Tuesday, August 3, 2021

Lesson #339: OKRs Unite Companies to Achieve Goals

Posted By: George Deeb - 8/03/2021


& Comment


Goals setting is one of those business processes that is really an art. When it is done really well, it can unlock huge performance increases and propel your business to new heights. I was recently introduced to Matt Roberts, the founder of London UK based ZOKRI, whose software helps fast growth companies use Objectives & Key Results (OKRs) driven goals and agile working practices to provide clarity on how growth will be delivered. He is an expert in this space and was gracious enough to allow me to pick his brain to assist me in writing this post.

Why Do Goals Matter? 

The research is clear. Goals serve to direct our efforts towards relevant activities and away from irrelevant ones. Put another way, goals are there to make sure we are doing the right things everyday. The activities that will make a difference.

There are other insights in the research, as well, though. The most important recurring theme is the need for goals to be a challenge to achieve, to push the business forward to new heights. This is why these "harder to hit" goals matter:

  • Harder goals are proven to increase our focus and prolong our effort
  • Harder goals encourage learning, collaboration and innovation - when goals are easy we don’t need to try as hard

If goals really matter to performance management then it is worth exploring what good looks like to start a process of inquiry and improvement. This post has been written to:

  • Introduce the basics of OKRs as a way of setting goals - it’s a leading goal setting framework
  • Share common OKR failure points so you can avoid them
  • Share examples of OKRs that align and would unite a company and teams
  • Emphasize the importance of committing to a update and discussion cadence
  • Encourage you to go all-in if you feel that more aligned and ambitious goals and agile execution are for you

An Introduction to OKRs

OKRs are the go-to goal setting framework for start-ups and scale-ups, and they have been around for a long-time. In fact, they can be traced back to a framework called Management By Objectives (MBO), which was used in the 1970’s. Since then, they’ve become a mainstream way of setting goals and managing growth with Google being the most famous of the companies that use the framework.

There is a simplicity to OKRs that is really attractive. Starting with the fact that they have just two entities:

  • An Objective - describes the Mission you want people to sign-up to and why
  • Key Results - measure the outcomes you are trying to get to. 

Other attributes OKRs have that make them different to other methods like SMART goals are:

  • Frequency of discussions - OKRs are designed to be discussed frequently and widely
  • Aligned - OKRs are set at the top in the form of Company Objectives and aligned with by teams, both departmental and cross-functional.
  • Transparent - OKRs are designed to be shared across teams and not hidden away in silos.

However there are nuances to OKRs that if not understood can cause confusion and even make their introduction a failure that it’s worth understanding.

Common Issues with OKR Implementations to Avoid

Like with the introduction of any new system or way of working, some of what you do and is being asked feels alien or even counterintuitive at first. The most common issues are:

  • 100% is not the only definition of success, in fact, the level of ambition and how you work towards the goal often matters more than the final outcome.
  • Tasks not outcomes are used for Key Results - usually because teams are not good or comfortable talking about measurement.
  • OKRs implemented well are talked about all the time and weekly priorities are constantly aligned and re-aligning execution around them. If agile ways of working are new, OKRs can still become a set-and-forget goal.
  • OKRs are expressions of the most important objectives being targeted. They are what teams are being asked to align with and focus on outside their business-as-usual activities. The issue can be that teams describe their roles and everything they are doing as OKRs, so everything and nothing is most important.

How you avoid these issues is with education, coaching and reinforcement of what good looks like, and leadership. 

OKRs that Can Unite a Whole Company

OKRs, when used well, have the ability to not just be a way of setting goals in traditional teams like Sales and Marketing, they have the ability to unite teams around Company goals and encourage the creation of cross-functional teams. Here is an example of a Company Level OKR that could unite and focus a start-up:

Achieve product market fit and be easy to invest in

As measured by:

MRR increases from X to Y

Churn has reduced from X to Y

LTV : CAC Ratio is over 4

NPS is 80+

Teams would be asked to align Objectives with this OKR. Which is what will be discussed next.

It’s easy to see how Marketing and Sales could work together on top, middle and bottom of the funnel OKRs and target the MRR and CAC metrics. What is often not done as well is Product, Data Science and Engineering OKRs.

If these teams go it alone they are highly likely to create OKRs that target improvements in processes and systems that improve their team performance. For example, it’s common for Product Managers to create OKRs around talking to more customers, or Engineering to reduce the bug count or increase story-point velocity.

If you got these teams together and asked them a different question such as ‘how can your team be improved’ and asked everyone, ‘how could the product be improved to help customers?’

To be clear, you can also have a team OKR, but having an OKR that is targeting the customer and the value they need you to provide is more important.

For example, what if your product was hard to learn and it’s stopping you from getting scale. The value you need to provide is:

Make learning our product really easy

As measured by:

80% of new sign-ups complete all 5 engagement tasks

50% of new users invite 5 colleagues to the app

To achieve this you’re going to need Product Management, Engineering, and the UX / Design team to work together, not working in separate silos.

Tracking & Reporting OKR Progress

What then follows on from this is a planning session where Initiatives are proposed, a backlog is created, some are moved to ‘in progress’ and execution begins.

Every Monday the teams propose priorities for the week, share problems, and review related metrics that would support the OKR like Sign-ups Volume, Weekly Average Users.  On a Friday, wins are shared.

This focused agenda and cadence is what keeps the teams connected to the OKR and helps its achievement, and is what OKR software like ZOKRI supports.

Software matters because spreadsheets not only suffer from ‘set and forget’, they are not good at managing the constituent parts of goal and executional conversations, both when teams are together, and when people are working asynchronously.

The reality is you want and need the reminders, alerts, input structure, workflows, integrations, data views and reports. Not having them reduces goal and execution focus, or increases the time and management overhead.

The other part of the argument is that you want to be breaking down the silos not supporting them. Having a friendly easy to navigate common system that shows anyone what teams are trying to accomplish, their progress and priorities has huge advantages. For example, it helps decisions in teams make sense, especially if what is being done conflicts with what you need, as goals provide context for the work being prioritized and committed to.

Mastery is Not Hard But Needs Commitment 

Mastering OKRs is not hard but does take commitment from the top and an understanding that changes in how you plan and collaborate takes time as you are acquiring new skills and embedding new behaviors. The destination and journey can be a rewarding one as it can unite your whole company around a common vision and set of goals. If you want a deeper dive on this, Matt shared this free guide on OKRs which may be helpful.  If any of you need help with setting business goals, call us at Red Rocket.  If any of you need help with measuring and achieving those goals, call Matt's team at ZOKRI.  Matt, thanks again for your help and inspiration here.  

For future posts, please follow me on Twitter at: @georgedeeb.

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