Best of 2024 - Derisking and Evolving on your OKR (Objectives and Key Results) Implementation

[00:00:00] Welcome to the Convergence Podcast. I'm your host, Ashok Sivanand. Ashok Sivanand, Baked Into Our Philosophy is this approach that you're talking about. It's not about command and control. It's about collaboration. It's about bringing minds together. I think in OKRs, we have a system like that. On this show, we'll deconstruct the best practices, principles, and the underlying philosophies behind the most engaged product teams who ship the most successful products.

[00:00:36] This is what teams are made of. Welcome back to the Convergence Podcast, folks. Today, we have another Best of 2024 episode for you. And we're talking about OKRs or Objectives and Key Results. Back in the 1970s, Andy Grove, the legendary CEO of Intel, introduced the framework to Intel as a way to align the company's efforts during a really critical time of growth and change.

[00:01:00] He believed that by defining clear objectives and measurable key results, teams could focus on what mattered most and execute with greater precision. The framework only gained broader recognition in the late 90s, though, thanks to John Doerr, who used to work at Intel and then had gone on to become a venture capitalist. Dora introduced OKRs to Google when they had fewer than 50 employees, and the results were staggering.

[00:01:30] So much so that Google famously adopted the framework to maintain clarity and alignment as they grew. And since then, companies like LinkedIn, Spotify, Amazon, and even the Bill Gates Foundation have publicly talked about their adoption of OKRs. So why are OKRs considered so powerful? I think there's a couple of reasons.

[00:01:54] First, it provides an alternative to the traditional command and control style of management while still maintaining accountability, fostering alignment, and done right, and done right, creates transparency across any organization regardless of size. Today, we're combining segments from various OKR expert guests that we had on Convergence in 2024.

[00:02:21] From folks who've worked actually at Intel and Amazon, to consultants who've helped implement OKRs, and folks who have literally written the book on customer-centric OKRs. We get to hear from our guests on why they like OKRs better than other goal-setting frameworks, whether your organization and culture are ready to succeed with OKRs,

[00:02:45] and some best practices on how to adopt OKRs in your organization and on your product teams. The guests share how to integrate individual objectives on your team based on the overarching organizational strategy, how to get started on your OKR journey, how to de-risk and manage your OKRs, and also how to blend human-centered design with your OKR implementation.

[00:03:11] We also get to hear a ton of war stories from the field on the good, the bad, and the ugly of OKR implementations. Now, we'll have links in the show notes to all of these segments in case you're interested in hearing the full episode with any of these guests. Subscribe to the podcast to get future episodes as soon as they're published. If you find this helpful, give the podcast a five-star rating on your podcast app or hit that like button on YouTube.

[00:03:38] A common challenge that we hear from product teams is that their digital transformation and adoption of lean and agile are constrained by the broader organization. The business teams, if you will, haven't really had a similar movement as big as lean or agile

[00:04:03] that converges the better, faster, and more nimble coupling between strategy and execution. Our first clip to talk more about that is from Josh Seiden. Josh has authored or co-authored a number of books that lean, agile product nerds are likely familiar with.

[00:04:24] Books like Lean UX, Sense and Respond, Outcomes Over Outputs, and their latest book, Who Does What By How Much. Josh, I got to check the book out and I found it to be delightfully rooted around customer-centric outcomes and human behavior, especially when implementing OKRs.

[00:04:47] Josh developed a lot of his product opinions when working in product management, product design, and in product coaching. Josh Seiden, and he co-founded a company called Neo that was ultimately acquired by Pivotal Labs. And he's also gotten to work for The Alan Cooper and now runs a training business with his co-author, Jeff Gothelf, called Sense and Respond.

[00:05:13] In this segment, Josh shares how OKRs can be an organization-wide approach beyond just product teams. Josh Seiden, and one of the questions that we've been looking for, is how do we systematize this way of thinking, collaborative, cross-functional, right?

[00:05:40] Oriented around continuous learning and improvement. Josh Seiden, and I think that's a great idea of how do we make a system like that that's not just for technology product teams, but is for whole organizations. And I think in OKRs, we have a system like that. And so kind of baked into our philosophy is this approach that you're talking about, which is that it's not about command and control. It's about collaboration. It's about bringing minds together, right?

[00:06:08] So this isn't, you know, my boss writes the OKR and then I do it, right? This is, you know, as a team, we have a conversation with leadership, right? We understand what's important to leadership because they've written an OKR for themselves, right? And then we look at that OKR and we say, how can we as a team best support that? And we have that conversation with our leaders, right? We think the best way we can support that is X. What do you think, right?

[00:06:37] You have a two-way conversation and then you kind of ratify that, right? And then you say, OK, good. Now we've got our marching orders. This is your OKR and this is how we're going to support it, right? And, you know, it's I think it's a viable alternative to command and control that maintains accountability.

[00:07:10] A lot of goal setting frameworks are really like planning frameworks in disguise. You know, they may lay out some sort of high level vision, but then it's really about what's our plan to get there. And OKRs are a little bit different. OKRs kind of, they capture strategy. They say, here's our strategic vision. And then that's the objective, right? Here's our strategic goal.

[00:07:39] And then the KR, the key result part of OKR is the measurement. How do we know we've gotten there? And what's really cool about that is that it doesn't, it asks a question, right? It says, here's our goal. This is what we're trying to do, but it doesn't answer it. It doesn't say, here's what we're going to build or here's what we're going to make.

[00:08:00] And, you know, if you've spent any, any amount of time in product development or technology, you know that, that a lot of the ideas that we have at the beginning of a project or an initiative. Even for super smart teams, a lot of those ideas don't work. And so, you know, when our goals are set in terms of we're going to build a thing. OK, maybe we build it, maybe we don't.

[00:08:28] But there's no there's no connection to whether that thing is valuable. And OKRs really focus the story on value. This is a story about Tesla. OK, and so OKRs express strategy, right?

[00:08:57] And so strategy is, you know, we have an obstacle to overcome. How are we going to overcome it? And so in the earliest days of Tesla, one of the obstacles that they faced is that electric cars were not perceived as sexy. They were they were super uncool. They were like nerdy, slow, underperforming vehicles. And so how do you address that challenge? Well, the first car that Tesla worked on was their Roadster.

[00:09:25] They didn't expect to sell that car, you know, certainly not in any high volume. It was not a high volume production car. It was a car aimed directly at like the editors of car magazines. Right. And what they wanted was to change the public perception by having car magazine editors write, you know, enthusiastic stories about how cool this is. Electric Roadster was. OK, so the objective then, right?

[00:09:51] The objective might be something inspiring like, you know, make electric cars cool. Right. And so what's the what's the key result? Right. And it doesn't say build a roadster. The objective isn't build a roadster. And the key result is also not build a roadster.

[00:10:11] The objective might be who does what by how much get car magazine editors and enthusiasts writing enthusiastic articles about our concept cars. Right. At in all of the major magazines, at least once per quarter. You know, have car magazine editors feature our roadster on the cover of top 10 car magazines.

[00:10:39] You know, five of the top 10 car magazines this year. Right. So objective inspiring make, you know, make electric transportation cool. Right. Key results. Who? Magazine editors. Does what? Right. You know, exciting articles. Right. About our car. By how much? Five out of the top 10 magazines cover us enthusiastically.

[00:11:06] A common question that shows up is whether your organization is ready to implement and get the benefits out of OKRs. Josh talks about two really important criteria that need to be true at your organization in order for OKRs to be successful. First, it's a journey that takes careful iteration rather than a silver bullet that's going to bear outcome right away.

[00:11:36] No one gets it right out of the box. Right. We talked to lots and lots of companies in our research for this book, and everybody reported a similar experience, which is that the first implementation, you know, wasn't as successful as they hoped. Now, there were usually germs, seeds of something good there. Right. For example, we talked to InfoBip.

[00:12:04] They've been iterating on their OKR process for, you know, more than five years. Right. And every year they may they learn something and they make a change and they learn something and they make a change. And this is a pattern that we saw over and over again. So like one of the things that has to be true at the organizational level is just starting with the understanding that it's a journey and it's going to take time to get right.

[00:12:32] And so if, you know, if your organization is an organization that likes and expects and only tolerates sort of silver bullet kind of thinking. This is not for you.

[00:12:45] So, Josh's second piece of advice on what needs to be true in your organizations for OKRs to be successful is about an interplay between organization strategy and how your OKRs play out. It's an interesting problem when you're writing about OKRs because OKRs really don't work without a strategy.

[00:13:11] Right now, you may have a strategy that you haven't articulated well and then OKRs can help you articulate it. But, you know, I've worked with companies that really wanted to do OKRs. They really, you know, they thought, well, we were really having trouble delivering from quarter to quarter on our commitments. And we really think OKRs are going to help us deliver a quarter to quarter.

[00:13:40] And so when I started working with them, my first question with this particular company that I'm thinking of is, OK, let's articulate the strategy so that we can focus on only the most important things. And we can let all these other commitments kind of move into second priority. And what we discovered was that actually they didn't have a well articulated strategy. They didn't have a strategy.

[00:14:05] And so what their problem was not in their goal setting framework, their problem was they were always thrashing because somebody was always barging into the room saying we need to do X and we need to do Y and we need to do Z. And they couldn't agree on their priorities. And if you can't do that, you can't write OKRs.

[00:14:34] So that starting point of being able to have strategic clarity and strategic discipline, OKRs can help you maintain the discipline, but you need the clarity first. Our next guest is a segment from Deepika Yaragunta. Deepika is the head of e-commerce platform products at PepsiCo.

[00:14:56] And prior to that, she ran platform products at Intel, as well as lead product for the team at Amazon that brought Alexa to our smart TVs. Deepika Yaragunta. Deepika shares how Intel, Google and PepsiCo align teams using Andy Grove's management by objective system by breaking down company goals all the way down to every individual on the team.

[00:15:23] It's great to hear from someone who is actually at Intel. Here's Deepika. Number one is the idea that you manage by objective that helped with a company like Intel, which is you have these large goals and objectives at the top. You break it down into smaller goals and then break it down into further goals. And then finally, each individual in the organization knows exactly what their operating plan is, so to speak. Right. What are they executing on day to day?

[00:15:51] And those little drops of water actually move that big needle. Right. Like and that that's I think was a very core principle that, you know, MBOs was started by Andy Grove and then, you know, Google took it over. That was popular as OKR system. And now we have it at Pepsi as well. We use the OKR system to help communication. Right. What is in the roadmap and why is it not shakeable? And because we all agreed upon it sitting in one room.

[00:16:21] Right. So I think that that whole piece is one big culture shift that I think I've actually brought in from, you know, my own previous experiences. Fostering an engaged product organization and aligning them with the principles around lean, human centered design and agile will more than likely lead to successful business outcomes for your organization. But getting started or getting unblocked can be hard.

[00:16:51] This podcast is brought to you by the player coaches over at Integral. They help ambitious companies like you build amazing product teams and ship products in artificial intelligence, cloud, web and mobile. Listeners to the podcast can head on over to integral dot IO slash convergence and get a free product success lab.

[00:17:15] During this session, the integral team will facilitate a problem solving exercise that gives you clarity and confidence to solve a product design or engineering problem. That's integral dot IO slash convergence. Now back to the show.

[00:17:32] Josh is back and he builds on Deepika's insight into how objectives need to be integrated and connective across various levels of your organization. I think a good organization, you've got OKRs at various what you sometimes hear described as flight levels in the organization.

[00:17:56] Right. So you've got organization wide OKRs and then you have OKRs at levels below that work groups and teams. And so it's and it's important that the OKRs kind of be connected. So you want the team to have an OKR that supports the work groups OKR and the work groups OKR should support the organization's OKR. The way they get written. The way they get written.

[00:18:21] Is through a conversation top up and bottom down, top down and bottom up in the story that I just told about this Wall Street example. This the CEO was was right. Right. You have people in your organization as the organization grows whose job it is to be those customer experts. And so his expert is how do I make the organization successful? And so you need he needed to have that conversation with the people who were doing the field work.

[00:18:52] Who were developing that that daily expertise in customer needs and that and and they needed the blessing and support of the CEO. So who writes them, you asked me, you write them in conversation up and down and you rely on the fact that there's important clarity about different dimensions of the business at every level.

[00:19:17] Josh builds on his point by sharing a really powerful story from his time working with a Wall Street company. The story really drives home his points about writing the OKRs together to drive alignment and also empowerment across your organization, both top down and bottom up. I worked on Wall Street once for a really successful CEO.

[00:19:45] He was a serial entrepreneur with, you know, three successful companies behind him. And our the business I was working in served stock traders at institutional money managers. So mutual funds and things like that. And so we need stock traders really well. And we wanted to diversify our product offering. And so stock traders work with portfolio managers.

[00:20:14] Portfolio managers make the investment decisions. Stock traders execute them, basically. And we didn't really know portfolio managers very well at all. And our CEO had an idea for a product for portfolio managers and gave my team. I was I was running design at this company at the time, gave my team the mandate to go design and then lead the construction of this product. And we went out and we started talking to portfolio managers and we discovered that none of them wanted this product.

[00:20:46] And so the mission diversify our port, our product offering was a good one. Portfolio managers, it's an interesting audience for us. Go out and make this thing for portfolio managers. It was the wrong idea. And so we had to bring that learning back into the organization and bring it back to the CEO and say they don't want it.

[00:21:10] And when we were able to create better conversations between the CEO and the other teams in the company and these portfolio managers, we were able to come up with a product that they really did want. That was similar to what the CEO wanted, but it was significantly different. And so what what's the point of this story? The point of this story is give the team a problem to solve. Right.

[00:21:35] Which is create a product that portfolio managers will love rather than build this product. Right. And in the in the first case, that problem to solve, it gives the team the opportunity to engage and find the right answer. Right. Rather than just embarking on an execution track that is going to be expensive, time consuming and will ultimately fail. We needed to diversify our product offerings.

[00:22:05] And he was right that that was a good market. But he was not close to that market personally. And so his this and that's not because he was bad at his job. It's because as a CEO running this business, it's not his job to be close to every customer and every user. Getting started on this journey requires being intentional.

[00:22:34] Josh shares three key tips on de-risking your OKR rollout at your organization. So there's some advice that we give to in the book about getting started. The first is understand your why, like start with why. Why are we implementing OKRs? There are a lot of things that OKRs can do for an organization and sort of the way that you.

[00:23:01] The goal there is going to influence the way you implement them. And and being able to tell a story about the why is really important for leaders. So being clear, are we trying to create more accountability? Are we trying to create more transparency? Are we trying to create more alignment? Like what's the what's the reason for the tool? You know, that's the first thing. The second thing is start small and start small with a kind of a stacked deck.

[00:23:31] Right. So we're not going to roll this out to the entire organization in the first iteration. What we're going to do is we're going to start with a pilot team or a pilot group. Right. A small number of highly capable people who like change because our goal is to succeed. Right.

[00:23:55] And so you want to sort of stack the deck and pick places where you're likely to be able to get wins because you're certainly going to find the obstacles. So you need to get some wins along the way. And so start with why start small, stack the deck and then be prepared to sort of iterate with their process as you go. Now, this is somewhat meta here.

[00:24:18] And while we're speaking about de-risking your OKR journey, Josh recommends having a meta OKR outlined for the OKR implementation itself. And this helps drive clarity on the objectives that you're expecting from rolling OKRs out from your journey. And what kind of measurable factors or key results you can expect along the way that will benefit your organization as you adopt OKRs.

[00:24:46] One of the things that happens with goal setting is we we can come together in a room and we can say like like with your story about empowerment. Right. We want to create an empowered team or we want to create more accountability in the organization. And again, you can't argue with those things. But how do you how do you make them real?

[00:25:10] Right. Well, one way that you can make them real is you can say when our teams are more accountable, what will they be doing differently? Right. And so what are the what are the behaviors associated with highly accountable teams? Right. Well, maybe they proactively check in every week. Maybe they set milestones and hit them. You know, whatever that whatever that behavior is.

[00:25:38] And so when we say we want a more accountable organization. Right. Or at when we use OKRs, we're going to be more accountable. What we do with our clients is we say, OK, we're going to write an OKR for our OKR implementation that will tell us that we are actually making progress towards our organizational goals.

[00:26:02] Right. And then we're measuring the behavior that we're seeing in the organization to to tell us whether, you know, we're actually making progress on this stuff. Josh is back and shares a really important point about scoring OKRs.

[00:26:21] It's pretty often during our work at Integral that I've seen a lot of teams performance factored on what percentage or how many of the KRs or key results they complete by the end of the quarter or whatever the time period is.

[00:26:35] And I fully agree with Josh here that the scoring or completion percentage is much more effective when you consider a relative percentage compared to previous OKR completions and the trends rather than looking at any one time period in isolation. Josh here that the way that you're seeing is a really important thing that the team is doing that is only one of the most popular things that we're seeing, but what are you doing that?

[00:26:55] And I think that that idea of scoring our OKRs is useful for helping us improve the system. Right. So we hit 80% of our OKR. OK? We consistently hit 80% of our OKR and last quarter we hit 40% of our OKR. Right. What does that mean?

[00:27:21] right? Like there's a, there's a signal in there that something is different and we need to pay attention. What does it mean? Does it mean suddenly we started doing a bad job or that we got something wrong or like, it's, it's a question that I would want to put to the team. What was different about this quarter than last quarter? Yeah. So, so I think scoring OKRs are really important for, for diagnostics, for self-assessment, for continuing to improve our OKR

[00:27:50] implementation. And, and I think that's the, that's the most useful. And, and, and because of that, it means that, you know, set up a scoring system that works for you and your organization and then stick with it over time so that you can use it to compare quarter over quarter, year over year. Our third and final guest featured on this segment is Holly Biloa. Holly is a product coach

[00:28:14] and leads product at Jeff Patton Associates. You've probably heard of Jeff Patton if you're a product or design nerds, because he authored the very influential book, User Story Mapping. Holly has previously to Jeff Patton Associates helped organizations like TD Ameritrade, Cengage Learning, and Bloomberg with either organizing their product teams and or shipping delightful products. Holly shares

[00:28:41] here how she likes to get started on a product team and facilitating a two-day workshop to kick things off with OKRs. So what are some ways that folks can get started? There's probably a lot of signal, a lot of noise, especially in the early days when you're saying I'm switching away from maybe a more traditional measurement system to OKRs for landing folks. So, you know, I have always started this really

[00:29:10] simply. I've done, you know, two-day product, two-day strategy sessions in person where we get everyone together and talk about, you know, what are we doing? Why are we doing it? What is success like? Because really the key results and being able to prioritize what you do is what is success look like? And what's the, what are the most important indicators of success for this thing before we start actually

[00:29:37] saying we're going to do it. So sometimes, but having an aligning on what a success really looked like over a period of time, that's fundamental. Those are fundamental conversations to OKRs. And aligning on it is fundamental to creating some stability to go find out more information.

[00:30:02] When it comes to books to help you get started on OKRs, the book Measure What Matters by John Doerr is probably the foremost work to get started on. Given how a lot of you have probably read that, we have Holly returning to tell us about some of the other required reading suggestions she has, specifically for product teams that are getting started or trying to course correct on their OKR journey.

[00:30:32] I like escaping the bill trap. Like some Melissa Perry might say that that's an elderly book, right? And she has a new one. But that book has been so helpful for leaders to understand that they're overbuilding and not set up to understand what they should be building and prioritizing. So I like that book. I think the new book, product operations is a great reference book for all the pieces and parts and how to look at the reporting and what data you need.

[00:31:01] So I like that. So of course, I partnered with Jeff Patton and the user story mapping book. I'm not I'm not kidding you, but people still reference that book. I still have it dog-eared and highlighted. And it's still very helpful because it's story mapping is a bridging practice between business, product and execution. And it's somewhere. Oh, Teresa Torres' book, A Continuous Discovery Habits. Also great. Also a great book.

[00:31:30] So those are the those are really my top book. Marty Kagan's new book, Transformed. It's it's pretty cheap, but it's also based on a lot of experience from product coaches. So I appreciate a lot of what's in that. I also appreciate the writing that he's that he's done. Josh is back and he shares his advice on how to organize check ins or meetings that you have to measure progress on your OKRs.

[00:31:59] There's a pretty well established rhythm for using OKRs. You know, you set OKRs at an organizational level annually. You check in quarterly. You check in monthly and with the teams should be checking in every week or two.

[00:32:17] It kind of depends on the team. Right. And so that rhythm of frequent, we'll call it every sprint or every week meetings, weekly, monthly, quarterly, annual. That's the that's your meeting rhythm that that kind of is the OKR cycle.

[00:32:36] And at each one of those points, you're checking in on progress and you're checking in with kind of a different group of different group of folks and kind of different roles. Next, we have Deepika Return and she adds to Josh's advice on meetings and check ins.

[00:32:58] And talks about what she feels like is really important to have leading indicators when measuring progress so you can de-risk your OKRs early in their life cycle. Everyone is busy, heads down doing work. You look like you're doing work. The engineering teams are definitely driving the sprints. But then you get to the end of the quarter and you haven't met your KR because there were delays.

[00:33:25] That should be surfaced up sooner. Right. Bring in retros, bring in like things like other processes where you're constantly having a milestone check in between and you're not waiting until the KR hasn't been met. And then you're trying to like measure yourself because at that point you've already done six sprints. Right. So you've missed the point. Like you want to be able to like get control of the situation much earlier on than waiting for the end result to show up.

[00:33:51] While we're on the topic of check ins and meetings, Josh is back and has three tips or best practices for how you as a leader can facilitate really productive OKR check in meetings. So the first rule of thumb is, is you want most of the meeting to be forward looking. Right. So let's look at the numbers. Let's understand where we are today. Right. But most of the meeting is about planning what we're doing next. Right.

[00:34:19] What are we doing next week? Right. What are we doing next month? And so it's it's that's part of it. The second is that it really is. I think people need to understand their roles. Right. That OKRs are really, really good for problems where we are working to discover the answer.

[00:34:45] Right. So we always want to be talking about what we've learned, what we what we're deciding based on what we've learned and what we need to learn next. Right. And I think, you know, if it gets into sort of teams defending what they've done. Then we sort of lost the script.

[00:35:09] So I think, you know, for a leader in that meeting, it really is. Tell me what you've learned in the last week. Let's say tell me what you've learned in the last month, because that's really where the weekly meetings are for the team. That's it. Right. But it's that monthly meeting where we're sort of having a more formal presentation to leadership. The questions around leadership are what have you learned?

[00:35:38] What have you decided based on what you've learned and what do you need to learn next? Right. And then the next question is, you know, how can I help? Right. But that what do we need to learn next is really the the focus of the meeting. And I think in some ways, if you're if you've spent any time in the design world. Right. The sort of attitude here is that this is a it's a critique. Right. We're trying to make the work better. Right. We're not trying to hold the team's feet to the fire.

[00:36:06] We're not trying to, you know, prosecute people. Right. We're working together to make the work better. So what do we need to do to make the work better? And what do we need to do? Where's the learning focus for the next period? Josh shares how important data becomes at your organization as you embark on the OKR journey.

[00:36:36] Measuring things is hard in organizations. Measuring. Right. We say that our measures are human behavior. And it's often the case that we don't have good measures of what people are doing. Right. And so being able to, like, build those data systems for collecting all the kind of data that we need in order to run this system. That's actually a really big challenge. It's a big hurdle for adopting this.

[00:37:05] And it's part of the reason why OKRs take time to implement well. Because one of the things you're going to learn in that first iteration is, oh, this is an important thing that we want to measure. And we don't have a way to do that yet. So how do we start to build infrastructure for measuring whatever this important thing is? Right. Right.

[00:37:29] Usually in the first couple of instances, you can figure out proxy measures or other ways to measure. But so that's the first thing is that access to data becomes like a really first class problem. It's not uncommon for data to start to become a major priority, almost a concern or a constraint. And that's where product operations, I think, comes into play for your product teams. It's a very fast emerging field.

[00:37:59] And one of the major benefits, I believe, from product operations is that it makes data readily available. And it drives out the confusion, uncertainty and guesswork when you don't have reasonably precise data to measure your progress. Up next, Deepika also shares how measurement can sometimes be hard. And how it's really important to differentiate between OKRs that have strategic impact and ones that have immediately measurable impact.

[00:38:28] She outlines also an example of what Josh referred to as a proxy measure. Some of the goals are not measurable, right? Sometimes it's just not measurable. Like until I build four things, I'm not able to go and be able to truly measure the impact of it. And we're going through some of that right now in my current roadmap planning, right? Some of them are just core capabilities that have to be lit up, like in supply chain, for example, right? Like inventory management. Getting real-time inventory data is the most important thing.

[00:38:57] How do you measure the success of that, right? And if you harp too much on measuring the success of it, you're losing the point. So assigning the differences between strategic impact and measurable impact and improving hours saved or revenue or things like that, that has to be separated out and measured accurately.

[00:39:22] Otherwise, you know, it's like, oh, I can't do this until this feature is lit up. But the feature is not lit up. It's taken five months. Somebody has to measure why the velocity of it was so slow, right? And so how do you actually still manage to define it, whether it's an OKR or in any other way? But for strategic goals, have some kind of, you know, point system or something to tell you whether you're actually meeting the goal or are you stuck or are you unblocked or, you know, do you need unblocking and things like that.

[00:39:53] If you're a product team leader or an organization leader, you're probably self-checking whether you're leading and organizing and prioritizing for your team well. Josh is back and he has some advice for you. He's got three self-checks for leaders that you can run as a test against your OKRs or your team's priorities today. So there are a couple of kind of, I think, useful guidelines, heuristics, whatever you want to call them.

[00:40:24] Most teams should have one OKR. OK, one OKR, single objective, somewhere between three, four, maybe five key results associated with that one objective. And the idea is that an OKR represents your main area of focus for that time period. It's not 100% of the work you're going to do.

[00:40:51] So if you're writing an OKR for everything you're doing, you're doing it wrong, right? Yeah, we've got these other KPIs. Maybe we're responsible for some other part of the business. We've got numbers that we're measuring. But our OKR is our single focus. So that's one rule. The second is, is the objective inspiring? And is the objective expressing value that we're creating for our customer?

[00:41:20] We should talk about that word customer in a couple minutes. But is the objective inspiring and creating expressed in terms of where we can see the connection to customer value? And then the third big rule is that the key results, they must be measures of what we call outcomes, right?

[00:41:43] So measurable changes in human behavior that create value or who does what by how much, right? Holly's back and she has a caution for you. And she wants for everyone to be very intentional in differentiating between business and product OKRs and the downstream impact that has.

[00:42:05] One of the largest root causes for trouble is that people don't know that there's a difference between business OKRs and product OKRs. So business OKRs are about what we want. We want to increase revenue or we want to decrease costs or we want to streamline operations, things like that. And those results are usually money or saved money or decreased risk or something like that. Product OKRs are about our customers and our users.

[00:42:34] When it comes to things outside our four walls and we have to go find out, that requires product thinking and discovery and things like that that are more difficult to implement. In larger organizations, people don't look at their software as software products. And they don't organize that way either. So it's harder to get a product OKR because you have to say basically as a hypothesis.

[00:43:03] Somebody said, how do you know those are even true or achievable? And the fact is, like any of these things are hypotheses. But it's the idea that, you know, we bet that if we do something, a customer will do something or a user will do something. And that will result in something good for us. But in terms of making the data available to decision make, it costs money to implement some of the metrics and dashboards you need as a product manager to make good decisions.

[00:43:31] So I think product operations is also very helpful.

[00:43:41] Speaking of business versus product OKRs, Holly is back and she shares a story of how framing an initiative as key results and objectives that were relevant to the business unblocked the greenlighting of a multimillion dollar idea at one of her past clients. There was one that was a customer in, I mean, an employee enabling product. In fact, it was a call center.

[00:44:10] So for a company that did trading. And the problem was that somebody would call with money and they would say, I have $60,000 and I want to start, I want to deposit this and trade it. And the customer service representative would have to say, that's awesome. Deposit your money and when it clears in three days, you can start trading.

[00:44:32] So the OKR hypothesis statement was, we bet that if we create a way for that customer service rep to see the risk level of the customer who's calling in, like in line during that call, that we can allow that person who low risk to start trading immediately. And because at that time it was per trade, it was like $2.50 per trade, having somebody start trading immediately was real revenue for the company.

[00:45:01] So that was, you would say, we bet that if we do this, the customer service rep will be able to allow the customer. So they were the user and it took a while for this product to get funded by the company because it was an architect who was talking about it as a data lake. So he was talking about it in these very technical, I want to create a data lake where, you know, customer data comes in and then it goes out and it wasn't clear what the value was.

[00:45:30] So by creating an OKR, by really creating an OKR and figuring out about how much revenue do we think, like how many people do we think are low risk, that you could calculate real business results from that. And it ended up being a multimillion dollar idea. This is a topic that comes up often around tying OKRs to compensation or promotions.

[00:45:53] Holly is back and she warns us explicitly about avoiding the tying of OKRs to compensation or personnel evaluations. And when you say that, it means what leads to their promotions and compensations. Yeah, it's a real anti-pattern because, you know, to get products right, it's so collaborative. Yeah. Right. It's so collaborative across the organization.

[00:46:18] I have a slide about that in my deck where, you know, promotion is vertical, is usually vertical. And product thinking and good product practice is collaborative, collaborative across. And so now because of that, we're seeing the rise of chief product officer silos. The hot topic as it is, Josh is back and he adds to Holly's warning.

[00:46:46] Don't explicitly tie your OKRs to your compensation or promotions. You don't want to tie OKR performance to compensation, for example. Right. Because then that starts to introduce all kinds of financial incentives that mess up the spirit of the OKR,

[00:47:13] which is that this is a way for the team to genuinely learn and get better, as opposed to a way for the team to get paid. Right. And I'm not saying that getting paid is unimportant. Right. I'm just saying that those things influence each other in complex ways. For our final segment for this best of 2024 on OKRs, Josh is back and he talks about how him and his co-founder, Jeff Gothelf,

[00:47:42] further de-risk the efficacy of an OKR journey by combining it with the benefits of human-centered design or customer centricity. In the full episode with Josh, he also clarified his definition of customer here as whoever is consuming your work. So this could either be an external customer who's a consumer of your overall product and a customer of your business,

[00:48:10] or it could also be an internal customer, like, say, a developer on your team who consumes, for example, an API that you develop. Here's Josh. Customer centricity is one of those things that nobody's going to disagree with those words. Oh, no, we shouldn't be customer centric. Screw the customer, blah, blah, blah. You know, but the trick is in actually doing it. Right. What does it mean? And I think a lot of times we mistake that phrase. Oh, we're going to be nice to the customer.

[00:48:40] We're going to be polite. We're going to use please and thank you. Or we're going to, you know, paint the room a beautiful color or whatever. And like, I'm not saying those those things are unimportant, but like the core of customer centricity is what's the customer trying to do? Right. And how can we enable that behavior?

[00:49:02] How can we make it possible for them to do that thing in the way they want, in a way that's easier, better, faster, or in some way creates more value for them? And at the same time creates more value for us. And so with that lens, the sort of actionable piece of customer centricity is about customer behavior. What is the customer trying to do? And and that's where the name of the book comes from.

[00:49:30] Who does what by how much? Right. We say that in an OKR, your objective is a statement of the value you're trying to create for customers. And the KR is a measure of customer behavior or what we call an outcome. So who who's the person? What are they trying to do? Right. What's the what's the behavior that we're going to try and create? And by how much? What's the measure of that?

[00:49:56] So we're going to increase foot traffic in our stores or we're going to increase daily usage of our product. Or, you know, something specific and concrete and measurable. Thanks a lot for tuning in to our best of 2024 episode on OKRs at the Convergence podcast.

[00:50:19] If you found that valuable, please give the show a five star rating where you're watching or listening to it. It helps us out at the show a lot and also helps similar curious product folks like yourselves find us on the Internet. Stay tuned as we roll out more of our best of 2024 episodes that compile insights and stories about product roadmapping and prioritization,

[00:50:45] as well as on leadership and culture in product organizations. We'll be back next week with another episode. In the meantime, hit that subscribe button so you get notified as soon as the episode launches. Have a great week, folks. Thank you for joining me on the Convergence podcast today.

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