A Smarter Way to Define OKRs

Aligning OKRs with Your Product’s Growth Stage

OKRs (Objectives and Key Results) are a powerful tool for aligning teams and measuring product progress. However, many teams implement them without considering a crucial factor. Before defining objectives, you must ask yourself one essential question: What stage is our product in?

This might seem trivial, but the answer can change everything. To illustrate this, let’s refer to Kent Beck, one of the most influential minds in agile development. Beck is not only a co-creator of Extreme Programming (XP) but also one of the original signatories of the Agile Manifesto, a key advocate of Test-Driven Development (TDD), and the creator of the Three-X Model. This framework outlines the three phases of product evolution and serves as a guide for defining OKRs. Let’s explore why.

Beck Divides Product Development into Three Phases:

• Explore: The exploration phase, where the goal is to uncover insights and validate hypotheses. Here, the focus is on learning and rapid iteration.
• Expand: The growth and scalability phase. Once Product-Market Fit is achieved, the objective is to expand the product sustainably.
• Extract: The maturity and optimization phase. At this stage, the priority is to maximize efficiency, improve profitability, and defend market share.

How to Apply OKRs Based on Your Product's Stage?

• In Explore: Avoid strict numerical metrics. The goal at this stage is not growth but learning. Define qualitative objectives such as identifying key user problems or validating hypotheses.
• In Expand: Set growth metrics based on validated insights, such as increasing retention rates, or expanding product adoption in new markets.
• In Extract: Optimize key metrics and enhance efficiency, such as reducing customer acquisition costs or improving operational costs.

In summary: If your product is in Explore, focus on generating insights. If it’s in Expand, prioritize growth. If it’s in Extract, optimize profitability. And remember, before defining OKRs, always ask yourself: What stage is my product in?

by David Almazán