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‘We are at a critical moment. Our leaders and institutions are failing us, but it's not always because they're bad or unethical, says venture capitalist John Doerr- often, it's simply because they're leading us toward the wrong objectives. This has to stop.’
In one of the most engrossing TEDx videos that got over 7 Million Views, John Doerr, Managing partner, Kleiner Perkins explains the power of Objectives and Key Results: Why the secret to success is setting the right goals .
Most often than not, leadership teams come back rejuvenated after intense discussions at an annual Strategy Retreat. There are definitely enthusiastic efforts to communicate strategy and goals during town hall events. These are probably reviewed mid-year or annually.
In reality, we know the story that follows. The understanding of company strategy often gets lost in emails over time, with no real effort to help teams understand where the organization is, and how an individual can action it!
If you have practiced or heard about OKRs, you would know by now, OKRs (Objectives and Key Results) is a strategy execution framework. The beauty of OKRs is that companies, big and small can set and align teams to the most critical business metrics.
The importance of carefully selecting the right Objectives is not only imperative to a company’s success, this has become one of the most critical skills in a modern leader's tool kit.
OKRs are anything but set and forget. It is more than a goal-setting framework. It changes the way your business operates, and requires discipline and thought to execute. The topmost reasons why companies adopt OKRs are:
If a company is adopting OKRs because:
It’s time to STOP and think again.
OKRs are magical. They must tell a story. Great stories always make great memories.
The first misstep in OKRs writing is that they are not the goals of a CEO. OKRs are written collectively by the leadership team, mirroring a company’s strategy.
While writing Company OKRs, the leadership or top team members and the Internal OKRs champion should be part of the discussion. The intent of writing Company OKRs is not to come up with an Annual Operating Plan or throw out a bunch of financial KPIs. Now, we totally understand that revenue metrics are the health of an organization. However, on their own, they will not move the company forward, unless supported by Processes, People, and Customers.
This executive exercise is about choosing the Vital Few, over the Trivial Many, mostly written for 6-12 months.
The Mission and Vision are the building blocks of a company. They call out the very reason your company exists, and the principles which guide you to action.
Powerful Mission statements stand the test of time. For instance, Google’s mission is to ‘Organize the world’s information and make it universally accessible and useful.’
Vision statements are the word pictures of the future. When articulated, they most often have a quantification. Google’s Vision is ‘to provide access to the world’s information in one click’.
As for Strategy, in his bestselling book, Richard Rummelt, author of Good Strategy Bad Strategy gives a concrete picture of the elements of strategy.
“Good strategy is not just “what” you are trying to do. It is also “why” and “how” you are doing it… Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.”
When OKRs are written, they cannot be written in a vacuum. OKRs set at the company level must connect to the Mission, Vision, and Strategy of the organization. OKRs are not the strategy by themselves. It is a Strategy-to-Execution framework that comes into play once a strategy is well articulated.
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Armed with the Strategy of the organization, the leadership team together comes up with three levers that are critical to bringing business leverage over the next 6-12 months.
Let's take an example of an Insurtech company, which has great aspirations for expansion. Scaling their business required three business levers to be pulled:
When the leadership team started listing down their OKRs, they started with an exercise of free listing metrics which would help them measure progress on the business levers. These levers could, of course, not be accelerated without investing in people's development and experience.
OKRs is an acronym for Objectives and Key Results.
Objectives tell you “What do we need to achieve?” They are qualitative statements that must call out a business value.
Key Results focus on the “How do we measure success?” You can think about Key Results like a Google Map, moving you from point A to B.
Key Results Start with a Verb + Metric to be measured and improved + movement from X to Y
Tasks/Initiatives which is “What do we need to do to get there? The Verbs in OKRs are important, as everything about OKRs is about moving the organization through actions!
When OKRs are written, it is important for leadership and next-level teams to write with consistency. This would help communicate OKRs in a unified language and enable teams to connect and align their metrics, to move the business forward.
Here’s how the Insurtech company (from the example above) would write a Company OKR:
Objective statement: ‘Focus on expanding our width of distribution in order to accelerate new customer acquisition.’ Objective statements could get creative as well, having emotions in the verbs helps build memorability ‘Conquer or Go all out with our width of distribution strategy in order to accelerate new customer acquisition.’
In the sentence above, new customer acquisition is the business value, and ‘What would they want to accomplish’ is the Width of Distribution.
The key results can take the form of metrics, and new launches to enable this aspiration:
KR 1: Increase distribution in specific Cities from X to Y
KR 2: Increase partnership onboarding from X to Y
KR 3: Launch our new product offering
KR 4: Increase new customer acquisition revenues from USD X to Y Million
One of the litmus tests for a well-written set of company OKRs is that they must fit on a page. If there are too many, nobody would remember. Company OKRs written by leadership teams could get into the complex creative zone, with each leader looking to bring their department OKRs into the fold.
Red Flag Alert! While writing company OKRs, leadership teams must elevate their thinking to writing for the company as a whole, and not place forward a department OKR. For instance, ‘Increase distribution in specific cities from X to Y’ is a company Key Result. There are two or more teams/ departments who can align to move this key result forward.
Let's say you have a Key result that says ‘Increase website impressions from X to Y million’, you know for sure, the place is at a department/team and does not need to be tracked at the Company level.
Less is always more in OKRs.
Once company OKRs are written, they must be communicated swiftly. CEOs are the best sponsors of OKRs. Either during the town hall or over email, company OKRs once explained to next-level teams would set the stage for Team OKRs writing.
It doesn’t stop there, executives must add value to Team OKRs writing, by coaching teams to pick the right metrics, but not picking them on their behalf. Leadership reviews around OKRs are essential to keep the momentum on progress, groom next-in-line team members to present progress, and learn end-to-end of the business.
Fitbots has worked with over 5000 teams in helping them get OKRs right and tracking powerful insights on our OKRs software. During Executive or Company OKRs writing, our 5 Step methodology has simplified OKRs writing in a few hours, helping leaders to focus on action rather than verbose discussions. Click here to book a call with our OKRs expert on how we can help you get OKRs right, and manage them with powerful insights.
Vidya Santhanam is the Co-Founder of Fitbots OKRs. Having coached 600+ teams, and conducted 1000+ check-in meetings, Vidya likes writing about Metrics, high performance, and leadership.
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