Capacity planning for more credible OKRs 

OKRs, whether stretched or committed, often fall short of delivering tangible outcomes, leading to frustration and a loss of credibility with teams, especially when they feel imposed by leadership. Many teams and companies try to adopt OKRs "the Google way," but from my experience working on multiple products and OKRs at Google, even the most ambitious goals never felt arbitrary.

While many industry discussions focus on how to write effective OKRs, a critical aspect often overlooked is estimating the resources required to achieve them.

This post will serve as a practical guide for integrating resource estimation into your next OKR planning and management process, ensuring your goals are both inspiring and attainable.

Why should product leaders care?  

As a Product Leader, you're ultimately responsible for both the strategy and execution that drive impact within your product area. While some may see resource estimation as a project management task, it’s actually a core responsibility of the Product Leader to ensure that the execution capability matches the ambition of the OKRs. Without aligning the right resources (time, skills, and effort) to these objectives, OKRs can quickly become discredited or unattainable. 

Understanding the full picture around delivering on your OKR will not only help in communicating your plans effectively but also build credibility with the executive team. They need to see how improvements are made with the available resources, reinforcing the viability of your OKRs.

By collaborating closely with engineers and other stakeholders, product leaders can ensure that resources are in line with strategic priorities, giving OKRs a realistic chance of success.

Problems with ignoring effort and execution in OKR planning

• Overcommitment: goals can become unrealistic when set without a clear understanding of the team’s capacity, time, and skills to execute them. This creates unachievable targets that ultimately impact other stakeholders down the line.
• Underutilization: on the flip side, under-committing can result in missed opportunities and a lack of impact.
• Cross-team OKRs Fail: for shared OKRs, if one team misses their targets, other teams and initiatives depending on them are also affected. Read more about best practices to sharing OKRs with other teams.‍
• Ineffective Prioritization: skipping the effort estimation makes it difficult to prioritize OKRs (both KRs and initiatives) effectively. This can lead to the illusion that everything is a priority, which results in misalignment and vague outcomes.‍
• Burnout: oversubscribed teams push themselves too hard, leading to burnout.

Capacity estimations for OKRs

This model is based on the capacity planning approach outlined in this sheet. Feel free to copy it and personalize it to your needs. 

The goal of this model is to help you determine, for a given period (e.g., a quarter), the subscription level of each team. This will guide you in making decisions that allow for course correction and ultimately building stronger OKRs.

Here are the key components of the model:

• Inputs:
  • Define KRs and Initiatives: start by listing the KRs and initiatives you plan to work on. If you're unsure about specific initiatives, you can still assign an effort estimate to each KR, indicating the level of work needed to achieve it.
  • Involved teams: Identify the teams that will contribute to these KRs and initiatives. Be sure to include shared resources (e.g., design, legal) and non-engineering teams.
  • Team capacity: estimate the capacity of each team for the designated period. For each team, note the number of members and estimate their available capacity based on the percentage of time they can allocate to OKR work. For example, an engineer might spend 30% of their time on bugs and holidays, leaving 70% for development work related to OKRs.
  • Time estimates for KRs and initiatives: estimate the time required for each planned initiative and KR. Use high-level effort estimates from each contributing team. A common method is "t-shirt sizing" (S, M, L, XL) to represent the amount of work in weeks. For example, team 1 might contribute an "XL" effort to an initiative, while team 2 might contribute an "S" effort.

• Output:
  • The model will help you calculate the "subscription level" of each team contributing to the OKRs. Teams with a subscription level above 90% are considered over-subscribed, while those below 80% are under-subscribed.

(Note: This model does not account for the seniority level and skill set of individual team members, but these can be factored in as needed)

Make the right decisions to achieve your OKRs

This model should help guide discussions and decisions in key areas, such as:

1) Are teams over, correctly, or undersubscribed?

• If oversubscribed:
  • Reprioritization of initiatives to focus on the most impactful ones. At this stage, many product managers and teams are told that their initiative will have to be deprioritized because of lack of shared resources. 
  • Reduction in scope of come initiatives or ambition of a KR to ensure achievable goals with the available resources.
  • Consideration of additional hiring or external support to meet ambitious targets.
• If undersubscribed:
  • Reprioritization of lower priority initiatives and KRs to better utilize available capacity.
  • Reallocation of team members to other projects or higher-priority initiatives.

2) Are you focusing too much on low-value initiatives?

Evaluate whether resources are being disproportionately spent on initiatives that provide limited value and consider shifting focus to higher-impact opportunities.

3) Mid-quarter, reassessment of resources and priorities

Reassess resources and priorities based on the work completed so far. Decide which initiatives and KRs to prioritize or adjust to ensure the best outcomes in the limited time remaining.

Additional learnings and considerations

• Collaboration between product, engineering and design: ensure that product, engineering and design teams work hand-in-hand on OKRs and resource estimation, with clear responsibilities for each.
• Transparent prioritization: when teams are oversubscribed and deprioritization is necessary, make it a collaborative, team-wide exercise. Be transparent about why certain initiatives are being deprioritized to avoid frustration and eliminate the perception of a "black box" decision-making process.
• Communication and alignment: clearly communicate resource allocations to all stakeholders, ensuring that everyone is aligned and understands the expectations. This creates shared ownership of both successes and limitations

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While ambitious OKRs are essential for driving growth, they are only effective when supported by realistic resource planning. As a product leader, it's your responsibility to ensure that the goals set are not just stretched (or not) but also backed by the resources available. Without this balance, OKRs risk becoming abstract goals that fail to deliver measurable impact.