Any business owner will tell you there is a massive chasm between “concept” and “execution.” More than half of the time, business owners and entrepreneurs will come up with amazing concepts — foolproof plans. And more than half of the time, it’s the execution phase that kills them. Here’s how OKR’s completely transformed our culture.
The new startup using OKR’s.
As a relatively new startup, we, too, experienced a fair amount of struggle during our execution phase. We fell prey to some of the more common “new business killers.” Business killers are the roadblocks that could, if left unaddressed, send a brand new startup careening off the road.
We lacked the foresight we needed to successfully predict the potential challenges we would face once we started expanding our team and we focused too much on the “big picture.”
These oversights very nearly shot us back to square one.
Thankfully, we stumbled across the concept of OKRs—an exciting system, and one that merited a trial run. Not going to lie; it was bumpy at first (as is par for the course when implementing something new), but we kept going.
The process took less than a year for us to realize that OKRs were the solution (and salvation) we’d desperately been looking for.
WHAT ARE OKRS?
OKR stands for Objectives and Key Results. Founded by Intel Corporation and now widely used by industry giants like Google, Dropbox, Oracle, and Twitter, these three simple letters can be considered actual game-changers.
By definition, an OKR is a tool used by organizations to set company-wide goals and measure productivity through milestones. As the name suggests, there are two parts to this tool: (1) the objectives and (2) the key results. Both must be clearly defined in order for the OKR to work.
Objectives are short-term goals that are quick, simple, and straightforward. They should also be achievable but ambitious, realistic but inspirational. For example:
- increase profits by 20%
- improve profit margins by 15%
- diversify and grow revenue streams.
Although objectives should be clearly defined, and in fact, can often be summarized in a sentence or phrase, it is extremely challenging to choose the best one for your company—which is why many managers often choose three to five high-level objectives per department, per quarter.
Key Results are numerically-defined expectations or deliverables you can expect from each objective. They are the milestones you use to measure your progress and how close you are to reaching your goals.
Just as an employee or department can have three to five high-level objectives, each objective should have—ideally—two to five key results. And all of these results must be measurable.
Objectives “increase profits by 20%” could be broken down into key results like:
- find a company to outsource distribution operations to and effectively reduce distribution costs by 15% – 25%
- create a marketing campaign to promote this years’ season-end sale to double revenue from online stores
- launch promotional materials or reward referrals to increase sales in physical stores by 10% at the end of the quarter
The point of key results is that they are measurable. Quantifiable. They cannot be broad, vague statements like “reduce distribution costs,” or “increase in-store sales.” Those kinds of statements are better suited to be objectives.
Key results need to be quantifiable and subjective so that you can track your progress and know how close (or far) you are to hitting your goals.
WHY USE OKRS? (OUR STORY)
Ours is a digital marketing agency that offers a bunch of online marketing services (think SEO, social media management, email campaigns, and the like). We started with limited resources, a handful of members, and one shared goal.
Because of our humble beginnings, everyone needed to move in the same direction. We couldn’t afford to have one member doing their own thing over here while two others did their own job over there.
There had to be constant communication and accountability—otherwise, we knew we wouldn’t last long. With smaller numbers, it was easy enough to keep everybody in check.
But as the company grew, so did the challenges.
Before we introduced any organizational tool or system to track our progress, most of our members had their own ideas or preconceived notions of how they could contribute to the overall success of the company. This meant that they were all working on their own individual goals that the managers frankly knew nothing about.
We had many short-win successes. However, because these achievements were so disconnected from the company’s own goals, they barely made a dent in the greater scheme of things.
Success in the wrong areas led to people feeling disheartened, feeling like they weren’t doing enough, or feeling like their own achievements didn’t matter. Enter a couple of years of absolute chaos and minimal progress.
Everyone was going in 20 different directions in the hopes of making some advancement. Our team was exerting so much time, effort, and energy to make something stick.
But without any clue what we were trying to achieve and no milestones to direct us, we felt like we were always back at square one. We were working harder, not smarter, and it was taking a toll.
Do you know how ducks always look so calm and serene above water, but then you go beneath the surface, and you see that they’re paddling madly to get around? That was us. We were doing so much to stay afloat. Sound familiar?
What Went Wrong?
We wanted our team to be accountable for their own tasks, but this practice encouraged isolation. We didn’t have a unifying goal in place, which means members of the same department had different ideas of “success.” Doing their own thing meant they were working to achieve vastly different objectives.
While we, as a company, value initiative, and accountability, we realized almost too late that our current business model was not scalable. We could still encourage independence within a system of goal-setting and productivity, but we didn’t have that system in place.
We first introduced OKRs into our model as a means of survival.
When we first came across OKRs, we saw them as merely a way to pull the company together. By giving each department one or two objectives to work towards and specific key results to mark their progress, we were able to get everyone roughly on the same page. After a month or two of using this system, we managed to pull our heads above water.
Once we achieved that sort of stability, we realized that we could take this system even further. We could continue to use OKRs as a viable and verified system to keep our company objectives simplified—and thus, in order.
Company Objective —broken down Team Objectives broken downà Individual Objectives
By breaking down our overall objectives into smaller Team Objectives.
We were able to give each department something to focus on. For instance, before we were giving the Copywriting Team a vague, loosely defined goal like “increase registered website users,” or “close more sales.”
Round two, we gave them more specific objectives that were tailored to what they knew—for instance, “improve blog engagement,” or “drive more traffic through keyword usage and placement.”
From there, these Team Objectives were broken down even further into Individual Objectives.
Each member of each team now had objectives that were short-term, attainable yet challenging, and would help the team as a whole reach the overarching goal.
For instance, one objective could be “increase main keyword usage in each blog from three repetitions to six repetitions.” Alternatively, another purpose could be “start ending each blog with a thought-provoking question.”
By breaking one huge goal down into smaller, bite-sized goals, people were able to sync up their successes and contribute
REAL-LIFE SITUATIONS: IMPLEMENTING OKRS
We’ve already seen some incredible results. And we would love for other businesses to experience firsthand just how powerful this simple system can be.
We’re going to share a couple of things we learned regarding OKR implementation:
Stick with two (2) to five (5) items per list.
Early on, one of the biggest mistakes we made when listing our OKRs was listing too many objectives. And underneath those objectives, we’d have about seven or eight Key Results.
You want to keep your objectives and key results straight and to-the-point, regardless of how many teams you have or how many individuals are in each team. Too many items can make it hard for people to focus on each goal, especially since they need to work within a timeframe.
Let’s put it this way: two groups are given 15 minutes to answer an essay test. The first group gets a test with only three essay questions. The second group receives a quiz with ten essay questions.
Which group do you think will yield better, more eloquent answers?
We recommend two (2) objectives (three, max), with three to five (3-5) critical results under each. On the website Medium, former Google employee Niket Desai shared Uber’s OKRs as an example of “OKR best practices.”
You’ll see in the lists that follow that Uber only has two (2) significant objectives and no more than three (3) key results for each.
Objective #1: Increase drivers in the Uber system.
Key Result #1—increase driver base in each region by 20%
Key Result #2—increase driver average session to 26 hours/weekly in all active regions
Objective #2: Increase geographic coverage of drivers
Key Result #1—increase coverage in San Francisco to 100%
Key Result #2—increase coverage for all active cities to 75%
Key Result #3—decrease pickup time to <10 min. in any coverage area during peak hours
Regular check-ins are a must.
As a company, we greatly encourage independence and self-assessment; we also believe that regular team meetings are a crucial part of staying productive. We feel it’s a good way for everyone—from the admin to the team leads to the project managers—to get caught up in the company’s status and progress as a cohesive whole.
We’re not big fans of daily meetings that eat up 30-40 minutes of everyone’s time.
Think: just because every single employee has to give a five to eight minute report of what they accomplished yesterday and what they’re hoping to accomplish today. Such daily practices are fine within groups or within departments, but scheduling a company-wide meeting for it could do more harm than good.
Daily updates through team message boards, EOD email reports, or shared calendars work just as well, too. As a business owner, project manager, or team leader, consistent communication and up-to-the-minute reports are crucial for keeping people in-line and on-track.
We highly recommend regular check-ins; weekly meetings, end-of-the-month all-hands meetings, bi-monthly team lead check-ins, quarterly OKR planning sessions. These only need to last 20-30 minutes. These short reports can do wonders to keep your team—and yourself—accountable. But keep them short.
OKRs must be ambitious.
OKRs go hand-in-hand with improvement. One of your overall, long-term goals must be continuous improvement—otherwise, this system isn’t going to work for you.
Let’s look at the Uber OKR example again. Note how the word “increase” shows up in almost every line. That’s because OKRs are all about helping your company do better than it did in the last month, year, or quarter.
If your objectives don’t entail pushing your business’s resources or improving areas that are already performing well, then you need to sit down and choose new ones—ones that preferably focus on bringing in more value to your team.
John Doerr, the author of Measure What Matters, makes it a point to mention that OKRs are being used by at least a dozen industry giants: Google, AOL, Dropbox, LinkedIn, Oracle, Twitter, Spotify, Disney, BMW, and Intel.
It’s worth taking a step back and mulling it over; if these powerhouses are using OKRs to scale their businesses and keep their productivity and check, why can’t small- and medium-sized businesses do the same?