What is key result? How to build detailed and effective Key Result

Key Result is one of the important indicators in the goal management model, helping to measure and control the level of completion of key goals in the business. In the article below, 1C Vietnam will introduce information related to what a Key Result is and how to build a detailed and effective Key Result.

1. What is Key Result?

Key Result is one of the important factors for businesses applying the OKRs method. Because Key Result is a factor in the OKRs method with two main factors: O (Objective) and K (Key Results). In there:

• Objective: The destination aimed at.
• Key Results: Indicates whether the business has achieved its goals or not.

Thus, the purpose of building Key Results (KRs) is to help businesses identify goals and create motivation to achieve those goals, while managing performance effectively.

2. Key Result types

2.1 John Doerr's classification

Typically, Key Result will fit into one of three categories: Input, Output and Outcome. Based on that, businesses can think of Key Result for each method, then choose the best method for their current needs. This ensures the business delivers relevant key results and accurately measures progress towards goals.

• Input

These are the activities and input data that businesses need to perform to create results. Businesses often focus on Input because they believe that if the input values are appropriate, the desired output values will occur. In particular, Output is something that the business cannot control. At this time, the business will need Input to easily monitor work progress.

Specifically, Input will focus on important core actions and make sure that the Input businesses choose will bring the desired output results. Besides, businesses can also consider using Input key results in improving employee performance.

For example: The business's goal is "Achieve the target of 1000 product sales, instead of using main output results such as: Number of products, number of customers reached,... Business can focus on input results (Input) such as: Distributing leaflets, marketing policies, focusing on potential customer files,...

• Output

The main output (Output) is influenced by the input (Input). Or in other words, to get output, we need to perform input actions. A key output will be effective if there is a plan and accompanying actions.

Main results Output is often used in cases where the business's goal is to change and the business has a solid database of output after performing a series of input actions. At that time, the main result Output is what is affected and not what the business wants to control.

For example: The business's goal is "to increase the number of new customers in the first quarter". Assuming that, on average, a business receives 5 potential customers out of 100 calls, instead of writing the main result Input as “number of calls made”, the business should change it to the main result Output as “ number of potential customers.

In short, the main result Output shows what results the actions a business takes will bring.

2.2 Felipe Castro's classification

In the document "The Beginer's Guide To OKRs" by Felipe Castro, key results are divided into two basic categories.

• Key results based on activity

Key results measure the completion of tasks, performance or delivery of milestones of a project. Activity-based key results often start with verbs such as: Release, launch, test, prepare, deliver, etc.

For example:

• Develop a product promotion plan.
• Develop ideas for new projects
• Check the garment production process.
• Distribute goods to units and partners.
• …

• Key results based on value

Key results will be based on measuring value, delivering value to the organization or its customers, and measuring the results of successful activities.

For example:

• Maintain stable customer levels below Y.
• Improve revenue from X% to Y%.
• Reduced complaint rate from Y% to X%.
• Increase customer engagement from X to Y.
• …

2.3 Classification by Ben Lamort & Paul Niven

According to Ben Lamorte and Paul Niven (authors of the book Objectives & Key Results published in 2016), Key Results are divided into 3 types based on the types of measurement metrics:

• Key Results “Baseline metric”

Key Result “Baseline metric” is built for reporting and tracking and does not have historical data. Setting the final result to be exact is usually not required until the baseline data is established. At that time, administrators must adjust Key Results accordingly.

For example: The accounting department of a business is in the early stages of implementing OKRs that recognize Server costs with the goal of "Reducing business management costs". However, costs fluctuate according to the actual number of customers and OKRs tools, which previously had no historical data. Therefore, businesses will need a Key Results to report Server costs weekly, in the fourth quarter.

As can be seen, this action is not a value. Businesses choose a solution to monitor and measure weekly until clear data is collected to avoid arising risks that affect solvency.

• Key Results “Target metric”

• Positive: Key Results have a positive target index, meaning “as much as possible”

For example: 30 articles were posted on the 1C website in February. In this case, the closer the number achieved to the target number, the better.

• Negative: Key Results has a negative target index, which means “Less is more”

Key Results of this type are often used for goals related to costs, production time, material consumption, etc.

For example: Business expenses are less than 2 billion.

Because the main results are negative, businesses are not encouraged to use it. Instead, businesses can rewrite in a more positive direction: Save 1 billion compared to last month, reduce costs from 3 billion to 2 billion.

• Threshold: Key Results have a threshold target index, meaning “Between the range of minimum and maximum acceptable values”.

For example: The working time between the customer service department and the technical department after receiving a request from the customer is 2 - 4 days.

The threshold target specifies an acceptable low numerical value, and an acceptable high numerical value, used as the threshold to determine the target range of the metric.

• Key Result “Milestone” (milestone)

Because this type of Key Results cannot be set up, it will be divided into small steps to make the results more feasible.

Businesses should update Key Results regularly to record achieved results, avoiding confusion between milestone KRs and tasks.

For example:

Objective: Complete the new branch expansion process.

Key Results: Opening a new branch in Hanoi with 6 employees.

This Key Result “Milestone” will be divided into small steps such as:

• Sign a contract to rent an office at a good price.
• Recruit 6 employees with corresponding capabilities, responsible for customer care.
• …

3. Criteria for evaluating an effective Key Result

Key Results are not an action, task or project that needs to be done, but Key Results are the final results that need to be achieved. Administrators need to understand the 6 criteria below to get effective key results.

• Measurable: KRs need to be measured in an objective way and must have a specific scope, measuring progress toward goals in detail and accurately.
• Relevant: Key Results must have a close relationship to the original goal. Otherwise, the process of achieving goals will become vague and not achieve the desired results. Therefore, Key Results are considered a decisive factor in the success of the goal.
• Detailed and specific: Key Results need to be detailed and specific so that everyone can understand.
• Challenge: Key Results need to be challenging and ambitious. The main results set need to be slightly greater than the employee's capacity, this helps increase employee productivity.
• Completion deadline: A good result needs a clear deadline to create pressure to complete the set goal. Typically, Key Results will follow a quarterly cycle.
• Reality: Key Results need to be actionable so employees understand what actions they need to take to achieve. However, we should not make too many big and unfulfillable demands.

4. Principles when building Key Result

4.1 Key Result needs to affect Objective

The relationship between Key Results and Objectives is close and has a strong impact on each other. Key Results affect the level of focus on achieving the business's goals. Therefore, building KRs needs to be done around questions such as "Are these KRs very important? If not, will it affect the OKRs?".

4.2 Quantifiable Key Result (number)

KRs need to have data and be quantifiable. Otherwise, the Objective will become vague and the business will not be able to determine when the goal has been completed. This is one of the common mistakes that most new businesses using the OKRs method encounter.

4.3 There should only be 3-5 Key Results in 1 Objective

According to analysis from experts, a person should only have 2-3 Objectives/quarter, of which each Objective should only have 3 - 5 KRs. This not only helps workers stay more focused, but also prevents overload and ensures all work is completed on time.

However, it is also possible to have more or less than 3 - 5 KRs in each goal. The important thing is that it still depends on each person, you need to think about the importance of the results and choose the appropriate index.

4.4 Set a specific deadline

When using Key Result, employees need to set a clear deadline for the key result because it will create motivation and increase commitment. In cases where there is no specific timeline, businesses can default to the deadline at the end of the quarter.

4.5 Key result and Objective must be completed simultaneously

After completing the OKRs method, the developer needs to check again by asking questions such as:

• If any KRs are eliminated, will the Objective be achieved?
• If all KRs are completed, is the Objective achieved?
• Are there any missing KRs?

If the Key Results have been completed but the Objective is still missing, it means that the Key Results created have errors. At that time, the business will modify or add additional KRs.

The above article has reinforced the content of what Key Results are and how to build Key Results effectively. In order for key results to be highly effective, businesses need to ensure they follow the correct principles when building Key Results such as: Pay attention to measurement data, specific deadlines, Objective limits,... At the same time, the Administrators can use modern software such as 1C:Company Management, which helps automate business administration, connect departments and divisions together, and track and monitor goals. as well as Key Results of the business. For more information about this software, contact 1C Vietnam immediately for support.