In the previous issue, we introduced the performance management framework OKR (Objectives and Key Results) and how it can help us build and grow performant product teams.
In short, OKR is a set of measurable objectives and key results that we set quarterly. Each objective has a responsible, and at the end of each quarter we draw the line and evaluate the results: how many goals we were able to accomplish? Next, we will consider a timeline for implementation of OKR in a company, with a snapshot of annual and monthly activities.
Here is an example of OKRs at company level:
O: Increase recurring revenues by the end of Q1 2017
KR1: Increase the percentage of recurring revenue from monthly subscriptions to 85%
KR2: Increased average monthly subscription at 300 EUR / user
KR3: Reduce churn rate to \<5%
This example follows the classic recipe of OKR:
O: Objective: The goal that we want to accomplish → qualitative
KR: Key Results: Success Criteria → quantitative
All objectives are derived from the company's mission. If the organization's mission is not defined yet, this is critical step to begin.
OKRs are related to defining the focus for the next quarter; for companies that start with this methodology; we recommend starting a single set of objectives and key results at company level (O + 3-4 KR) and a set of OKRs for each team. In this case, less is more.
At the company level, OKRs fall into these buckets:
Financial objectives (may be two separate related to revenue and profit);
Customer satisfaction objectives;
Market leadership objectives;
Employee engagement goals (this is getting more attention);
Objectives related to innovation;
"As soon as possible", said Rick Klau, a partner at Google Ventures, in response to a question about when a management team should adopt OKRs.
Some of the benefits of OKR framework are: company-wide transparency, as OKRs are public and measurable; aligning the efforts of all employees to the company's mission and vision, as OKRs are derived from the mission; OKRs make the link between strategy and action, as they translate into practical terms the concepts of the business strategy.
It's a good idea to remind ourselves that the first months with OKR will be months of learning and adjustment. We should not feel discouraged if after the first quarter we have not reached all targets, or we are not entirely familiar with this framework. There is usually a period of trial and error; the first months of the year are a good time to reflect on the good and the bad of last year, to decide on the direction for this year and to start the year with a set of OKR. From my experience with different teams, I noticed that it takes at least a quarter OKRs to implement the framework. When choosing bold goals and significant changes, it is only natural to expect obstacles and potential errors.
Q1:
January 2017:
Complete and present the performance analysis of the last quarterly goals and new annual goals for 2017;
Present OKR sets for Q1 2017;
Discuss and define of individual objectives for Q1;
February 2017:
March 2017:
Continue weekly check-ins and make the necessary adjustments to achieve the objectives;
Q2:
April 2017:
Complete and present the results of the analysis of Q1 OKR;
Present OKR sets for Q2;
Discuss and define of individual objectives for Q2;
May 2017:
June 2017:
Continue weekly check-ins and make the necessary adjustments to achieve the objectives;
Analyse the performance for the current quarter (Q2) and create new OKR (as draft) for the next quarter Q3.
Q3:
July 2017:
Complete and present the results of the analysis of Q2 OKR;
Present OKR sets for Q3;
Discuss and define of individual objectives for Q3;
August 2017:
September 2017:
Continue weekly check-ins and make the necessary adjustments to achieve the objectives;
Q4:
October 2017:
Complete and present the results of the analysis of Q3 OKR;
Present OKR sets for Q4;
Discuss and define of individual objectives for Q4;
November 2017:
December 2017:
Continue weekly check-ins and make the necessary adjustments to achieve the objectives;
Define and present company's new annual objectives for 2018;
Depending on company characteristics, culture, experience with OKR, and the level of commitment from senior leadership, we have identified three ways to implement a performance management programme with OKRs:
A company-wide roll-out, right from the start:
A full company-wide roll-out will work very well if you are already familiar with OKRs or management by objectives (MBO). Otherwise, it requires that the benefits OKR are very clear to everyone and the company culture is open to change. Young companies, whatever their size, qualify more easily for this approach than more mature companies. This approach does not imply that everyone should work with OKR from the first day. We recommend to define OKR at company level first, then at the department and team leaders, and from there to the employee level. All this can be implemented in a very short period (e.g., 1-3 months). The central idea is not to lose momentum.
2. Implementation in two stages, starting with a pilot project
We start OKR implementation within a pilot team; then everyone will be involved. Instead of a quick roll-out, we experience first with a pilot team to help define the most appropriate approach at the company level. The pilot team can test implementation team with shorter timeframes, like a month, to learn fast. Once the plan is clear, everyone can join. This approach is safer than the one above, and implementation can be completed in 3-6 months at company level.
3. A gradual implementation, starting with a single team and expansion at company level
In this approach, we will set an implementation timetable, and we start with a small team consisting of about 5-10% of employees: for example, the product team or HR team. Instead of company-wide deployment in the next step, we add gradually more teams and departments. We will need more time (3-9 months depending on company size). If you are uncertain that OKR is a good fit for your company or you expect resistance to change, this approach may be the best option.
Regardless of the implementation approach and the time required, it's good to remember that there is no single correct approach, and will depend on your company or team.
The OKR framework is flexible and adaptable like open source code; thus, we can use OKR at company-wide level or team level with quick and measurable results. The fact that it works at first in a smaller team can be a factor of acceptance for other departments within the company.
OKR is an excellent tool to facilitate the communication and alignment of several teams working on the same project within the company. In the next issue, we will explore how we can align the product team with other teams in the company, using OKRs.
by Ovidiu Mățan
by Andrei Avram
by Remus Pereni
by Gelu Vac
