As part of our ECI Unlocked programme, connecting business leaders across the ECI portfolio, we recently invited Peter Kerr from AuxinOKR to chat with our portfolio about what OKRs are and best practices in implementation. So, what are OKRs? OKRs, or Objectives and Key Results, are a goal-setting framework popularised in the book “Measure what Matters” by John Doerr and used by organisations such as Google and a number of ECI portfolio companies.
However, setting up and implementing OKRs isn’t easy – Peter and the business leaders across the portfolio utilising OKRs suggested the following top tips for getting the most out of OKR and goal setting:
1. Focus on outcomes to avoid just more tasks
OKRs highlight the key things an organisation absolutely must do, rather than just should do. To make them successful you therefore really need to focus on the outcome and why it matters, ensuring you’re not just creating a list of tasks. If you commit to why you are truly doing something, rather than what you are doing, you are likely to naturally create objectives that are motivating and keep everyone focussed. For example, hiring a Head of Marketing isn’t an objective – it’s a task – but if you think as to why you are doing it, you’re likely to get closer to the end goal.
An example for a good OKR might be, we want to grow Widget usage by x% over organic growth rate, or to improve Widget’s public reputation. By focussing on outcomes that matter to your business, OKRs should bring a sense of urgency where everyone understands the need for change.
2. OKR setting is a prioritisation exercise
As business leaders, you will likely have a highly talented team working with you, but you can’t physically do everything. You need to define your priorities and focus on what’s important, allowing for stretch within the team.
In fact, Dan Huddart, CTO at Avantia, stressed that one of the real benefits of implementing OKRs is that it forces you to prioritise, which requires commitment but can be hugely valuable. It means at a Board level you’re having conversations around the most important next improvement, which can make for challenging trade-offs but means you aren’t spreading yourself thin, and the whole organisation can be aligned behind a few clear objectives.
It is better to start less, and finish more. One framework which can help you do this is by putting various objectives into categories which can help determine their priorities e.g. OKRs; Future OKRs; Maintenance; Projects; Initiatives; and Tasks.
3. Get the right data for your business
Unsurprisingly once you have your OKRs, reliable data will be key to track your performance. Peter stressed the importance of focussing on leading indicators that influence future performance (e.g. output activity levels) as opposed to lagging indicators that analyse past performance (e.g. EBITDA/Revenue.) Focussing on leading indicators will be more effective at achieving the behavioural change required to achieve an objective.
Good metrics should also give clear accountability at a team level as to what is expected to be achieved and by who so that it is clear how different teams align behind your objectives and are responsible for helping to achieve them.
4. Create an OKR mindset
OKRs aren’t just about results, they’re also a way of thinking that can be transformative, if the team is all focussed on them. For that to happen they need to become part of the culture, which starts from making sure that mindset is supported from the top, that there is broad input and ownership, and teams understand how they are aligned behind the objectives.
One pitfall that was flagged was that it is easy to structure OKRs by your org chart, but a process done this way tends to only reinforce silos. Instead start with what you want to achieve and then consider what input is needed from the business to achieve that goal.
A common question is whether OKRs should be tied into employee appraisals. Peter’s suggestion was that OKR achievement should certainly be part of the conversation, but it is worth remembering that your appraisals (should) normally have a how you do it rather than just a what you do element, so aligning appraisals too strongly to OKRs may get you ruthless delivery but an unhappy team. OKRs should also be set aspirationally – aiming for 100% achievement won’t encourage stretch from the team.
5. Find the right OKR cycle for your business
How often should I review my OKRs? There is no right answer for all businesses, but it’s clear that OKRs require a cycle of regular review and re-set to ensure the organisation is continuing to focus on what’s important, and to take the learnings from the delivery of the previous set of OKRs.
While some proponents advocate a quarterly cycle, the important thing is ensuring the cycle relates to your business needs, so that it allows you enough time to complete items, but not so long that the focus shifts away from the OKRs. Portfolio companies that use OKRs typically found a cadence of around 3-4 months balanced these factors well.
Once you’ve decided on the right cadence for your business, break the cycle into three steps: definition (alongside business mission, vision and values); Pulse check (live autopsy); and reflection/reset to apply learnings along the way.
If you’d like to find out more about how ECI portfolio companies use OKRs please contact Duncan or to find out how AuxinOKR can help your business please get in touch here: https://www.auxinokr.com/lets-talk/.