1 OKR. In other words, the O set within a quarter must be feasible and “within reach and achievable” in that quarter, rather than setting “vanity goals” that cannot be accomplished.

3. Focus #

In our daily work, each of us may have multiple directions to work on. Correspondingly, when setting OKRs, there may be multiple Os. If OKRs are set on a quarterly basis, how many Os should be appropriate for one person? Based on my experience leading the OKR transformation in JD.com, setting 2-5 Os per person is relatively reasonable.

If there is only one O in a quarter, the workload may be problematic, or this O may contain too much content. In this case, the O can be broken down into multiple O’s through categorization. However, if too many Os are set within a quarter, it will lead to a lack of focus. As an individual’s energy and an organization’s resources are limited, this will ultimately result in none of the Os achieving good results.

4. Incorporating Self-Drive and Challenge #

One of the values that OKRs bring to an organization is the desire to stimulate the vitality of individuals within the organization, so that everyone can create value and make contributions to the organization. Therefore, when writing the O, it should embody the philosophy of OKRs, which means advocating and encouraging directions that involve self-drive and challenge. It should not be limited to doing only what the boss asks, or merely completing tasks assigned by the boss. It should entail taking the initiative to challenge other valuable and breakthrough work.

For example, when our department set the Q3 2020 OKR goals, one person in the testing team not only set an O for the established testing tasks required by superiors but also set an O for improving the testing specialization called “Precision Testing”. When we implement the self-drive and challenge philosophy advocated by OKRs, we will find that all individuals in the organization become more activated.

By following these four principles, we ensure the effectiveness of setting OKRs within the organization.

• Pay attention to vertical and horizontal alignment, addressing both the implementation of organizational strategic goals and supporting external collaborative goals;
• Follow the principle of feasibility to ensure the rationality of O achievements and eliminate “vanity goals”;

• Balance the quantity of O, focus on high-quality output, to prevent doing everything but not doing anything well.
• Incorporate self-drive and challenge concepts into O, allowing everyone to contribute value and create more performance.

Huawei’s founder, Ren Zhengfei, once said, “The direction is roughly correct, and the organization must be full of vitality.” This quote perfectly corresponds to the content mentioned above. So, what types of direction can be chosen as valuable for organizations?

Types of O Selection #

To help you better understand this part, I will provide two examples from the business dimension and the technical dimension to illustrate which types of O are valuable for organizations. In other words, these O values have already been verified by JD.com. When you look at the cases, pay attention to the value types of the O I mentioned.

Here is an example of a business leader, Q2, at JD.com. This business leader is responsible for JD.com’s ISV open business (customized development of products and services for JD.com merchants through independent software vendors). In his Q2 OKR setting, he wrote four directions for O.

If we analyze these four directions more broadly, we can find:

• O1 aims to increase GMV, which is a revenue-oriented direction.
• O2 focuses on business capabilities and improvement.
• O3 is still related to commercialization, but O1 is revenue for merchants, while O3 is revenue for ISVs.
• O4 is related to the preparation for the 618 Shopping Festival, with the ultimate goal of improving user experience.

In summary, the O directions of this business leader focus on these three types: revenue-oriented, capability improvement, and user-oriented.

Now, let’s look at an example from a technical leader. This technical leader is responsible for managing the front-end development team and improving professional capabilities. In his Q2 OKR setting, he wrote three directions for O.

Let’s summarize these three directions:

• The purpose of O1 is the growth of team members, which means improving employee capabilities.
• The purpose of O2 is to improve development efficiency through capability building, and for the sake of user experience.
• The purpose of O3, with merchants representing users, is also to improve user experience.

In summary, the O directions of this technical leader focus on three types: capability-oriented, efficiency-oriented, and user-oriented. By summarizing the directions of these two typical cases, we have formed four types of O.

1. Revenue-oriented: For example, the mentioned case 1 of increasing merchant GMV and ISV revenue.
2. User-oriented: For example, the mentioned case 1 of preparations for the 618 Shopping Festival, improving user shopping experience, and the mentioned case 2 of improving user page experience.
3. Efficiency-oriented: For example, the mentioned case 2 of development efficiency.
4. Capability improvement-oriented: For example, the mentioned case 1 of improving business capabilities and the mentioned case 2 of improving employee capabilities.

These four types actually constitute organizational performance. A business organization needs to not only generate revenue but also focus on user value, improve internal efficiency, and develop and enhance capabilities. The choice of these four types also corresponds to what I mentioned at the beginning, that strategic choices should include both business-oriented and non-business-oriented directions. Business-oriented directions focus on revenue, user value, and business capability accumulation. Non-business-oriented directions focus on efficiency and personnel capability improvement within the organization.

If we want to prioritize these four types of O, it is obvious that for a business organization, revenue comes first. Without revenue, it is difficult for an organization to survive in the long run, which means there won’t be enough funds to continuously improve user experience, meet more user demands, and invest in continuous efficiency improvement and capability accumulation.

The second priority is user-oriented O. A business organization can generate revenue because it continuously solves problems for users, provides them with continuous value and good experiences. This will be reflected in user satisfaction, user volume, and other aspects.

Finally, based on revenue and the ability to provide continuous value to users, organizations need to continuously focus on improving efficiency and organizational capability. Cost efficiency determines the market competitiveness of an organization, while improving capabilities contributes to efficiency improvement. However, capability accumulation and development are long-term processes that cannot produce immediate results. Therefore, when choosing O, if it can immediately improve organizational efficiency, its priority will be higher than the long-term capability development.

Therefore, when you write O, starting from the four types: revenue-oriented, user-oriented, efficiency-oriented, and capability improvement-oriented, will definitely bring value to the management and development of the organization. If you need to make trade-offs among these four types, I suggest prioritizing the types in this order: revenue-oriented > user-oriented > efficiency-oriented > capability improvement-oriented.

Conclusion #

By now, I believe you have understood how to write good O and have thought of new O for your work. Feel free to write your work O in the comments, and I’ll help you evaluate them. I might even help you iterate on them.

After mastering the writing of O, you might wonder how to write good KR. In the next lesson, I will introduce a universal formula for writing KR. With this formula, you won’t need to worry about writing KR anymore.