What if I told you there was a way to make sure what you are doing is truly impacting your customer and your business? How about a framework that bakes experimentation, hypothesis and problem solving as opposed to top down mandates?
I have found most clients and customers I interact with, have very little or no knowledge about the framework. More importantly, they don’t understand how this isn’t just a new goal setting framework but a truly fundamental change into their culture and organizational way of doing work.
Let’s talk about OKRs.
Well first, let us start with the basics. An OKR is not meant to feel like OK Arghh (albeit this one is more fun to say). It’s an Objective and Key Result. An objective, at the most basic definition, is simply something that you want to achieve. That something should be attempting to solve a problem statement (a problem you’ve identified for your business or customer). This should be something that aligns to your strategy. Solving world hunger is a noble problem but is not going to get more people shopping in stores. A key result is the measurable impact to obtain your objective. But before we go on there are a few other terms that we want to address.
- Outcome: a new or change in behavior.
- Output: an activity or creation that influences the outcome.
OKRs live in between Outcomes and Outputs. It’s a way to guide and measure the “what” you do, to ensure it is causing a measurable change in behavior that will impact business strategies. It’s a leading indicator of what makes your business successful. Remember, the Objective is attempting to solve a problem that is blocking your business strategy. Let’s take a quick detour, have you ever heard of SMART Goals? You may be asking yourself, what in the world is the difference? Well to some it’s a philosophical debate, but in reality SMART is a process or method by which you can define a thing (goal). In this case, the SMART process is the homework behind the scenes that goes into creating a really awesome OKR.
OKRs are an exceptional way to set direction without prematurely defining a solution. OKRs provide the direction for teams to move important metrics or KPIs but also give teams the space to experiment and learn the best path to reach the goal. The foundation for the OKR framework is based on experimentation and hypothesis testing. This may sound subtle but it’s massive because we are wrong A LOT! The problem you identify that is blocking your business or customer is a hypothesis that needs to be validated. After establishing an OKR (oh and by the way this is a whole team activity with lots of inputs going into this) you will start where any good experiment starts: with a hypothesis. These are ideas or “bets’’ for how you believe you can make progress towards reaching your OKR. What comes next takes hard work to do well, but very important. Coming up with small experiments to validate your understanding of the problem and the best way to solve it (Marty Cagan has popularized this as Product “Discovery”). This allows you to rapidly validate the assumptions you have in your idea before spending super expensive development time building it. Sometimes you’ll miss, sometimes you won’t, but that’s what makes the OKR framework so powerful. You may find after 2 weeks your latest experiment is failing, then throw it out and measure something new. Your team realizes that the hypothesis was based on bad data and so the entire objective was wrong? Pivot!
Checkout the example. The final OKRs shown give a direction, but are not prescriptive to the how. These are hypotheses that may solve the identified problem, in this case declining revenue. Great OKRs are aspirational and should have a countermeasure in place to ensure the objective is sustainable. You’ll notice that the final example has a countermeasure to ensure customers remain happy while growing revenue.
Objective: Build a Mobile App
Key Result 1: Launch MVP
Key Result 2: Increase adoption
Key Result 3: Decrease delivery time for new features
Is this good or bad? It is going to need some improvement.
Objective: This is a task, objectives should not be a task
KR1: Task, not time bound, not measurable or via a date.
KR2: By what? How much? When? By launching an app you increase adoption, so what is this actually measuring?
KR3: Generic, not aggressive, no measurements
Let’s make it better.
Objective: Grow mobile revenue while delighting users
KR1: Add new channel offering by Q1
KR2: Increase weekly return users from 10% to 40%
KR3: Add 1000 customer reviews
How is this better?
Objective: Not a task, sets a direction but not any solutions.
KR1: Measurable, aggressive, verifiable. We can measure revenue after launch.
KR2: We can measure both revenue, and retention, quantifiable, and this is a large change, so this is aggressive.
KR3: Solving this can come through multiple activities, better UX, faster delivery of features. Gives us a direction, but not the how. That’s what your product team is for!
This is a simple example; how might you make these better? If you want to learn more about OKRs and how to change the way you think about solving problems, reach out and let’s connect!