🎯 Best Practices for Implementing OKRs (Objectives & Key Results)
Summary
TLDRThe video script discusses common pitfalls in OKR (Objectives and Key Results) implementation and goal setting. It emphasizes avoiding a cascading approach that stifles autonomy and adaptability, instead advocating for a top-down, bottom-up method fostering strategic alignment across the organization. The script also highlights the importance of considering both business and customer impacts, balancing leading and lagging indicators, and recognizing that outcomes are not entirely within our control. It advises against tying OKRs directly to performance metrics due to external influences on outcomes.
Takeaways
- 📊 OKRs Should Not Cascade: Companies often mistakenly make OKRs (Objectives and Key Results) cascade down the organizational chart, which can limit autonomy and hinder adaptability and innovation.
- 🔄 Empowerment and Autonomy: Allowing team members to set their own OKRs that align with the company's objectives can foster a more agile and innovative organization.
- 🌟 Strategic Alignment as a Constellation: Instead of viewing strategic alignment as a linear process, it should be thought of as a constellation where different parts of the organization align in various ways, not just top-down.
- 💡 OKRs Require Strategy: OKRs should be informed by a broader strategy, with data and strategic choices driving the selection of objectives and key results.
- 🔄 Balance of Leading and Lagging Indicators: It's important to balance leading indicators, which show progress towards goals, with lagging indicators, which reflect the outcomes after a longer period.
- 👥 Customer and Business Impact: OKRs should consider both the impact on the customer and the business to ensure a balanced approach to goal setting.
- 🚫 Avoid Tying OKRs to Performance Indicators: Because outcomes can be influenced by external factors, it's not fair to tie OKRs directly to individual performance metrics.
- 🌱 Planting Seeds for Growth: The analogy of planting seeds for a lemon tree illustrates the need for patience and the understanding that achieving OKRs may take time and is subject to external factors.
- 🔄 Adaptability in OKRs: OKRs should allow for adaptation and pivoting based on feedback and changing circumstances, rather than being rigid and unchangeable.
- 🔑 Understanding the 'Why': Teams need to understand the rationale behind their OKRs, including how they fit into the larger strategic goals of the organization.
- 🛑 Recognize Uncontrollable Factors: Accept that some outcomes are beyond control and that OKRs should be set with the understanding that external events can influence results.
Q & A
What is the main issue with the traditional cascading approach to setting OKRs in organizations?
-The cascading approach to OKRs often lacks autonomy and empowerment, as it forces objectives and key results to flow down from the top, stifling innovation and agility. It also creates a dependency on upper management for any changes, making it difficult for teams to adapt quickly to new situations.
How does a top-down, bottom-up approach to OKRs differ from the traditional cascading method?
-A top-down, bottom-up approach allows for more autonomy and alignment within the organization. Instead of inheriting objectives, teams create their own OKRs that align with the broader goals, enabling them to adapt and pivot more effectively without needing approval from higher-ups.
Why is it problematic to have OKRs that are solely focused on internal business metrics?
-Focusing only on internal business metrics can lead to a neglect of customer needs and market opportunities. Effective OKRs should consider both the business impact and the customer impact, ensuring that the organization is delivering value to its customers while also achieving its business goals.
What does the speaker mean by considering the organization as a 'constellation of stars' rather than a 'ladder'?
-The 'constellation of stars' metaphor suggests that strategic alignment in an organization is not a simple top-down process but a complex, interconnected network where different teams and units may align with various other parts of the organization, not just their direct superiors.
How should OKRs be informed to ensure they are strategic and effective?
-OKRs should be informed by a clear understanding of the organization's strategy, supported by data, market research, and a clear vision of the desired outcomes. They should not be arbitrary but rather represent strategic choices that the organization is making to achieve its goals.
What is the importance of aligning OKRs with both leading and lagging indicators?
-Aligning OKRs with both leading and lagging indicators allows organizations to measure progress over time and make informed decisions. Leading indicators provide early insights into the progress, while lagging indicators confirm the long-term impact, ensuring a balance between short-term actions and long-term outcomes.
Why should OKRs not be tied directly to individual performance evaluations?
-OKRs should not be tied directly to individual performance evaluations because outcomes are not always within an individual's control. External factors can influence the results, and tying OKRs to performance can lead to a focus on outputs rather than outcomes, potentially causing negative behaviors within the organization.
What is the 'value exchange' concept in the context of business and OKRs?
-The 'value exchange' concept refers to the fundamental principle where a company provides value to its customers by solving problems or meeting needs, and in return, customers provide value back to the company, often in the form of revenue. This concept should be considered when setting OKRs to ensure they drive meaningful outcomes for both the business and its customers.
How can an organization avoid falling into the trap of creating silos when setting OKRs?
-An organization can avoid creating silos by fostering a culture of cross-functional collaboration and ensuring that OKRs are aligned not only vertically but also horizontally. This means that teams should be aware of and consider the objectives and goals of other teams and business units when setting their own OKRs.
What are some common mistakes that organizations make when implementing OKRs, according to the speaker?
-Some common mistakes include cascading OKRs in a way that stifles autonomy, focusing solely on internal business metrics without considering customer impact, failing to connect OKRs to a broader strategy, and tying OKR outcomes too closely to individual performance evaluations without considering external factors.
Outlines
📊 Organizational OKR Traps and Goal Setting
The speaker discusses common pitfalls companies encounter with Objectives and Key Results (OKRs), emphasizing the importance of proper implementation. They critique the 'waterfall' approach to OKRs, where objectives are cascaded down the organizational hierarchy, leading to a lack of autonomy and stifled innovation. The speaker advocates for a more dynamic, top-down and bottom-up approach that allows for greater adaptability and alignment with organizational goals.
🔄 The Shift to a More Agile OKR Framework
This paragraph delves into a more flexible OKR methodology, where team members at various levels craft their own objectives that align with the company's top-level goals. It describes a back-and-forth process that resembles a 'ping pong' dynamic, fostering a feedback loop for stronger strategic alignment. The speaker also metaphorically compares strategic alignment to a 'constellation of stars' rather than a linear ladder, illustrating a more interconnected and complex structure.
🌟 Embracing the Constellation Model for Strategic Alignment
The speaker expands on the 'constellation model', highlighting its advantages over traditional hierarchical alignment. They discuss how this model promotes cross-departmental alignment and the ability to skip levels when necessary. The paragraph also touches on the importance of OKRs being informed by a broader strategic context, including vision, market research, and competitive analysis.
📈 The Strategy Behind OKRs and Value Exchange
Here, the speaker underscores that OKRs should not exist in isolation but should be grounded in a company's strategy. They explain how OKRs are essentially models of strategic choices aimed at driving progress toward overarching goals. The concept of value exchange in business is introduced, emphasizing the importance of aligning OKRs with both business impact and customer outcomes.
💧 The Parable of the Lemon Tree: Measuring Progress
Using the metaphor of growing a lemon tree, the speaker illustrates the difference between leading and lagging indicators in OKRs. They stress the importance of measuring progress continuously and not just waiting for the final outcome. This approach helps teams to adapt and pivot based on ongoing feedback rather than relying solely on end results.
🍋 Balancing Leading and Lagging Indicators in OKRs
The speaker discusses the need to balance immediate (leading) and eventual (lagging) indicators within OKRs to ensure that teams maintain focus on both short-term actions and long-term outcomes. They caution against overemphasis on either type of indicator, as doing so could lead to misguided efforts or a lack of foresight.
🚫 Avoiding the Pitfall of Tying OKRs to Performance Evaluations
In the final paragraph, the speaker warns against linking OKR outcomes directly to performance evaluations, as external factors can influence outcomes beyond an individual's control. They argue for the separation of OKRs from performance metrics to prevent negative behaviors and maintain a focus on meaningful objectives.
Mindmap
Keywords
💡OKRs
💡Cascade
💡Autonomy
💡Innovation
💡Agility
💡Strategic Alignment
💡Constellation
💡Leading Indicators
💡Lagging Indicators
💡Value Exchange
💡Performance Indicators
Highlights
Common traps and mistakes companies make with OKRs and goal setting.
The importance of avoiding a cascading waterfall approach to OKRs that stifles autonomy and adaptability.
The need for a top-down and bottom-up approach to OKRs for better alignment and agility.
How cascading OKRs can create silos and hinder strategic alignment across the organization.
The analogy of a constellation for strategic alignment instead of a linear ladder.
The necessity of OKRs being informed by data and strategic choices rather than existing in a vacuum.
OKRs as a model of strategy, representing levers chosen to measure progress.
The importance of considering both business and customer impact in OKRs.
Avoiding the trap of setting OKRs solely focused on internal business metrics.
The concept of value exchange and its fundamental role in business and product strategy.
The need to balance leading and lagging indicators in OKRs for effective feedback and adaptation.
Recognizing that outcomes in OKRs are not entirely within our control due to external factors.
The risks of tying OKRs directly to performance indicators due to uncontrollable outcomes.
The dangers of setting outputs as outcomes in OKRs to ensure control over results.
Encouraging a culture of learning and adaptation when OKR outcomes are not achieved.
The recommendation to separate OKR outcomes from performance evaluations to prevent negative behaviors.
Strategic alignment should be multi-directional, not just top-down or bottom-up.
The final summary emphasizing the importance of strategy, context, and balance in OKRs.
Transcripts
so just a quick video we'll talk about
some of the common traps some of the
mistakes that companies make from my
observation when it comes to okrs and
goal setting
um walk through some of them you can
even think of some of these as first
principles around okrs and how to
actually go about implementing them
properly and and how the best
organizations and places I've seen do
things like okrs really really well and
how they go about it
so the first trap or mistake I see
companies make all the time is to make
okrs Cascade so what I mean by that is
you can think of like you know we have
an organizational chart right so you can
think of your org chart like this
and you know just draw a bit of an org
chart and this is often what
organizations look like and then we have
the teams down the bottom multiple teams
right
and what we do is we try to make the
okrs fit our organizational chart so
what we do is we set I'll change colors
here what's that in okr at the top so
often we'll have an objective and then
we'll have key results and what we then
do is we make it Cascade down like a
like a rolling waterfall and what ends
up happening is we say well these key
results become your objective
for the next layer down and then they
set key results and then those key
results become the next layer Downs
objective and in key results and so
forth and so forth down the ladder and
you can see how like this rolling kind
of waterfall analogy right but the
problem with this is there's well
there's many problems with this
um and some of the problems are that
there's very little autonomy and
empowerment inside this right we're
essentially standing there waiting for
the person above us to tell us what our
objective and key result is going to be
now this looks great from like a
planning point of view like you can have
this nice linear plan that says you know
the person above at the top sets are
okay ours then the next layer sets them
and then the next layer sets them and
this looks great from plan and point of
view
but highly adaptable and agile
organizations aren't really need to nice
and linear they're a little bit more
messy but that enables them to have
Innovation and to adapt and to be more
have greater agility right
so the other problem with this is that
Innovation and Agility part in order for
me to be able to change plans so if I'm
down here and I want to change plans I
actually have to go up and get the okr
above me to change in order for me to
change plans
whereas if we have what I'll go through
in a second which is a more top-down
bottom-up approach it enables me to be
able to come up with my own plans and to
be able to Pivot and adapt in the moment
and within my realm without having to
escalate up and change things because
here's the kicker offered as well it's
not just about changing that one level
up because they inherited theirs it
actually needs to go all the way back to
the top in order to get that changed so
then you can make a change at the bottom
so you can see how this can strifle
adaptability because when we need to
Pivot and move we actually need to run
everything all the way back up to the
top and it needs to all change and then
it needs to run all the way back down
which is not great and not effective or
efficient either
the other thing
that happens here too is if I had a
brilliant idea and this can be at any
level I know I'm drawing it down the
bottom but it could be at any level
if I had a brilliant idea and a
brilliant thing to work on and to do I
can't really work on that until the okr
above me aligns to that right now yes we
need to have strategic alignment we'll
talk a little bit more about that in a
minute
but
because I'm waiting to inherit okrs and
I don't really have a say in it when
it's kind of coming top down
then I am basically just waiting and
trying to come up with new new ideas
is is almost wasted right like why
bother come up with new ideas when I'm
just wait waiting for it to be told
which also makes it very hard to do any
forward planning
because again I'm living my life one
quarter at a time because I don't know
what my okr is going to be next quarter
because I'm waiting to be told what my
okr is going to be or at least I'm
waiting to be told what my objective is
when we move away from this and we move
towards a more
top down
and bottom up approach
Things become a bit more messy but
enables us to do those things the bottom
people at all levels of the organization
can have a roadmap they can have a
vision and a plan and a view on where
things are going to go in three six
twelve two three four years time if they
really want to and that's fine because
we're not dictating to them what their
okrs are they can have a view and then
they can say well I was planning to do
this next quarter how does that align to
your goals to the person Above So how
this then looks to make it look
differently is the person at the top was
set their okrs right we still we still
have that but then the people in the
next run of the lidar rather than
inheriting a key result as their okr
they start to think and the question
becomes what within your realm of
responsibility so what do you own what
slice of the organization do you own is
it marketing is it whatever
um within the realm that you own how can
you
help me as the person at the top or the
CEO or whoever how can you help the CEO
achieve their goal
and then they will come up with their
own okrs which align to that okr it
doesn't Cascade it aligns so they'll say
okay if your target is just growth
number well I own this part of the
business and I think that we can
attribute X percent to that growth
Target and we're going to do that by
focusing in these areas and I'm making
these decisions because that's the
business unit I own and rather than you
telling me what key result I have and I
um I basically inherit I'm then telling
you how I'm going to help you achieve
your goal and this happens throughout
the whole organization so they'll sit
there okr and then the next layer down
will do the same they'll set their okay
eyes you can have multiple okrs and
they'll say Okay based on what I own
this product or this Suite of products I
can help you achieve your goal by doing
these things and again goes down to the
bottom so we have this you know back and
forth it becomes kind of like Ping pongs
and yo-yos throughout the organization
obviously back up again at the end I
know this is getting messy as a pitcher
but this is how it works there's a lot
more back and forth like this is the
goals that I want to chase how are you
going to help me realize those goals and
then they'll come back with what they
think they should focus on as a business
unit or area or group or team or
whatever and then there's a feedback
cycle the person above them their boss
might change their okrs based on that
feedback they might not they might you
know and then they might give feedback
back to their team to say
well I'm not quite sure there's okrs are
like where they need to be you know have
you considered this have you considered
that and again we're trying to
strengthen the okrs not tell people what
to do
and as a result and this gets me into my
second Point as a result
organizationally with okrs and if you
think about strategic alignment in
general it doesn't it doesn't happen as
like this picture-perfect like ladder if
you think about the org chart like we
always think about it like a ladder and
we start to think about strategic
alignment as this perfect ladder like we
just need alignment top down you know
and it just needs to go top down bottom
up and whilst that's true like I'm not
saying that we don't want strategic
alignment top down
strategic alignment in an organization
in my experience especially when we
start doing okrs and stuff too is more
like a constellation of stars
so if you think about it this way
you start to have
start to have like these stars and then
like little little clusters of stars and
these clusters of stars often represent
a business unit and their teams right
and then in the center we have deceased
weight or the organization which is you
know that's what everybody is trying to
drive towards an attribute towards
and then what we end up having is again
yeah like a constellation right of stars
and the reason why I say it's a
constellation too and not a ladder is
because it's not as picture-perfect
again as this top down because we might
have a product over here let's say a
product over there
and that product
might need to align with another
product's okrs that is not in their
business unit right it might be another
part of the organization a very simple
example of this is like sales and
marketing sales and marketing often sit
outside and whatever we do on product
needs to align with sales and marketing
sales and marketing will have their own
okrs to have their own strategy they'll
have their own plans but my product and
they still align with theirs and vice
versa they need to align with me as the
person who owns that product right so we
can't have this like you know ladder
construct anymore because a ladder
construct would ignore that we again
work in silos I just worry about the
fact that I need to align to the level
above me and this is also another reason
why that kind of top-down approach
breaks down because when we allow it to
just go top down we create silos and we
forget those types of impact and yes
whilst we all line back up to the top we
miss out on these opportunities to
create strategic alignment across the
organization not just vertically right
so we also want it horizontally
and then equally as well this enables
like even teams within the same business
unit to again or Department to again
align between themselves
this also does some other things that
starts to get a bit Advanced and it
might break your brain a little bit but
I'm just going to touch on it which is
that it also enables you to have a you
know okr a strategy a plan a thing here
and have that not necessarily aligned
directly to their business unit but they
might line directly to the organization
the organizations okr and the top and we
can start to skip levels because we're
not thinking about the organization as
like a ladder anymore as levels we start
to think about the organization as more
like a constellation of stars which
means that we could have an okr
here that arguably actually best aligns
to our North Star as an organization and
don't whilst it does a line here it's
Loosely aligned and rather than trying
to again do square peg around whole and
make it a line we can say no that makes
a lot of sense it's a strategic
imperative for us as an organization and
it's okay that it just aligns straight
to the organization's goals at the top
and there's nothing wrong with that we
can we can do that we can get away with
that it's okay and this again enables
that adaptability that flexibility in
the organization and again that is going
to drive greater Innovation and Agility
so
think of your organization and at least
strategic alignment I should just say
don't think of it like a ladder think of
it like a constellation of stars so
um that's kind of like first principle
number two uh in regards to definitely
strategic alignment and how to cultivate
that strategic alignment
the next thing I haven't um that I want
to just chat about
um in terms of okrs is that they don't
exist in a vacuum right so you know if
we go back up here if I was to take any
one of these I'll use a different color
any one of these it doesn't just exist
in a vacuum obviously there's context of
the okrs up and down but there's also
context in terms of why did we pick that
okr you know what what's next if we
achieve that what what is a building
towards what's that higher level you
know things like vision and you know
what what are we going to work on next
and who do we Target and what data drove
us to to actually decide on those okrs
what are our competitors doing all those
other types of things and all of this
is strategy
so what I mean by this is your okrs
don't exist in a vacuum they are a
representation or a model of your
strategy
so how does that work well you need to
still have a strategy your okrs can't
just be plucked out of the air they're
not something that you just pick right
they need to be informed by data and
they need to be actual strategic choices
as an organization we are going to focus
on these objectives and we're going to
measure progress by these key results
Great why did you choose them how does
that help us forward ourselves as an
organization you know what data supports
that etc etc this is all strategy
so your okr has become a model of your
strategy because they essentially
represent levers that you have
strategically chosen to pull
and you're going to then use to measure
progress towards realizing your strategy
so I start to make this tangible for you
let's say that you have an overarching
goal that's a growth goal right like
let's say we want to you know start we
want to get annual reoccurring Revenue
you know a certain percentage you know
20 million dollars or whatever it needs
to be right
that's your overarching you know high
level goal that's kind of at the top
company level or Department level or
something like that
you then own a product within that you
then start to look at well what do I
know about my customers with the product
what do I know about the product Health
in general looking at competitors doing
research Discovery all that type of
stuff and you're pulling data points to
think about well
how do we continue to grow this product
in a way that it supports that higher
um that higher goal right so you then
formulate a strategy off the back of it
to say we're going to Target these
people these target market and we're
going to solve these specific you know
needs of theirs and if we can do that we
believe that these are a new these
represent a new market for us
which when we look at competitors
is untapped so no competitors are really
playing in that space too much which
recognize which presents an opportunity
for us to grow right but this is all
strategy you have looked at it you've
chosen where you're going to play how
you're going to win why you're going to
do that all those types of things
from there you start to look at well how
do I then measure that and that is
really where your okrs come into
I need to start to turn this into
okrs in the sense of measuring my
progress towards that so we're going to
focus on these people and these needs
well how about I can have some tasks
success type metrics on that I can start
to look at a you know this Market as a
market share percentage right I can look
at acquisition in that space all those
types of things I can look at retention
that those types of things and this is
important because all this context we
can't forget about it this is all really
important context for our teams and our
people that get across and to understand
that hey we've picked these okrs for
these reasons if I'm measuring you know
task success here it's not because I'm
not focused on you know market share and
growth and and dollars I'm just focused
on it for now because we need to find
product Market fit first again strategy
right we need to find product Market fit
first and once we have that then we can
start focus on acquisition and growth so
yes our okr today is focused here but
our okr in the future might be focused
over here and if you have all these
contacts people can see that they can
understand that they can acknowledge it
you can talk about it and we can have
greater alignment not just within like a
quarter or a short period of time but
long term as well
um another example of this just to make
this and also again tangible and like
how do we measure things
again that's a very simple one I'm
making this really simple
um sorry it's a bad example in the sense
that it's too simplified but it
hopefully it illustrates the point
you could have a growth Target right or
growth objective
now you can achieve that by acquiring
new people as we're just talking about
but maybe you looked at the product
maybe you looked at your data you talked
to your customers and really you don't
have too much of an acquisition problem
you actually got a retention problem or
a churn problem and this is what I often
call the leak in bucket so you can
visualize a metaphorical bucket and
customers are coming in or new customers
are coming in and then essentially
you've got like a lake at the bottom
which is your churn now if you've got a
really big hole in the bottom of your
bucket and your churn is really high
throwing more people into your bucket
might not be the best strategy so whilst
yes you could set an okr up here that's
all about acquisition numbers maybe
again strategy and the context maybe our
okr actually needs to be down here first
we need a resolve churn so we might be
like reduced churn reduce churn by X
percent increase retention by X percent
whatever and then once we've solved that
then we can move on to that acquisition
number again
again churn still aligns that our growth
kind of Target right I can help you
achieve that by just minimizing like we
can grow to user base by minimizing
churn we can also grow it by adding more
customers but again strategy context and
what data drove you to make those
decisions and why are we making those
decisions you can't just have an okr off
by itself because then we don't have
answers to any of those questions right
like why are we doing it what's next you
know who are we doing it for all those
types of things how do we get to these
numbers answering all those questions is
absolutely pertinent in organizations
and you can I definitely have seen my
fair share of organizations fall into
the Trap of not having these types of
things and they just have you know okrs
and people don't understand the okrs
they don't know why we're doing the okr
and that again is going to be
detrimental to the organization because
we need to know why we're doing things
again that's going to enable people and
give people in the organization the
tools and the information to be able to
make smart decisions it's going to
create better Clarity in the
organization ultimately going to help us
be able to execute better and have
greater impact over the long term
now this touches on one of my next
points which is that
and if you do strategy really well you
will actually cover this but I'll make
this really basic because this is a
common trap as well
when you think about any business
so any business
really exists
through or you know business and product
can get distilled down to something as
basic as value exchange so the way value
exchange works is a company exists to
build a product that
people that give value to people so we
give value to people often via the
product Often by solving their problems
and meeting their needs
people then give us value back as an
organization and which is often in the
term of dollars not always in the total
dollars you don't always get paid for
your products it could be data could be
other things it could be you know
acquiring customers and then they buy
other products and then that would then
get us money and revenue but then that
money enables us to sustain the company
right and be able to employ people in
order to work on that product and then
the kind of flywheel kind of continues
from there but that is value exchange
and that is a business and product
at its absolute most fundamental so why
am I talking about this well because
companies can fall into the Trap I've
seen this too often where
they are too focused on the business and
themselves and they set okrs that are
solely focused on the business
things like growth targets growth
revenues costs drive down costs increase
Revenue increase customers do this do
that and it's all internally focused
right which is fine we need to think
about the business impact that we want
again we need to complete this flywheel
this is still an important part of
the whole picture but if we only focus
on these things we can fall into the
Trap of the whole building and they will
come we become too inshallah we look at
ourselves we set our own targets and our
own goals and then we build a whole
bunch of stuff and do a whole bunch of
stuff in the hope that it's going to
achieve that but we have completely
forgotten and neglected this side of
defense and without any insight and
without any measurements against this
side of the fence then the whole thing
fails
you might have success in the short term
but it will fail in the long term so we
also have the customer all the market
all your users whatever term you want to
use here
and what we need to do is we need to
make sure that we are focusing in this
intersect
right so this intersect is super
important this is where we need to be
thinking about both
what business impact do we want to have
and then what customer
impact outcomes align with that business
outcome and we need to Target that that
is where good product is going to happen
that is what good okrs look like good
okrs consider both the business and the
customer it's not just the business
thing and it's not just a customer thing
because it was just a customer thing
we'll just give free money and free
products out to our customers right but
if it's just a business thing then we'll
charge for everything we'll make our
fees really really expensive
um and make life a nightmare for our
customers we need to focus in this
Center so okrs should have both customer
impact and business impact we need to be
thinking about both and we need to be
you know making sure we're balancing
both of them so don't become too insular
need to be able to see your customers in
your okrs need to be able to see the
business as well like you need both it's
really the moral of the story there
which also often means
we're starting to think about things
across different time Horizons now what
do I mean by that
often measuring the customer side of
fans often happens earlier than the
business side so often we give value to
our customers and then it takes some
time to realize that impact back to the
business
what we refer to those things as is
leading versus lagging indicators
and the analogy that I often use is
let's say we want some
lemons to make
I don't lemonade let's just say right
and that's what we ultimately want to
want to have one day
we let's say we decide to plant some
seeds
right
planting seeds and turning into a tree
where we would be able to harvest lemons
is quite a long process this could be a
year two years longer before we realize
and actually have lemons so if our okr
and our measure was up here and it was
like you know X number of lemons
let's say 10 lemons right it could take
us 12 18 24 months before we even
realize that okr which means we planted
seeds and then we wait 18 months
and then we come back and we look has a
tree grown and surprise surprise there's
no tree and we think oh we failed now
it's time to Pivot right that's a long
time to get feedback that what we did is
not working and not achieving our goals
so what can we do instead well we can
measure progress as we go we could plant
seeds and we could measure how many of
those seeds actually germinated into
something we could then
start to look at the growth rate right
so as it starts to turn into a bush we
could maybe measure how quickly it's
growing and spurring up we could then
measure other things right like the
health of the tree does it look like
it's going to actually give us what we
hope it's going to give us those types
of things but what we're doing as we're
set in measures and key results in okrs
along the full time Horizon
and what this again I mentioned before
gets referred to is this is leading
indicators
and this is ligand so we need both we
need the leading and the lagging
indicators we focus just on the ligand
indicators it will take us a very long
time to get any feedback to know whether
our okrs are working or not equally if
we just focus on the leading indicators
we can lose sight of the lagging
indicator because there's also an
argument here of well how else might we
solve given lemons maybe we don't need a
lemon tree maybe we could do something
else so these two things need to be
balanced because if a team is just
focused on planting seeds and then
measuring the growth of it and they
don't know why they're doing it and
where that's contributing to and not so
larger picture and what's that longer
term lag in business impact that we hope
to have then we just get fixated on that
quarter by quarter by quarter and we
just keep doing and doing and doing and
there's no opportunity to get your head
above the trees and to say well why are
we planting a tree is it like maybe we
could do something else we could do we
could go buy some lemons right we could
partner with you know a lemon farmer to
be able to get a good deal on the lemons
that we need to have on a regular basis
but again without that lagging will you
miss that and then equally without
deleting we could wait 18 months and
have no lemon tree and no lemons and
that's a long time to find out that the
stuff that you're working on is not
working
equally we might also you know plant
seeds and try maybe we tried to plant
the seeds three times
and every time it failed this could be
an indicated Shin at that point in time
to then pivot and to say well maybe we
just suck at growing lemon trees maybe
we should just change tactic and to do
something else but again without that
leading metrics and indicators you won't
know or you won't have any feedback in
order to be able to make that decision
and pivot and adapt
which brings me to my second last point
and that is that okrs outcomes one of
the hard things of outcomes is we don't
have full control over it
if I planted lemon seeds and my yard
flooded or my farm flooded
and that's just the bad weather event
like I might not have known that was
going to happen right so just because
that happened doesn't mean I failed per
se right I did all the right things I
checked the soil level I fertilized it I
watered it I planted the seeds
everything like that I might have done
everything correctly but I still didn't
realize that outcome at the end of the
day and this could be because of things
outside of your control now this doesn't
mean it's a get out of jail free card
don't use this as an excuse for not
hitting your outcomes but it's something
that we need to acknowledge that
outcomes aren't completely in our
control there are external factors that
are going to influence it economical
factors interest rates all those types
of things
that doesn't mean we shouldn't focus on
the outcomes the outcome is still the
outcome that is still what we want to
achieve we still want lemons we still
want to focus on that and try to achieve
it it doesn't make the goal any less
worthy but what it does is we need to
acknowledge that hey if at the end of
the quarter we haven't realized that if
if it flooded and all those my lemon
trees all died or we got a cyclone or
something like that that's just bad luck
and we need to look at it through that
lens of what can we learn from this is
it anything that we did that we could do
better next time and sometimes there is
and sometimes there isn't and that's
okay
and that also means that if you're not
hitting your okrs all the time that's
also okay
because those unexpected events can
happen and they can influence us and as
a result we miss out on it but that's
again it's okay that we missed out on it
um it doesn't change the goal we just
try again let's clean the field let's
plant the seeds again let's do what we
did last time because we did things
right maybe we do have some learnings we
can tweak things but we couldn't have
stopped a cyclone right
um
which brings me into my last point which
is that a big anti-pattern and a big
No-No is tie in your okrs to people's
performance indicators
this becomes very hard or very bad to do
because of that reason because we don't
have full control over it you can
essentially punish people like hey
you're not getting your bonus this year
or you know you're not getting promoted
Because by the way a cyclone came
through and destroyed all your lemon
trees that's not their fault
so when you look at different things in
order to measure people's performance
and to work those types of things out if
your organization wants to do that but
those things are not outcomes we need to
separate those two things yes over time
some people the better people should hit
more outcomes than others but it's so
contextual and it's so you know tied to
external factors that it is not fair and
it's generally an anti-pattern to tie
those two things together because guess
what's going to happen when you tie
those two things together
people are going to then not set worthy
and good outcomes they're going to set
more outputs as outcomes as their okrs
because they have control over that why
would I have a key result about you know
getting X number of lemons when I don't
have full control over how fast that
tree is going to grow when it's going to
grow whether a cyclone is going to
happen I'll probably end up sending okr
that's a really bad okr it'll be
something like plant five lemon trees or
plant them take that off happy days but
we know that just planting trees which
is an output is not an outcome right we
need to realize those benefits from
those trees that is the ultimate outcome
so it can drive bad behaviors in the
organization it's just generally a bad
thing to do so that's my last point to
kind of just touch on and to leave on
um but that's really it I recognize I
covered a lot of ground so I might just
summarize here
think of your organization more as a
constellation and not as a ladder which
means strategic alignment can happen
multi-directional it's not just a
biodeirectional up and down it's
multi-directional which also also means
that our okrs shouldn't Cascade don't
make him Cascade just make him online
they need to align to each others and
have cohesion they don't Cascade down in
the organization
Cascades um okrs also don't exist in a
vacuum they have strategy behind them
they are really a model and a
representation of your strategy they we
need to have this information in context
that sits behind it so we can make
informed decisions
which means that we need to consider
both customer and business impact
and not just one or the other and we
need to consider both leading and
lagging indicators and we don't have
full control over our outcomes that is
part of it that is the nature of
outcomes which means we shouldn't time
to people's performance it's really that
at the end of the day so hopefully you
found that useful hopefully that covers
a lot of ground around okr strategic
alignment those types of things like I
said you can think of this in just terms
of goal setting in general but in
particular okrs common traps some first
principles around them so hopefully
that's helpful and useful and if you
want to learn more about product check
out our productpathways.com we have
online courses self-based courses and a
whole bunch of free tools guides
templates for you to use so plenty of
great resources there so check it out
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