[Podcast] Logically Using KPIs & Key Results

In this podcast episode, you'll learn about properly utilizing KPIs & Key Results.

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Podcast Transcript

Stephen Newman 

Do we dare attempt the KPI issue?

KJ 

We should definitely cover it, yeah.

Stephen Newman 

Okay. How do KPIs factor into all this stuff?

KJ 

Well, KPIs are key performance indicators, and they do exactly that. They're a numeric value that indicates your progress or the effort that you've exerted and your performance.  But, the subtleness between a KPI and a Key Result is this, every Key Results should be a KPI. But not every KPI needs to be a Key Result. So it's the environment in which you decide your Key Results. As we said earlier, they're both the same thing. They both indicate performance. But OKR is designed to identify an area that perhaps needs improvement, or that with a touch an ambition can be brought further, you know, grown.  So Key Results are really just identifying the KPIs that are already in place, and which ones are at risk. Those are the ones you select as Key Results.

Stephen Newman 

So, Key Results are the ones that you want to improve. So like, you could log into Google Analytics, for example. And there's a treasure trove of data. I mean, you can slice and dice this stuff. And you can get down to as granular as I want to see everybody in Zimbabwe using Google Chrome on a mobile device. Yeah, like, that's the KPI. Now, whether you want to increase that by 100%, if that's what you really want to focus on Zimbabwe is your jam, then that's a great Key Result. Because it's super specific. But more than likely, that's not something that you need to measure or improve. But I think I'm just going to make some bumper stickers that with what you said, you know, every Key Result is a KPI. But not every KPI is a Key Result.  And so a lot of this stuff kind of gets ambiguous, because there's plenty of like data visualization companies out there that say, well, I got Tableau or Geckoboard, and I can build all these widgets, and I can create these really fancy dashboards and I can just have a real time view of my business, it doesn't matter. It doesn't matter, we could do that now. You know, it doesn't matter if nobody's actually moving something towards that number. And focusing on that number. And when everybody's aware that that's the priority, like, and you're getting those dopamine hits, watching progress and watching the number go up. Like, if you don't have that, then you just have a dashboard.

KJ 

Exactly. So really, that's it to summarize Key Results and KPIs. They are both numeric values that represent performance. And, in your example, there are all these numeric metrics, they're all lined out on a table, and you call them all KPIs. But when you decide to select very particular ones, in order to improve them towards some Objective, and drive that selection process, to bring them into an OKR. That's the process of converting them to a Key Result. Now they are Key Results, because you've decided out of 50 of these measurable things. I'm choosing this one or this these two, they're the Key Results.

Stephen Newman 

Yep. There's still a couple little things I don't think we really touched on. Like writing Objectives, which is not as complicated I would say, as, you know, identifying your Key Results, but it's an important one. We talked about not including metrics in your Objectives, that's what the purpose of the Key Result is, to contain the metric. The Objective is to give direction, motivation, clear vision of what you're trying to achieve, and what the focus is. It's "We're trying to build the world's greatest OKR company," "we're trying to be the best place to work for our employees," "we're trying to delight customers continuously," or we're trying to do whatever, right? It's like, this is the motivation, the inspiration, the direction that we're trying to go. And that's important to put to paper and start to talk about and start to break that down. I don't know if you have any other thoughts on better Objectives?

KJ 

No, I think you summarized it perfectly, and beautifully. I think the only thing I'd add is some tips. Writing Objectives is your opportunity, as a team, and as a leader of the team, maybe, to think broadly, to step back, not be so narrowly focused on this as the metric we have to get from this to this, that will all come later, this is your opportunity to really be creative, reflect on past, performance, consider what is really compelling, everyone to act with a sense of urgency, what will really benefit other people, what will benefit our customers, what will motivate us here, as individuals on the team, these are things that you really need to discuss at length, and because if you just decide, well, this is our Objective, guys, and I'll have no more to say about it. It immediately negates the whole purpose of it, because it's not memorable, it's not motivating, and it really isn't anything to strive towards. So, you want those components needs to inspire you, and you need to remember it. And so think broadly about it, you know, have a good debate about it. And another quick tip is just, you know, maybe use an action words in your Objectives, you know, become the world's best thing, or build the greater product or delight our customers, you know, something like that short, sweet, and maybe something action oriented in there, that people can just look at every week, every month, every quarter, whatever and go, "Yeah, I like that. I could strive towards that."

Stephen Newman 

Yeah, it's your priorities, what are your priorities? Do you want to know your priorities, open up a checkbook, that's, you know, where are you spending your money and your priorities, you know, as a business? Well, probably half your priority is are your people, that's probably where half your money goes, if not more, probably more. So like, that's a big priority, like taking care of your people, like spending tons of money building products, and maintaining product for your customers, like, that's a priority, right, you got to make sure that that's surface to the top, ensuring that the business is healthy, and producing money and generating revenue, and isn't burning cash like that the health of the business is a priority. These are the big priorities, and they got to be surfaced, and it doesn't have to be unique to everybody, everybody's going to have their nuances, but that's really it. It's like keep your people happy, keep your customers happy, and keep the business happy. You do that, like the things below the surface, you'll figure out where you want to improve, where you think you can improve. Those are your assumptions, your hypothesis, different metrics that you would like to move the needle on, like you can do that. But, breaking those down in terms of priority is huge. I think the last bit here, though, that we touched on a little bit. But we talked, you know, we made fun of a lot of the examples, you know, do five things that's just output or, you know, complete the project. It's at 80%, or 60%, or whatever. But really putting these different types of actions and the right bucket using the logic model. I don't know if maybe you want to touch on that how to distinguish logically, you know, what, what would be a good Key Result, which is an outcome or an impact metric. Versus just, you know, tasks, actions, deliverables, output, hiring, what are what are some ways to kind of structure your thinking when you're trying to come up with these different ways of measurement?

KJ 

Yeah, it's great. The logic model I never knew it originally came to came to light from an article WK Kellogg sort of performance management sort of article, but it's, it's a great model. It visualizes linear progression of the relationship between your planned work and your intended results. So your planned work is your resources, that includes humans financial, organizational, technology, capital, and then your activities, which is what you're going to do. And that's your planned work, what am I actually going to do the processes, the events, everything you're going to create. And then that all leads to outputs, which are the byproduct of the activities or what you produce. Then those are related to outcomes and outcomes are how you change one's behavior with the output, if I am attempting to do all this activity, so that I can produce x volume of this feature or whatever, and then in an attempt to change a user's behavior, and finally, impact if we change someone's behavior significantly enough, we make a greater financial, economic movement or impact. So I think what would help if you tried to describe it in shorter way? And use the better example, maybe, or a exam?

Stephen Newman 

No, I think you did well, and explained that nicely. I mean, you could look up the impact, or the logic model and you can see that a lot of this is related to like, child psychology and child development and learning programs and just for how to actually drive change. But it starts with resources, like it starts with your people starts with time, technology, money, that's where it starts, you got it, you can't do anything without the resources. Like that. That is, that is, like, logically, the first place, you can't build a super profitable best business without people, and time, and resources and money. Right? And, and even if you get all that stuff, you got great people and you got tons of money, you got plenty of time. If you're not working on the right things, you're not creating the right things. It doesn't matter. We raise money, we got great people, if every day we just sat down and watched YouTube videos, that was our activities, we would quickly burn through all our resources. But, all this stuff leads to outcomes and impact. And I think understanding these is really critical, because they make number one, they make fantastic Key Results, because they're things that you can measure an influence over time. Short term outcomes, are really about learning an action, right? Like, are my customers aware of my products? How do they feel about my products? How are employees satisfied with working here, like learning information about people and customers and your business and putting those as outcomes is a great place to start with short term. In the medium term, it's behaviors, it's policies, it's the decision making.  Like, do I want to be a customer? Yes, no, right? Like those decisions and action and changes, the measurable change. Those are great, great Key Results. And then really the long term outcomes or the the impactful outcomes. And those are related to like you said, it's change in economics, you know, situations, it's environmental change, social change, things that just don't happen overnight. They take a long time, it takes like a year, right? Like your financial impact doesn't come about on December 31. Like, how much money you made for the year doesn't happen on the last day of the year, it's a collection of all the things that you did. This is obviously not very logical, but it's the collection of all the things that you did throughout the course of the year that determines, did you hit your number or did you not hit you hit your number, right? And so like, now we're going into this new era where we're trying to do these really big changes for like our planet, climate change, or God doers, writing books with plans in it. Like, that stuff's going to take a long time. But if you can measure it, and you can see the needle moving, you can, you know, start a movement. And so those outcomes are critical. And that's the logic model and it's a great way to frame any business.

KJ 

Yeah, dead right. And you know what I'd say to everyone listening is go into our Knowledge Center, we have downloadable playbooks and worksheets where you can see the logic model and see some examples of it. I tell you why it's just just try it out as an experiment doesn't take long.  It's not so much the Logic Model itself, that's impactful and helpful. It's the clarity of thinking, that occurs when you create the model and put it in through your perspective, through your life and your business. That clarity of thinking is the benefit of the model. It's not the model itself, or wherever we go, it's, it's about actually creating it, modifying it, going through the process of putting it into your perspective. That's where you suddenly have all these epiphanies of like, Oh, my God, we haven't been getting this outcome because we haven't been dedicating enough resources. You know, we need a resource plan and you add capacity there, and what activities why are we doing this many, we should do those. So it's all the value comes from just that process of doing it.

Stephen Newman 

Yeah, and this is our simplified version, there's actually more complex visualizations of the logic model, but we kind of broke it down into three pieces. But to add on just one other minor detail, it all starts with a hypothesis and an assumption, right? That's what it starts with. And to use a business example, every investor that invests into a company has an assumption and a hypothesis. And the first thing he's trying to figure out is, do these jokers know what they're doing? And if I give them, you know, resources, my capital, if if I do that, in the long term, will there be an economic impact? Now, the benefit of the investor is they don't have to go off and find the resources. They don't have to do any of the activities. They don't have to drive any of the outcomes. They get to skip all that. Yeah, go right to the economic impact. Yeah, they might be a little stressed along the way, because they can't control and influence things. But really, that's it, it's like, they have an assumption. And they make a decision, and they give resources and the end goal is an economic impact, or maybe they just want to do it for the betterment of society by donating money, and they just don't really care about getting money back. But, from a company perspective, like we've had an assumption that there's a market here, that we can build products, that we can serve customers, but like none of this is guaranteed, no matter how good you are. And so to do that, we needed resources. And now we got it. And now we're trying to build and produce stuff. And then getting in front of people, and letting them validate our assumptions. And then going back and saying, alright, well, we have to test new assumptions. And then going back and seeing what those like those outcomes are. And if you do all that stuff, right, and you're continuously learning, you'll get over time to a long term impact for yourself, your business or even, you know, the society and culture around you.

KJ 

Well said, That's great example, you know, and so definitely, everyone go out and check out the logic model and just try it out with your team, you know, your company, you and as an individual, it's worth worthwhile. It's good exercise. Good

Stephen Newman 

The models you describe those only that's only for customers only customers can log in and download some of this stuff, right? We don't have public facing logic model information. Okay, so not everybody is going to be a customer when they hear this. Maybe they should be.

KJ 

They should be then. That's our assumption. That's what you got to do. Become a customer you get all this great shit.

Stephen Newman 

Angel writer kJ. All right, good stuff. I think we went a little long on that one. Yeah, fucking legs are killing me. Oh, you're standing up.

KJ 

Standing up?  I've been standing up since nine? I don't know had these people do it.

Stephen Newman 

I've been I've been sitting all day. I should probably stand up.