If you have never implemented OKRs or if you think it is a simple goal system, similar to MBO (Management by Objectives) or S.M.A.R.T. goals, I recommend you take a look at our Introductory post: “OKRs – What are they for and why you should implement them in your company”
Both when I have had to implement OKRs in the companies I have led, as well as when we have helped startups in our Product Led Growth Program to use them, the biggest challenge is incorporating the methodology into the day-to-day.
We recently held a workshop with companies in the ecosystem close to their Series B, most of them had had some relationship with OKRs, but had not managed to implement them successfully. This is what they told us in the survey prior to our working session:
- “OKRs, we would announce them at the general meeting every first Tuesday of the month. People got bored and considered that hour-long meeting a waste of time.”
- “There was no one to take responsibility for OKRs.”
- “We implemented them very strongly at the beginning but then we fizzled out in the day-to-day.”
- “OKRs didn’t work for us, they motivated some people, but people were pretty disengaged.”
If any of these points resonate with you, or you have experienced something similar, read the following:
1. OKRs don’t start with the goal…
If you were to ask your team who runs your company, they would probably answer: the CEO, the customers, the founders, the investors, the team… The reality is that none of these run the company. The correct answer is: the culture.
Organizations are driven by their culture. Whether the CEO goes on vacation, you change customers, get new investors or hire a new management team, the company is still running. You will only succeed in changing the company if you are able to influence the company’s culture. So, if you want to implement OKRs successfully, you have to integrate them as a cultural aspect of your company.
Culture is the invisible thread that guides your organization, and if you want it to have any direction you must clearly establish it on the company’s mission, vision and values that should govern your company.
If your OKRs are disconnected from this, you will probably fail in their implementation.
Don’t even think of setting up a system of OKRs without connecting them to the mission, because if you don’t, your team will be able to answer the questions: what to achieve and how to achieve it, but it will never be able to answer why to achieve it. And when you stop to ask why you work tirelessly, you will feel the same way the Little Prince did when he asked the Lamplighter.
When the Little Prince arrived on the planet he respectfully saluted the lamplighter:
– “Good morning. Why have you just put out your lamp?”
– “Those are the orders,” replied the lamplighter. “Good morning.”
– “What are the orders?”
– “The orders are that I put out my lamp. Good evening.”
And he lighted his lamp again.
– “But why have you just lighted it again?”
– “Those are the orders,” replied the lamplighter.
– “I do not understand,” said the Little Prince.
– “There is nothing to understand,” said the lamplighter. “Orders are orders. Good morning.”
And he put out his lamp.
2. “We are what we repeatedly do” Aristotle
It’s so hard to implement a new habit, and even more so if it’s a collective habit. However, thanks to neurogenesis, today we know that it is possible and that we simply have to allow enough time and space for the process.
When implementing your OKRs, I suggest you follow the simple scheme described by Charles Duhigg described to create habits, which consists of only three steps:
- A trigger that orders your brain to automatically engage in a specific behavior.
- A routine that can be physical, mental or emotional.
- A reward that helps your brain decide if the trip was worthwhile and should be remembered in the future.
Thus, to successfully implement a good OKR system, you must start by defining “triggers,” followed by a periodic routine and ending in a reward that motivates your team. Here are two examples of routines:
- Periodically, every quarter (“cue”), organize an OKRs meeting with your team (“routine”) where each unit reports its progress and receives public recognition, thanks to the impact its work is having on the company-wide challenge (“reward”).
- Periodically, for example every month (“cue”), hold a 1-to-1 meeting with your team managers (“routine”), review their OKRs and try to give feedback that makes them learn and grow as professionals (“reward”).
3. Establish Key Results correctly:
The Key Result is the key element that links the day-to-day of your team with the objectives of the company, so it is crucial that you know how to delimit them correctly taking into account the following 5 principles:
- It must be a number.
- It must be quickly measurable.
- It must be a challenge.
- It must be understandable to the entire organization.
- Don’t have too many Key Results, your team must be able to memorize them so that in their day-to-day work they can ask themselves if what they are going to do impacts the Key Result or not.
4. Remember that you created the company to fulfill a mission.
OKRs are a management system that rewards innovation and learning, and brings you closer to fulfilling the company’s mission. It is not an employee evaluation system, so it does not use a scale where meeting 100% of the goal is rewarded and falling below 40% is considered a failure.
In this methodology a second question must be asked:
- If you met 100% of the Key result, you would have to consider whether you were ambitious enough. If the answer is yes, congratulations, but you must improve on your next forecast and be even more ambitious. No one goes through space, if they don’t aim for the moon.
- If you achieved 20% of the Key Result, you have to ask yourself what you learned and if everything was correctly sized. Maybe having achieved 20% of a Key Result and analyzing that “relative failure” will bring you the improvement you needed for the future.
A meaningful scale under this scheme would be represented in the following graph:
Keep in mind that these are relative values, there is no written rule. Achieving 81% compliance does not mean that it is better than 79%. However, if you achieve 40% compliance by learning along the way, that rule may have more impact on the company than if you achieve 99% of the Key Result without learning along the way.
This is the best way to avoid the unintentional blindness that is created under a traditional target system.
5. OKRs are based on transparency:
To achieve alignment, you need to know what is going on in each team of your company, so it is crucial that all teams know the OKRs with absolute transparency. It’s that clear.
I often see founders who miss having a team that takes more responsibility for the company’s results. If you let your team decide what they are going to do, you will get them to take that responsibility you are missing. Build OKRs with your team by guiding them toward the mission, from the bottom up. This will increase the accountability of each team member and, as a direct result, their ability to execute.
7. OKRs are separate from variable compensation.
Yes, that’s right! An effective OKR system does not have variable compensation as a key element of it. This would give rise to another post, which in fact, I have written and you can read here but which I will summarize by simply saying:
“OKRs are a management tool, to align and focus your team with the company’s mission. They are not a performance appraisal system for each individual”
You must decouple the variable pay from OKRs, to get ambitious, transparent behavior, and free you from all the problems that targets have when they go wild (👉 check out this thread on Twitter where I explain what that means about targets going wild).
Implement these seven points in your OKRs system and get ready to see your company fly. 😉