- Introduction
- The framework for Radical Focus
- OKR fundamentals
- Setting a rhythm of execution
- The timing for OKRs
- OKRs for MVPs
- Improve weekly status emails with OKRs
- Common OKR mistakes
- Quick tips on OKRs use
Don't tell people how to do things, tell them what you need done and let them surprise you with their results – General George Patton
You can release all the features you want, but if it doesn't solve the underlying business problem, you haven't really solved anything.
Executives and other stakeholders all too often come up with the quarterly "roadmap" of features and projects and then pass them down to the product teams, essentially telling them how to solve the underlying business problems. Progress is measured by output and not by outcome.
Ideas, like NDAs, aren't worth the paper they are printed on. Ideas are easier to come up, what's hard, really hard is moving from an idea to reality.
It's not important to protect an idea. It's important to protect the time it takes to make it real. You need a system to keep you and your team aimed at your goal.
A startup enemy is time, and the enemy of timely execution is distraction.
If you are CEO or a manager, you want things for your company. Even in the most successful companies, the thing we have determined must happen, often doesn't. This is due:
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We haven't prioritised our goals
If everything is important, nothing really is.
You could probably put stuff in order of importance, choose to work one thing at a time. Setting a single Objective with only three Key Results to measure keeps you focused.
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We haven't communicated the goal obsessively and comprehensively
When you are tired of saying it, people are starting to hear it.
Once you have the goal projects must be evaluated against it. By repeating the goal in commitment meetings, weekly status emails or Friday wins celebrations, we assure that the goal is in the front of everyone's mind and tied to all activities.
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We don't have a plan to get things done. Will power is a finite resource. you need a process that helps you make sense of the work you need to do, and keeps you on track even when you are tired.
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We haven't made time for what matters. The Eisenhower Box (Important/Urgent matrix) is a time management tool. Urgent things get done because the pressure of time. Unless we bring that pressure to important but not urgent things, they won't get done. Block out time to do what matters. Nothing is as invigorating as a deadline. By committing to work towards the Objective, you assure you'll be held accountable to progress.
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We give up instead of iterate. You'll fail the first time you implement OKRs. Maybe a company will find they have sandbaggers where no one ever sets hard goals; a company that is afraid to fail. Or maybe you have a company where no one makes their Key Results, because people over-promise and under-deliver. The most common fail is no follow-through, people set OKRs just to ignore them afterward. Successful one try again in. The only hope for success is iteration; you track what works, and what does not.
We start our journey to our dreams by wanting, but we arrive by focusing, planning and learning.
If you think that you create a startup to make money, you are misinformed. 90% of startups fail. If you want to change the world you will need a mission.
The mission has to be simple, memorable and act as a guide when you make a decision about how to spend your time. Great missions are inspirational, yet directed.
A mission and an Objective in the OKR model have a lot in common, they are aspirational and memorable, the key difference is time scale. An Objective takes you through a year or a quarter. A mission should last at least five years.
A mission keeps you on the rails. The OKRs provide focus and milestones. Using OKRs without a mission is messy, undirected and potentially destructive. Once you have a mission, selecting each quarter's Objective is straightforward, you are ready to have conversations on how to move the mission forward.
OKR stands for Objectives and Key Results, they came from Andy Grove implementing Peter Drucker's Management by Objective system at Intel. John Doerr, former intel executive, began evangelising them to all the startups he invested. Some like Google and then Zynga embraced them fully.
The Objective is qualitative, and the KRs (most often three) are quantitative. The objective establishes a goal for a set period of time, usually a quarter. The Key Results tell you if the Objective has been met by the end of the time.
Your Objective is a single sentence that is:
- Qualitative and Inspirational. Designed to get people jumping out of bed in the morning with excitement, it provides meaning and progress. Use the language of your team.
- Time bound. For example, doable in a month or a quarter.
- Actionable by team independently. Your Objective has to be truly yours, and you can't have the excuse of "Marketing didn't market it".
Key Results take all that inspirational language and quantify it. "How would we know if we met our Objective?". Typically you have three Key Results. They can be based on anything you can measure like Growth, Engagement, Revenue, Performance or Quality.
If you select your KRs wisely, you can balance forces like growth and performance, or revenue and quality by making sure you have potentially opposing forces represented.
OKRs are always stretch goals, KRs should be difficult, not impossible. A great way to do this is to set a confidence level of five of ten on an OKR. If you want to achieve great things, you have to find a way to make it safe to reach further than anyone has before.
Pushing yourself and your team to bigger things yet not making it impossible. The sweet spot is when you have 50/50 chance of failing.
The company should set an OKR, and then each department should determine how their OKR leads to the company's successful OKR. A team can focus their OKR ona single Key Result or try to support the entire set.
Much of the value in OKRs comes form the conversations on what matters.
When setting OKRs for individuals, each one should set OKRs that reflect both personal growth and support the company's goal. Individual OKRs are about becoming better at your job as well as helping your product get better. When working with individual OKRs, you can set goals to correct problems before they blossom into full disciplinary actions.
OKRs are part of your regular rhythm. Bake them into your weekly team meetings and your weekly status emails. Adjust your confidence levels every single week. Have discussions about why they are going up and down.
Do not change OKRs halfway through the quarter. Fail or nail then, and use that learning to set them better next time. Changing them halfway through teaches your team not to take OKRs seriously.
OKRs aren't about hitting targets, but about learning what you are really capable of. Failure is positive indicator of stretching.
It's important to have a cadence of commitment and celebration. Each Monday, the team should meet to check in on progress against OKRs, and commit to the tasks that will help the company meet its Objective. A format of four key quadrants is recommended:
- Intention for the week: What are the 3-4 most important things you must get done this week toward the Objective? Discuss if these priorities will get you close to the OKRs.
- Forecast for month: What should our team know is coming up that they can help with or prepare for?
- Status toward OKRs: If you set a confidence of five out of ten, has that move up or down? Have a discussion about why.
- Health metrics: Pick two things you want to protect as you strive toward greatness. What can you not afford to eff-up? Key relationships with customers? Code stability? Team well-being? Now mark when things start to go sideways and discuss it.
┌─────────────────────────────────┬──────────────────────────────────────────┐
│ PRIORITIES THIS WEEK │ OKR CONFIDENCE │
│ │ │
│ - P1: Close deal with TLM foods │ Objective: │
│ - P1: New order flow Spec'd │ Establish clear value to │
│ - P1: 3 sales solid candidates │ distributors as quality tea provider │
│ for interview │ KR: Reorders at 85% 5/10 │
│ │ KR: 20% of reorders self-serve 5/10 │
│ │ KR: Revenue of 250K 5/10 │
├─────────────────────────────────┼──────────────────────────────────────────┤
│ NEXT 4 WEEKS - PROJECTS │ HEALTH │
│ │ │
│ - Passive reorder notifications │ Team health: #yellow │
│ - New self serve flow for │ Team struggling with │
│ distributors │ direction change │
│ - Metrics for distributors on │ │
│ tea sales │ Distributor satisfaction health: #green │
│ - Hire customer service head │ │
└─────────────────────────────────┴──────────────────────────────────────────┘
This document is first and last a conversation tool. Set the tone of the meeting to be about team members helping each other to meet the shared goals they have committed to.
Missing your goals without also seeing how far you've come is often depressing. Friday wins session is critical. Teams demo whatever they can, every team should share something.
Keep the meeting small, ten or fewer people if possible. Should be run by the CEO and must include senior executive team. Take away phones and computers.
A few days before the meeting, solicit all the employees to submit the Objective they think the company should focus on.
Have someone collect and bring forward the best and most popular ones.
Set aside 4.5 hours to meet. Two 2-hour sessions, with 30 minute break.
Each exec head should have an Objective or two in mind to bring to the meeting.
Combine similar Objectives and narrow them to three.
Have all members of the exec team freelist as many metrics as they can think of to measure the Objective. You put one idea on each Post-it so you can rearrange, discard or modify the data you have. If two people write down DAU, you can put those on top of each other and count two votes for that metric.
Pick three types of metrics.
It's easier to discuss what to measure, then what the value should be and if it's really a "shoot for the moon" goal.
It's recommended having a usage metric, a revenue metric and a satisfaction metric for the KRs. Find different ways to measure success. Two revenue metrics might have an unbalanced approach to success.
Set the values for the KRs. Make sure they really are "shoot for the moon" goals. You should have only 50% confidence you can make them. Challenge each other.
Take five minutes to discuss the final OKR set.
Plan out the timing for OKR implementation, teh standard rhythm from quarter to quarter:
- All employees submit the Objective they think the company should pursue next quarter.
- Exec team in half-day session discusses the Objective propose. They choose one. The team sets the KRs, as outlined previously.
- Execs introduce the OKR for quarter to their direct reports, and have them develop department OKRs.
- CEO approval.
- Department head gives the company and department OKRs to any subteams, and these teams develop their own.
- All hands meeting in which CEO discusses why the OKR is what it is for the quarter, and calls out a few exemplary ones set by directs. Covers last quarters OKRs and points out a few key wins from the quarter.
Admit you have missed a KR, or admit you set a KR too low and it it too easily.Get that learning, and roll it into your next goal-setting exercise.
OKRs are about continuous improvement and learning cycles.
The first time you try OKRs, you are likely to fail. Your team may become disillusioned with the approach, and be unwilling to try them again. To reduce this risk:
- Start with only one OKR for the company.
- Have one team adopt OKRs before the entire company does.
- Start out by applying OKRs to projects.
Anyone initiating a new feature should outline a clear Objective and a set of Key Results to better understand why we are doing the work.
Including OKRs on the Kanban cards forces the team to answer two important questions before anything is built:
- What are we trying to achieve with this feature?
- How do we measure success or failure?
┌───────────────────────────┐
│ MVP: EXAMPLE │
│ │
│ - Hypothesis (Objective): │
│ - Key result: │
│ - Method: │
│ - Stories: │
└───────────────────────────┘
This allows to prioritise work on the roadmap based on its expected impact in business goals.
If the business has an Objective, we can prioritise features that we think will have the biggest impact on that area.
Being able to quickly recite the business logic behind a feature and its position in the queue can make conversations much more efficient and less emotional!
At Zynga, reports were sent to the entire management team, these status reports were very successful because they ahd important information laid out in a digestible format.
- Lead with your team's OKRs, and how much confidence you have that you are going to hit them this quarter. You list OKRs to remind everyone why you are doing the things you do. How likely you feel you will meet your Key Results on a scale from 1 to 10. Red falls below 3, green as it passes 7.
- List last week's prioritised tasks and if they were achieved. If they were not, a few words to explain why.
- Next list next week priorities. Only P1s, they have to have a clear outcome.
- LIst any risks or blockers. Things you can't solve yourself. Do not play the blame game. List anything you know tof that could keep you from accomplishing what you set out to do.
- Notes. Anything that doesn't fit in these categories.
To: [email protected]
Subject: Week of 10/15/2020
Body:
Objective: Establish clear value to restaurant suppliers as a quality tea provider,
KR: Reorders at 85% 6/10
KR: 20% of reorders self-service 6/10
KR: Revenue of 250K 4/10
LAST WEEK
P1 Close new deal with TLM Foods NOT DONE - extra surprise level of approvals
P1 New Order flow spec'd and approved
P1 3 solid sales candidates in for interview NOT DONE one flaked, need better pipeline. Discuss?
P2 Customer service job description to recruiter DONE
NEXT WEEK
P1 Close deal with TLM
P1 Offer out to Dave Kimton
P1 Usability tests: discover and prioritise key issues with self-serve
NOTES
Anyone know the procurement VP at Johnson Supplies?
Also, lmk if you want to sit in on usability! It's good for your soul, y'know....
This format also fixes another key challenge large organisations face: coordination.
Coordinating organizational efforts is critical to compete and innovate. Giving up on the status email is a strategic error.
- You set too many goals per quarter. Try setting only one.
- You set OKRs for a week or a month. Startups maybe shouldn't use OKRs before achieving product/market fit. If you can't keep on track longer than a week, you probably aren't ready for OKRs.
- You set a metric-driven Objective. The Objective needs to be inspirational.
- You don't set confidence levels. OKRs are there to encourage you to shoot for the moon. Setting a confidence level of five out of ten means you have a 50% chance of hitting the goal. That's stretching.
- You don't track changing confidence levels. Mark changes as you get new information.
- You use the four-square on Monday as a status report. Discuss what needs discussing.
- You talk tough on Friday. Let's crack a beer and toast what we did accomplish. Let's be proud of what setting big goals did let us accomplish.
- Set only one OKR for the company, unless you have multiple business lines.
- Give yourself three months for an OKR.
- Keep the metrics out of the Objective.
- In the weekly check in, open with company OKR, then do groups. Don't do individuals, that's better in private.
- OKRs cascade; set the company OKRs, then group's/role's, and then individuals.
- OKRs are not the only thing you do; they are the one thing you must do. Don't jam every task into OKRs.
- The Monday OKR check in is a conversation.
- Encourage employees to suggest company OKRs. OKRs are great bottom up, not just top down.
- Make OKRs available publicly for the whole company.
- Friday celebrations is an antidote to Monday's grim business.