Hi everybody Sort of a bigger group for us today, and I think more people are I’ll be joining So welcome. I hope everybody’s having a good Thursday sunny here in Boulder Even though Daniel and I are not together. We’re actually both in Boulder, which is kind of fun Yeah, but good to see everyone okay, and yeah, and don’t worry if you’re off- camera that’s totally fine you can jump on and off We have such a big group today are expecting such a big group.

Anyway, we’re gonna keep We’re not gonna do in Introductions as a group we’re gonna just go straight into introducing Daniel. So thank you for all joining us Thank you for caring about OKRs Definitely hot topic right now and a little bit confusing I know I’ve read the book probably everybody’s read the book but like feels sometimes hard to Figure out how to put those into real life. So so glad Daniel is here today Daniel is the founder and managing director of a company here in Boulder called agile strategies.

It’s a consultancy Previously he was with the balance scorecard Institute and EY Which is I think really helpful here and I’m just gonna turn it over to him and let him get started Well, we’ll probably do 30 35 minutes of presentation and then open up into questions. I know we had a bunch Submitted beforehand as well so Mary here. I’ll help us talk through those and then we can just open it up and discuss as a group as well So, yeah, thanks for being here and thanks Daniel, okay, so can everybody hear me, okay All right.

I will just jump in I’m gonna share a screen here if you’ll bear with me for just a sec All right, everybody see that Great okay, so I’m here to talk about managing with OKRs, you know, and I understand you’re all representing companies that may be at different stages You may have different functions that you’re in within those kinds of companies So I’ll just say a lot of general things, but we do have some questions here about How do you take it from the company level down to a team?

So I’ll certainly address that Where do you start with the leadership team? How do you establish them in the first place? So I’ll do my best to give you a good flyover of all of that Then I’ll be really interested in any of your questions about it. Okay, so Let’s just with that in mind.

Let’s just jump in so One way you could describe OKRs is that they’re fast goals You may have heard the term smart goals Which has been around for a long time and is pretty confusing because nobody quite remembers The same way what all the initials stand for we could call these fast goals Because they bring focus to the whole organization F can also stand for frequently discussed. That’s a very important thing with OKRs.

You cannot set them and forget them you’ve got a You got to have them as part of a regular conversation And what that does is just shift us away from our usual focus of like we’re focused on what we’re doing To having more focused on why are we doing what we were doing? It’s more outcome kind of thinking It’s more design thinking which I think given all the uncertainties all that you all deal with That’s you know, you need to stay focused on what the big outcome is a Stands for alignment. It also stands for aspirational.

So we use OKRs in order to align across the organization s.

Let’s say that stands for stretchy, that’s a very important point with OKRs, and one of the things that makes it culturally different from some of the previous models out there like management by objectives, because we need to stretch into the unknown to do new product development in particular, and new business models, and if we don’t stretch we’re not going to get there, but that always puts us in territory that nobody’s been in before. So that’s why we hear the term moonshot a lot, you know, because the first time nobody had ever done it.

It was a great idea, but how do we actually do this?

So aspirational, ambitious, stretchy, and then the T mostly stands for transparent because it’s really important when you deploy OKRs that as a default everybody in the company knows what the OKRs are, because it helps people understand how their work is contributing to the greater mission and vision of the organization, gives people a sense of meaning in their work.

There are always a few exceptions, you know, if you’re talking about a merger, something like that, yes, that needs to be limited to certain people, but the default is that they are transparent. So with that in mind, let me just move on here to OKRs are not, they’re not a brand new thing that only got invented when John Doerr wrote this book a few years ago.

The whole idea of setting specific targets for knowledge workers actually goes back to the work of Peter Drucker back in the 1950s, because before that time, anybody studying goals and measuring organizational productivity, the whole metaphor that they used, they were talking about factories, because that’s the environment that most people worked in up to that point.

So you know, you had Henry Ford with the assembly line, you’ve broken jobs down into the smallest possible pieces, and you’re trying to improve efficiency.

But once we got past the Second World War, we had the development of what Drucker called a knowledge worker. So it’s an important difference. I’m not just doing this as a history lesson, or if you’ve been to business school, your organizational behavior class, it’s important because knowledge workers have a lot more control over what they’re doing. A lot of the work they’re doing is far less tangible. You know, you’re not attaching axles to a chassis.

You’re doing something that’s unique.

You can’t get a lot of it down to routine work.

So you needed a different kind of approach to it.

So Peter Drucker came up with this idea of management by objectives, which is basically the board gives the CEO, look, here’s your marching orders.

And then I’m the CEO. You’re the finance, chief finance officer. So you’re going to come up with goals that support my goals. So everybody is supporting the manager above. Now, Andy Grove really liked this model in theory at Intel, but he made some changes to it because he’s operating in a hyper- fast, rapidly changing, hyper- competitive environment, semiconductors. So he said, well, it can’t just be about managers because, I mean, all the engineers on the team have to understand what we’re up to.

We’re paying a lot of smart people, and we want all of them engaged here.

Management by objectives typically was annual. And it’s like, look, we’re moving way too fast for that.

So they moved to quarterly, resetting OKRs every quarter.

And traditionally, management by objectives was actually tied to compensation.

So it’s like if the CFO does what the CFO said they were going to do, they get a bonus.

But then you don’t have the stretch.

People will set very safe targets if it’s tied directly to their compensation.

So that became a no- no. So it’s the whole team, it’s fast, and it’s stretchy. If you’re going to get stretchy, you can’t tie it to compensation. So basically, John Doerr took this approach. He worked for Andy Grove. Then he went to Kleiner Perkins and started exposing companies like Google, an early one, over like about 25 years ago now, exposing them to this approach. And so a lot of those big Silicon Valley companies actually grew up using OKRs.

So they’re a place we can go to to see what does mature OKR deployment actually start to look like.

So many of you may have read John Doerr’s book. It’s a great book. Like a lot of business books, it kind of sells the concept and the benefits and doesn’t actually tell you how to do it. So that’s created a great market for consultants like me and some of my friends.

So there have been great books written by Ben LaMoure wrote the OKRs field book, which is a really good one.

Paul Niven has written OKRs for dummies.

I wrote one called Start, Let’s Finish More.

And there’s any number of other ones out there.

So I think there’s a lot more advice out there about how to actually go about it. So let’s get, let’s get into some definitions here, because often there’s a confusion about what’s the difference between an OKR and a KPI, and I think of a KPI as a health metric and OKR is more of it’s a strategic goal. It’s moving you from point A up to point B, so it’s a transformative kind of change and there’s a certain way to go about setting those and measuring them. KPIs, on the other hand, are health metrics.

So it might be well we have to manage cash flow while we’re doing that, and that’s not a big dynamic, strategic thing necessarily- but if we don’t have the cash, we don’t function. So there’s an analogy to all of us in that I might have great goals for my business, but if I’m not healthy, I can’t achieve those. So that’s all those things that you know. You go for your annual physical and they give you all these blood tests and look at your body mass index and all those kinds of things. And are you exercising, are you eating right?

That’s all the health level stuff. So both of them have to be there. It’s not to say that KPIs are not important, but OKRs are really there for the big moonshots, so they have much more uncertainty. They are inherently stretchy. They have to be collaborative because it takes it takes more than one person, like the CEO may have a great idea or the founder might have a great idea, but it takes a lot of people to actually realize it.

Then, individual goals: some people are tempted to use OKRs for setting individual goals and I would say it’s not black and white. There’s some cases where that actually makes sense, but most companies we see they look at how is the individual acting as a team player in the process of setting OKRs and carrying them out. So you’re not holding.

If a team has a big, stretchy goal, don’t hold the individual responsible for the achievement of the goal, but more how they’re working toward a goal, so that that gives us a lot of room to talk about psychological safety and trust and things like that. Probably the only exceptions are often chief executives and salespeople who are more comfortable having big numerical targets- that that’s a target on their back. So that’s the exception. That mostly proves the rule.

Google, in fact, when I wrote my book, I interviewed people in the engineering departments at Google. They were only using individual OKRs for onboarding. So we’ll give you some goals for your first 90 days, so you’re up to speed and you’re a functioning team member, and after that it’s all about the teams. So any questions popping up. So far I don’t think I can see the chat anybody. I’ll just go on and we’ll have plenty of time for questions at the end if you prefer.

So, Daniel, just submitting or posting a pre submitted question that I thought was relevant here. So someone asked if you could share a few techniques for establishing oKRs and discussing them with the executive team weekly and then the broader team periodically.

Yeah, that’s actually the next couple of slides. I’m gonna go over at least part of that question. I’ll address all of that. So how does strategy inform OKRs? Like? OKRs don’t make sense unless you have some strategy behind it. But I think I spent a lot of time doing strategic planning when I worked for Ernst & Young and I became convinced a lot of strategic planning is worthless it. It tries to predict the future too far in advance.

So I came up with the idea of minimum viable strategy, the idea of being like: well, how much do you need to know about where you’re going in order to set OKRs? Like: how much is enough? So basically, if you have answers to these questions and they could just fit on like two sheets of paper, then you’ve actually got enough to go on. So the classic strategic planning stuff all starts with a lot of these high- minded things of like what’s our mission and vision and purpose and all that.

I don’t want to spend much time on that, except to say I think a lot of mission statements are not very useful. The whole point of the strategy here should be to get you focused on what’s important right now, getting that done and making decisions that you need to make. Otherwise it’s just a lot, a lot of lofty stuff.

I teach a class on strategy and OKRs, and one example I love, like, I love Patagonia, and their mission statement is something equivalent of, like, we’re here to save the planet. They don’t tell you what they make, who they sell it to, what the qualities of the product are at all, which are all wonderful things, but they’re just there to save the planet. So I would argue that’s a wonderful value, but it’s not a very good mission statement.

The best one I ever saw, we did some work with Indeed. com, some of you may have used, and their mission statement is we help people get jobs. That’s extremely helpful for saying, like, OK, are we getting too far off base with this idea or that idea if it’s not about helping people get jobs? So the next two questions are, I think, particularly for an early stage company, often very much in play. It’s really about what your product market mix is. Where will we play? Who’s our target customer, and how will we win? What’s our value proposition?

What are we going to deliver to that customer that they’re going to love and come back for more of and tell their friends? So if you know what those things are, communicate that to everybody before you start setting up OKRs, because it’s just very important to know that. If not, you may still be in a very early stage where you’re trying to define what that is. From there, you say, OK, if we’re delivering recyclable, rugged outdoor wear to progressive affluent customers, what capabilities and systems do we need to have in place?

Like what technology, what operating models? Are we going to have stores or are we going to go online? How are we going to do all that? So it’s basically the old people, process, technology, all of those kinds of things that you need in place. So that’s all the strategy background. But then if you want to get to the point of thinking about OKRs, the next question is, all right, what do we have to focus on right now? And that’s what a lot of strategic plans miss.

They’ll write three years worth of initiatives and budgets and cash flows without really saying, what do we have to do in the next 90 days? And that’s an absolutely key difference between OKR oriented strategic planning and conventional strategic planning. How do you get to that point? How do you identify what needs to be done right now? I think that the best system here is a design thinking approach that starts off with, OK, what’s our biggest challenge?

Let’s say our biggest challenge right now is reaching the Latin American market, let’s just say so. So you pose a question, how might we, how might we achieve whatever our goal is in the Latin American market? And then you start breaking it down and talking about, well, what would need to be true in order to convince us that we were succeeding in that market? And once we know that, it’s sort of like Thomas Edison says, OK, I’m trying all these different things to make a light bulb work.

I got to find something that stays lit for at least a minute and then I’ll narrow down the elements that I’m looking at. So that’s like what would need to be true? Well, it needs to stay on for at least a minute. So you look at that and say, what are the barriers or the challenges we have doing that? And that’s where you can start breaking it down into bite sized objectives and key results.

The objective being the qualitative aspirational statement of where you’re going and the key results being one or more actual metrics that you want to achieve with that. OK. And then from there, you can say, all right, well, we need an initiative to do this. You know, we need to hire more talent in this area. We need more capital to apply to that area, whatever that might be. So actually setting the OKRs. We have to go through this process. Sorry, it’s just me. No, I lost him, too. I’ll check in with Daniel. His Wi- Fi might have just gone out.

All right.

He should be back momentarily. In the meantime, did anyone have any questions? Maybe they wanted to drop into the chat or things that you wanted Daniel to address in the meantime. Or you guys could potentially share some tips or maybe some strategies that you have used that were helpful if you want to share with each other.

OK. Am I on again? Sorry, I just.

Yes, you are.

I’m in a windy spot and we just lost power. So let me just share my screen again, see if this works. OK, we’re back. I think I was on this one. So the thing I would emphasize is I think it’s very important to start with company- wide cross- functional OKRs. A big mistake I’ve seen people make, they read John Doerr’s book and they say, that’s great. CEO says, everybody read the book and set some OKRs.

And the problem is you get a set for product, you get a set for marketing, you get a set for sales, you get a set for finance, and they’re not necessarily well- integrated with each other. And the best method I’ve seen now is you need to get everybody on the same page. There’s a reason you have functional departments and you want them to focus on particular things. But start with the company- wide strategy and what you need to do there. And then the best results I’ve seen is actually just running with that approach for one or two quarters.

So the whole leadership team has a sense of how these work. They have some stories about what worked and didn’t work in their company. And then if you want to roll it out to the rest of the organization down into functional groups or project groups or whatever you want to do, you’ve all, as leaders, got good stories to tell about it. Early on, we used to see people try to do a big bang approach where it’s like, OK, we did a leadership retreat. We wrote some OKRs.

Then we’ll do a little bit of training for everybody else because they’re not as important. And then ask them all the right OKRs down to individual level. And you’ll end up with hundreds of OKRs, many of which are duplicative. So I really believe on that duplicative point that the fewest OKRs that do the job, make it as simple as possible, but not too simple, as Einstein said. Because you want these to be memorable and you want people to keep them in mind, not to replicate some older form of functional decomposition.

So do the function- specific ones when you’re ready, and I’d say typically run it at the leadership level for at least a quarter and then consider it. The last point here is extremely important too, that don’t set them and forget them. You need to have regular conversations. And so what I typically recommend is if you’ve got a weekly leadership meeting, make this part of the agenda, and actually use this as a structure for the agenda, because it gets you focused on, you know, the big rocks.

And you may have seen that metaphor, I think it was Stephen Covey’s about, if you start with all the easy things to do, if you imagine like sand, pebbles, and bigger rocks, if you just start with the easy stuff, you know, you throw all the sand into a container, then you throw the pebbles in, and then it’s like, okay, we better focus on the big stuff, it doesn’t all fit. But if you start with the big rocks and then the pebbles, shake it up a little bit, throw the sand in, it actually works. So it’s a really great metaphor for this.

Otherwise you get caught up in the whirlwind of urgent things, and you don’t focus on what you’ve decided is truly strategically important. So OKRs are a way to bring the important into the urgent, because we’ve agreed we’re gonna talk about this every week, talk about whether we’re getting there or not. And there’s a lot I could say, we don’t have time about how to structure those meetings, but we can certainly talk about that later if you’re interested in it. Okay. So the objectives. Objectives are qualitative and aspirational.

So at the level of the original moonshot, it’s basically the statement, we’re going to go to the moon. And the key results were more like, we’re gonna do it by the end of the decade, we’re gonna put a man actually on the moon, and we’re gonna return him home safely. So in that case, President Kennedy was actually declaring measurable conditions by which the success of the moonshot would be judged. So objectives are like that. So these are just some examples of some sort of mad objectives in gray on the left, and better ones on the right.

And I won’t go through all of them in the interest of time, but like, okay, improve and streamline recruitment process. Yes, we always need to do that, but it doesn’t do a very vivid job of describing the end state to that or why we’re doing it. So the objectives should be a tidier strategy rather than improve and streamline recruitment process is just a thing that you’re gonna do, it’s almost more of an initiative.

So hire the best and brightest, or sometimes we use like, be the A team, something that’s a little more vivid that describes what it feels to have succeeded. And so don’t hesitate to use even like marketing branding type language. It might even be such a cool phrase that fits on a t- shirt that everybody wants to wear. So best and brightest is much better than improving the recruitment process. You’re doing that in order to get the best people in the jobs. Yeah, so I can come back to that if you want to.

I think the, oh, the other one, the last one here, we went in one time to a local company that was in the HVAC business for a particular industry. And the, I think he was the fifth CEO in six years. Stock price was terrible. And he came in and said, look, I know what our biggest OKR is. It’s got to be share price. And in order to do that, we’ve got to grow our profitability. Makes complete sense. But you also have to consider that you want these to be transparent. They’re communicating. This is a business with 100 hourly employees in the back.

That doesn’t necessarily inspire people. So we said, you know, I think you really need to talk about what are you going to do with that profitability? Well, we’re reinvesting in the future because A, it feels like a secure place to have a job. And we can keep reinvesting in the equipment that we need in order to make better HVAC equipment. So there’s got to be a story that’s appealing to the whole organization in order to do that. And then profitability can be a key result. That’s just fine. That’s a number.

And that’s a big difference with the key results. They’re quantitative, they’re numerical. So one thing I’ve learned over the years with these, if you read Measure What Matters, bear in mind that’s an engineering function that doesn’t have any of that business as usual. And so they’d have five or seven OKRs and they might have seven key results under each O. That’s way too many for most people unless you’re doing nothing but product development. Most of us have other things we need to focus on as well.

So, and again, the biggest problem here with writing key results is that people tend to write tasks rather than outcomes. So a good example here, the first one.

Key result is: well, we’re going to launch the new website by March 31st. But ask yourself, well, how is that actually going to help? And so it might be that, well, we’re launching a new website because you know the traffic isn’t staying on it, we’re not converting. Well, let’s talk about the criteria that are going to make it a good website. That’s the purpose of launching the new website, not doing it for its own sake. So in this case, we’ve said, well, we need a website with a better click- through rate.

The last one was a global consumer goods company we were working on just before the pandemic happened, and they were going to open offices in Southeast Asia stores- in their case, retail stores. Then the pandemic hit. You know, Asia shut down and we said, well, okay, maybe that isn’t the best key result. Why are we doing that? Well, we’re doing that because we want more market reach. They shifted everything to online very successfully.

By the end of the year, 75% of all their sales were online, and so they actually expanded their market reach without opening new bricks- and- mortar store. So let’s get to the like. You could ask the five why is literally, why are we doing it? And just keep asking that until you get to the thing that’s actually the most important for your bottom line: ownership of OKRs. It should be shared. The whole leadership team should really buy into it.

I think it’s a mistake for a CEO to just declare what the OKRs are going to be, because the level of buy- in and engagement that you can get from having a collaborative process to develop these means everybody owns it. You still want one person who’s accountable for the OKR, in the sense that they’re not accountable for everything that has to get done, but they they’re accountable for knowing what’s going on, what initiatives support this, what’s the status of it, and and then these weekly meetings we talk about again.

You really want to build the maximum level of psychological safety so people can really talk about. Well, if this didn’t work, why didn’t it work? Can we really tear this apart and look at it in a different kind of way? How ambitious should your OKRs be? That’s always a big question. So I look at that as a spectrum there from there’s running the business, there’s growing the business and there’s transforming the business and, depending on your situation, you want to think about how much investment are we making in each of those.

A more mature business is going to be more focused on running it. If you’re, you found a stable place in the ecosystem, you’re more focused there. If you’re not there yet, you might really be all about transformation. So you could look at these three strategy horizons- this is an idea that originally came out of McKinsey- and say: well, how much energy you’re going to put into these. And so the true OKRs are more to the right and as you go to the left, they’re more KPI, business as usual things.

But I think this is a helpful way to think about how many OKRs we want because, like I said, Google engineering- they’re coming up with brand new products. They’re supported for doing that. A hundred percent of the time they’re all in moonshot realm. Somebody else- that’s a mature business that’s been around for 15 years trying to create a new product line. Well, what’s the make, what’s the right mix going to be?

Common pitfalls, shadow OKRs, very mysterious, very creepy. We had one case where the whole leadership team, we took two full days talking about what the OKRs were. The CEO went to a board meeting, came back with some other goals, but they left the OKRs where they were, but then he’s having one- on- one conversations with different people about, okay, I really want you focused on this. Well, what about the OKRs? That’s not so important. If they’re not so important, change them. OKRs should be about the things that are most important to you.

So if a pandemic comes along and you have to drop what you’re doing and focus on something else, like I had an organization that was mostly, the operation was a call center. People couldn’t come into the call center. They had to figure out how everybody would do this from home. And so I talked to the CEO and he said, well, we don’t have time for OKRs right now because we’re trying to get everybody working from home in the next two weeks. Well, that’s your OKR right now.

Get that done and then go back and decide what’s important now because now is always changing. It’s dynamic. Don’t set it and forget it. We talked about that. Talk about it every week. If they don’t make sense anymore, change them. Don’t have too many OKRs. Talked about that too. I typically, we have a slide in some presentations where we have three apples stacked up, which if you have the right kind of apples, you can get up to about three. Any more than that, it falls over. So we use that as a metaphor.

You shouldn’t have any more than you can count on the fingers of one hand. So I often say three plus or minus one. If a company seems just too, too busy, I say three. I had one startup. They were in the kind of moving clients to the cloud sort of space. They had so much going on. I said, how about two? Don’t have any more than two OKRs at any level. So leadership team, you’ve got two in common. Any of you functional groups you can have in common, just focus on those things.

They found that their weekly meetings went from two hours down to 20 minutes because the OKRs became, that’s the focus of the meeting. This is what we’re working on in common. Anything else going on, if it can be taken offline between a couple of people, let’s do it that way. Let’s not use the weekly meeting as a big show and tell session. They grew 250% in the next year. And the guy credited with me, like I put him on an OKR diet. And I talked about the big bang approach too. It’s really worth like, go slow to go fast.

Just work at the leadership team level. Or if there’s a particular place you want to pilot it, just focus there for a while, learn your lessons, share that with everybody and then move on. So, OK, at that point, I’m going to stop. I’ve covered the ground, like 30, 000 foot flyover. I’d just love to know what questions you’ve got. I can open up the chat and see if there’s anything in there. Mary, are there any in particular you want to see?

To hop in. So we had two questions just now. The first was, on the moonshot OKR, what’s the line between moonshot and realistic, sorry, and realistic goals that the team can hit? I find it hard to set realistic results.

Okay, yeah, that’s really the difference between what I called a roof shot and a moon shot. A roof shot should be something that, the goal is 100%. What it requires is focus and commitment. And those are perfectly valid kinds of OKRs. And often they’re easier to start with because they build the muscle for setting targets and commitment and accountability and reporting and tracking and all of that. You can build out those systems even with something that’s fairly predictable.

But at least it keeps you from getting knocked off base by other kinds of priorities. So did I answer the whole question or was there another piece of it?

Yeah, Jen, does that make sense, or is it that you want to sort of pressure test some of them maybe before you throw them out there? Well, I think just, so we’re startup early stage. I think a big challenge that we have is our aspirations are so high and we have to be moving at such a rapid pace that we want to set these goals. We’re doing new OKRs every quarter. And the goals that we know we need to hit and we have to hit are…

challenging, and we don’t always hit them, just frankly, just honestly, like, we often don’t. And I think there’s some level of understanding within the company now that we’re not going to hit these goals, because they are so high and to the right moonshot, right? So it’s almost becoming normal now to come in at between the 50 to 80%, which I don’t, I personally don’t love because I feel like that’s failure. So it’s, that’s the question. It’s like, it’s now becoming part of our company culture.

If I were to redo it all over again, maybe like start with some smaller goals that we can hit 100% and like start building, like you said, that muscle memory, I appreciate that. I don’t know if there’s a way to fix it now that we’re in this, but that’s, that’s the reality of our OKRs right now.

Well, I would really urge you to keep talking about them, even if you’re just at 50%, because then the tenant’s like, oh, that’s not, that’s depressing. Let’s focus on something else. But I think even just talking week by week and saying, OK, did we just set the bar way too high? Did we not, did we not really craft this right? Are we not really measuring the right things? And, you know, you’ve got the option to change if you want to do that.

But I think we’ve seen just continuing to talk about it is at least as important as setting them right or getting there because it does, it gets you in the habit of focusing on outcomes, which is a more strategic way to think than like, OK, yeah, I’ve got 50% of the feature points, the user stories done on this new feature that we want. That’s like, OK, so what? Where is that really getting us?

And I’ve seen, especially in product development, and I don’t know if that’s kind of the scene you’re talking about, as we’ve seen with Agile, it gets really easy to just fall into, this is just a big list of things we’re going to get done, which is not really the spirit of it. The spirit of it is keep focused on what have we decided are outcomes that point to customer value and financial success.

Right.

Keep coming back to that question.

Is that the diet, the OKR diet concept, too?

Yeah, yeah, yeah. Because don’t use it as a roadmap for everything that you’re doing. I think we could add that to that slide. OKRs for everything is a big mistake. So yeah, the diet. That sounds like a great name for a book, the OKR diet, because it just, you know, everybody buys that.

Well, I mean, it’s prioritization, right?

Yeah, for sure.

Yeah. Yeah. So, Jessica, is that helpful?

Yeah, definitely. Thank you.

Great.

OK. And then Daniel, we have a next question from Kevin. He said, what should be the time horizon for the OKRs? One year? One quarter?

Et cetera.

I think it’s good to set a North Star often for a year or more. If you’re saying like, we want to be the dominant player in the XYZ segment of whatever your market is. And dominant player means, you know, this kind of market share. Or like the classic example in the John Doerr book is at Google, YouTube, you know, where it was like, I think it was a million hours of views. And originally, they were counting how many users, but that, I mean, so that’s no joke actually coming up with what’s the right North Star metric that gets you to the next stage.

And they decided, well, no, we want it to be about how long people stay on YouTube. We want YouTube to be addictive. We want them to go from one, you know, one little clip to another little clip. And that’s more important than having lots of people on there for a minute. We want fewer people on there for 10 minutes is better. So that takes some time to craft.

Yeah.

There’s a choice in that, right? Like we’re going to say more minutes, not more people. And that at least gives the team some direction, I feel like is the power of that story when the woman, I can’t remember her name, the CEO of YouTube decided.

Susan something.

Right.

Yeah.

Yeah, I think that’s interesting. So maybe you have a overarching one with a long timeframe like that. Do you then have shorter timeframe ones? Do they all have to be the same timeframe?

No, they don’t. I mean, the default is 90 days. So I always suggest it should be 90 days. And then if people think it should be shorter or longer, then we talk about that. But that’s the default, 90 days. Because especially like I’ll work with, I work with some NGOs in the climate space and they always want a lot more time because it’s like they’re influencing other people to do policies or whatever.

And it always takes longer, but I still encourage them then like, okay, have a yearly OKR, keep it really simple, but then do a quarterly OKR because otherwise it’s too easy to say, oh, that’s just way out there. We wanna have a family vacation in the next year. It’s too long, it’s too easy to put it off. And like, yeah, we wanna have a summer vacation and pretty soon it gets to June and there’s too much else coming up and you can’t plan it. So like put a stake in the ground now.

And then, yeah, but translate it back into 90 days because 90 days, you can feel that coming. It’s like, I’m gonna drive to Chicago from here, but I have to like, well, what road am I gonna take? What interstate am I gonna get on? Like those are the immediate things I need to deal with. So again, it’s bringing the important future stuff into the present. So it’s a neat mental trick actually. A lot of executive coaches do the same thing. It’s sort of like you’re visualizing like, well, what kind of manager do I wanna be in a year?

And yeah, I wanna be a better delegator. I wanna deliver more inspiring speeches about where we’re going. It’s like, okay, what can I do about that in the next 90 days where I can really tell if I’m on track.

Awesome.

Okay, other questions.

Mary, do you wanna go through these two from Scott? I think these are really good. Great, yep.

So we have a few questions from Scott. The first one is, are there some OKRs that are common to early stage startups as well as what kind of OKRs are inappropriate to startups?

Right, okay. Yeah, I mean, I think the challenge with early stage is finding the right product market mix. I have had some early stage companies. I had one in the blockchain space that they felt like there was stuff they had to do just to be in the game at all. So they actually decided they were premature for OKRs and I respected that. It’s like, look, this was about a year ago and they’re like, by the end of January, we just simply have to have this software in place with these capabilities and we know that.

And it’s like, fine, that’s an OKR. You don’t have to call it an OKR, but you just need, you know you need to do that in order to satisfy the investors and know that you’re on track. It’s table stakes to get into the game at all. So that’s, do you wanna call that an OKR or not? I mean, it’s clearly a roof shot. Like we know what we need to do and we just have to get it done.

So- Have you seen, are there examples of OKRs that you’ve seen for smaller companies that have worked well? I mean, the YouTube example at Google is interesting because it’s a product- focused OKR, I guess that was driving usage, customer- focused usage. Are there, I don’t know, are there other sort of iconic examples or things you’ve seen in your work or in the broader literature?

Well, I’d go back to saying like, all right, what’s your problem right now? Like what’s keeping you up at night right now? And it might be, I really need five more engineers or I really need more capital or I really need a early adopter customer testimony. So any of those could become OKRs. It’s like, look, I gotta focus on that. Like that’s the biggest challenge because if I don’t get that nailed, I’m not gonna get to the next stage.

So I would recommend breaking it down that way. Jessica.

Yeah, so, okay, what keeps you up at night? Like what’s the top goal? It always comes back to bottom line and revenue. So in an early stage, when you’ve got the funding and you’re like set there, it’s about getting customers and generating revenue.

But one of my other struggles with setting OKRs is to not just say generating revenue is the OKR, because there’s so many other things that go into that, that’s not a good OKR. We’ve tried some other, like on the go to market side, things around like marketing OKRs and looking at pipeline, like let’s generate the pipeline and the opportunities and let’s track those as more indicators to driving that revenue.

But I guess if I were to say to you like, okay, keeps us up at night generating revenue, what would you say to like boiling that down and converting that into OKRs that makes sense?

Well, I would do some kind of a root cause analysis of it. And you mentioned several possible ones because it could be like, well, do we have a pipeline that’s gonna generate what kind of estimated revenue at what point in time? So you can have leading measures and lagging measures. And so because we call them outcomes, it doesn’t mean they need to be a lagging measure like revenue.

I would break it down and say, well, if we were at the revenue level we wanna be, and I would just define what that is and say, well, how many customers would we need at various stages in the pipeline, for example? And then what, okay, let’s look at our pipeline. Are there leaky places in the pipeline? If so, why? Let’s break that down. So I mentioned that term, what would have to be true? I mean, you can start applying that at different levels.

So, okay, between initial conversation and actually giving them a concrete proposal, only 20% of the people that contact us make it through that. Well, why is that? How can we learn more about that with as little effort as possible, obviously? And like, let’s just really get focused on that problem. I mean, there’s so many reasons you could not be getting revenue. You could drive yourself crazy. So just focus on the most likely one and really dig into it till you’re done. That’s why I called Mike. Yeah, go ahead, go ahead.

I’m sorry to interrupt, I thought you were finished. So this is Scott Hopkins from Corsha. I wanna see if you agree with something. I’ve heard it, one of the things that always resonated with me was this idea that making more money or achieving greater revenue is not in and of itself, it’s an objective. It is the result of achieving an objective. So maybe the objective is, hey, we need to land three new contracts in the next quarter. So the outcome of that is naturally more revenue, right?

So, and I don’t know, maybe your comment about pipeline aligns with that. I think it was the book, Start With Why or something like that, I forget. But anyway, the part of defining these discrete and concrete objectives and key results and not these sort of broad brush, make more money sorts of objectives and key results.

Right, well, I mean, I think like with that kind of North Star metric I talked about, you could say, we wanna be a $ 1 billion company in three years. And I think that’s legitimate at that level, but then yeah, you gotta really break it down. Like, how would we do that? Are we gonna open dollar stores? I mean, carpet cleaning? I mean, what are we gonna do? Could be anything. So anyway, I’m not sure I’m quite getting to the essence of your question, Scott. I guess I’m saying those are okay.

I agree as a lagging indicator, particularly when you’re seeking investment and you’re looking at market value of your company, any of those kinds of things. Obviously those dollars need to be there, but they are gonna be the result of things you do with the people you’ve got arrayed, the culture you’ve got, the processes you’re doing, the products you’re developing, the technology you’re using. And that’s often really where you need to focus is on the capabilities that are going to enable you to do that.

Now, resources, capabilities, customer value. Yeah, I was kind of empathizing a bit with Jessica because of course we have the same issue, right? We want more customers, we want more money, we want bigger pipeline, all of the above, right? And we want it right now. But saying more revenue is one of our OKRs, I don’t know if that’s the right way to think about it. Because of course that’s what we want to achieve. It’s those discrete things that lead to that that I think is where the OKR lies.

Yeah, the question to ask yourself when you consider any key result is, is this actionable? Is this an actionable metric? Does the result of that actually enable us to get better at what we’re doing? And that’s the problem with that kind of high level thing. It’s like, that’s great, but…

what does that tell us to do? So yeah, you need a way to kind of break it down into what you believe the drivers are.

Right, and just answering, like asking that how question over and over again, right? Like, well, how are we gonna do that? Well, how are we gonna do that? Well, how are we gonna do that? Until you figure, you find one that feels maybe leading and actionable. I like those words, right? So something that’s leading and actionable may be clues that you’re getting to more productive OKRs potentially. To Scott’s second question, what are inappropriate kind of KKRs? Maybe that would also help. Like, what are problematic OKRs when you see, yeah.

Well, like, I think a classic example is like what you could call a vanity metric. It’s like, yeah, we came up with a LinkedIn page and we’ve got 15, 000 followers and that’s great. But are they buying anything? That’s a little more relevant. So yeah, I’d avoid vanity metrics. I’d avoid, yeah, the ones that are just too high level or they’re ones that we don’t actually have any control over.

I mean, these have to be things that you feel you have a direct influence over, which is why like dealing with climate organizations is really difficult because they’re trying to influence things that they have no control over. You know, it’s an enormously complex system. So I like working with them because it’s enormously challenging to figure out how to have OKRs actually help them. And I think in a business that’s selling something directly to customers, the logic is you can get your arms around it a lot easier.

Okay. I’m sorry, I put some things on the chat.

I wasn’t sure if these were…

Yeah, John, are you still there? Do you wanna talk a little bit about this? Because I love the idea of leading indicators. I used to measure this on a weekly basis in one of my old jobs. Like, what are we doing this week? Not because we’re gonna see the results this week, but because I hope, I know that if I don’t do it this week, then in three weeks, it’s gonna suck. So I don’t know if you would mind talking about that. It looks like you’ve done some work here.

Right. Just from experience, those leading indicators have to be driven on how much lead time you need before you achieve a result. And I agree with the statement that just achieving a bookings or ARR target is often the key. And what are your leading indicators though? Well, obviously pipeline coverage ratio for your current quarter, for the quarter after that. Your conversion ratios, your metrics on who is contributing to pipeline, marketing, inbound, outbound, what are your STRs doing? What is your channel contributing?

What are reps individually contributing? If you don’t have the pipeline and you don’t have a conversion ratio, then you won’t have the target that you wanna hit from an ARR perspective. What can you do differently now, six months from when you need to hit your ARR target? Well, you need to work on those things. You generate more pipeline, put the spend where you need it in the most effective areas. Just an example of a leading indicator that gets you to your top line goal.

And then of course, there’s things like monitoring productivity per rep and figuring out what’s been affected, who you’re hiring. And so I’m with you on that. For early stage company, bookings is your most important overall target metric. It’s leading to your funding, but examples of early indicators are some of these things.

Thank you, John. All right, well, we wanna be respectful of everybody’s time. Please give us your feedback. We’ll circulate notes and video and slides and everything for everyone. You’ll get that directly from Mary. But Daniel, thank you so much for your time and thanks everybody for being here and yeah.