Better Backlogs from OKRs

Agile delivery, using frameworks like Scrum, starts with defining a Product Vision (called the Product Goal  in Scrum). A Product Vision describes a future state of the product, and serves as a target for a Delivery Team to plan against. The Product Vision must then be elaborated into a Product Backlog – a prioritized list of everything needed to achieve the Product Vision. Scrum provides no guidance on how to accomplish this. The framework only defines the elements needed to implement Scrum theory. All other supporting processes, techniques and methods are considered organization- or domain-specific tactics that can be added to extend the basic framework. OKRs can be an effective compliment for agile delivery frameworks, and can be applied in the translation of a Product Vision into a Product Backlog. OKRs can help ensure that Product Backlog items are traceable to measurable business outcomes.

This article outlines how organizations can incorporate OKRs into their delivery frameworks as a tool to provide much improved focus on achieving product goals and objectives. In particular, we will describe how OKRs can be used to build better product backlogs.

Some General Definitions

There are no standard definitions for terms like Product Vision, Strategy, Roadmap. For the purposes of our discussion let’s adopt the following:

• Product Vision – An ideal future state of the product. What customer problems are solved by this target state. The Product Vision can serve as a target to plan against.
• Product Backlog – Everything needed (product capabilities, features)  to support the realization of the Product Vision. The Product Backlog is the single source of truth for the product delivery team to work from, and is aligned with a set of specific business objectives defined in the Product Strategy.
• Product Strategy – Whereas the Product Vision is often very abstract and describes a moonshot, the Product Strategy shows how the vision will be realized. What is the sequence of goals and objectives needed to achieve the Product Vision? This sequence of goals is referred to as a Product Roadmap. It is important that roadmaps identify goals to be achieved – not features to be implemented. OKRs are an effective way to define goals. Populating a roadmap with OKRs presents strategy as a series of measurable business outcomes.
• OKRs (Objectives & Key Results) – A framework for setting objectives and measuring progress towards their achievement. In our context, OKRs are stepping stones towards the Product Vision.
• Value – Changes to a product that contribute to actual business results (revenues, costs, margins, market share, customer retention, NPS scores …). Key Results should create business  value. A popular way of framing this is to talk in terms of outcomes versus outputs. KRs lead to measurable business outcomes. On the other hand it is entirely possible for a delivery team to produce tons of output, including product features, but no measurable business value.

Product Goal vs. Product Backlog (from the 2020 Scrum Guide):

In Scrum terminology, the Product Goal is synonymous with the Product Vision:

OKRs Defined

Much objective or goal-setting is primarily focused on WHAT need to be achieved: Achieve $10M in sales by the end of this year. OKRs are fundamentally different because they also specify HOW we will achieve an objective. A set of measurable acceptance criteria are defined for each objective.

Poorly defined OKRs are a waste of time and effort. Good OKRs have the following characteristics:

Key Results should be value-based. They should describe business outcomes, ideally moving the needle on a business metric. They should not be the activities or tasks needed to achieve those outcomes.

OKRs have 2 parts: A what (objective) and a how (key results). The following definitions are from John Doerr’s book, Measure What Matters.

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OKRs (Objectives and Key Results) are a collaborative goal-setting protocol for companies, teams and individuals.

An Objective, is simply WHAT is to be achieved. Objectives are significant, concrete, action-oriented, and (ideally) inspirational.

Key Results benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive, yet realistic. Most of all they are measurable and verifiable. You either deliver a Key Result or you don’t. At the end of the designated period (typically a quarter), we declare the Key Result fulfilled or not.

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Key Results should reflect tangible business results/business outcomes – not activities or tasks to be carried out. Key Results should move business KPIs like conversion rates, customer signups, delivery lead-times and so on. Conversations around Product Strategy should be about problems to be solved – not solutions (features) – leave that up to the delivery teams.

Back to our basic flow.

Or, more simply: Vision → Strategy/Roadmap (OKRs) → Backlog (Features).

For the next quarter, we want delivery teams to work on smaller, more manageable objectives.

OKR Examples

Objective	Key Results
Achieve quarterly on-line sales target of $2.5M	Deliver improved product images and product-reviews functionality to improve user conversion rate by 25%. Deliver one-click checkout and cart-editing features to reduce shopping cart abandonment rate by 30%.

Incorporating OKRs into the delivery framework can help improve alignment, focus, and engagement. Talking about Objectives and Key Results makes it easier to engage all stakeholders directly into conversations about what is needed to achieve a Product Vision and how to accomplish it.

The diagram shows a set of objectives defined to achieve the overall product vision. Each objective has a set of Key Results that specify the criteria for confirming the objective is done. Finally each Key Result has a set of implementation- or solution-specifics needed for its realization. Think of product features as things that deliver a positive change in a KR. These are then captured on the Product Backlog, which will represent the single source of work for the delivery team. Sometimes delivery teams struggle with setting Sprint Goals. Sprint Goals should represent incremental progress towards achieving the overall Product Goal. Having a prioritized set of OKRs can make Sprint Goal setting straightforward. Each Sprint Goal can be derived directly from an OKR, and can show how the work of the delivery team is contributing directly to these objectives.

 

Objective	Key Results	Features
Achieve quarterly on-line sales target of $2.5M	Improve user conversion rates by 25%.	Multiple images showing product front, side, underneath. Image size at least 640×640 pixels Ability to zoom into an ear of the image Show product reviews and ratings with search results

For organizations that operate using a quarterly planning (or PI Planning) model, defining OKRs for the next quarter will be done ahead of the next planning event. The input to planning for the next quarter will now include a set of OKRs, and the target feature set can be linked directly to these objectives. When setting up an OKR planning cycle, ensure that it is synchronized with delivery planning cadences.

Summary

The Product Vision is a view of the future. OKRs are an effective way of defining the things needed to achieve the vision. Product Strategy defines how the vision will be realized.  An effective product strategy cannot exist without a clear vision. Product Roadmaps help visualize the Product Strategy. Roadmaps can be used to communicate product strategy as a sequence of OKRs to be achieved over time. Product Roadmaps with goals and deliverables linked to OKRs bring clarity on the Who/What/Why of each deliverable, and forge stronger alignment between delivery teams and business stakeholders.