Ep. 99: Revolutionizing Business Goals with OKRs

Peter: 0:05

We lcome to Definitely, Maybe Agile, the podcast where Peter Maddison and David Sharrock discuss the complexities of adopting new ways of working at scale. Hello and welcome to another exciting episode of Definitely, Maybe Agile with your hosts Peter Maddison and David Sharrock. Hey, Dave, how are you today?

‍Dave: 0:22

Peter, this is like our energizer conversation, isn't it? It doesn't really matter what's going on around us. When we get a chance to get a conversation going, this brings the energy back up to the levels that I like to be working at most of the time.

Peter: 0:34

Most of the time. Most of the time, it's our occasions. As we know, it's not always like that.

Dave: 0:42

Well, I think you and I have been talking about lots of different things and we spend a lot of time talking about leadership and vision and guidance, and I think we agree. The topic we'll really focus on today is OKRs, objectives and key results. It's really a tactical tool for providing guidance across an organization.

Peter: 1:01

Yeah, I mean we once upon a time in ancient management history we had MBOs, and we've moved through various other types of things like balance scorecard and everything was very popular. And MBOs is management by objective, right? Ye s, and possibly one of the key differen ces being MBOs are very much like Sedum and once a year, and they roll down from the top of the organization tell people this is your objective, let's do things this way. And so I think we can definitely explore, like, how does an OK art differ from that? But it is, I would agree, it's kind of the flavor of organizational alignment du jour.

Dave: 1:40

Well, I think what's interesting is when you describe management by objectives, balance scorecards, kpis, key performance indicators and that roll down from the top of the hill. Anybody who's listened to our conversations knows we don't. The hill isn't stationary anymore. The environment we're in is continuously moving, so any objective has to be a lot more how would I put it? A lot more directed in terms of recognizing the environment is changing, so any objective is a placeholder which may or may not change as we learn things.

Peter: 2:16

Rig ht exactly, and so they can't be long lived. They do need to be revisited and they also pushing them down from the top versus allowing them to come up from the bottom as well is also one of those big differences, because the people who are closest to the work have the best understanding of what those objectives should be. So there's two sides to this. How do we get that alignment between it? If we're going to set a key result, what are we going to do? If we set an objective like we want to get number one market share in North America, and we set that at the top of the house or the top of our sales or marketing division, then what are the key results? What do the people under that need to do in order to set an objective that will allow them to work towards that objective? Like, how can they get these two things aligned?

Dave: 3:10

Right, but, Peter, you're jumping over a big piece of OKRs. So when you talk about objectives coming down, key results coming from the bottom up, explain a bit what you mean.

Peter: 3:22

So there's this piece where MBOs are always being set and KPIs typically are also set from the top of the organization, because KPIs you have as well as OKRs, so two of them will exist in parallel. Because KPIs are very much like how is the organization going? How are we doing? What's our revenue look like? We still need these things as guidance as to is the organization healthy? Do we have any problems? Whereas OKRs are more about the stretch goals, the milestones that we can set ourselves, the targets that we can set ourselves, to say, ok, here's an objective, like we want to set an objective which is going to for us to strive for, something that we can measure our progress towards, but is going to help us move in the right direction, ultimately to try and achieve the outcomes we're looking to achieve as an organization. And this, in turn, is how the this is how you start to align these together and, from an organizational perspective, you don't want these just to be pushed down from the top of the organization. You need them to also bubble up from the bottom of the organization as people realize that, hey, if we're going to align towards that objective, maybe we've got an idea of how we might want to go about moving to that. We'd like to set an objective for ourselves to achieve this, because it'll help us, we believe, move towards that other, larger objective that the organization is looking for.

Dave: 4:42

So whenever I think of this, I think that that's a very broad description. But whatever I think of this is, the objective comes really is driven to align with the organization's direction. So it comes from the top down, but the key results, which is how the steps towards achieving that objective are really coming from the teams, the groups, the leaders who are responsible for delivering those particular things. So it's a very much a two-way street and the objective kind of is coming down and is very much aligned with the organizational imperatives, but the key results, the things that we do in order to, or we need to, the steps we need to go through in order to hit those objectives, are defined by the teams responsible for delivering that work. Is that fair?

Peter: 5:31

It is. I think there's also an element of what is the size of the organization. In that too there's a piece where in a smaller organization then, you might be able to set all of the get alignment to what those objectives are from one set of objectives, whereas in a larger organization you may need objectives at different layers of the organization. Just because of the network nature of it. It's too large for everyone to align everything into one. You'd end up with it would be too much going on all over the place. You'd need to be able to have different departments or areas of system set their own objectives that they might be striving for, which in turn should align, hopefully, to the larger objectives that the organization is looking for.

Dave: 6:13

So cascading objectives down completely makes sense. You're typically not going to have one or two OKRs across an organization, or three or four. You're going to have those as you go deeper into the organization, kind of creating more and more as they go forward. So at each level there's that sort of negotiation backwards and forwards so that they have cohesion all the way through. But those objectives sorry, the key results in particular, are a hypothesis of how you're going to achieve those objectives there. We think this is the direction we're going to go. So what I really like and what you're talking about with short time horizons, what I really like about that is this idea that you can revisit the OKRs on whatever time horizon you might be looking at. And certainly 12 months is way too long In most organizations revisit quarterly. Potentially nowadays, dynamic environment, volatility changing all the time you're going to revisit more frequently. But it also raises the possibility of my team coming to you and saying this key result is an achievement, what we thought it would. We're going to change it because we've learned more and we'd like to chase this one that we on the same page.

Peter: 7:14

Yeah, and you might. You might potentially change the objective too if you have an objective that you realize that was the wrong objective. But the objectives will last longer. If you're looking at the key results, you want to have key results that are measurable and, depending on what time horizon you're looking at, are you going to be able to impact that within that time horizon. You want key results that are also going to be representative of both leading and lagging indicators of are we going in the right direction, are we achieving that objective? And so we're looking at it in that perspective. So we need to look at it from that perspective as well, and I've seen organizations create what they call OKRs, and it's really just the objective. There's no key results. There's no way of measuring whether or not they're going to achieve that objective or not.

Dave: 8:05

Yeah, if I just add in to that, because actually describing this one, I always think of what I really like about OKRs is that we know a pattern that's very similar to that and that patterns a user story. And if I have a user story, as I as a so and so I want this stuff, so I get something valuable, that's only half the story, right? The acceptance criteria tells you that you're achieving that or you're not achieving it, and the OKRs have that sort of similar structure. I've got an objective, but an objective on its own isn't sufficient and I need those key results, which is sort of my idea of what I'm expecting to see, whether they're loved, what you're talking about, leading lagging indicators, whether it's activity that we need to do, whether it's some sort of goal that we have to achieve, whatever it might be, but those components that stitch together or that show that the objective has either been achieved or we're on well on the way to achieving it, or isn't going to work, those that's the conversation around the key results.

Peter: 8:56

Yeah, exactly. And so as an example of that sort of marketing example that we're looking to grow market share so we want to increase, say, something like customer NPS, so we want to go from, say, plus 40 to plus 60 or from some number to another number we want to look at we've got a measurement that we're looking to improve. The marketing automation team might set an objective for themselves to improve their measurement of that or to improve how they can roll it out of the number of targets that they can hit with that and, as a consequence, with the intent of helping to improve that customer NPS is in the score and they would set their key results on that to ensure that they're going in the right way.

Dave: 9:33

And there'd be other key results, right. So it may well be that key results around by different parts of a team or parts of an organization. So you might have, let's, make the NPS visible, make sure we're tracking it. There might be another team that looks at you know, can we figure some function out that shows us how the NPS changes based on the length of time, number of time, number of impressions or any number of other measures that might be relevant in that marketing context. There may be another one that's actually going out there and talking to customers to find out what their thoughts are and see from all to the NPS and promote a score that they could use so that OKR becomes an enabler but also a tool to manage dependencies across team cross department conversations, I guess.

Peter: 10:17

Yeah, and the nice thing about this is it's technology independent, right. I mean, it's very often like it's really about what are the objectives setting as an organization. It's not something that's very technology focused, which a lot of the things we end up talking about often are, and when you get down to things like user stories, for example, they don't have to be, but they often are considered to be the domain of IT.

Dave: 10:40

So certainly I think both of us have seen this in the last few years. Everybody now is talking about OKRs. So if anybody listening to this is not aware of OKRs or not actively looking at that, probably that's something to think about, because organizations, large and small, are definitely looking into it, you know, tooling up in order to be able to support that, or have rolled it out and are moving all of the sort of activities behind OKRs. That would be certainly my observation.

Peter: 11:07

Yeah, and I mean along with that, I mean that's a good follow-up to the conversation, Doesn't mean they're doing it very well?

Dave: 11:16

Is that not the reason that we have a job right? So is a lot of it is helping organizations understand what the key practices are to roll these out.

Peter: 11:25

Yeah, well, exactly this piece where, as I was describing earlier, where they do part of it but not the other part of it, or their objectives are just pushed down from the top of the organization and they really just become another form of management by objective, and it's just versus. And one of the other common pieces that, if you're in your organization, you're asking are we doing OKRs right? Ask if, can everybody see them? I mean, there's another key piece. One of the big differences is that OKRs are intended to be transparent. Anybody should be able to see what anybody else in the organizations OKRs are, so that you can like learn off them and see what people are targeting. So these are all key elements that you should be looking for. Looking for, like, if people have defined their OKRs but they've got like 27 key results associated with them, that's another indication that, yes, these are probably a little bit more thought into what is it we're trying to do here, because if you're trying to track that many key results to measure progress towards something, it's probably too much. You're looking at the wrong things.

Dave: 12:26

Yeah, and it's the indication that when you're using key results as some sort of work breakdown structure, which isn't the end of things. yes

Peter: 12:33

The as-measured by is being kind of that base piece like an objective as measured by Like, how do we measure it? Remembering that those three words can really just be a simple way of helping understand that we first of all want to say, okay, let's define an objective, something that we can aim for, that's understandable and written in very clear language and is a stretch target that we can all get behind and we want to do, and then work out as measured by the key results, like, how are we going to measure this?

Dave: 13:02

That's great. So maybe I think we've been kind of talking around this topic for a few minutes now. So what are the sort of takeaways that you look at when you're thinking about OKRs? If you're talking to a leadership team, what's the one or two things you're going to suggest about them?

Peter: 13:16

I would. I always suggest it's a great way to start to get your organization aligned strive to for the transparency of those OKRs, because that in of itself is going to drive a very, very different level of conversation within the organization. That cultural change will naturally come along with that. The don't assume it's going to be easy or that you'll get it right the first time. That's. The other key part is that you will. It will take several iterations to get to something that works for you and that people are comfortable with. Creating these and looking at them over time, and there is lots of tooling out there nowadays that can help with that. There are various tools that will make it easier to like set up the structure, set up the record, key results, put numbers into track and all that type of stuff is. There's lots of stuff out there that will do that and in some cases, even tie into other platforms as well to make it easier to keep all of this stuff together. What would you add?

Dave: 14:10

It's interesting You've taken that perspective of the top down leadership direction and so on. So if I just turn that one around, the three things that jump to my mind is number one the time horizon is pretty short, because if it's a long time horizon you can go use management by objectives or any number of other things that have proven to work pretty well on the long time horizon. So it's normally months or quarters, not quarters to years, I guess, but for an OKR. Secondly is the discussion. We say this about user stories. I just like the analogy of user stories to OKR. So, just like with a user story, the discussion is the bit that's really useful. It's a placeholder for a conversation. I think in so many ways OKR to that same thing. We need a discussion between the leadership and what they're trying to achieve and the team that's trying to achieve it in some way. But the other thing that we just touched on which is interesting is we've kind of painted them as a picture that we can change. Most people think of these sorts of goal objective setting as something that you don't change unless you're not going to make it and therefore you're weakening the objective in order to get a bonus or achieve a step in a journey or something, but I find it quite interesting. There is change inherent in this and it's almost like that. Let's be thoughtful about how we can learn and use those learnings and more information that we gain along the way to strengthen the OKRs.

Peter: 15:27

Yeah, I mean. I think that's another key point. Another bad smell, if you like, is that OKRs are tied to performance, which they shouldn't be. The intent of an OKR is that if you keep hitting your OKRs every single time and achieving them, then you're not stretching yourself enough. It's like you should be hitting 80% of the OKRs, but even that's it's bad to set a number, because then if you do that, it's the same problem as setting any kind of number as soon as it becomes a target, it ceases becoming a good measure. You could probably remind me which particular Agileist said that rule.

Dave: 16:00

Well, I was just going to say. What you're describing, then, is OKRs become a lot about the planning exercise that you go into and knowing what the direction is. You're having that conversation of cascading it down, so it's also almost like sort of micro planning over a shortage term, but cross functional and all of the things that we're trying to do in lots of different ways, but it's just one of the new mechanisms that organizations are using to achieve that?

Peter: 16:24

Yeah, definitely, and I think anybody who wants to know more should reach out and ask us, because it's a fun conversation and I've seen it used quite effectively at a number of organizations now.

Dave: 16:35

A great conversation again, Peter. So I think this is the point at which we say if any of our listeners want to keep getting snippets of information, then please subscribe, add comments below wherever it is that you're subscribing from, and if you've got questions or comments, feedback it's feedback@ definitely maybe agile. com.

Peter: 16:54

That's right, Until next time. You've been listening to Definitely Maybe Agile, the podcast where your hosts, Peter Madd ison and David Sharrock, focus on the art and science of digital, Agile and DevOps at scale.