Scaling productivity with OKRs - Moving from stage 3 to stage 4

Sten Pittet -

In this series we're exploring how you can grow your goal-setting and goal-tracking muscles progressively.

First, we looked at building the foundation for an outcome-driven culture, and then we explored how you can empower the team with a 2-way approach.

Today we'll see how OKRs can help your business be more agile.

Requirements

This post has a few assumptions:

  • You're familiar with the 4 stages of goal-tracking.
  • Your organization knows how to define goals following the SMART framework.
  • You have bottom-up quarterly goals that stem from top-level goals set by leadership.
  • You're tracking progress every month.

If all of this is true then you're in stage 3. Making the next leap forward will require a few things.

  1. Spreading the use of OKRs to rally teams around a set of priorities.
  2. Accelerate the feedback loop on progress.
  3. Learning how to make critical decisions to execute on goals rather than projects.

Let's dive in!

1. Make OKRs your go-to model for goal-setting

If you're not familiar with the Objectives and Key Results framework, I invite you to read the introduction to OKRs in the previous post.

The big advantage of OKRs over Key Performance Indicators (KPIs) is that it expresses intent in a clear way, and makes it much easier to align people around a set of focus areas.

With KPIs, you typically emphasize the metric itself. For instance, you would say "Increase our conversion rate by 30%". It will work, but it does not explain why we chose to focus on the conversion rate. OKRs solve that problem by having Objectives outlining why we have a set of success metrics.

Objective:  Land new customers

Key results:

  • Increase our conversion rate by X
  • Increase traffic to our Marketing website by Y

That's important because metrics can't always be trusted. In a previous company, one of our objectives was to "delight users". We decided to use the Net Promoter Score (NPS), a simple survey asking about referrals, as a proxy to see if we were improving things.

One team got a huge bump in their score by simply switching from email to in-app surveys. Nothing changed in the product. What happened was that they stopped getting the sentiment of people that had abandoned the product - and those people are quite likely to have an unfavorable opinion.

Focusing on metrics without context can be dangerous, and this is why OKRs can be helpful. You should still be careful when rolling out OKRs for the first time as there are a few gotchas.

Have attainable KRs

The OKRs literature will push you to have ambitious goals that stretch your team. I'd avoid doing that at the beginning:

  1. Setting realistic goals without significant experience is hard.
  2. You'll hurt morale if the first iteration results in everyone failing.

Try to keep things reasonable and stretch goals only when your team is comfortable with picking the right Objectives and Key Results each quarter.

Limit ownership

One person should not have more than 5 quarterly Key Results to focus on. The more you add, the more you will dilute their attention and make reporting hard to do. 3-5 is the sweet spot as it will provide a clear direction.

Strict cascading is costly, focus on alignment instead

If you're a small team, you'll probably have a single layer of OKRs. But, as you grow, you'll need to add different levels to help departments and sub-teams to come up with their strategy. You might have the company's OKRs, set for the year. Then the department OKRs (Marketing, Design, Sales...), and even product-specific OKRs if you have multiple offers.

It's tempting to create strict relationships going from the top to the bottom. Beware of doing so as it will introduce significant coordination costs at scale while not necessarily delivering the clarity and visibility that you'd expect.

It is much better to make sure that OKRs between levels are aligned, and that those on the same level do not cancel each other.

2. Track progress every week

Setting goals is only half of the job. It's important to have fast feedback loops if you want to make your business more agile. My advice is:

  • Monthly updates for yearly goals
  • Weekly updates for quarterly goals

Reporting things should be quick and easy. A report card should answer the following questions:

  • Are we on track?
  • How much progress have we made?
  • If things are not on track, why is that and what's the plan?

You also need to make sure that you keep the history of updates. If you have a spreadsheet or a wiki that only looks at the last status, then it will be tough for you to understand how you got to where you are. If you always replace the content of existing cells, you will have a clear snapshot of time but no more than that.

Being able to look back and get more context is imperative. You need to see trends and the feedback attached to it. You should be able to understand when things dipped, and when you recovered. You should be able to get context and see the decisions that were taken to deliver.

My final point about tracking progress is that it should not be automated. It's a bit weird for me to say that because my previous job was all about automation (I worked on continuous delivery solutions). The problem of automated reporting is that it makes it easy to ignore the things that are most important to your business.

But, our script is saving us hours of manual updates every month!

Wrong.

First, having to report on things creates ownership. It makes you care about achieving your goals. It makes you accountable.

Then, the metrics have little value by themselves. What matters is the interpretation that you make of it. Did it move as expected? Why not? What can we do about it? Maybe it wasn't a useful metric to to begin with?

Finally, you want your team to be able to act early. Of course, you can have automated alerts, but it's much easier to look at a graph and check if things are slowing down. Start drafting a plan B before it's too late.

3. Be more outcome-agile and less output-agile

Ok. So your teams can now set their own OKRs, and they track progress on a weekly basis. Now it's about using that feedback to adapt your plans accordingly.

When we think about an agile team, we usually think about getting scrappy with the backlog - making sure that a project or a task will get done in time. It's an important skill to have, and you must keep it and nurture it. But to make your business agile, we need something more.

Rather than looking at projects, you need to focus on your ability to deliver the outcomes you want. What that means in practice is that you should be able to change items on your roadmap or cancel an initiative completely if what you're currently doing is not moving the needle.

Let's say that you have several unexpected guests for an impromptu aperitif, and you need to offer them some food.

  • Output-agile: Using several pans at the same time to cook a wonderful meal 3x faster.
  • Outcome-agile: Grab a bag of chips.

It may look like a stupid example, but when it comes to projects we often focus way more on the technology than the problem it's supposed to solve. And that is why all the previous points matter.

Beware of being too reactive

Being agile does not mean changing the direction of your company on a whim. Don't drop everything if one of the Key Results is suddenly in the red. Instead, have a conversation to understand what's happening first. Your team will need structure and commitment to be able to produce results. They need to be empowered to do their own assessment and propose a plan to move forward.

There's another important thing when you're using OKRs. Some things will rarely make it into a plan, yet they matter a lot for your long-term success. Quality, security and performance are such things that tend to be overlooked. It can be easy to push them to the bottom of your priorities, but doing so will hurt you in the long run.

It will take time to find the right balance between pushing through with projects, and shifting priorities to have the right impact. But having good practices to set goals and track them will make your teams more productive. Defining roadmaps becomes straightforward, and people have more autonomy as they have a clear understanding of where the business needs to go.

What's next?

That's it is for this series! If you're looking for a tool to help you with goal-tracking, we're building one at Tability. Please be sure to add your questions and feedback in the comments below.

Check our tag #pragmaticgoals to see the entire series.

Add your feedback and questions in the comments, and you can find me on Twitter.