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From mission to execution with OKRs
Oct. 9, 2018
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The Partech Shaker hosted Arnaud Meunier, Founder & CEO of Twitoaster (taken over by Twitter and Hickory), former Managing Director at Numa and Partech resident entrepreneur. He gave a comprehensive guide on the OKR (Objective and Key Results) method, its benefits and tips for implementation.
The OKR concept was invented by Intel corporation in the 90s. Standing for Objective & Key Results, OKRs are a set of objectives linked to measurable key results, that you grade or upgrade accordingly every quarter. Although the method is a great execution framework, it can also challenging to put in place.
Start by defining your mission
OKRs typically derive from your mission, so you need to define your company mission before setting your OKRs. Answering the following 3 questions can help you do this:
- What is the purpose of my organization?
- Which actions best describe what I do?
- What impact am I trying to have?
Having a mission and communicating about it internally is key. This gives meaning and purpose to your company. SpaceX for example defines its mission as “to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.” Their mission is “to send people to Mars”! Google’s mission is “to organize the world’s information and make it universally accessible and useful”.
Then set up OKRs
Now that your mission is defined, OKRs will help you to translate your mission into actions. For consistent vision and execution, setting objectives is a good starting point. Objectives that are in line your company mission will align everyone on what success means for the company. This will give meaning and direction to everyone.
An OKR set looks as follows:
A given set of OKRs should have 3 to 5 objectives that are consistent, stable and exhaustive. These can be financial, operational, based on human resources…
For each objective, define 3 to 5 Key Results that are:
1 - measurable: you cannot manage what can’t be measured. After 3 months, grade your Key Results to see if they have been achieved or not;
2 - ambitious: if you achieve 70 % of these Key Results, you have achieved a good quarter. 100% would be excellent.
3 - outcome versus output: your key results need to guide your actions (and not the opposite).
Don’t put recurrent items related to day-to-day company operations in your OKRs.
Let’s take SpaceX as a very simple and hypothetical OKR example.
SpaceX’s objective could be developing a rocket that is reusable. Their mission is to send people to Mars and to reduce the Ground to Planet Mars ticket cost to 100,000 USD within the next decade. If rockets explode each time they are sent to Mars, this will never happen. Some examples of Key Results to measure the outcome of these objectives (and not the output) could be:
- reduce the atmospheric input speed to less than 500 mph
- reduce the parts wear-rate to less than 30 %
To successfully achieve your Key Results, prioritize your To Do list every 2 weeks. Figuring out the best way to achieve Key Results is up to your team. Keep in mind that Key Results are not a To Do list. They should be based on Outcome. Leave the “how” to the team, who can use the Scrum or Agile method.
OKRs and large companies
When your company grows and reaches a certain size, aligning the whole company on 2 or 3 Objectives with 3 Key Results per objective gets complicated. One solution is to develop team OKR sets. OKRs are recursive: you can have Sales OKRs and Product OKRs, but make sure that they all are aligned and consistent with company OKRs. Defining OKRs can help you identify and eliminate redundancy between teams. OKRs give you a snapshot of your organizational structure: they help identify direct responsibilities.
OKRs help to develop and maintain organizational clarity, shared comprehension of your company success and operational alignment. Each employee can identify what the success in 3 months will be and how to get closer to the mission objectives. OKRs also promote growing ownership from your teams. Giving Key Results to your teams rather than a To Do list is more powerful: give them the chance to act as they see fit.
Finally, I believe that it is important to distinguish OKRs from personal objectives. Some companies define OKRs for individuals, I don’t really see the point as I think that OKRs should differ from individual performance (i.e.: bonus fixed on OKRs).
Q & A
Q / Are OKRs a team management method or a new way to manage projects?
I believe that OKRs are a method to drive your whole company, similar to the annual steering committee. Your teams can do whatever they want for the roadmap. OKRs enable you to guide your company for the next 3 months with operational discipline. This is quite new for large groups which are not used to updating their OKRs every 3 months, but it works. It’s better to be wrong for 3 months than for 1 year.
Q / How do you bring OKRs “to life” for your teams on a weekly basis so that they remain motivated?
Difficult to do it every week. In my previous experience, I did it during our screening planning meeting which was held each Monday. During this meeting, we went through our weekly To Do list and we got rid of anything that was not aligned with the OKRs. This helps your team understand what you are doing.
Q/ Are OKRs complementary to Lean methods?
Absolutely. They are part of it. This is not a heavy process. Once your mission is defined, it is quite simple to implement.
Q/ How do you establish your OKRs? With your team or with external consultants?
OKRs are not a top-down approach even if the guidance does come from the top. At Twitter (4,500 employees), objectives didn’t change every 3 months, but in general after 9 months. Each team developed their own OKRs (sales, engineering, products) …I believe that the process should be internal, especially for large companies, even if you require external help to align OKRs with the organization. At Twitter, my teams used to take 1-2 days to set their OKRs.
Q / As nobody is directly accountable, what happens if you miss an objective?
I believe that people can be held directly accountable, and I have, in the past, fired people, when OKRs were not achieved. If you face a cash flow constraint, failing to reach your OKRs can be very impactful. But OKRs don’t work well in companies with few or no constraints.
Q/ Is OKR implementation vertical?
Yes, the first time, it is. When you implement OKRs, you often discover organizational problems such as redundancies. Initially, this implementation is a time-consuming process, but then, it is easier the following quarter, as the objectives are supposed to be stable. And then it becomes a bottom-up process. Company objectives are often the last ones to be defined.
Q / Can a young start-up adopt the OKRs method?
As soon as you have a 9 to 12-months visibility, it is worth doing it. Thinking about your 3-months success goals and how to measure them is good practice.
Q / How can a small structure define OKRs?
The leader should provide the guidance and give the impulse, and then he can exchange and discuss with his team. It is quite a fast process. Next, you define separate OKRs for sales and products. From 50 to 100 employees, I believe that it is important to define different levels.
Q/ Can you give us some good practices to help teams to reach their key results?
Nothing specific comes to mind, but achievement sharing is key. You can stick them on the wall, but it is not very efficient. The best thing to do is to share and use your OKRs during meetings. For each level (products, sales…), you should have some criteria and a very clear description of what is expected, not correlated to the OKRs. You should have one ladder for each job function.
Q/ Can we apply the OKRs method to a 5-person company?
Strictly speaking, no. However, the key principles of OKR are still very helpful (mission, outcome, measurement…) and can enable you to check where you stand on a weekly basis. OKRs are a great method to implement.
Q / Should you steer the results during a quarter or wait until the end of the 3-month period?
At Twitter, during the quarter, we used to grade the Key Results with green, yellow and red colors to check the progress. We had very formal monthly manager meeting and we adjusted the Key results accordingly then.
Q / How do you define the Key Results level?
70 % is a good achievement level but always aim for 100%. Try and adapt, but it is better to have too high a target and then to level down. If you know, for example, that it is impossible to have a 30 % increase within the next 3 months, then it doesn’t make sense to stick to the 70 % rules.
Q / I am a PM: how do I evangelize the OKRs method to my company?
Talk to the CEO and he will see the benefits. Ask him if he knows who does what. The OKR method is a good way to identify each person’s role, especially when your company is growing, as you can easily lose track. It is also very convincing to give some ownership to your teams.
Q / Do you know any large company that replaced performance management by OKRs management?
I have worked with several large groups that used annual targets, but I don’t know of any large groups that totally migrated to OKRs. They did use it for specific divisions, such as the innovation or product teams for example. Not on a group level but more by business unit.
Q / Do you still put financial objectives in your OKRs?
It depends on the type of company and its maturity. If the company will die in 3 months unless you get 50,000 €, then it must clearly be a Key Result. It is frequent to have a financial KR but not an absolute number.
For more info, check out Arnaud's blogpost on the same topic on Medium.