With so much poorly written information out there about creating OKRs, we decided to set the record straight.
LISTEN
Stephen N.
Alright. So, we're back in the virtual lab, talking about some OKR creation.
KJ
How to write OKRs that don’t suck!
Stephen N.
Yeah. Can we just acknowledge how much crappy information exists? Some of it, we've created ourselves.
KJ
Yeah.
Stephen N.
Like, I mean, it's a process. There's so much bad information out there.
KJ
Yeah. It's the minute you open your computer. It's like a wave of garbage flowing into your face. Dead banana skins, you know? Just crap.
Stephen N.
Yeah. And it's because you must fail at this stuff to get it right. It's proven true. I mean, we started a damn company about it, and we've screwed it up.
KJ
Yeah. What's funny, though, is like, the people that don't acknowledge the screw ups really make me laugh. You know, they're like, we have it all together. Like no, that means you have nothing together. We're top notch at this stuff. It's like, no, you're not then.
Stephen N.
Yeah, well, you know, it's the attempt, though. You got to start somewhere. Yeah, you got to be honest with yourself. I mean, we're being very honest. We're saying that we're learning as we go, putting things in the right bucket, labeling things correctly and measuring correctly. And what's a Key Result? What's not a Key Result? Like it's important, but once your kind of once it clicks, it clicks. And then, the goal is really getting OKR to click at scale.
KJ
Yeah, yeah. That's the garbage men, outside. They've come in to collect this podcast,
Stephen N.
They're coming to drop off a bunch of Key Results that are out on the internet. My favorites, just the ones that are like, I mean, you could Google some examples, but the ones that just list like, write five blog posts or schedule four meetings with my colleagues.
KJ
Yeah, the vagueness is great.
Stephen N.
Or "attend an event." It's groundbreaking stuff it's almost like you know, when you when you like, create a to do list and the first thing you put on your to do list is create the to do list. And then you check it off. It's like it's a retroactive dopamine hit that you're trying to achieve and you're forcing by doing something that sets the bar unbelievably low.
KJ
Yeah, yeah. But let's try to dissect why that happens. And here are my thoughts. I think, why that happens is because OKR is all about momentum. And you can only build momentum with confidence. And you build confidence with dopamine hits. So, people know what to do. They love that. So that's immediately what they go to, if you ask them to write a Key Result? They go, "Oh, well, I think we should improve the onboarding process and, and create a survey and interview the product managers about the survey." So, they start immediately listing out all the crap that they want to do, and they know how to do and they've been meaning to do it, but they haven't got around to it. That's immediately what people do. And then they just label them as Key Results. This is all the crap, you know. And they're done. Okay, done. That's my theory. That's my theory about what happens.
Stephen N.
I mean, we did it ourselves. We did it ourselves.
KJ
Yeah, we were like, We got to create a website. It's a Key Result.
Stephen N.
Yeah, we got to integrate the thing. We got to build the feature we got to build, you know, we'll build a blog post, like we did it ourselves, which is hilarious.
KJ
And then we're like, we're great, aren't we? Yeah, pat on the back.
Stephen N.
Then we go in and we meet about it, and all look at each other like, "Oh, did we actually do the thing? I don't know. Yeah, I did that. Oh, no, everything changed. I couldn't do that." And, you know, we're covering our we're justifying our own existence in a little operation that we have here. So, it's funny, but it's true. It's like, you got to be honest with yourself and ask yourself, why? Why are we trying to do these different things? And what is it going to going to improve? Is it just that "Hey, my job is a BDR, I pick up the phone, I pick up the phone, and I call 50 guys and I send 50 emails, and that's what I do every day? And I get, you know, 10% connects, and I get a meeting in five meetings a week and I can go on, and I could do that for the rest of my life." Okay, that sounds like a miserable existence. But, where's the improvement there? What do you want to improve? There are things you do you want to improve the result of getting meetings? Do you want to improve?
KJ
So, let's take that: you've written down a whole list of crap that you must do, which you've always wanted to do. Now, it's about recognizing the pattern and determining which of these go together. So, you group them and identify which of these activites are similar and would be related to one another. You use your inductive thinking to try and associate them and you group them, and then you label the groups. And then you can all look at them and say, as a team, if you're doing this as a team, which we always did sort of as a team, and you look at all this crap, you just written down and go well, which is the most important here, which most worthwhile? It seems like this is what does everyone think? And then you sort of debate it, and you go, yeah, I think you know, what, we wrote a lot about improving the onboarding process. There's the Objective, what do we want to achieve? Want to create a badass onboarding process for new customers? Right, next step, quantify it. That's it, that's the Key Result it’s the quantifying of the Objectives. So, what you're doing, is putting a numeric value to the Objective that you can then through the process of a quarter, a certain time frame, you attempt to improve the metric. So how do we quantify how we're going to create a badass onboarding process? Well, what KPIs do we currently use for onboarding, time to value or engagement rate? You then must list them all out and do the same thing, choose to be selective, choose the ones that know you think are representative.
Stephen N.
And the control versus influence part is important too. Because you can control creating five web pages, or creating a new deck for the onboarding experience, you can control how that's received, the satisfaction of it, the engagement of it, there's maybe it's not the best example. But like, the Key Results paired with, you know, initiatives and action. That's, that's where the magic happens. Because like everybody, you know, to use the consumer example, Key Result is right now i weigh 250 pounds, and I want to weigh 215. Great, that's a great Key Result, reduce your weight by whatever 40 20%. Well, to do that, what do I need to do? Well, maybe going to the gym 10 times would be a great start, or doing some sort of physical activity, something new, not the things that I do every day, stop eating leftovers, or getting second helpings, like, whatever it might be, like, what are the actions that you're going to take?
KJ
And that's where you're empowering teams, when you talk about empowerment, know, our approach here is to determine collectively what direction you're heading in, and then give the teams or in your case, the overweight person, but the team's the autonomy to decide how to get there, how to move that metric, okay, we must decrease customer churn. That's the direction we're going. That's how we're going to measure it. And it's going to be Objective, we're not going to try and, you know, undermine the numbers somehow by changing things in Salesforce. We're going to, like, try to move that Objective. So, what are we going to do? Experiment, that's the, that's the fuel that you need to try and influence the metric you've agreed upon. It's experimentations deciding, well, let's try this. Let's try that. If that didn't work, okay, let's try something else.
Stephen N.
Yep, that's what it's, that's what it is just trying to identify the biggest priorities, the things that you want to improve. And taking a crack at it, and doing something different, and trying something new. I think that that's important. It's like, you got your day to day stuff, you know, everybody's got to pick up the phone, talk to customers, you know, do write code, build pages, you got all your stuff, but like, there's time to extend yourself and push your limitations, because for every growing company, that's what you got to do, you got it, you got to go above and beyond, you know, these, these b2b SaaS companies that are no longer startups and they want to, you know, hit that next phase of growth, like you got to, you got to continuously improve. That's what this is, this is like continuous improvement, changing behaviors, and driving measurable outcomes.
KJ
Yeah. But if you make your Key Results, outputs or initiative, or just any sort of actionable, you know, task or effort, instead of an outcome, and the outcome is, you know, the actual behavioral change that drive the result, if you make your Key Results, like create five blog posts, what a lot of crap, you know, if you make that your Key Result, not only, it incurs a series of problems, it incurs a problem of, well, what if halfway through your quarter, things have changed. And now you have to pivot, but you've already committed to writing five blog posts. So, what now have committed to doing this Key Results? And now I must do something else, and you can't just simply change it, you know? So also, maybe it's, it's like a domino effect. Maybe you write Key Results that are all action orientated. And if you don't do the first one, then you can't do the next three, you know, so just get out of that routine of, you know, when you quit when you write the Key Results, and you're going to try draft and then when you're, you know, it's a scale. It's like riding a bike, you're not going to get it right the first time, but look at the Key Results and go, are these just things like tasks I can do? Are they actual measurements? Do they have a measurable number, like a metric that quantifies this Objective? The question is, you know, how do I know when I've met this Objective? Like, what's the number that gets influenced? When I've met this Objective? That's the Key Results. Everything else is the effort that you do.
Stephen N.
Well, what are some ways to kind of prevent poor Key Result? Creation, if you're, you're meeting with your team and teams are doing their 2022 planning, and they're coming up with all their different Key Results. And they're they got a laundry list of all these different KPIs that they could potentially plug in and like, and they're starting to draft them and they’re writing them, and they're piecing it together, and like, how can you prevent yourself from locking yourself into something that might not matter halfway through the quarte? Like, what are some of the things that you can ask yourself, like to prevent that from happening proactively?
KJ
Yeah, well, I think it's a, it's a team exercise. So, you must ask the team, broadly, you can't be the leader here and go, "We're using this KPI as our Key Result" You know, that, that just demotivates every person in the room. So, it's a team exercise, and just like determining any sort of prioritization, you, you lay them all out, and you group them together. Ideally, there's a KPI that you have already set in place that measures something already, that's in danger or not in danger. Maybe it's, you know, not where it's supposed to be. So, you can identify a few key KPIs for the onboarding process in your company. And one of them is satisfaction rate. And that's not where it's usually should be about 80% and it's down at 40. Well, then you already know if you can easily identify and prioritize. If you just look at the KPIs and see which ones aren't where they're supposed to be. But if they're all where they're supposed to be from Maybe I don't even need to choose one of them. So, I don't know, what do you think? What are ways to to get Key Results? You know, to choose the right one?
Stephen N.
Well, I mean, I think the simple example that everybody can relate to is revenue. Right? Everybody, everybody, annual recurring revenue, you know, for b2b SaaS companies is the most critical metric, or monthly recurring revenue if you do monthly programs, or monthly products, but you're at, say, 5 million or 10 million annual recurring revenue, and you're trying to get to 20 million, right? Like, that's, that's always like the top priority for any business because businesses exist to make money. But that can't be the only metric that gets measured. And there's a lot of touch points and a lot of things that happen from you know, that that journey, but if you're looking at it Objectively, say, alright, we want to we want to grow revenue, and be a highly profitable company, like, that's our Objective, and we were gonna measure our success by revenue from 5 million to 10 million or 10 million to 20 million, whatever it might be. And you might look and say, well, if we just keep we've been growing at 100%, doing we've been doing, like, great, maybe we don't we just keep going. And that's fine. Or but maybe you look at a number and you go Yeah, uh, Harry, our VP of Sales isn’t going to get us there. We like, we need to hire a chief revenue officer that's been there done that, or, as an example, like, that's an initiative that you can, you know, add to the mix. But I think baselining those numbers is important. So, you can always have a starting point in comparing apples to apples when it comes to these metrics, right? Like, you've mentioned, satisfaction, like, what is that number? Where do you derive that number from? Do we do a survey? Are we going to use the same survey? Three months from now? Like, you got to have a baseline metric? And you have to be able to consistently reference that that's, I can tell you like, from a marketing standpoint, that's the biggest challenge is Apples to Apples measurements. Because, yeah, hey, I want you know, a million new leads. All right, great. Yeah, maybe like we're quality leads like you, if you're not measuring the same things, consistently, you can gain the system, you know, yes. But that gets a little bit more nuanced in the funnel, I would say. But yeah, it's important to just say, here's the link to the to the report, and that's the one we're going to look at. And the one we're going to track the dots going up and down, whatever. And, and it's unequivocal, it's unambiguous. It's very clear. That is the report. Yeah,
KJ
I think you touched on something, which was that, you know, unless you have a balance in Key Results, you will not encapsulate a holistic view of performance. So, by that, I mean, if you're only measuring, and it's very easy to go straight to revenue as a measurement, because it's unanimous, every human knows what money is. So, like, it's easy to go to revenue, but you need to pair it with quality so that you have a balance, because you could grow revenues by X percent. But what if you're not incorporating retention? Now, what if you're just focusing on new SAS, but all your customers that you got last year are churning. So, you know, you must, and it's difficult to measure quality come out and say this really difficult, but nothing, everything can be measured. It's, it's whether the measurement is effective or not, there's so measurements and metrics that are more effective than others. But as we spoke with our CTO, it's sometimes very difficult measuring engineering activities, but it's still worth measuring them, you know, it's, it's still worth having a bad measurement than no measurement unequivocally because at least you can learn, you know. So, the two tips there as to add on to yours are that you pair, your Key Results have more than one basically, I think, at least two so that you have a balance between quantity and quality. And have the metrics there, even if they're, they don't encapsulate everything and effort you put in. At least you have a metric that as you say, you can track over time, you can Objectively analyze, and try to learn from them as you spoke about at the very beginning of the song, it's all the OKR It just all a bell, but movement of continuous learning.
Stephen N.
And the third one I would add to that is helps, right quality quantity and helps it's like, Alright, I want to say I want to increase lead count. Okay, I want to go from 1000 to 2000. Great, that's a volume-based metric. I want to improve the quality. Okay, great. So, say you improve your targeting, and you go right in LinkedIn, and you home in on a particular segment, and you just nail it. Right? So, you hit the quality, you check the quality box, but you can piss off a lot of people in the health of your customer interaction can be reduced significantly, if you show up to the website, and there's just forms everywhere. And things dinging and, you know, if I sign up here, it's like, yeah, you might increase volume. Yeah, you might even increase quality. But you might piss off us a good segment of your customer base. You know, like, that's not healthy. It's not a healthy and it's same with employees. It's like, okay, yeah, we want to increase revenue from X to Y. Right? We want to increase, you know, our market share in this segment, right. But if we're burning everybody out, the health of our people is sacrifice or jeopardize like, is it worth it? Probably not. At some point, everybody can, you know, say, uncle. And you don't you want to get out in front of that. You don't want to wait till it's too late. You know, I've suffered from burnout before. You don't want to, like your health is key, it's probably the most important thing.
KJ
Yeah, that's great. That's great examples of just those metrics and how to balance them, don’t make the mistake of all financial performance metrics, because they are the first things that come to mind. And naturally, you'll have them and it's important to have that balance is critical. If you want to sustain your business, your OKRs your people, you know, if you want more sustainable growth, it's about balance.
Stephen N.
So, I like for companies now that are creating their annual ones. So, they got the ideally the one at the top, the tippity top that sort of collects and aggregates the business. Is that being that you aggregate Key Results across all your different groups. Do? You know, do you do get selective about different one’s quality, quantity health? You talk about customers and people and business performance? Like how do you kind of reconcile those different aspects of your business and surface? The right ones to the top?
KJ
Yeah, look well, there's two parts to that question: being selective and surfacing the right metrics to the top is a difficult process, it's unbelievably difficult, because you have to say, no. It's like, having 10 Great ideas and only being allowed to pick one. So, OKRs are about saying no, or at least, not right now. So that's really going to be a difficult process. And they're going to require a lot of debate. But as you're saying, absolutely, we advocate here for simplicity with this stuff, like you can't make the mistake of trying to do five OKRs at the top and all these Key Results. No. Just choose one, as you say, one OKR sits at the top of the company, very clear Objective. And it's got three Key Results. And those are, you know, across as we maybe just said, your business, or maybe your you know, your financial performance, your customers and your employees. Start there. You know, if you want to add more for different business lines, you know, and you must adapt them fine. Okay. Try it again. boil it down to something as simple as that.
Stephen N.
Yeah, I mean, if you think about it, like the ideal pairing, and I'd be curious to know what your thoughts are, but like, if I was only given three Key Results for this company, and say this company was 300 people. If I was only given three, we would obviously get in a room and we would debate it. But if that was just my decision, it would be revenue, like, what's the quantity of dollars that we brought in? It would be churn - are we retaining our current customers? No, I would say negative churn. What's the quality of both our interactions with existing customers and growing, existing customers like negative churn would probably be the way I would measure quality and then employee satisfaction. And just do a quarterly survey or an annual survey or, you know, that would be the initiative. But like, I would want to benchmark that number, maybe even do like use the Q 12, the Gallup Q 12. And just use that as your benchmark and just say, well, this is how we measure success. And, and those, those three right there, if you had a company that was growing revenues, if you have a company that's expanding your customers, and you had a company where your Q 12 number is, like, above a nine, you get a damn good business, no matter what you're doing, you know?
KJ
But no matter how really big you grow, those are the three components that are always there, you know, I guess you can go up to these massive company, but, you know, for tech companies growing, that's it. Just you've just set when the three key components and why not just put the OKR together with that, and that's it, then you don't have to worry about communicating 50 fucking OKRs, just one, there it is.
Stephen N.
Yeah, and now everybody can see how they fit into that like, alright, well, I need to not waste money, I need to help the company make money, I need to ensure that these customers are happy. And I need to you know, not be an insufferable asshole to my colleagues. Right? Anybody can connect the dots and I think we just did all the annual planning for every business on the planet right? Now just take that template and plug it in and see how it goes.
KJ
It's free as well if you just listen to the podcast.
Stephen N.
But you know, below the surface, like that's perfection. Right? Like if you just nail it, but like below the surface the problem is, is you know, your customers are churning, growing revenue is difficult, and your people are leaving, right? Like we painted a rosy picture but, there’s a lot of problems that every business, even ourselves like we need to grow revenue. I want to make sure that everybody's happy. So do you. Our customers? We want to keep them happy. We want to grow them we have the same problems. How will you fix that and how we break that down is going to be you know, how we structure our program.