About a year and a half ago my co-founder and I decided to employ a system called Objectives and Key Results to set and track goals within our company. Creating plans and tracking results is something that's generally lacking in the startup world, especially with very early stage companies (pre-venture/positive cash flow). Big business planning methodologies (across years, dividing resources, etc.) really aren't relevant, and as a result most new companies (if you're like the ones I've started or worked with) end up doing nothing. What's needed is an agile system for planning and measuring.
The general architecture of what eventually became the Objectives and Key Results system was developed by Andrew Grove, the former President of Intel and author of High Output Management. It was later popularized (early 2000's) in the tech world by John Doerr, a partner at Kleiner Perkins who encouraged his companies (Google and Zynga) to employ it as their planning and tracking system. These days Mark Pincus, the founder and CEO of Zynga is the most vocal proponent of the OKR system (you'll find reference to OKRs in virtually every one of his earnings calls since they've gone public).
However and ever since we've started employing OKRs within our own company, I've continually come up empty handed in my search for information on the subject. Perhaps John Doerr and Mark Pincus have some secret manual, but there's little public information to be had on how to implement OKRs effectively. Having used the OKR system in our company for the past year and a half and having worked with others to implement the system in their companies, I'd like to share some of our experiences. , I believe the OKRs to be a solid and simple system to help you and/or your team to achieve great things. What's needed is a data and elucidation.
This is the first of a number of posts I plan to do on the topic of OKRs. My goal is to share how we've implemented them, the specifics of our process, what's worked, what hasn't, and the results we've been able to produce. This first post is an attempt to outline the high level benefits and principals associated with the OKR system. Future posts will get into more specifics.
HOW OKRS WORK
- Establish "long term" objectives
As you probably well know, time scale is different in a startup. Startups often require change and adjustment on a (very) frequent basis; few are the successful companies that, years later are still doing the same thing they set out to do on day one. As such, building a business in a rapidly changing environment means that it's pretty much impossible to create an actionable plan that spans more than a few months.
But, just because it doesn't make sense to plan beyond a few months doesn't mean that planning isn't important. The OKR system prescribes setting goals (objectives) and the specific metrics by which you'll track them (key results) on a quarterly basis. In my opinion, monthly or bi-quarterly planning probably makes more sense for startups still searching for their product/market fit. Since we started employing OKRs at our company, I don't think we've gone a single quarter where we haven't made significant adjustments to our objectives before the quarter was up.
A successful CEO-for-hire and friend of mine has a simple rule regarding board meetings that I think also applies to OKR planning intervals: a company that hasn't reached positive cash flow should have (lite) board meetings every month, whereas a company that has reached positive cash flow should have (more formal) board meetings quarterly. If you haven't reached positive cashflow, consider planning your OKRs on a monthly/bi-quarterly basis.
- Make everyone an owner of something
One of the best aspects of OKRs is that it's a system designed to get everyone involved and on equal footing. As Mark Pincus has said, "it's about making everyone the CEO of something" – from the top management team on down to members of the support staff. The principal is a good one: everyone in a company should understand what the company's objectives are and be responsible for helping to achieve those objectives, in whatever capacity they're able.
From a planning standpoint, I think there's still a need to take a bit of a top-down approach. Within our company and others I've worked with, the CEO/founders take the first step by setting their own OKRs, which represent the top-level objectives for the company (e.g., grow revenue by x, ship a product, establish y partnerships, etc.). Next, the CEO/founders review their OKRs w/ the top management team, each member of which will establish their own OKRs, and so on and so forth all the way down the company.
- Encourage people to think big
Whatever the interval, when you and the members of your team set your OKRs the general rule is that each person should have three objectives, each w/ three key results. When John Doerr encouraged the Google team to start using OKRs, it was meant to be a system that would enable them to do amazing, world-changing things. The idea is this: objectives should be lofty enough that at the end of the quarter, when you score everything up, a successful result for any given employee would be 70% achievement. Achieving anywhere around 100% for one or more intervals means that person's objectives weren't big enough.
Clearly, not every company is pursuing something as lofty as organizing the world's information, however and no matter what you do, the idea of getting everyone on your team to be thinking about and setting big goals for themselves is powerful. Like many aspects of the OKR system, it's a cultural thing; no employee wants to have their role and tasks solely defined by their superior, nor is that an effective way to manage. OKRs empower everyone to bring their own ideas to the table in a manner that supports the company's overall objectives and holds each person accountable for their results.
- Be completely transparent
While the OKR planning process may require a somewhat top-down approach, when all the OKRs have been established for a given interval they should be made accessible to everyone in the company to review whenever they choose. We've found a good solution to be a shared Google spreadsheet, with pages for each team and their members (Management, Product, Sales, Marketing, etc.). Again, this is a culture decision: making everyones' OKRs available to anyone within the company is a powerful statement of leadership's commitment to transparency. No matter who you are, if you want to know what anyone's objectives are, all you have to do is look.
Something I'm still trying to figure out is how we can better keep the OKRs in front of everyone, when they're not looking at the spreadsheet. We look at the spreadsheet twice a week: once on Monday to set that week's OKRs and then again on Friday to review and score them. However, it's way too easy to not look at (and forget) the OKRs after that Monday review. More on this later.
- Establish a regimen
If all you did was put down OKRs at the beginning of the quarter and review how you did at the end of the quarter, chances are you and your team wouldn't come anywhere near achieving them. During the quarter, we set, review, and score OKRs on a weekly basis. These weekly OKRs are essentially children of the quarterly (parent) OKRs; added up over the course of a quarter, these children OKRs are how each one of us go about achieving our quarterly objectives.
Within our company, I ask my team members to put down their weekly OKRs on Sunday. Just like the quarterly OKRs, we each put down three objectives, each w/ three key results. Each of the objectives and set of key results should be focused on supporting the achievement of one of the quarterly objectives. Monday mornings at 9am we do a call to review (and if necessary, adjust) the weekly OKRs we've put down. Friday afternoons at 3pm we get back on the phone to review and score them.
MORE TO COME
Hopefully this provided you with a good, high-level understanding of the elements and benefits of the OKR system. With your help, I look forward to working out the specifics around how to more easily and effectively implement OKRs within any company. Till the next post!