5 ways by which OKRs can help fast growing companies

OKRs an acronym for Objectives and Key Results is framework to manage a company's goals, objectives and measurement systems. It was invented by Andy Grove, the Co-founder of Intel and legendary management guru in the past century. Andy also talks about the tenets behind OKRs in one of my favorite management books, High Ouput Management.

OKRs is a simple and effective framework that defines 3-5 key Objectives that any company or organisation is trying to strive for and what Key Results would measure whether they are able to get there.

John Doerr, one of the most successful VCs at Kleiner Perkins brought this to Google and other younger companies in Silicon Valley in the late 90's and early 2000's. In fact, he has just authored a book "Measure What Matters (OKRs) - the simple idea that drives 10X growth" about this topic (haven't read the book yet but seems highly recommended).

I personally learnt about OKRs during my 3-year stint at Google in the late 2000's and found it to be a critical component of the company's success. A lot has been written about the basic of OKRs (see the video below for a primer). Are also a few good presentations on Slideshare that I encourage people to check out.

Every company, esp. a startup, that is growing rapidly has lots of opportunities and challenges to drive their growth. They are hiring like crazy, they are opening new businesses, scaling up existing ones, expanding geographies, perhaps acquiring companies, etc.

There are 4 key questions that emerge:

Challenge #1: What is our Big, Hairy, Audacious Goal (BHAG) for the next year and why?

Most companies are founded on something they want to change in the world. They may even manifest it in a mission or a vision statement (broadly, I'm not a big fan). On an ongoing basis, the companies get focussed on the day to day, quarter to quarter execution focus. And they should. However, the company loses track of what is the larger picture that will meaningfully help them get closer to their eventual mission.

To make this concrete, let us take the example of a professional sports team (inspired by @jhoff). Your team's owners may want it to become, say, the most valuable franchise (MVF) in the league in a few years. Now, on a day to day basis, you may just be focussed on the winning the next match or having a winning month or such. Don't get me wrong; that's a critical component of execution. However, to become the MVF, your team needs to think more than one match or a stage of a professional league.

That's where OKRs can help. For the objective of becoming the most valuable franchise, one may need to set key results along the way.

Beyond the obvious, win a championship, additional, incremental key results may look like reach qualifiers every year, or have a mix of rookies and very experienced players so they can win year after year, or even have a highly engaged and excited fan base. These then get further broken down into incremental, quarterly objectives and measurement criterion. Lastly, each team, whether its a founder or a front line engineer, builds the plans to be able to accomplish their key results.

Answer #1 FOCUS ON WHAT MATTERS:

Having a big, hairy, audacious goal and highly measurable quarterly results helps focus the company, its founders and the entire team on what really matters this year and why!

Action Item: What are your 3-5 OKRs for the year (and subsequently this quarter) that will help materially move the needle in your team or organisation?

Challenge #2 : Is everyone working here making a difference and do they feel like they are?

As companies start growing rapidly, the culture changes from the small team, sitting around a table to dozens, even hundreds of people. However, as the number of employees grows, the need for communication grows exponentially and it is not possible to have daily, breakfast meetings across 100's of people. Some interesting problems emerge:

• The founders and other leaders appear "distant" and possibly inaccessible.
• People don't know (or feel they don't know) about what is going on.
• Cross organisational or cross geography politics start emerging.
• There is a lot of brownian motion and yet the "needle" is not moving.
• Many individuals and teams feel like they are working hard but are not being recognised or rewarded.

The reason these problems emerge is sheer, rapid growth and a rapidly evolving business landscape.

So, how do OKRs help? They do three things:

• Answer # 2 Creates alignment: They are a low cost, transparent, highly effective way for creating alignment. One of the key tenets to make OKRs successful is to have everyone in the team share their OKRs be shared openly and transparently with the entire company. They can be put on the company's intranet. Now, every employee can the OKRs of the founders, organisation heads of every function, and even their peers, etc. Likewise, everyone can see every individuals OKRs and their past history.

• Answer #3 Encourages ambitious objective setting and weed out mediocrity: Two key things happen here. One since everyone's OKRs are public, you see if everyone is being audacious enough and pushing the envelope? One additional feature of OKRs that is everyone's self-assessment at the end of each time period is up for display. This is not true for your manager's assessment of you but your own assessment. This way, thanks to the transparency, you are collectively pushing setting ambitious targets and weeding out either sandbaggers or worse yet under-performers without any intervention. People become self-aware and push themselves to achieve their best; if they are consistently not able to do it but feel others are, they may voluntarily seek to get new assignments or leave.
• Answer #4 Creates organisation commitment: In addition to having visibility if you don't see alignment in your goals or that of your team with the larger organisation, you can initiate a discussion or even a debate to seek clarification and eventual alignment. Now, everyone sees the overall company mission, alignment, debates, discusses and aligns their set of OKRs and then gets down to executing them.

Commitment is what transforms a promise into a reality -- Abraham Lincoln

Action Item: Have a discussion in your team, and with your manager, if you would be willing to create open OKRs and document results openly. For extra credit, once you are done with your own team, convince one other team that you work with closely do their OKRs and share them with you and your team. I assure you both will be a fun discussion!

Challenge # 3 Are we there yet?

Once you have focus, alignment and commitment, everyone can start trackintheir own OKRs and those of other teams effortlessly. You can and should do monthly meetings with your manager/team to ensure you are along the way and re-adjust as you go along. In addition, it is the company's leadership teams responsibility to keep the company abreast of how the company is performing on its overall objectives. Cascading down, each individual team leader or even individual contributor can keep an eye on whether what they are doing is affecting the eventual company OKRs in a meaningful and measurable way.

Action Item: Even if you haven't had OKRs yet, publish the top 3-5 things you or your team has accomplished last quarter (admittedly, it will be retroactive but be honest).

ANSWER #5 Tracking and Re-alignment - Makes the scorecard simple, public and effortless. It gives visibility to re-allocate capital and human resources where required to deliver on the overall OKRs.

Putting it all together

OKRs are simple and a very light weight way to deliver 10X results. Here's a nice summary of some OKR best practices (Credit : Weekdone.com).

That said, these are not a panacea to solve all problems. They are a means to the end.

Extra action item: While OKRs are meant for professional organisations, you can use them for your personal life, your family or even your community. See if you can set up OKRs for yourself for the next 12 months and share it with one loved one!

Note: The FACTS (Focus, Alignment, Commitment, Tracking, Stretch) acronym that I use above is derived from John Doerr's book.

(Amit is a Managing Partner at Prime Venture Partners, a seed stage VC firm based out of Bangalore, India. Prime invests in category creating, early stage companies founded by rock star teams. Amit has held leadership positions at Makemytrip, Google and IBM. He is also deeply engaged with the early stage ecosystem in India and actively volunteers with iSpirt, TiE and NASSCOM. He tweets regularly @amitsomani and is trying to become an active, late blooming blogger).