06 Kr the Universal Formula for Writing Good Krs

06 KR - The Universal Formula for Writing Good KRs #

In the previous lesson, I introduced the concept of “O” in OKR. OKR is a combination of “O” and “KR,” with KR being the key support for achieving the objective “O.” KR not only requires a specific implementation path and method but also needs quantifiable results.

When it comes to the application and writing of KR, most of us understand that it involves quantifiable work. However, I want to share with you first an important attribute of KR for organizational and business development: growth.

The Growth Attribute of KR #

On November 23, 2018, after a gap of ten years, Microsoft surpassed Apple in terms of market value and reclaimed the top spot in the world. Microsoft, which missed the mobile era, achieved such success because of a series of transformations carried out by Satya Nadella, who became Microsoft CEO in 2014. In order to align with the strategic transformation, Microsoft also made adjustments to its incentive system. The strategic indicator weights in its cash bonus incentives are as follows:

Assess the strategic effectiveness from three dimensions:

  1. Product and strategy weighting: 16.67%;
  2. Customer and stakeholder weighting: 16.67%;
  3. Culture and organization weighting: 16.66%.

As you can see, Microsoft’s strategic choices are not limited to business-oriented products and customers but also include culture and organization as dimensions of strategic planning.

Strategy is about solving the problem of organizational growth, and strategic thinking is growth thinking. Therefore, the focal point for Microsoft’s organizational and business development lies in KR.

For example, based on the financial report for the fourth quarter of 2019 released by Microsoft, its revenue from productivity and business processes grew to $11 billion, revenue from intelligent cloud grew to $11.4 billion, and revenue from personal computing reached $11.3 billion. If these growth results are managed using OKR to align with Microsoft’s strategic objectives, they need to be reflected in the KR. This is the most important growth attribute of KR.

There is no doubt that the growth attribute of KR is crucial for organizational development. If an organization loses its growth, it means that financial and user growth stagnates, and internal efficiency and organizational capabilities stop improving. In such a situation, it will lose its competitive advantage and gradually be eliminated from the market.

Therefore, when writing KR, we need to remember that KR must address the issue of organizational growth. This growth attribute is essential. In addition, to make the written KR effective, we need to follow four principles.

Four Principles to Follow for Writing Effective KR #

To help you better understand KR, I have provided three examples of KR and explained the principles that need to be followed. This will serve as your reference when writing KR, ensuring that your KR is more effective.

Example 1: Use the method of filming 1.5 short videos every two weeks to record the agile process of all agile teams. In the WeChat domain, the average video views and shares reach more than 300 UVs.

Example 2: Use key opinion leaders to acquire 10 million new users for the JD main site in Q2.

Example 3: Rely on Kwai Speed version to exceed 300 million peak daily active users before the Spring Festival.

(1) Quantification of Process and Results #

Quantification in KR not only includes the quantification of processes but also the quantification of key results. In the three cases mentioned above, process quantification refers to “shooting 1.5 short videos,” “KOL fans,” and “express version,” which basically means the specific paths, measures, or methods to achieve key results. Result quantification refers to “UV reaches 300 or above,” “10 million new users,” and “DAU exceeds 300 million,” which means that specific values are used to quantify key results.

Therefore, the quantification of KR not only requires process quantification of the paths and measures to achieve key results, but also requires quantification of the results in terms of values. Both dimensions of quantification require continuous discussion and consensus with the team or superiors.

However, in daily work, such as the phased work content of the R&D team, it cannot be directly quantified with numbers. In this case, how should we write the KR of such teams? Actually, we can quantify it in the form of “time + output.”

For product development, it is first necessary to go live and then achieve business results through operations or marketing. There is a time gap between going live and achieving business results, so it is not possible to immediately produce business results as soon as it goes live. However, in organizations, we divide different departments according to their functions, such as the R&D department, product department, and operations department. Therefore, when the R&D department writes KR, they often cannot use the future business data results of the operations department as their own KR results in a timely manner, so they write interim go-live results.

For example, a certain feature or version goes live at the end of February, but the operations schedule is scheduled for March, and business result data may only be available in March. In this case, the KR for the R&D department’s OKR in February can be written as “complete the go-live of feature XX by the end of February,” and this writing method is also feasible.

Similar to this, there are also project-based OKRs. Each project will have its own milestone nodes, but not every node will produce business results. Therefore, the KR writing method for project-based OKRs is similar to that of the R&D department, and it can be written in the form of “project milestone + output,” such as “discussing and determining the project plan in June.”

(2) Time Constraint #

The second principle is time constraint. KR needs time constraints to regulate the output. In the three cases mentioned above, time constraint refers to “every two weeks,” “Q2,” and “before Chinese New Year.” Combining with the rhythm set by the objective O, the time constraint of KR will be based on the quarter, with weekly, monthly, or specific time nodes as interim completion deadlines. However, the longest completion period should not exceed one quarter, and items that take longer than one quarter to complete can be written in the OKR for the next quarter.

The significance of adhering to the time constraint principle in KR is for efficiency. Having a time constraint on the specific implementation process of achieving a goal will bring pressure, and pressure creates motivation, which will improve efficiency.

Imagine if we have no concept of completion time for anything we do, we will achieve nothing. As the saying goes within Alibaba, “a process without results is just hot air,” and no organization or team wants to see that.

(3) Multidimensional Support for O Implementation #

KR needs to support O, and multidimensional support is reflected in the number of KRs. Therefore, an O will contain multiple KRs, usually around 3 to 5.

If the number of KRs included in an O is too large, such as more than 5 KRs, it may be because the granularity of the KRs is too fine. In this case, they can be classified and merged. We do not need to include all the details of our work in the KR, but rather focus on the key outcomes that can be achieved. For example, when determining the granularity of the KR, I often see people including very trivial daily tasks in the KR. This results in a large number of KRs that are very detailed but are not “key results.” Therefore, the granularity of the KR can be set around the output or effects brought about by a two-week or monthly cycle.

However, if the number of KRs included in an O is too few, it is also not acceptable. For example, if there is only 1 KR, it could mean that the granularity of the KR is too large and needs to be broken down into multiple KRs to be completed, or it could mean that the set O is a lower priority direction with limited resources and energy to invest in, resulting in limited KR outcomes.

For example, for a complex project that needs to be launched by the end of Q2, the direction should not only have a single KR like “complete the launch of XX project by the end of Q2,” but should be broken down into multiple phased KRs such as:

  • KR1: In April, complete the research and argumentation of requirements;
  • KR2: In May, complete the output and development preparations of the plan;
  • KR3: In June, complete the project launch. In order to clarify and support the control consensus of the phased outputs of the process, it is necessary to have a high-priority O that includes multiple KRs. Since KRs have growth attributes, they support the implementation of O through multidimensional growth. Like Baidu’s Li Yanhong’s OKRs, they used three dimensions of growth KRs to support the implementation of the business direction of the AI ​​track.

O: Establish a sustainable growth model in the mainstream AI track

KR1: Xiaodu enters thousands of households, with daily interactions exceeding 100 million KR2: Intelligent driving and intelligent transportation find a scalable development path, with double-digit revenue growth in 2019 and 2020 KR3: The cloud and AI2B business becomes the leader in at least * trillion-level industry.

(4) Challenging #

The challenge of KRs can be reflected in the numerical values ​​of “UV 300”, “acquiring 10 million new users”, and “breaking 300 million DAU” in the three cases mentioned above. So what kind of values ​​are considered challenging? We can consider two aspects: comparing with the industry and comparing with ourselves.

Let’s take the example of Kwai (also known as Kuaishou). In mid-2018, Douyin (TikTok) surpassed Kwai in terms of daily active users, and Kwai’s growth stagnated, even experiencing negative growth. Later, against the backdrop of Douyin’s DAU breaking 320 million in mid-2019, Kwai made a commitment on June 18, 2019 to break away from being a “slow company”, which led to the formulation of the KR of achieving 300 million DAU. The numerical value of 300 million DAU was based on Kwai’s DAU reaching 250 million by May of that year. Although there is still a gap between 300 million DAU and Douyin, it is considered a challenging and breakthrough key result for Kwai itself.

Therefore, the challenge of KRs lies in competition with the industry and comparing with one’s own performance. An organization that cannot break out of its comfort zone, cannot establish a sustained advantage in market share or achieve sustained growth in performance, will not have challenging KRs that reflect the strategic direction of the organization. If individuals only focus on their own work without comparing it with the industry, doing repetitive tasks without continuous breakthroughs, then there will certainly be no challenge in setting KRs.

By following the above four principles, KRs ensure the effectiveness of setting KRs in our organization.

  • Quantification of processes and results: Quantifying the process promotes detailed communication and consensus on the implementation path, reducing ambiguity. Quantifying the results ensures that goal completion can be measured by data, rather than relying on subjective judgment.
  • Time bound: Setting a deadline for KRs improves the efficiency of delivering key results and avoids procrastination and lack of results.
  • Multidimensional support for O implementation: It reflects that the chosen direction is truly valuable and meaningful, and worth investing more resources and effort to achieve more key outputs, rather than focusing on directions that are not of great value to the organization.
  • Challenging: Setting challenging KRs corresponds to breakthrough organizational performance, competitiveness in the market, and avoiding becoming a passing fad too early.

Is there a universal formula for KRs? Of course, there is. Now let’s take a look at what this universal formula looks like.

The Universal Formula for Writing KRs #

Next, I will provide two KR examples, one in business and one in technology, to reveal to you the universal formula for writing effective KRs.

Business example: Reduce the average onboarding time for merchants by 10 days using a simplified onboarding method in Q3. Technology example: Achieve a merchant satisfaction score of 85 in Q3 through the implementation of skeleton screen technology.

As we can see, there is a common structure in the presentation of KRs. This is the universal formula for writing effective KRs:

Through XXX method, achieve XXX effect at XXX time point.

“Through XXX method” refers to the specific path, measures, or means to achieve the goal. “At XXX point in time” implies the concept of having a time limit.

“By achieving XXX effect” means there should be a quantifiable outcome.

Through this structure, we can meet the principles I mentioned earlier about quantifying the process and results, as well as having a time limit. If the quantified values are indeed challenging as discussed and agreed upon by the team or superiors, it ensures the effectiveness of the written KR.

This universal formula temporarily meets the basic requirements of writing KR, but it lacks a focus on organizational management. What is this focus? At the beginning of 2019, JD Retail CEO Xu Lei proposed a management concept of “building trust and creating customer-centric value.” The core of this phrase is to emphasize that every aspect of the organization should be able to solve customer problems and create value.

On November 11, 2019, Tencent released Culture 3.0, which stated in its mission vision that “users come first, technology is benevolent, and everything should be based on user value.” The core of this phrase is to emphasize that the goals set by the organization should solve user problems and provide user value.

By combining JD’s management concept and Tencent’s cultural mission and vision, we need to understand that the formulation of organizational goals must include the value created for users/customers. In simpler terms, the formulation of goals must first consider the value provided to users/customers and the problems solved, as this is the fundamental basis for business operation.

Therefore, combining the concept that organizational goals need to create value for users/customers and solve problems, I have upgraded the universal formula for KR:

Through XXX method, solve the XXX problem for users/customers, achieve XXX effect by XXX point in time.

Based on this, the examples I mentioned in this section can be upgraded using the more comprehensive KR universal formula as follows:

Business Case 1: By implementing a simplified onboarding process, solve the problem of complex merchant onboarding procedures and high learning costs. Reduce the average onboarding time for merchants to 10 days in Q3. Technical Case 2: By implementing skeleton screen technology, solve the issue of long page loading white screens in front-end and back-end separation, resulting in poor user experience. Achieve a merchant satisfaction score of 85 in Q3.

With the upgraded universal formula, we have incorporated the need for organizations to create value for users/customers. However, as I mentioned earlier, types of OKRs can be divided into business and non-business. Business OKRs really need to consider how to create value for users/customers when writing KR.

On the other hand, non-business KRs, such as improving organizational efficiency or enhancing the capabilities of individuals in the organization, may be further removed from the business and are considered supporting work for business development. Therefore, it is not possible to directly explain the value provided to users/customers in non-business KRs.

However, it should be clear that improving efficiency is done because the organization is facing efficiency problems that need to be addressed, and the need to enhance skills is because there is an issue with skills not keeping up. Therefore, when writing non-business KRs, we need to include the problems the organization solves. As a result, a simple adjustment to the above universal formula allows it to be applicable to all individuals in the organization:

Through XXX method, solve the XXX problem (for users/customers) by XXX point in time, achieve XXX effect.

This is the final form of the universal formula for writing KRs. If you have job responsibilities that are more business-oriented, you need to clearly state the user or customer problems being solved when writing KRs, as this is the core of organizational management. If you have non-business responsibilities, you can omit the user or customer wording and directly describe the organizational problem being solved and the desired outcome.

Summary #

How to achieve business growth is an eternal topic, and in organizations, growth is always based on goal setting. Therefore, by combining OKRs and effectively utilizing the growth attributes of KRs, we have found a way to manage organizational business growth. The universal formula for KRs, starting from the pain points of users, customers, and organizations in the field of operations, helps to clarify the key path to achieving growth, facilitates detailed communication and quick consensus on organizational goal setting, and effectively solves the challenges of organizational growth.

After introducing the universal formula for KRs, I welcome you to share your specific ways of writing KRs in the comment section. I will provide advice on the structure and principles to help evaluate the effectiveness of your KRs.

In the next lesson, in order to deepen your overall understanding of the O+KR writing method and the issues to be aware of, I will provide complete OKR examples and review their strengths and weaknesses to teach you how to write high-quality OKRs.