First publication: 27 May 2020 on LinkedIn
Objectives and Key Results (OKR) helps to nurture a results-focused culture by shifting the perspective from outputs to outcomes. Outputs are a means to an end (the “what”, the actions); they represent the pieces that contribute to delivering what matters: results, outcomes (the “why”, the reason for performing the actions).
If the organisation has thrived on all planned outputs, but the desired outcome hasn’t been achieved, something is wrong and the outputs need to be revisited. At the end of the day, if no benefit is being produced to the customers, if no value is being added to the users (or at least the perception of), it doesn’t matter if all the boxes have been checked from an operational point of view — that will certainly translate into poor business performance.
In turbulent, uncertain times, the results of actions — for good or ill — may get amplified. Efficiency gains, doing more with less, identifying & exploring opportunities, and focusing energy & effort on what really matters is absolutely essential.
That’s exactly what motivated me to set the time aside to produce this text.
Now, more than ever, correctly focusing on outcomes and having a measurable & agile action plan can mean the difference between surviving the crisis — or even thriving on it — or disappearing.
My first contact with OKR was back in 2014 when I watched the famous (or infamous) video “How Google sets goals” and decided to self-experiment. I started using the framework for structuring and tracking personal goals. In 2015, I brought it to work and began to use it for establishing and measuring goals for BTFIT.
At the end of 2016, at Blackbaud-Everydayhero, I stepped up to help our new leadership to implement OKR in the organisation.
Driving on a dark road at night using a GPS
I have always used this analogy when explaining OKR to my colleagues, and I believe it fits like a glove for the current conditions with the pandemic and the high level of uncertainty it brought to every sector.
You know where you want to go, but the scenario is volatile, so you have to plan as if you are driving a car at night. Embrace the fact you can’t see past what your headlights are reaching.
At the same time, if you have a GPS you know you need to turn right after a certain number of meters as part of the journey to reach your destination. I like to think of these steps as the Key Results and your final destination, of course, is the Objective.
It is important, though, to also have the cockpit in front of you so that you know how much fuel you have left, what is your current speed vs. speed limit and the temperature of the engine amongst other key indicators — i.e. monitoring & controlling is key.
Know also that, even with a well-calibrated GPS you will certainly encounter roadblocks on your way — “The map is not the territory”. That’s why working on your Fluid Intelligence (to complement your Crystalized Intelligence) is important, but that’s more likely to be the subject of a separate article. ;)
Below are four learnings I have acquired and developed over these past years using OKR, and I’m also sharing the template spreadsheet I’ve created and always used for establishing, communicating and tracking my Objectives and Key Results.
1. From non-negotiable targets to stretch goals
Some may argue that committed goals shouldn’t be represented in the form of OKR, not even as Key Results directly. The strong consensus, though, is that OKR, at its best, should be primarily used for establishing and tracking stretch goals, and not as an employee performance evaluation tool.
Either way, some areas of the company may start using OKR more as a communication tool for sharing their non-negotiable targets for the quarter rather than using the framework for pursuing something greater (the “moonshots”), whilst achieving the business-as-usual commitments along the way. I learned to accept that.
The speed at which an organisation embraces OKR in its best form truly depends on their level of maturity or capacity of being agile, i.e. being able to operate in a highly responsive way; learning and adapting rapidly to the new circumstances. This mind shift can certainly be stimulated, but not forced — it’s a cultural change. Optimistically, I trust that those using OKR only for non-negotiable goals have the potential to eventually evolve to be properly using it for pursuing stretch goals and aspirational Objectives.
From experience, specifically for Sales, or commission-based roles within the organisation, I believe, it is possible to navigate between non-negotiable (committed) & stretch goals with less difficulty. In this case, I suggest clearly identifying what is “committed” and what is “stretch” amongst the goals, but still making both categories of goals public and allowing this combination to work as an incentive or healthy challenge for the Sales team as they can naturally be more competitive and driven by results than other areas of the company.
If the parties involved (leadership and team) have a clear understanding that the OKR reflects stretch goals — which they should — KR owners cannot be held accountable for any failure. Moreover, because it’s all about stretch goals, even if they ‘fail’, the ‘failure’ itself is valuable as it generates learning on its own. On the other hand, if the stretch goal has been achieved and it is resulting in benefits for the business, the effort and dedication of the individuals need to be recognised properly.
I believe the secret is to have the non-negotiable, committed goals (outside of OKR) and on top of that have the OKR as the ‘extra mile’: if achieved, recognise; if not, no penalties.
Committed goals, on the other hand, must be delivered as they should translate into actions required for the business to fulfil its purpose of maximising profits for owners or stakeholders while maintaining corporate social responsibility — or even to survive at a more primal degree.
2. Effective tracking, assessing delivery confidence and grading
For simplifying the process, I personally prefer to do OKR tracking and scoring on top of three stages represented by 0% (zero or none), 50% (half achieved), and 100% (fully achieved), instead of using increments of 1% as I have seen some people doing. The three stages (0, 50, 100) can also be used for representing the level of confidence in achieving, by acting as Traffic Lights or RAG. The three-level scale mapping to a visual RAG makes it easier, quicker to communicate status on a weekly or fortnightly basis.
Additionally, when calculating the final scores, either the KR was developed in full, or at least it reached 50%, period. If it’s less than 50%, it may still yield important results for the business, of course, but it does not significantly contribute to increasing the overarching Objective score.
If OKR is being properly used to establish and track stretch goals, the final score (in fractions of 5% or 10%, at least) can act as a thermometer indicating if unrealistic stretch goals have been set up. For example, if less than 65%-70% is achieved, especially for two quarters in a row, the Objective and Key Results may be truly infeasible for the moment, as well as if the quarterly score is constantly higher than 90%, it may be an indication that they are “too easy”, not necessarily representing moonshots or aspirational objectives.
It goes without saying, KRs are quantitative and measurable and, as such, they must always be associated with a metric that will serve to directly indicate if the Key Result has been achieved or not.
If it’s difficult to determine a metric, for example, if the numbers yielded as a result of actioning on the particular KR cannot be fully realised within the quarter due to its dependency on the volume of data (reporting) that cannot be generated or collected within the time box, milestones can be temporarily used as a form of measurement. For example, a KR could read: “Have XYZ completed by the end of the second month of the quarter…”, meaning the results of tackling XYZ will only be properly measured in the following quarter, but still allowing the business to represent its trust on the (perceived) importance of having the KR completed as a contribution to achieving the overarching Objective.
Keep in mind that by measuring you KRs using milestones instead of “real” metrics you may be drifting away from properly focusing on outcomes. I would say it’s OK to turn to milestones at the beginning of your OKR journey; as part of your learning process or to facilitate for some areas of your organisation to adopt the new goal-setting framework. However, as you & team become more comfortable with the framework & processes, make sure to replace milestones by proper metrics in your KRs.
3. Weighting Key Results
Although all KRs are relevant, it is essential to indicate which KRs, mapping to the same Objective, are slightly more important than the others. In this case, the 3 to 5 KRs will be associated with a percentage and rolling up to 100% at the overarching level.
However, I still suggest no more than a 5% weight difference between the KRs. If the gap is higher than 5%, perhaps the weaker KR is not an action that has the level of importance to be classified as a Key Result for the quarter. At the end of the day, if KRs underneath the same Objective have the same level of importance — which sometimes is the best scenario — the weight (100%) just needs to be evenly distributed between them.
If there are different weights to the KRs, when the totals at the Objective level as well as at the overarching level (grand total; final results from all Objectives combined) are being calculated, there will certainly be percentages that are not necessarily 0%, 50%, 100%, and thus more accurately represented.
This approach results in a healthy combination, accommodating the simplicity of the traffic lights for the weekly or fortnightly monitoring, but also allowing for the adequate level of granularity when calculating the final scores at the end of the quarter.
Food for thought: OKR experts such as Felipe Castro advise that by having to assign weights to KRs in the first place you are probably adding unnecessary complexity, and it can even be a strong indication that you may have too many KRs.
4. Rolling out the OKR process: make it accessible, publicly visible and hold people accountable
When I was spearheading the process, helping the new leadership to kick it off and run it for the first year, we were always working with the sponsors weeks in advance, before the end of the quarter, so that we could have the new OKR ready to be presented at All Hands¹ at the beginning of the next quarter.
Likewise, when we were reaching three weeks to the end of the quarter, we all already had a pretty decent idea of what was going to be achieved or not. There was always some carryovers from one quarter to another (i.e. KRs that were not achieved but were still relevant) as well as brand new Objectives with underlying fresh KRs.
Together with the global leadership, we engaged the sponsors holding them responsible for working with us along the way, I even established a RACI matrix as a way of gently forcing their buy-in. The sponsors were also in charge of engaging their teams for producing the relevant KRs: the collective knowledge, including the hands-on experience and awareness of operational pain points, were crucial for mapping the right set of KRs to be attached to the overarching Objective at that point in time.
I also published an internal website and asked every OKR sponsor to record a video explaining what were their area’s Objectives for the quarter and the respective Key Results discussed with their teams. Prior to that, I delivered several presentations to our teams explaining how the OKR process was going to work.
The sponsor videos were showcased during each quarterly All Hands¹ and were always accessible to the teams, published on the internal site. Additionally, weekly or fortnightly, each sponsor was requested to report on their group of KRs by updating the tracking spreadsheet (available in ‘view mode’ on the internal OKR site) and also sharing it with the other teams. The tracking spreadsheet served as a critical Information Radiator, helping to keep people focused on what really needed their attention whilst promoting transparency at the same time.
Finally
OKR keeps people focused on the important goals, but also on pragmatic, tangible tasks at the same time. The tasks are translated into measurable daily/weekly/monthly achievements that serve the mission of acknowledging progress & closure whilst the important goal at the top level can help to establish the purpose. By clearly defining the goals, tracking and, more importantly, giving everyone access to common objectives, focus and productivity within the organisation are inherently improved.
Additionally, due to the “stretch” nature of OKR, a healthy challenge, stimulating the organisation to strive further, can be sustainably (and genuinely) established. In other words, people can rightfully start to believe they can achieve a bit more than what they thought it was initially possible, and that’s when extraordinary things can happen.
Along the lines of what I mentioned at the beginning of this text, in turbulent times, making sure the team is heading in the same direction and is feeling motivated (working towards a goal) is paramount, and OKR is a great management tool to help with that.
Bonus: Why having the Objective sponsors recording videos to present the OKR, instead of sending an email or just sharing a spreadsheet or slide deck?
“A picture is worth a thousand words.”
¹All Hands, also known as Town Hall meetings normally take place on a monthly or quarterly basis and can involve the full organisation, with a representative of the C-level leading the session, or it can be for the underlying operating companies or business units with directors and heads hosting the event. It depends on the size of the company and how geographically dispersed are the teams. All Hands are used by management to keep their team up to date on important topics and to make sure everyone understands the goals and values of the organisation. It also opens up space for employees to ask questions and provide feedback directly to the leadership team.
