Driving ambitious goals and innovation - Tenets of building the best (#2)

Most companies aspire to be innovative. All of the companies I studied (Google, Amazon, Facebook, LinkedIn, Uber, Grab, Microsoft) have taken big bets and succeeded, of which most have succeeded repeatedly.

This post is about driving innovation as well as ambitious goals together - yes, sometimes they can be conflicting especially if resources are constrained. Google seems to have innovation DNA ingrained very well. According to most, it is hard to innovate if you are deeply focused on measuring productivity. Balancing innovation can lead to productivity drop. Having a “No regrets” mindset and “fail fast” has worked, but it does require the ability to withstand failure, which often helps if you have a large moat which protects the core. Nevertheless, over time teams become better at judgment and are right most of the time, which is the key. Hence building consensus to ensure that the best ideas are debated before implementation, knowing what higher level goal will get unlocked, encouraging bottom-up ideas and “No regrets” mindset are essential to foster innovation. Long term planning and unconstrained thinking during initial planning phase bring the innovation themes in front. At Amazon, most of the big bests emerged from the long range planning sessions and PRFAQ are evidence of the detailing done several years before launch.

Another useful tool which most companies adopt is cross collaboration between the best talent across diverse tech teams which raises the bar of innovation. When the best in class talent who have exposure across various businesses get together, it improves the odds of success substantially.

Now let's move to how to get things done!

Once the strategy is decided and the planning exercise is completed, the next important step is translating the milestones to goals for everyone. Goals drive behavior, and need to be carefully selected to drive the behaviour most suited for the organization.

What does a good goal setting process do?

1. Creates ownership at every level

2. Aligns all the teams to the organization goals

3. Sets ambitious targets, without employees worrying about risks of failure

4. Gives clarity to employees and managers on expectations

5. Provides early warning signals and interventions required

6. Ensures measurable outcomes at frequent intervals

How should goal setting be done?

Goals are derived from the operational plan. Several players have adopted OKRs,?Google being the first one to adopt OKR. Anyone can adopt the OKR framework, which can be modified to the size and needs of the business. The definition of “OKRs” is “Objectives and Key Results.” It is a collaborative goal-setting tool used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals.

An Objective is simply what is to be achieved, no more and no less. By definition, objectives are significant, concrete, action-oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking — and fuzzy execution. Key Results benchmark and monitor how we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. OKRs are “stretch goals”. Achievement of 50–60% percent is good. Google has a way to grade OKRs rather than simple Yes/No. OKRs vary by levels. As an example, senior staff may have Staffing related OKRs in addition to projects.

Google delinked OKRs from performance management following experience that linking create disincentives to think big. Linkedin also follows same approach.

At Amazon, there are Input and Output goals. Everyone has business, team and individual goals. This is useful as there are several behaviors which need to be driven which indirectly impact the business in the short term, but have long term implications.

One of the challenges everyone sees often is managing competing goals. It is perfectly ok to have competing goals, which need to translate to balancing metrics. For example, ease of buying journey for a user vs. security features are competing goals. As long as each goal is broken down into balanced metrics, such objectives can be achieved collaboratively.

Finally, goals can be annual, half-yearly or quarterly. It is best to have atleast six monthly if not quarterly check-ins to ensure that course corrections, if required are done.

Once companies reach a stage where teams have scaled beyond all employees reporting directly to founders, goal setting exercise is the best way to achieve the planned objectives. This works even in the most situations irrespective of how dynamic the market environment is, so get started now if you have not done this yet in your startup!

This is part of the earlier series I mentioned about learnings of building the Best-in-class technology company in India (see link below)