When planning your annual goals with quarterly breakdowns, you need to make two key decisions about structure and measurement. This guide helps you choose the right approach for your organization.

This article focuses specifically on the annual-to-quarterly breakdown decision. For comprehensive guidance on all OKR alignment patterns and time horizons, see OKR Alignment and Time Horizons: Building Effective Goal Hierarchies.

Annual goals set strategic direction for where you want to be by year-end. Quarterly goals create confidence milestones that prove you're on track. Think of annual as your destination and quarterly as the route markers along the way.

The key principle is that children build confidence in parents. Your Q1, Q2, Q3, and Q4 goals aren't just subdivisions of the annual goal. They're evidence that your annual goal is achievable and on track.

Your structure depends on two questions about your annual goal.

Yes - when the annual Key Result metric already exists:

Revenue, customer count, headcount, or retention rate are examples where the metric exists and can be measured from day one. You can track progress in Q1, Q2, Q3, and Q4 because the measurement is already defined and available.

No - when you don't know what the annual Key Result means yet:

New product launches, market entries, or new capability development often follow a learning path. In Q1, you're doing discovery and don't yet know what success looks like. In Q2, you're building prototypes and testing concepts. By Q3, you're achieving product-market fit. Only in Q4 can you finally measure the annual Key Result metric (for example, "customers using connected execution workflows").

The Key Result that defines annual success doesn't exist as a measurable thing until later in the year.

Yes - when each quarter represents a distinct phase of work:

Product launches often require different narratives for each quarter because the work is fundamentally different:

Each quarter tells a different story about what you're trying to achieve. The work in Q1 (discovery) looks nothing like the work in Q4 (scaling).

No - when the same narrative covers the entire year:

Revenue growth typically uses one narrative that spans all four quarters:

The story doesn't change quarter to quarter. You're not doing fundamentally different work in Q1 versus Q4. You're just tracking milestones toward the same $10M target throughout the year.

Use this structure when:

Break down an annual Key Result into quarterly sub-Key Results using the same metric. You don't need separate quarterly Objectives because the annual Objective tells the whole story.

Example:

When you state quarterly sub-Key Results as "from X to Y":

This format prevents confusion about whether you're tracking cumulative progress or quarterly increments.

Connect each sub-Key Result independently to your data source (for example, HubSpot or Mixpanel). This ensures you're always tracking against both the quarterly checkpoint and the annual target. For details on connecting data sources, see How to Set Up Auto-Updates.

If you miss your Q1 target, you can adjust your Q2 goal while still seeing your progress toward the annual goal. Both metrics stay visible throughout the year.

Clear checkpoint validation shows whether you're on pace or falling behind. The structure is clean and simple, focused purely on outcomes. You know at any point in the year if you need to course-correct.

Use this structure when:

Create full quarterly Objectives and Key Results that use different metrics than the annual goal. Each quarter tells its own story about a phase of work leading to annual success.

Example:

This structure shows the building blocks of annual success rather than just mathematical subdivisions. Each quarter answers a different strategic question about what you need to achieve to reach your annual goal.

Phase-based work naturally fits this structure because Q1 work looks fundamentally different from Q4 work. You're not just tracking the same metric over time. Instead, you're completing sequential phases that build on each other.

Once you've determined you need quarterly OKRs, you need to decide how annual success should be measured. You have two options.

How it works: Your quarterly OKRs structurally align to the annual Objective to show the relationship. However, quarterly progress does not mathematically contribute to annual progress. Annual success is defined purely by whether you hit the annual Key Results at year-end.

Why this works: This maintains a cleaner, simpler model. Your quarterly OKRs show you're doing the right work each quarter, but annual success comes down to whether you hit those year-end targets. This keeps everyone focused on outcomes rather than just checking off quarterly tasks.

It also avoids false progress indicators. Just because you completed Q1 discovery doesn't guarantee you'll achieve the annual revenue target. The quarterly work builds confidence that you're on the right path, but the annual Key Results are what truly define success.

This is the default Rhythms behavior and requires no special configuration.

Example in practice:

How it works: Both quarterly Objectives and annual Key Results contribute to the annual Objective's achievement percentage. The annual Objective achievement becomes a weighted average of all children, and you control the balance through weights.

Why you might choose this: This gives credit for quarterly execution even if annual outcomes aren't perfect. It shows progress visibility throughout the year and balances whether you did the work with whether you got the desired results.

Some organizations find value in this when quarterly work has intrinsic value regardless of the final annual outcome. It can help show momentum and progress to stakeholders throughout the year.

Example:

How to set weights:

Real outcome example: If you completed all quarterly work (achieving 100% of Q1-Q4 objectives = 60% weight achieved), but only hit 30% of your annual revenue Key Result (= 6% of that 20% weight), your overall annual Objective achievement would be approximately 66%. This shows you executed well on quarterly work but didn't achieve the desired annual outcome.

Important considerations:

This approach requires non-standard configuration. You need to enable "Objective contribution" in Model Customization, which is a workspace-wide setting. This isn't the default Rhythms behavior.

There's also administrative overhead. You need to set up weights appropriately from the start, or update weights as you add quarterly OKRs throughout the year. If you only define Q1 initially, your progress percentage will fluctuate significantly as you add Q2, Q3, and Q4 later.

This can create scenarios where you show 60% progress on quarterly work but haven't proven the annual outcome yet. The math is correct, but it may not represent meaningful business progress. You need to be comfortable explaining this nuance to stakeholders.

When this makes sense: Choose weighted contribution when your organization values showing progress for work done throughout the year, not just final results. However, understand that this adds complexity and requires ongoing management. Most organizations find that alignment only (Option A) provides clearer, more actionable insights.

For more details on how contribution and rollup work in Rhythms, see Understanding OKR Automatic Rollup.

Initiatives can span multiple quarters while supporting an annual goal. This is perfectly fine and often necessary for complex work.

For example, if you're building a new product:

The initiative shows what work is being done. Your quarterly Key Results show what outcomes you're achieving from that work. These work together to build confidence in your annual goal.

Initiatives don't need to mathematically contribute to show value. They provide execution visibility even when the metrics you care about (the Key Results) are what define success.

When using quarterly sub-Key Results with back-weighted targets (common when both questions are YES), initiatives become especially important for showing the narrative. The sub-Key Results track outcome progress while initiatives explain what you're building to achieve that progress. Together, they accomplish what quarterly OKRs would provide, narrative plus measurement, but keep focus on the outcome.

If you answered YES to both questions, the metric can be tracked continuously AND you need different quarterly narratives, both structures can work. Choose based on where you need emphasis:

Structure 1 (quarterly sub-Key Results): Emphasizes the outcome

Structure 2 (quarterly OKRs): Emphasizes the building phases

Choose based on what needs emphasis: Structure 1 keeps focus on results (are we achieving the outcome?). Structure 2 keeps focus on execution (are we building what we planned?). Both provide accountability, but for different aspects of success.

For quarterly sub-Key Results tracking the same metric, contribution happens automatically. Your Q1 revenue progress directly updates your annual revenue goal.

For quarterly OKRs with different metrics, the default is alignment only (no contribution). Annual success is determined by hitting the annual Key Results.

However, if your organization values showing progress for quarterly work done, you can enable weighted contribution through Model Customization. Most organizations find alignment only provides clearer insights.

This is common for ambiguous work like new product development. You have a few options:

If using quarterly OKRs with weighted contribution, you can define all four quarterly Objectives upfront (even if somewhat ambiguous), set your weights once, and then add specific Key Results to each Objective as you learn more throughout the year.

Alternatively, if using alignment only, just define quarterly OKRs as you go. After completing Q1, you'll have learned enough to set Q2 goals. The alignment relationship shows how they connect without needing to pre-define everything.

The world moves too fast to reliably predict Q3 goals from Q1. Quarterly planning exists precisely to let you adjust and iterate based on learning.

At the end of each quarter, you close out the quarterly OKR or sub-Key Result. This involves reviewing what you achieved, what you learned, and scoring the goal.

Then you set the next quarter's goals based on where you are and where you're trying to get by year-end. This is your learning and iteration cycle. For more details on this process, see Closing and Scoring OKRs.

The annual goal remains open until the end of the year. Your quarterly reviews help you understand if you're on track for annual success and where you might need to adjust.