A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs.
by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte. With additional material from Measure What Matters, Lattice OKR 101 and Perdoo.
Having explored the basics of OKRs and prepared for the OKR journey, we are now ready for implementation. Due to the length of this section, we will be covering the crafting of OKRs in two posts – one this week and one the following Monday. OKRs are comprised of three components – 1) Objectives, 2) Key Results, and 3) Initiatives. Where do we begin? We always start with the objective as it is the cornerstone of successful OKRs.
CHARACTERISTICS OF EFFECTIVE OBJECTIVES
Inspirational
A well-written objective is more than a short collection of words that string together to describe a business goal. Your objectives should compel people to a higher standard of performance based on the inspirational power of the message. People should be forced to think differently based on the inherent challenge and inspiration of the objective. It’s not enough to say you want to see 10 percent improvement when you know that’s well within your reach. It means you’ll just keep doing the same things, just working ever so slightly harder. However, if I said to you, I need 50 percent improvement in what you’re doing; you’d probably say, “Gosh, in order to do that, I’d have to completely solve this hard problem,” or “I need to completely rethink how I’m addressing X or Y.” That’s what OKRs are supposed to do.
It’s not enough to say you want to see 10 percent improvement when you know that’s well within your reach.
Qualitative
Objectives should represent what you hope to accomplish, and therefore, be expressed in words and not numbers. The use of numbers will be thoroughly covered with key results.
Attainable
It’s no accident that this item appears directly below our call for inspirational objectives. Finding the balance between inspiration and reality is one of the foremost trials of creating objectives that work. We encourage you to push the limits of employees’ imaginations when setting objectives, but please be cognizant of the fact that limits exist.
Doable in a Quarter
Assuming you’re creating objectives each quarter, you’ll want to advance something that can, indeed, be accomplished during the subsequent three months. If, after drafting an objective, the collective wisdom of the team suspects it will take a year to realize, then perhaps what you’ve developed is closer to a strategy or even a vision.
Controllable by the Team
Whoever drafts the objective, whether it’s at the corporate, business unit, department, team, or individual level, must be able to control the outcome. If, at the conclusion of the quarter, your objective has not been reached and your first temptation is to say, “Well, sales didn’t deliver, so we missed our objective,” you’re missing the spirit of the exercise.
Provide Business Value
Your objectives should be translated from your strategy and directed toward creating tangible value for the enterprise if achieved. If there is no promise of a business benefit at the end of the day, there is little need to expend the resources necessary to accomplish the objective.
TIPS FOR CREATING GREAT OBJECTIVES
Avoid the Status Quo
Your aim is to always identify new objectives that tug at the edges of your capabilities. Therefore, you should avoid those that simply recite what you’re already doing, for example: “Maintain market share” or “Keep training employees.” If you can accomplish an objective with virtually no change in the way you’re working, it is most likely going to prove to be wholly ineffective in moving your business forward.
Use Clarifying Questions
Often, the best way to cut the confusion is to simply and sincerely ask, “What do you mean by…?” If, for example, someone offers that you must “Create value for our customers,” assume the role of an OKR anthropologist and try to ascertain the specifics of that comment. Are they referring to a particular segment of customers? All customers? What does value mean in this context? Escalating from abstractions to specifications will help you unearth the true objective that requires your focus.
Frame Objectives in Positive Language
Ideally, you and your team should feel compelled to work towards achieving the objectives you set. Therefore, you should carefully consider how you frame them. As an example, let’s say you want to improve your eating habits. When designing an objective you have two choices. You could say, “Reduce the amount of junk food I eat.” Alternatively, you might term it this way: “Eat more calories from healthy food.” Choosing the latter will force you to research healthy foods, identify those you’d like to experiment with, and ultimately provide a greater likelihood of success.
Start With a Verb
Very basic advice, but frequently ignored. An objective is a concise statement outlining a broad qualitative goal designed to propel the organization forward in a desired direction. That implies action. Thus it’s crucial that every objective begins with a verb to denote the action and desired direction. Does the company want to maximize loyalty, build loyalty, leverage loyalty? Each of these is quite different and would drive diverse actions. Action verbs are what bring your objectives to life.
What’s Holding You Back?
There is real power in recognizing and overcoming challenges to improve your situation. When considering possible objectives ask yourself what problems are holding you back from executing your strategy. Taking an unvarnished look at the problems that separate you from the successful execution is a great starting point in the creation of objectives.
When considering possible objectives ask yourself what problems are holding you back from executing your strategy.
Use Plain Language
While you don’t want to shy away from using words that accurately convey the essence of the objective, you should err on the side of choosing language that everyone can immediately understand to generate widespread comprehension of the objective and why it’s important. We also suggest sparing use of acronyms. Should you include any, ensure everyone is aware of their meaning.
CHARACTERISTICS OF EFFECTIVE KEY RESULTS
Key results are defined as a quantitative statement that measures the achievement of a given objective. If the objective asks, “What do we want to do?” the key result asks, “How will we know if we’ve met our objective?” Sounds easy enough, especially since tracking results is something that comes almost naturally to most of us now, given the rise of Fitbits and other wearable devices. However, creating effective key results for your business, those that accurately gauge progress on your objectives can prove elusive
Aspirational
The results of years of goal science research are quite clear and compelling: Setting the bar high leads to improved performance and enhanced satisfaction at work. Conversely, should you decide to draft easy to attain results, you can expect achievement, but subsequent motivation and energy levels will most likely fall. So, when drafting your key results we urge you to stretch the limits in order to challenge your teams to think differently. However, ensure the results are ultimately achievable.
Quantitative
Objectives are always qualitative, representing a desired action, while key results are necessarily quantitative so that we can apply numbers to determine whether or not we’ve met the objective. It could be a raw number (number of new visitors to your website), dollar amount (revenue from new products), percentage (percentage of repeat customers), or any other form of quantitative representation. Progress on key results should never be a matter of opinion, that’s why numbers are so powerful.
Specific
Clarifying terms and concepts, and ensuring shared understanding, is critical when writing key results should you hope to foster communication among teams and avoid unnecessary and damaging ambiguity.
Owned
Those responsible for delivering key results must be actively engaged in the process, principally in the creation. You will always be more prepared (and disposed) to execute on something that you helped create, since you molded your intentions based on a common understanding of the desired result, and your willingness to find innovative ways of achieving it.
Progress-Based
Harvard Professor Teresa Amabile has written extensively about what she terms “The Progress Principle.” It suggests that: Of all the things that can boost emotions, motivation, and perceptions during a workday, the single most important is making progress in meaningful work. Moreover, the more frequently people experience that sense of progress, the more likely they are to be creatively productive in the long run.
Vertically and Horizontally Aligned
We would underscore the importance of ensuring your key results are vertically aligned by reviewing them within your team and leadership, and horizontally aligned by sharing and reviewing with teams upon whom you depend, or who depend on you.
Drive the Right Behavior
There are a number of pithy statements relating to measuring performance; perhaps the best-known being, “You get what you measure.” That is often the case. Once you shine a metaphorical light on anything, you will necessarily be drawn to it, and increase the attention paid toward it. We suggest you think carefully about the behavior each key result you generate may engender in people.
TIPS FOR CREATING KEY RESULTS
Key, Not All
This exercise is not an excuse to demonstrate how overworked and overburdened you are by cataloging every conceivable action you’re considering for the next quarter. On the contrary, it’s a strategic endeavor focused on highlighting and maximizing the most critical value drivers of your business. Maintain exclusive emphasis on identifying the key results that denote the most actual progress on your objectives.
This exercise is not an excuse to demonstrate how overworked and overburdened you are by cataloging every conceivable action you’re considering for the next quarter.
Describe Results, Not Tasks
Related to the item above, your goal is to isolate key results, not create a list of tasks or activities. To clarify our terms, when we say task we’re referring to something that can typically be accomplished in a day or two; that would reside comfortably on a to-do list. “E-mail a prospect” or “Meet with the new VP of Sales,” are tasks, not key results. Whereas, “Add twenty-five qualified opportunities to the pipeline” is a key result. To distinguish between a task and key result, look at the verb you assign. If you find yourself using “help,” “participate,” “assess” or other relatively passive verbs (passive in this context at least) you’re most likely offering up tasks rather than key results. If that’s the case, move up the value ladder by asking, “Why are we helping, or participating, or assessing?” What is the outcome? Once you do that, a more solid key result featuring an action-oriented verb is likely to emerge.
Use Positive Language
We shared this advice when discussing how to create objectives and it holds equally well here. Bigger is better with key results. Rather than offering “Lower error rate to 10 percent,” consider the messaging power inherent in: “Increase accuracy to 90 percent.” The positive framing will enhance motivation and increase commitment.
Bigger is better with key results.
Keep Them Simple and Clear
Creating robust key results doesn’t mean you should require a Ph.D. to decipher them.
Be Sure to Assign an Owner
There is a well-known phenomenon in social psychology literature termed diffusion of responsibility. Distilled to its essence, it suggests that people are less likely to take action or assume responsibility when others are present. The quintessential example is someone suffering a heart attack on a busy urban street with nobody stopping to help, because they all assume someone else will. In less dramatic fashion, key results may suffer the same fate if an owner is not assigned (i.e., since no one individual is ultimately responsible for the result, no action is taken and the goal languishes).
CHARACTERISTICS OF EFFECTIVE INITIATIVES
Initiatives are where the rubber meets the road, the fun begins, and the actual work gets done. They are the tasks that move you in a meaningful way towards achieving your Key Results and Objective. The best way to get started is to ask:
“What tasks (initiatives) will accomplish this with the most efficacy?”
Once you have answered this question, a few key steps will have you on your way to creating successful initiatives.
“What tasks (initiatives) will accomplish this with the most efficacy?”
Set a Strategy
Be sure your team is working on the right initiatives, and that there is a direct line of sight with accomplishing your objective. Determine where greater efficiencies can be created, or the steps needed to produce a better result or achieve specific outcomes. Also be sure to discuss obstacles or challenges you might face. If making significant change, consider if the team might benefit from training or a dedicated roundtable discussion.
Secure Buy In
Each team, unit, or group of people should be developing and working on initiatives in a coordinated fashion. All members of the team have a legitimate say in prioritizing initiatives, thereby increasing their level of vested interest in the process. Inclusion and transparency fuel collaboration, alignment, and ultimately the execution of strategy.
Make a Plan
Determine who will be championing individual tasks, if they will need additional team members to support, and the time frame to complete each task, “Who” will do “What” by “When”.
Execute
With strategy, buy in, and plan in hand, your team is now ready to carry out their initiatives. They are the ones who are accountable for executing the plan. Meetings should be set quarterly, monthly, and/or weekly for managers/leaders and teams to review progress and celebrate milestones achieved along the way. There may be a lot to accomplish, but the goal is to foster communication and collaboration, and have fun too. OKRs are designed to be inclusive and inspirational, leading to greater success in achieving your objectives.
Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.
