Goal Management: 6 Steps to Setting Amazing Company OKRs
How to Prevent the Best Laid Plans from Falling Apart
Does this sound familiar?
Management goes on their Quarterly or Annual Offsite. After vigorous debate, various forms of the Mission, Vision, Values, Strategy, Goals, Objectives, target KPIs and the Plan are documented. A presentation to the company is made by the Executive team, the company is excited there is a plan, and ready to go.
Two weeks later…no one can find the shared docs with the Strategy, Goals, Objectives, etc. The individual Departments put together their plan with the best information they have, but still prioritize day-to-day work over strategic goals.
Two weeks after that...KPIs and Product/Feature delivery dates are all anyone talks about. Executives stare at shared spreadsheets or Dashboards in meetings and ask things such as: “Why are leads off track?” or “Is the new product really going to be delivered in time for the launch?” or “What’s going on with our Churn rate?”
Two weeks later...Oh crap! Our funnel metrics are off, let’s put together a plan. PANIC sets in. A committee or task force is formed to resolve issues, a War Room concept is established, but no one knows what the heck that is.
Now it’s the end of Quarter, somehow you struggle through it, and everyone seems roughly content with the progress that’s been made on all fronts. A general sense of organized chaos remains, but you’re not sure why or how to solve it.
You could unbreak the process. How? Naturally, we recommend the Objectives and Key Results (OKRs) methodology popularized by Intel, Facebook, Google, etc. And...recently reinvigorated by John Doerr’s book: Measure What Matters. The OKR methodology has gained traction as a de-facto standard in some industries. The core difference between OKRs and other goal setting methodologies are that OKRs are frequently set, tracked, and re-evaluated – usually quarterly. OKR is a simple, fast-cadence process that engages each team’s perspective and creativity. Creating alignment in the organization is one of the main OKR benefits. The goal is to ensure everyone is going in the same direction, with clear priorities, in a constant rhythm.
But...rolling out OKRs isn’t as easy as it seems.
And chances are you only have a small percentage of employees who understand the methodology well. For this work, however, everyone needs to understand it, and to accomplish your goals, your whole organization needs to embrace the following steps:
Goal Management Best Practices
Identify a Champion Who Owns the Process
Develop a Playbook to Define the Purpose and Provide Clarity
Cascade Goals Top-Down, While Supporting OKRs From the Bottom-up
Emphasize the Why In Addition to the How of Your Goals
Set the Right Cadence for Both Planning and Performance
Drive Innovation (And Embrace Failure)
Step 1: Identify a Champion who Owns the Process
We feel strongly in imbuing a single person-you might call them the OKR champion-with owning the process itself. This is a different role than who's accountable for actually delivering your objectives and key results. This corresponds with crafting a playbook (see Step 2 below), and once you've decided how you're gonna incorporate goals into your meetings, its identifying the person who is going to ensure that process is followed, done well and best practices are maintained. This person would format, coach, provide a champion mentality around doing the process well and educating people around that playbook.
There are some practitioners we’ve met who believe that this role can be left to the managers. But we would argue that the manager has so much going on that it’s not realistic to expect them to become an OKR expert. Yes, they need to have a working knowledge of the OKRs they’re working in. But, what we’ve seen work time and time again, is that start with the playbook, and when there is a champion, or coach who has an embedded degree of expertise in the organization, they know what comes next, and by owning the playbook, they’re able to own the process as well.
It won’t surprise you that we believe this role is best assumed by a Chief of Staff, Chief Strategy Officer, Chief Operating Officer, or similar role.
Step 2: Develop a Playbook to Define the Purpose and Provide Clarity
In order to make sure that everyone is on the same page across the organization, we encourage you to develop a playbook. Doing so involves delineating how you're going to use OKRs in your organization, because there are multiple ways of interpreting and applying them. For example, there are a lot of questions when people hear the term objectives and key results if they're not familiar with them. It can also cause a lot of anxiety in people if they’ve only come across these terms in relation to performance management. Time and time again, the first question we get asked is, how does this affect my pay? How does this affect my focus? How does this affect my promotion prospects? If the answers to those questions are clear, and people are also clear on policy, you can preempt such early signs of resistance by addressing them in the playbook. It's the first step in your change management process.
One of the things we talk about with our customers is the importance of being thoughtful about where you introduce your goals or OKR discussion into the cadence of your regular meetings. This may occur at your weekly staff meetings, where you make sure that you not only talk about what's happening tactically, but reserve it a chunk of time to have a conversation about your goals and that bigger strategic picture. What’s important from a change management point of view, is that you've got a far better chance of success if you're trying to integrate your process into what already exists, as opposed to laying something new on top of what's already there.
Further, without that clear vision and strategy in place, it becomes much more difficult. Well, actually impossible for people to correctly align. Where are they going to get that sense of purpose from? Because that purpose comes from alignment and purpose. So without that vision and strategy, we will not actually develop OKRs. It’s absolutely fundamental though. Look, 85 percent of respondents we talked to said they wanted to use OKRs to improve the alignment of the business. That's a huge amount. But you have to have the vision and the strategy that clear crystal clear if they're going to achieve that improve alignment.
We also want to reference the importance of clear communication. What we see time and time again is that teams who live and breathe the development of vision statements, strategies, plans and priorities, instinctively get it because they live and breathe it day by day. But this can often create a blind spot because they can fall into the trap of thinking that whatever they’re communicating instinctively gets to the point. As you’re documenting, double check that you’re using simple and easy to understand language as you create your objectives and define your problems?”
One piece of pragmatic advice we’d like to give is, if there's an acronym that's part of your objective, can you not use that acronym? It’s possible that every single person in your organization will have a context that the executive team does to understand what you’re saying, but it’s just as likely they will not and it’s much easier to understand what you write down if the purpose is to clearly drive alignment.
Step 3: Cascade Goals Top-Down, While Supporting OKRs From the Bottom-up
In terms of what already exists, you must address the planning cycle itself, the challenges around actually setting goals and what you can run into there. So, first is the topic of goal cascading. And this involves having a simultaneous top down and bottom-up goal setting process, where you end up with something that looks a little bit more like a network of goals rather than a hierarchy or a tree structure. One of the absolutely fundamental principles of an OKR system is that they’re ideally used to empower, not constrain. However we see organizations where achieving an OKR becomes the objective of the next OKR down. We also see how the OKRs have been literally bolted together and that becomes difficult to work with. You want your system to provide guidance, context and direction, all the parameters in which everything else should then work. But then you must allow teams or the functions to develop their own goals off the back of them. Obviously there's got to be some negotiation and sign-off, but you're not dictating what their OKR should be. Instead, you're allowing these teams some freedom and empowering them. The message is we trust you to go away and have a go at drafting these on your own.
If a team is inspired by the top level organization or company goals, as well as the departmental objectives, one question you might ask is: how aligned should their objectives and results be with higher level objectives and key results versus a set of objectives and key results that aren't necessarily aligned. Is there any standard to know they’re doing this right? Said differently, when are you not aligned enough and when are you too aligned?
One answer, is that if you're an organization that is keen to innovate, you allow people the chance to go off and try new ideas, test out new thinking and whatever those projects might be. They might not necessarily have a direct line of sight to the top level goals for this particular period. However, when somebody is asking for some time and some resources to go and focus on something, there isn’t any harm integrating that with an OKR and ensuring that it stays within the review process, maps with the key goals, anticipates key pinch points and provides for regular cadence of discussion, a check-in and some ability to track it.
Which is to say, it doesn't necessarily have to align, but there needs to be a degree of governance around that to make sure somebody’s not running a little cottage industry of their own, which is never going to produce any benefit for the business.
Step 4: Emphasize the Why In Addition to the How
Properly written key results can empower autonomy. One of the first things you see is that the key results of the early stages are written as tasks. And all people are doing is tracking activity. They're not tracking the outcome. If you're just writing a list of activities that you're going to complete, that leaves no room for autonomy or empowerment. But what if instead, you state what the finish point is and allow people to work at how they get to it? So long as they do it,and don’t cause any harm to anyone or anything along the way, then where's the problem? What the message in this is, “you know, I trust you. I chose you because you've got skills, capability and knowledge, which I value. So, I'm trusting you to use it.”
One of the biggest challenges for organizations that are embracing a key results concept for the first time is it just feels natural to make a key result being the list of tasks because that's how we approach it. A lot of goals and our personal approach tends to be identifying what you want to do and listing out the things you need to work on in order to achieve that. Obviously an OKR framework proposes something quite different. Instead of saying, “here's what we're going to do,” it becomes, “here's how we're going to measure whether we've achieved that outcome.” And that's a pretty big challenge the first time you tackle it. It gets easier though.
It also takes time. It’s generally around nine months before organizations start to consistently see outcome focus and key results. We hope it feels obvious, but we would issue a challenge to set less goals. If you can do that, then that's gonna at least kick off this process, not make it too heavy and allow you to go on a journey of setting better key results over time.
Step 5: Set the Right Cadence for Both Planning and Performance
Now let’s dig into the challenge of the planning cycle. There are a number of interesting topics to talk about around OKRs and planning cycles. And in particular, seeking to understand what the right frequency of goal setting is. There's almost a default of, hey, this is always a quarterly business process, but a lot of organizations and teams struggle with that. Maybe we should be doing this yearly. Or every six months?
So, one of the planning cycle challenges is not having enough rigor around when a planning cycle begins and ends. And so therefore you find yourself, a week, two weeks or three weeks into the next quarter and you haven't gotten to our goals, your OKR is locked-down and now you all feel like you're behind. On the other hand, how do you execute a planning cycle, before the last quarter ends and then the next one starts? Because we see organizations focused on delivering by the end of the first quarter and they forget to actually prepare for the next quarter. This is where it really pays dividends to have regular check-ins both in terms of progress, but also confidence, around completing that objective or key result by the end of the period.
What we encourage is to do retrospectives at the end of each cycle. Ask yourself, was this the right cycle? Was this right for us? One example is an organization who did a retrospective at the end of the first 12 months of planning. They decided that they wanted to have a complete month of downtime at the start of the next year to give themselves enough space to breathe, to plan, to work out what the next 12 months would look like, and to design OKRs that ensured people were aligned. They made that first cycle just two months, and that's fine, they're not breaking a rule or doing it wrong. What they're doing is adapting it to their organizational culture. And as long as you don't lose sight of the fundamental principles of your OKRs (and once you’ve learned the lessons that apply to your organization), adapt them for yourselves.
And when you have progress you can use that data to help inform your predictions about where you might finish. Obviously one of the perspectives that we have as an organization is this is a place where software can come in and really help with those types of disciplines and make it easy for teams to follow the process.
Step 6: Drive Innovation (And Embrace Failure)
We also run into addressing how to identify goals in relation to performance management. People say, “we like the idea of having metrics associated with our objectives. But you know, we've always had this culture of linking the goals to pay and promotions.” And this is perhaps one of the most sensitive aspects of what we talk about, because what do you want to use OKR for? If you're looking to use OKRs to drive innovation in particular, and if you're looking to use them to help really drive growth, but drive growth through trying new things, finding new ideas, going in new directions, you can't expect that to be successful 100 percent of the time.
You want people to come up with that crazy idea and within some parameters, give it a try. People are not going to feel confident enough, safe enough to do that if they know that if they fail, if they miss or if they don't achieve 100 percent, then their pay or bonus or promotion is at risk. People will play it safe and you'll end up with mediocre average results. So to some degree that's what they've achieved. But you can also focus on what they failed on, and what they did as a result of that failure. For example, how did they adapt? It's what we call Adaptive Performance, which is widely regarded now as the aspect of performance and individual's performance that sets them apart from their peers. People get that a tactical performance is the focus on the numbers or focus on targets, on budgets and so on and so forth. But it's adaptive performance, which is about the ability to be creative and resilient. That's what’s important we want that brought into somebody’s overall evaluation. If they fail at something, how quickly have they bounced back, what have they learned and how have they applied that learning?
Ultimately, how to do this is to think about it as a business process that is designed and ideally written out into that playbook. Second, to identify someone (and yes, we think that person is the Chief of Staff) that owns the process and is responsible for the whole organization. And to put it in a context, what you’re trying to achieve as an organization is to align the process with your purpose and your values, so that you're actually unlocking the alignment and the drive, hopefully as the reason you're putting a goals process in place in the first place. Working parallel with your values is a fantastic way for organizations, or for people, to demonstrate the organization’s values, as well as how values are the building blocks of the culture. Prior to this, maybe the culture didn't promote open and honest discussion. It didn't feel safe enough to have that conversation. And so you couldn’t say, “I'm not so confident we're going to hit this by the end of the quarter.”
So, don't underestimate the change that OKRs represent and make sure that you've managed the change so that people are well communicated with and feel supported through the change. Also, give people the chance to try it on and work out for themselves so that they're not being dictated to.
Finally, what's the one thing you can focus on to make sure that OKRs are successful? It’s the regular practice of check-ins. This is how high performance is achieved. It doesn't happen by accident. It doesn't happen by chance, it’s achieved through routines and rituals. Plain and simple.