Aset of well-defined objectives is an essential prerequisite for the success of any company. Company objectives are extremely important for Product Teams because they guide strategic decisions in a manner which seeks to align itself with the solution meant to solve the issues product users are confronted with.
Even if there are many models and methodologies for performance management, the OKRs (Objectives and Key Results) model is one of the best means of keeping the people involved in development focused on the target. The model provides a clear and simple view of objectives and key results, as well as a transparent and measurable way of tracking the progress made to reach those objectives.
The OKRs model is used by companies like Google, LinkedIn and Twitter, and the model's usefulness and simplicity have been appraised in a 2010 New York Times interview, with Mark Pincus, co-founder and CEO at Zynga. He highlighted the potential of the OKRs model to motivate teams and ensure that everyone in the team is aligned:
"The main idea is that the entire company and each team have one objective (O) and three measurable key results (KRs). If your reach two objectives out of three, you meet your global objective, but if you reach all three objectives, you managed to reach a great performance level."
The OKRs model evolved from the MBO (Management by Objective) model developed by Peter Drucker în 1954. The MBO model is based on a black-and-white criterion for success: objectives are usually set on an annual or trimester basis, and they are either fulfilled or not. In the MBO performance model, "almost there" is one and the same with "not even close."
Hewlett-Packard was one of the first companies to adopt the MBO philosophy and it stated that it is an integral part of HP. However, the MBO model was static, because it worked only if you knew what your objectives were. Yet, in 90% of the cases, you do not know your objectives.
OKRs was first developed and adopted in 1970 by Intel, and it brought about a level of transparency that was much appreciated. Everybody in the company knew what the others were working on, what their objectives were and how the assessment was done from the CEO level to lower levels.
"Intel was going through a transition process, from a company that was producing memory support to a company that wanted to produce microprocessors. Andy Grove and his management team needed their employees to focus on a set of priorities for a successful transition. The creation of the OKRs model was a great help, and we adopted it", John Doerr declared in a 2104 interview. He also stated the following: "I remember I was intrigued by the idea of having a major objective or a North Star for each trimester, which helped me set my priorities. I was also very impressed to see Andy's OKRs, as well as my manager's and my colleagues' OKRs. I could connect my objectives to the company's objectives."
Doerr, now a partner at Kleiner Perkins, states that the OKRs model is so valuable, that he introduced it at several companies where he was an advisor, including titans like Google. Nowadays, many well-known and respected companies use the OKRs management and performance system, including LinkedIn, GoPro, Spotify, Box, Oracle, Yahoo!, Zalando, Zynga and Twitter.
In practice, the process of defining objectives differs from one company to the other, but it all comes down to the fact that the entire organization should agree on what it plans to achieve, divide the objective within its departments and teams, and decide what each of them has to do to fulfill that objective.
There is no good or bad way to define objectives in the OKRs paradigm. The real value of the OKRs model comes from the collaboration that is needed to set them. A great deal of the OKRs value comes from the conversations regarding the things that matter, regarding measurement and assessment, and regarding the meaning these things have for each team, given that teams are used to working according to their own standard. The OKRs approach introduces a common language among teams that are so very different, as is the case for the teams in IT companies.
The process begins with the definition of OKRs at organization level. Each team should be able to define their objectives, which contribute to the company objective. Then, the team members can create personal objectives which contribute to the team's objectives.
It is very important to align the people working in a company. By aligning employee objectives to company objectives, team members assume responsibility for their individual objectives. This leads to the creation of a clear "Red Line" for employees and they can see the way in which their contributions align themselves with the company vision.
Usually, a company begins the process of defining its most important three objectives which it wants to achieve in the next trimester (or year). Some companies will group trimester objectives in categories like "innovation", "growth" and "income", to ensure that the objectives are not focused only on one activity area. The objectives should be short, meant to motivate and inspire - like a company's vision or mission should, but, unlike the latter, they are limited in time. Objectives in OKRs must reflect the time period during which they apply. They must express what can be achieved in three months. These objectives must be measurable.
After the objectives are set, the focus is placed on identifying the key results for each objective (Key-Results or KRs) and these are meant to measure success. Each objective will have measurable key-results which the company will aim to achieve within the course of a trimester.
In most cases, the company objectives already have an OKR related to the product, because, in the end, the product of a company is the fuel for its activity. These make objectives easy to identify for Product Teams. If one of the company's major objectives for the next trimester is "the successful launch of product X or of version 3.0", it will be pretty easy for the Product Team to set OKRs.
When, at company level, the OKRs do not refer to products, a deeper perspective of OKRs is required and we need to know in which way the activities meant to develop a product can make a difference in order to reach the company objective. This also means that the product roadmap will be aligned to company purposes.
A simple way of defining the Product Team's OKRs for the next three months is to examine the OKRs at company level, do some brainstorming and write all the activities that the Product Team can perform to help the company reach those results.
For some OKRs, there will be a greater effort in finding the ways in which the Product Team can have a direct impact. In this case, we should not focus on finding impact means where we cannot make a difference and where we do not have control. By contrast, it is good to focus on the results that the Product Team can control and influence. In the stage of defining OKRs, the activities that the team identifies are not critical. They are instruments for identifying opportunities.
O: Objective: The purpose you want to achieve → qualitative criteria
KRs: Key results: Success criteria → quantitative criteria
Examples of OKRs for Product Teams
A very frequent challenge when we start defining OKRs is to find the ones that are suitable for us, for our team and for our company. I am often asked to provide examples, so that managers can think of correct objectives and purposes for their company.
This is a set of OKR examples for the different roles of the Product Team. These are a good starting point, but your OKRs will reflect your ambitions for the next period of 2017:
Examples of OKRs at company level:
O: Increase recurrent revenue by the end of Q1 2017.
KR1: Increase the recurrent revenue coming from monthly subscriptions to 85%.
KR2: Increase the medium monthly subscription to 300 EUR / user.
KR3: Decrease subscription churn \< 5%.
Examples of OKRs for the various roles in the Product Team:
Role: Head of Product
O: Increase the degree of interaction per platform by the end of Q1 2017.
KR1: Increase the number of daily active users by 3%.
KR2: Increase the number of weekly active users by 5%.
KR3: Increase the number of monthly active users by 15%.
O: Management of product lifecycle and strategic planning
KR1: Finalize the requirements document with the stakeholders in R&D, Design, Product, Software Development and Marketing by the 20th January 2017.
KR2: Draft a case study with the Marketing team by the 5th of February 2017.
KR3: Present the vision and the roadmap to Top Management until the 20th of February 2017.
KR4: Implement a prioritization and analysis process of the new functionalities until the end of Q1.
Role: Product Manager
O: Increase the degree of "daily engagement" with the product by 5%
KR1: Interview 50 customers or users to get feedback by the end of January 2017.
KR2: Configure 10 A/B tests for mobile applications to measure the "daily engagement" until the 15th of January 2017.
KR3: Change the onboarding process by adding educational and social sharing content by the middle of Q1 2017.
KR4: Identify the most involved users and document their behavior until the 30th of January 2017.
Role: Product Designer
O: Design the major interactions involved in a product launch
KR1: Participate at 5 interviews with users together with the User Researcher by the 15th of January 2017.
KR2: Weekly meetings with the software development team and the QA team by the 15th of February 2016.
KR3: Create and present 5 prototypes by the 5th of February 2016.
KR4: Deliver the final design to Product Team and Software Development Team by the 15th of March 2017.
In the next issue, we will explore a calendar for implementing OKRs and the way we can align the Product Team with the other teams in the company.
Challenge: Think of OKRs for your team, for Q1 2017, but focus on only one set of Objectives and Key Results. If you have 3-4 sets, delete the least important ones. This is the first valuable step for a powerful Product Team, by organizing and reaching objectives.
by Cassian Lup
by Claudia Mihu
by Mircea Vădan