Building Customer-Centric Teams: Josh Seiden on OKRs and Agile

[00:00:00] [SPEAKER_00]: Welcome to the Convergence Podcast. I'm your host Ashok Sivanand.

[00:00:05] [SPEAKER_00]: The core of customer centricity is what's the customer trying to do? How can we make it possible

[00:00:11] [SPEAKER_00]: for them to do that thing in the way they want, in a way that's easier, better, faster,

[00:00:15] [SPEAKER_00]: or in some way creates more value for them? On this show, we'll deconstruct the best

[00:00:22] [SPEAKER_02]: practices, principles and the underlying philosophies behind the most engaged product

[00:00:26] [SPEAKER_02]: teams who ship the most successful products.

[00:00:36] [SPEAKER_02]: This is what teams are made of. Welcome back, folks! On this episode, we are joined by Josh Seiden.

[00:00:43] [SPEAKER_02]: Josh is a renowned product expert and him and I share passions in how to build delightful products

[00:00:49] [SPEAKER_02]: as well as how to enable teams to be more customer-centric, more effective,

[00:00:53] [SPEAKER_02]: more collaborative and more nimble. Josh has authored or co-authored a number of books that

[00:00:59] [SPEAKER_02]: us lean, agile product nerds are likely familiar with. Books like Lean UX, Sense and Respond,

[00:01:07] [SPEAKER_02]: Outcomes Over Outputs, and his latest book Who Does What By How Much? I checked it out and I

[00:01:14] [SPEAKER_02]: found it to be delightfully rooted around customer centric outcomes and human behavior

[00:01:18] [SPEAKER_02]: when implementing OKRs. Josh developed a lot of these opinions when working in product management,

[00:01:25] [SPEAKER_02]: product design and in product coaching. He started a company called Neo that was acquired by Pivotal

[00:01:31] [SPEAKER_02]: Labs and prior to that he worked in design for The Allen Cooper who is known as the

[00:01:37] [SPEAKER_02]: father of Visual Basic and the author of the product design mandatory reading about face.

[00:01:44] [SPEAKER_02]: He was also on the team that built the Kensington Turbo mouse. You might remember the big red billiard

[00:01:49] [SPEAKER_02]: ball and if you're like me, you might have salivated over this while window shopping or may even

[00:01:55] [SPEAKER_02]: been lucky enough to own one. Josh now runs a training business with his co-author Jeff

[00:02:02] [SPEAKER_02]: Goldfelf called Sense and Respond that shares the name with the second book that they wrote

[00:02:07] [SPEAKER_02]: together. Today's discussion largely revolves around their latest book and a more customer centric

[00:02:14] [SPEAKER_02]: and human centric approach to winning at OKRs. OKRs or objectives and key results are a goal

[00:02:22] [SPEAKER_02]: setting framework that was introduced by Andy Grove at Intel in the 1970s and then really

[00:02:28] [SPEAKER_02]: popularized by John Doar after he introduced them at Google in the late 90s. We get to

[00:02:35] [SPEAKER_02]: hear Josh's perspective on things like what needs to be true at your organization to gain the

[00:02:41] [SPEAKER_02]: promise benefits of OKRs? What are the best practices in writing the O's and the KRs and

[00:02:47] [SPEAKER_02]: how do we best go about leading teams to gain disciplined execution of the OKRs to ultimately

[00:02:56] [SPEAKER_02]: serve your business goals? Subscribe to the podcast to get future episodes as soon as

[00:03:02] [SPEAKER_02]: you find this helpful. Give the podcast a five star rating on your podcast app

[00:03:06] [SPEAKER_02]: or hit that like button on YouTube for the OKR nerds out there. Make sure to check out

[00:03:12] [SPEAKER_02]: also our episodes with Deepika Yeragunta from June 11, 2024, as well as the one with Holly

[00:03:19] [SPEAKER_02]: Bilawa in the Agilent Beyond episode from June 24, 2024. Here's Josh.

[00:03:30] [SPEAKER_02]: Today, a lot of what we're going to be talking about is OKRs because of the book you've written

[00:03:36] [SPEAKER_02]: and no doubt a deep amount of expertise as well as introspection you've got to do about OKRs.

[00:03:43] [SPEAKER_02]: And maybe let's start at a really high level. Why do you like OKRs compared to a variety of

[00:03:49] [SPEAKER_00]: goal setting frameworks that are out there? So I think that a lot of goal setting frameworks

[00:03:57] [SPEAKER_00]: are really like planning frameworks in disguise. They may lay out some sort of high level vision,

[00:04:05] [SPEAKER_00]: but then it's really about what's our plan to get there. And OKRs are a little bit different.

[00:04:10] [SPEAKER_00]: OKRs kind of they capture strategy. They say here's our strategic vision.

[00:04:17] [SPEAKER_00]: And then that's the objective, right? Here's our strategic goal. And then the key result

[00:04:25] [SPEAKER_00]: part of OKR is the measurement. How do we know we've gotten there? And what's really cool about

[00:04:33] [SPEAKER_00]: that is that it asks a question, right? It says here's our goal. This is what we're trying to do,

[00:04:40] [SPEAKER_00]: but it doesn't answer it. It doesn't say here's what we're going to build or here's what we're

[00:04:44] [SPEAKER_00]: going to make. And if you've spent any amount of time in product development or technology,

[00:04:52] [SPEAKER_00]: you know that a lot of the ideas that we have at the beginning of a project or an initiative

[00:04:58] [SPEAKER_00]: even for super smart teams, a lot of those ideas don't work. And so when our goals are set in terms

[00:05:07] [SPEAKER_00]: of we're going to build a thing, OK, maybe we build it, maybe we don't, but there's no

[00:05:14] [SPEAKER_00]: connection to whether that thing is valuable. And OKRs really focus the story on value.

[00:05:21] [SPEAKER_02]: There's no shortage of books or even coaches now on OKRs. And for whatever reason, you decided to

[00:05:28] [SPEAKER_02]: add one more book to the mix. And so what inspired that? What did you feel like was different

[00:05:36] [SPEAKER_00]: about your take on it? Yeah, you know, this was a question that, so the book, my co-author

[00:05:44] [SPEAKER_00]: on the book is Jeff Gottelf and Jeff and I have written three books together. This is our third.

[00:05:49] [SPEAKER_00]: And when we started talking about this one, we had some hard conversations about whether or not

[00:05:56] [SPEAKER_00]: the world needed another OKR book because there's a bunch of really good ones out there.

[00:06:04] [SPEAKER_00]: And if we were going to write an OKR book, what was our point of view?

[00:06:08] [SPEAKER_00]: And as we started to look at it, we realized that the thing that we've been doing and teaching

[00:06:14] [SPEAKER_00]: was not really represented in these other books. And that specific thing was this idea of

[00:06:21] [SPEAKER_00]: customer centricity. How do you put human behavior? Or we can talk more about this

[00:06:28] [SPEAKER_00]: idea of outcomes, but how do we put that customer-centric outcome at the center of OKRs?

[00:06:36] [SPEAKER_00]: And so I think that's really what we felt like the world of OKR books was missing and

[00:06:45] [SPEAKER_00]: created an opportunity for us to add something to the conversation.

[00:06:49] [SPEAKER_02]: That makes a lot of sense. No argument there. I've worked at Pivotal Labs myself and got a

[00:06:56] [SPEAKER_02]: healthy dose of the importance of customer centricity, human centricity, and regretted

[00:07:02] [SPEAKER_02]: a lot of decisions I'd made before that job that didn't necessarily look at things in that

[00:07:07] [SPEAKER_02]: perspective. So no argument about adding more customer centricity to everything. That's one

[00:07:13] [SPEAKER_02]: thing that I'm happy to paint with a broad brush. When it comes to actually getting into

[00:07:19] [SPEAKER_02]: using the framework, tell us a little bit more about how that customer centricity comes into

[00:07:23] [SPEAKER_02]: play around defining it and then managing to the OKRs here. Yeah. I mean, customer

[00:07:29] [SPEAKER_00]: centricity is one of those things that nobody's going to disagree with those words. Oh, no, we

[00:07:35] [SPEAKER_00]: shouldn't be customer centric. Screw the customer, blah, blah, blah. But the trick is in actually

[00:07:41] [SPEAKER_00]: doing it. What does it mean? And I think a lot of times we mistake that phrase, oh, we're going

[00:07:47] [SPEAKER_00]: to be nice to the customer. We're going to be polite. We're going to use please and thank you. Or

[00:07:52] [SPEAKER_00]: we're going to paint the room a beautiful color or whatever. And I'm not saying those

[00:07:57] [SPEAKER_00]: those things are unimportant, but like the core of customer centricity is what's the customer

[00:08:04] [SPEAKER_00]: trying to do? Right. And how can we enable that behavior? How can we make it possible for them

[00:08:12] [SPEAKER_00]: to do that thing in the way they want in a way that's easier, better, faster,

[00:08:18] [SPEAKER_00]: or in some way creates more value for them and at the same time creates more value for us.

[00:08:24] [SPEAKER_00]: And so with that lens, the sort of actionable piece of customer centricity

[00:08:30] [SPEAKER_00]: is about customer behavior. What is the customer trying to do?

[00:08:36] [SPEAKER_00]: And and that's where the name of the book comes from. Right. Who does what by how much?

[00:08:42] [SPEAKER_00]: Right. We say that in an OKR, your objective is a statement of the value you're trying to

[00:08:48] [SPEAKER_00]: create for customers. And the KR is a measure of customer behavior or what we call an outcome.

[00:08:55] [SPEAKER_00]: So who who's the person? What are they trying to do? Right. What's the what's the behavior that

[00:09:02] [SPEAKER_00]: we're going to try and create? And by how much what's the measure of that? So we're going to

[00:09:06] [SPEAKER_00]: increase foot traffic in our stores, or we're going to increase daily usage of our product

[00:09:11] [SPEAKER_00]: or, you know, something specific and concrete and measurable.

[00:09:16] [SPEAKER_02]: I love that. I am. It also reminds me of the word empowerment. And I don't know if you've ever

[00:09:23] [SPEAKER_02]: familiarized yourself with the work of Tom Foster in his books around it's around people

[00:09:27] [SPEAKER_02]: management largely and organizational development. And I was in a workshop with him and he asked,

[00:09:33] [SPEAKER_02]: Hey, what is it that great leaders can do for their people? What is it that your people

[00:09:36] [SPEAKER_02]: really want? And I said, empowerment. And it's almost like he scapegoated me at this workshop

[00:09:41] [SPEAKER_02]: where he's like, what does that mean exactly? And and you know, there was a lot of

[00:09:49] [SPEAKER_02]: nebulous sort of follow up that I had as well as the audience had. And he said,

[00:09:53] [SPEAKER_02]: This is all so hard to understand. You barely understand it yourself. It's more of a feeling

[00:09:57] [SPEAKER_02]: than something that can be measured. And ultimately, there are two things that

[00:10:02] [SPEAKER_02]: you want. You want authority and accountability. You want to make sure folks know what kind of box

[00:10:09] [SPEAKER_02]: they're allowed to play in and do whatever they want. And then the second part that you're talking

[00:10:13] [SPEAKER_02]: about, which is what by when. And those are the two things that add up to this feeling of

[00:10:19] [SPEAKER_02]: empowerment. And at the same time, way more actionable, measurable as a leader, you can check

[00:10:24] [SPEAKER_02]: if you're you're clarifying accountability and and authority that way. And I love it. It

[00:10:30] [SPEAKER_02]: seems very aligned there. So speaking of the organization,

[00:10:36] [SPEAKER_02]: there are certainly a number of folks maybe similar to agile OKR is a little bit newer,

[00:10:41] [SPEAKER_02]: maybe. But what I see similar is a lot of folks look around and give it some sort of shot.

[00:10:49] [SPEAKER_02]: And to date, in my experience, it's a minority of companies that are really

[00:10:53] [SPEAKER_02]: gaining the most out of OKRs and seeing a team that's more productive, more likely to hit

[00:10:59] [SPEAKER_02]: their goals, being more predictive. So what needs to be true in an organization? I think before

[00:11:05] [SPEAKER_00]: OKRs can have a chance at succeeding. I almost want to start like before the organization

[00:11:12] [SPEAKER_00]: and and just talk about the what we've learned about successful adoptions of OKRs, which is that

[00:11:23] [SPEAKER_00]: you don't know one gets it right out of the box. Right? We talked to lots and lots of companies

[00:11:29] [SPEAKER_00]: in our research for this book, and everybody reported a similar experience, which is that

[00:11:35] [SPEAKER_00]: the first implementation, you know, wasn't as successful as they hoped. Now there were usually

[00:11:44] [SPEAKER_00]: germs, seeds of something good there. Right? For example, we talked to Infobip.

[00:11:51] [SPEAKER_00]: They've been iterating on their OKR process for, you know, more than five years. Right?

[00:11:59] [SPEAKER_00]: And every year they may they learn something and they make a change and they learn something

[00:12:03] [SPEAKER_00]: and they make a change. And this is a pattern that we saw over and over again. So like one of

[00:12:09] [SPEAKER_00]: the things that has to be true at the organizational level is just starting with

[00:12:13] [SPEAKER_00]: understanding that it's a journey and it's going to take time to get right. And so if you know,

[00:12:21] [SPEAKER_00]: if your organization is an organization that likes and expects and only tolerates sort of

[00:12:28] [SPEAKER_00]: silver bullet kind of thinking, this is not for you. And from a cultural standpoint,

[00:12:35] [SPEAKER_02]: if there are leaders out there that are maybe worried about it, they want to change,

[00:12:39] [SPEAKER_02]: they don't know what to get started or know that, hey, you know what, I'm moving away from

[00:12:43] [SPEAKER_02]: the silver bullet thinking, what's the advice to the leaders there to foster a better environment

[00:12:47] [SPEAKER_02]: where this kind of journey or iterative approach would succeed? So there's some advice that we

[00:12:55] [SPEAKER_00]: give to in the book about getting started. The first is understand your why, like start with

[00:13:02] [SPEAKER_00]: why. Why are we implementing OKRs? There are a lot of things that OKRs can do for an

[00:13:08] [SPEAKER_00]: organization and sort of the way that you, the goal there is going to influence the way you

[00:13:16] [SPEAKER_00]: implement them. And being able to tell a story about the why is really important for leaders.

[00:13:24] [SPEAKER_00]: So being clear, are we trying to create more accountability? Are we trying to create more

[00:13:28] [SPEAKER_00]: transparency? Are we trying to create more alignment? Like what's the reason for the tool?

[00:13:36] [SPEAKER_00]: You know, that's the first thing. The second thing is start small and start small with a kind of a

[00:13:42] [SPEAKER_00]: stacked deck, right? So we're not going to roll this out to the entire organization in the first

[00:13:51] [SPEAKER_00]: iteration. What we're going to do is we're going to start with a pilot team or a pilot group,

[00:13:57] [SPEAKER_00]: right? A small number of highly capable people who like change because our goal is to succeed,

[00:14:07] [SPEAKER_00]: right? And so you want to sort of stack the deck and pick places where you're likely to be able

[00:14:13] [SPEAKER_00]: to get wins because you're certainly going to find the obstacles. So you need to get some wins along

[00:14:17] [SPEAKER_00]: the way. And so start with why start small, stack the deck and then be prepared to sort of

[00:14:24] [SPEAKER_02]: iterate with their process as you go. I love to start small and also stacking the deck.

[00:14:31] [SPEAKER_02]: You know, as well as I do during our work at Pivotal doing kind of large scale enterprise

[00:14:36] [SPEAKER_02]: transformation, there were certainly executives that we worked with that would say, no,

[00:14:39] [SPEAKER_02]: this is our worst team. If you can fix them, you can fix anyone. And we'd have to kind of work

[00:14:45] [SPEAKER_02]: with them around. No, why don't you help us work with your best team that you don't think

[00:14:48] [SPEAKER_02]: can't do any better? And if you can make them better, not only do you prove out that this can

[00:14:54] [SPEAKER_02]: work, but also you will prove out to everybody else in your organization that it works in house

[00:14:59] [SPEAKER_02]: so that everyone else has some level of, you know, call itself efficacy or internal confidence

[00:15:04] [SPEAKER_02]: that this isn't just something for LinkedIn and Google and Facebook. It's something that

[00:15:08] [SPEAKER_02]: can happen right here at our larger company that isn't necessarily a tech company, right?

[00:15:17] [SPEAKER_02]: Fostering and engage product organization and aligning them with the principles around Lean,

[00:15:23] [SPEAKER_02]: Human Center design and Agile will more than likely lead to successful business outcomes for

[00:15:29] [SPEAKER_02]: your organization. But getting started or getting unblocked can be hard. This podcast is brought

[00:15:34] [SPEAKER_02]: to you by the player coaches over at integral. They help ambitious companies like you build

[00:15:40] [SPEAKER_02]: amazing product teams and ship products in artificial intelligence, cloud, web and mobile.

[00:15:48] [SPEAKER_02]: Listeners to the podcast can head on over to integral.io slash convergence and get

[00:15:54] [SPEAKER_02]: a free product success lab during this session. The integral team will facilitate

[00:16:00] [SPEAKER_02]: a problem solving exercise that gives you clarity and confidence to solve a product design or

[00:16:07] [SPEAKER_02]: engineering problem. That's integral.io slash convergence. Now back to the show.

[00:16:17] [SPEAKER_02]: Tell us a little bit about your background and how you got to where you are.

[00:16:22] [SPEAKER_00]: I've spent most of my career working in technology and product development

[00:16:29] [SPEAKER_00]: as either a product manager or a designer or a coach working with product teams.

[00:16:39] [SPEAKER_00]: My interest is really in how do we put great stuff in the world and how can teams be more

[00:16:46] [SPEAKER_00]: effective, more collaborative, more agile, more aligned to strategy and more customer

[00:16:54] [SPEAKER_02]: and user centric. Tell us about the different roles or any companies we may have heard of along

[00:16:59] [SPEAKER_00]: the way that you got to work at. If you go way back, the first company I worked at was a company

[00:17:04] [SPEAKER_00]: called Kensington. I worked on a product called TurboMouse. We made the best trackball in the

[00:17:11] [SPEAKER_00]: world as far as I'm concerned. That was a cool intro to the industry because I worked on

[00:17:18] [SPEAKER_00]: software and hardware and lots of fun stuff. I worked for my first real design job was for a guy

[00:17:26] [SPEAKER_00]: named Alan Cooper who had, I think, a pretty groundbreaking software design studio in Silicon

[00:17:32] [SPEAKER_00]: Valley in the 90s and wrote a book called About Face which I think every software designer

[00:17:37] [SPEAKER_00]: should know. I moved to New York. I worked on Wall Street for a while. I opened a company

[00:17:44] [SPEAKER_00]: called Neo. It was a studio that built digital products and which ultimately we sold to pivotal

[00:17:51] [SPEAKER_00]: labs. Let's say I'm a fellow traveler with the world of pivotal labs. Going back to your question

[00:18:00] [SPEAKER_02]: about the why, and I'm going to maybe have you try and put your designer hat on and do a little

[00:18:06] [SPEAKER_02]: bit of qualitative measurement. Things like accountability are maybe hard to measure.

[00:18:15] [SPEAKER_02]: Looking back, maybe a couple of quarters of doing OKRs, if we want to say, hey, is this

[00:18:20] [SPEAKER_02]: achieving the thing? Is there a more sense of accountability? What's a way that if you were

[00:18:26] [SPEAKER_02]: running a team you would try and do a comparison to give yourself confidence before you give

[00:18:36] [SPEAKER_00]: yourself confidence? What happens with goal setting is we can come together in a room and we can

[00:18:43] [SPEAKER_00]: sit like with your story about empowerment. We want to create an empowered team or we want

[00:18:50] [SPEAKER_00]: to create more accountability in the organization. Again, you can't argue with those things,

[00:18:55] [SPEAKER_00]: but how do you make them real? One way that you can make them real is you can say

[00:19:02] [SPEAKER_00]: when our teams are more accountable, what will they be doing differently?

[00:19:07] [SPEAKER_00]: What are the behaviors associated with highly accountable teams? Well, maybe they proactively

[00:19:16] [SPEAKER_00]: check in every week. Maybe they set milestones and hit them. Whatever that behavior is.

[00:19:26] [SPEAKER_00]: When we say we want a more accountable organization,

[00:19:32] [SPEAKER_00]: or when we use OKRs, we're going to be more accountable. What we do with our clients is we

[00:19:38] [SPEAKER_00]: say, okay, we're going to write an OKR for our OKR implementation that will tell us that

[00:19:47] [SPEAKER_00]: we're actually making progress towards our organizational goals. Then we're measuring

[00:19:53] [SPEAKER_00]: the behavior that we're seeing in the organization to tell us whether we're actually making progress

[00:20:01] [SPEAKER_02]: on this stuff. Yeah, 100%. There's that meta element of getting better at getting better

[00:20:09] [SPEAKER_02]: that comes into play here where you can maybe learn a little bit more about OKRs by having an

[00:20:16] [SPEAKER_02]: OKR for the implementation. On the other hand, it could also get really convoluted and over

[00:20:22] [SPEAKER_02]: complicated because you've got two layers of abstraction you're working on. What's some best

[00:20:26] [SPEAKER_02]: practices where if you were to go in and read a team's OKRs or you're reading your own,

[00:20:31] [SPEAKER_02]: you feel like, hey, these are well-defined, well-written, both on the objective as well

[00:20:36] [SPEAKER_02]: as the key results. Then what are some maybe cautions around being overly simplistic or

[00:20:43] [SPEAKER_02]: more likely, I think, around our technical folks being overly complicated around going about it?

[00:20:51] [SPEAKER_00]: So there are a couple of useful guidelines, heuristics, whatever you want to call them.

[00:21:00] [SPEAKER_00]: Most teams should have one OKR. One OKR, single objective somewhere between

[00:21:09] [SPEAKER_00]: three, four, maybe five key results associated with that one objective. The idea is that

[00:21:18] [SPEAKER_00]: an OKR represents your main area of focus for that time period. It's not 100% of the work you're

[00:21:27] [SPEAKER_00]: going to do, so if you're writing an OKR for everything you're doing, you're doing it wrong.

[00:21:31] [SPEAKER_00]: Yeah, we've got these other KPIs, maybe we're responsible for some other part of the business.

[00:21:38] [SPEAKER_00]: We've got numbers that we're measuring, but our OKR is our single focus.

[00:21:46] [SPEAKER_00]: So that's one rule. The second is, is the objective inspiring and is the objective expressing value

[00:21:53] [SPEAKER_00]: that we're creating for our customer? We should talk about that word customer in a couple minutes, but

[00:22:01] [SPEAKER_00]: is the objective inspiring and creating expressed in terms of where we can see the

[00:22:08] [SPEAKER_00]: connection to customer value? And then the third big rule is that the key

[00:22:13] [SPEAKER_00]: results, they must be measures of what we call outcomes. So measurable changes in human behavior

[00:22:23] [SPEAKER_00]: that create value or who does what by how much? So that's the first line of sort of self-check

[00:22:34] [SPEAKER_00]: that we recommend is just kind of looking at those three rules. And that's hard.

[00:22:41] [SPEAKER_00]: Like that by itself, if you get that right, that's a hard starting point.

[00:22:49] [SPEAKER_02]: So before we dig deeper, can you make this just a little bit more tangible with some examples of

[00:22:58] [SPEAKER_02]: inspiring, not inspiring? Having more than three to five, that one's easier to understand

[00:23:03] [SPEAKER_02]: in terms of key results to an objective ratio. So do you have some examples of

[00:23:08] [SPEAKER_02]: good versus bad on any of those or better versus not better?

[00:23:13] [SPEAKER_00]: I'm going to make up an OKR example for you here, but this is a story about Tesla.

[00:23:19] [SPEAKER_00]: And so OKRs express strategy. And so strategy is, we have an obstacle to overcome,

[00:23:27] [SPEAKER_00]: how are we going to overcome it? And so in the earliest days of Tesla,

[00:23:31] [SPEAKER_00]: one of the obstacles that they faced is that electric cars were not perceived as sexy.

[00:23:36] [SPEAKER_00]: They were super uncool. They were like nerdy, slow, underperforming vehicles.

[00:23:44] [SPEAKER_00]: And so how do you address that challenge? Well, the first car that Tesla worked on was their Roadster.

[00:23:52] [SPEAKER_00]: They didn't expect to sell that car, certainly not in any high volume. It was not a high

[00:23:57] [SPEAKER_00]: volume production car. It was a car aimed directly at the editors of car magazines.

[00:24:04] [SPEAKER_00]: And what they wanted was to change the public perception by having car magazine editors

[00:24:09] [SPEAKER_00]: write enthusiastic stories about how cool this electric Roadster was.

[00:24:15] [SPEAKER_00]: So the objective then, the objective might be something inspiring like make electric cars cool.

[00:24:25] [SPEAKER_00]: And so what's the key result? And it doesn't say build a Roadster. The objective isn't

[00:24:33] [SPEAKER_00]: build a Roadster. And the key result is also not build a Roadster. The objective might be

[00:24:39] [SPEAKER_00]: who does what by how much, get car magazine editors and enthusiasts writing enthusiastic

[00:24:47] [SPEAKER_00]: articles about our concept cars. In all of the major magazines, at least once per quarter,

[00:24:58] [SPEAKER_00]: have car magazine editors feature our Roadster on the cover of top 10 car magazines,

[00:25:06] [SPEAKER_00]: five of the top 10 car magazines this year. So objective, inspiring, make electric

[00:25:14] [SPEAKER_00]: transportation cool. Key results, who magazine editors does what?

[00:25:23] [SPEAKER_00]: Write exciting articles about our car by how much five out of the top 10 magazines cover us

[00:25:32] [SPEAKER_02]: enthusiastically. A very obvious assumption there is that they knew amongst the tens of thousands

[00:25:41] [SPEAKER_02]: of things that were really hard for Tesla to do, that making it cool was for whatever reason

[00:25:48] [SPEAKER_02]: something that they prioritized that quarter or those six months or whatever. And there's some

[00:25:53] [SPEAKER_02]: level of prioritization there at a business level that provides the stage for everything else to

[00:26:01] [SPEAKER_02]: kind of flow a little bit more smooth. And you're not probably worked at companies that don't have

[00:26:08] [SPEAKER_02]: that articulated at the same level of Tesla. So I'm curious about your opinions around articulating

[00:26:13] [SPEAKER_00]: strategy. Yeah, well, you know, so it's an interesting problem when you're writing about

[00:26:21] [SPEAKER_00]: OKRs because OKRs really don't work without a strategy, right? Now you may have a strategy

[00:26:28] [SPEAKER_00]: that you haven't articulated well, and then OKRs can help you articulate it. But

[00:26:34] [SPEAKER_00]: I've worked with companies that really wanted to do OKRs. They really thought,

[00:26:43] [SPEAKER_00]: well, we're really having trouble delivering from quarter to quarter on our commitments.

[00:26:49] [SPEAKER_00]: And we really think OKRs are going to help us deliver a quarter to quarter.

[00:26:54] [SPEAKER_00]: And so when I started working with them, my first question with this particular company

[00:26:59] [SPEAKER_00]: that I'm thinking of is, OK, let's articulate the strategy so that we can focus on only the

[00:27:06] [SPEAKER_00]: most important things and we can let all these other commitments kind of move into second priority.

[00:27:12] [SPEAKER_00]: And what we discovered was that actually they didn't have a well articulated strategy.

[00:27:18] [SPEAKER_00]: They didn't have a strategy. And so what their problem was not in their goal setting

[00:27:27] [SPEAKER_00]: framework, their problem was they were always thrashing because somebody was always barging

[00:27:32] [SPEAKER_00]: into the room saying, we need to do X and we need to do Y and we need to do Z.

[00:27:38] [SPEAKER_00]: And they couldn't agree on their priorities. And if you can't do that, you can't write OKRs.

[00:27:48] [SPEAKER_00]: So that starting point of being able to have strategic clarity and strategic discipline

[00:27:54] [SPEAKER_00]: OKRs can help you maintain the discipline, but you need the clarity first.

[00:27:59] [SPEAKER_02]: And do you think in terms of coming up with that clarity and strategy, there's maybe

[00:28:05] [SPEAKER_02]: some level of overcomplication that comes into play when most of the leaders kind of

[00:28:11] [SPEAKER_02]: tend to know what's needed?

[00:28:13] [SPEAKER_00]: Absolutely. I mean, strategy is one of those words I said earlier today with a group

[00:28:20] [SPEAKER_00]: of people I was working with. Strategy is one of those words that has its own walk on music.

[00:28:27] [SPEAKER_00]: Oh, it's strategy is here. You know what I mean? Whereas it's just like it's strategy

[00:28:33] [SPEAKER_00]: is an approach to solving a problem. So let's figure out our approach. What's the problem

[00:28:37] [SPEAKER_00]: and how are we approaching it?

[00:28:43] [SPEAKER_00]: And so, yeah, I think strategy really can be as simple as what's our biggest obstacle

[00:28:52] [SPEAKER_00]: and what's our policy towards approaching that obstacle? Right. The Tesla story,

[00:28:59] [SPEAKER_00]: we're going to make electric cars sexy. Their next car was the luxury model, Model S.

[00:29:06] [SPEAKER_00]: We're going to make them sexy. Then we're going to make them appealing to the market by selling a high-end

[00:29:14] [SPEAKER_00]: car that only a few consumers can afford. And then we're going to introduce the mass market.

[00:29:22] [SPEAKER_00]: And then follow that with a broader appeal, widen out the appeal, fill out the model line.

[00:29:29] [SPEAKER_00]: But first make it sexy, then make it something that consumers offer, something

[00:29:34] [SPEAKER_00]: that high-end consumers want to buy to reinforce that message and then address the mass market.

[00:29:39] [SPEAKER_00]: That's not a complicated notion, right? I mean, look, they have a lot of other problems.

[00:29:43] [SPEAKER_00]: They had a lot of other problems and they remain a lot of other problems to solving.

[00:29:48] [SPEAKER_00]: But in terms of a strategic statement, it's pretty straightforward.

[00:29:55] [SPEAKER_02]: Yeah. And I think we've also seen time and time again that if we can get everyone

[00:30:00] [SPEAKER_02]: present in a room, ideally in person, and it's well-facilitated and there's the right

[00:30:06] [SPEAKER_02]: sort of energy or vulnerability in the room, it's 60 minutes with some sticky notes and

[00:30:13] [SPEAKER_02]: clever facilitation. And everyone's going to agree with the top three things that need

[00:30:17] [SPEAKER_02]: to be solved in the next three to six months are across the organization,

[00:30:21] [SPEAKER_02]: a versus needing to go do a study and another study and take 18 months to figure out something

[00:30:25] [SPEAKER_02]: that is not going to give you any more information than the first 60 minutes of that expedition.

[00:30:32] [SPEAKER_02]: And speaking of leadership, I think different leaders have different ways in terms of how

[00:30:37] [SPEAKER_02]: they delegate. And I think you've had some experience with some leaders who have had to

[00:30:43] [SPEAKER_02]: figure it out or learn the hard way about what they're good at and what they need their

[00:30:47] [SPEAKER_02]: teams to be good at and the juice in between. So tell us about that one.

[00:30:51] [SPEAKER_00]: Yeah. I mean, you know, the, I think one of the ways, right, we were just talking about how strategy,

[00:30:57] [SPEAKER_00]: when you've got a strategy, it's people can align to it because it feels really simple and clear.

[00:31:04] [SPEAKER_00]: And I think a good leader makes things simple and clear. But I think one of the mistakes that

[00:31:10] [SPEAKER_00]: I've seen leaders make sometimes is they make things simple and clear the wrong way. And so

[00:31:15] [SPEAKER_00]: instead of creating a strategy and say, now go be fruitful and multiply or whatever,

[00:31:22] [SPEAKER_00]: they give a direction like build this product. All we need to do is build this product and once

[00:31:29] [SPEAKER_00]: we've built it, we'll win. And so you'll notice like in the Tesla story, that story was about

[00:31:35] [SPEAKER_00]: the goal there was to make electric cars sexy. It wasn't to build a roadster. Roadster was

[00:31:40] [SPEAKER_00]: a means to an end. I worked on Wall Street once for a really successful CEO. He was a serial

[00:31:48] [SPEAKER_00]: entrepreneur with three successful companies behind him. And our, the business I was working in

[00:31:58] [SPEAKER_00]: served stock traders at institutional money managers. So mutual funds and things like that.

[00:32:07] [SPEAKER_00]: And so we need stock traders really well. And we wanted to diversify our product offering.

[00:32:13] [SPEAKER_00]: And so stock traders work with portfolio managers, portfolio managers make the investment

[00:32:18] [SPEAKER_00]: decisions, stock traders execute them basically. And we didn't really know portfolio managers

[00:32:26] [SPEAKER_00]: very well at all. And our CEO had an idea for a product for portfolio managers. And

[00:32:33] [SPEAKER_00]: gave my team, I was running design at this company at the time, gave my team the mandate to go design

[00:32:38] [SPEAKER_00]: and then lead the construction of this product. And we went out and we started talking to

[00:32:43] [SPEAKER_00]: portfolio managers and we discovered that none of them wanted this product.

[00:32:49] [SPEAKER_00]: And so the mission to diversify our product offering was a good one,

[00:32:55] [SPEAKER_00]: portfolio managers, it's an interesting audience for us, go out and make this thing for

[00:32:59] [SPEAKER_00]: portfolio managers. It was the wrong idea. And so we had to bring that learning back into the

[00:33:05] [SPEAKER_00]: organization and bring it back to the CEO and say, they don't want it. And when we were able

[00:33:15] [SPEAKER_00]: to create better conversations between the CEO and the other teams in the company

[00:33:20] [SPEAKER_00]: and these portfolio managers, we were able to come up with a product that they really did want

[00:33:26] [SPEAKER_00]: that was similar to what the CEO wanted, but it was significantly different. And so

[00:33:31] [SPEAKER_00]: what's the point of this story? The point of this story is give the team a problem to solve,

[00:33:37] [SPEAKER_00]: which is create a product that portfolio managers will love rather than build this product.

[00:33:48] [SPEAKER_00]: And in the first case, that problem to solve, it gives the team the opportunity to engage

[00:33:54] [SPEAKER_00]: and find the right answer, rather than just embarking on an execution track that is going to be

[00:34:02] [SPEAKER_00]: expensive, time consuming, and will ultimately fail. And that notion of leadership highlighting

[00:34:09] [SPEAKER_02]: the problems and then the team ideating and validating and iterating on the solutions

[00:34:15] [SPEAKER_02]: sounds kind of similar to the, like maybe parallel to who writes the objectives and

[00:34:22] [SPEAKER_02]: writes the key results. And between the teams and the leaders, how do you like that all divvied up?

[00:34:30] [SPEAKER_00]: Yeah. Well, I think a good organization, you've got OKRs at various,

[00:34:39] [SPEAKER_00]: what you sometimes hear described of as flight levels in the organization. So you've got

[00:34:43] [SPEAKER_00]: organization wide OKRs. And then you have OKRs at levels below that work groups and teams.

[00:34:52] [SPEAKER_00]: And so it's important that the OKRs kind of be connected. So you want the team to have an OKR

[00:35:00] [SPEAKER_00]: that supports the work groups OKR and the work groups OKR should support the organizations OKR.

[00:35:06] [SPEAKER_00]: The way they get written is through conversation top up and bottom down, top down and bottom up.

[00:35:15] [SPEAKER_00]: You know, I think in the story that I just told about this Wall Street

[00:35:22] [SPEAKER_00]: example, the CEO was right. We needed to diversify our product offerings. And he was

[00:35:32] [SPEAKER_00]: right that that was a good market. But he was not close to that market personally.

[00:35:39] [SPEAKER_00]: And so his this and that's not because he was bad at his job. It's because as a CEO running

[00:35:46] [SPEAKER_00]: this business, it's not his job to be close to every customer and every user. Right? You have

[00:35:53] [SPEAKER_00]: people in your organization as the organization grows, whose job it is to be those customer

[00:35:58] [SPEAKER_00]: experts. And so his expert is how do I make the organization successful? And so he needed

[00:36:04] [SPEAKER_00]: to have that conversation with the people who were doing the field work, who were developing that

[00:36:11] [SPEAKER_00]: that daily expertise in customer needs and that and they needed the blessing and support of the

[00:36:19] [SPEAKER_00]: CEO. So who writes them? You asked me, you write them in conversation up and down and you rely on

[00:36:26] [SPEAKER_00]: the fact that there's important clarity about different dimensions of the business at every

[00:36:33] [SPEAKER_02]: level. So that's that's really helpful around that conversation across the organization to make

[00:36:40] [SPEAKER_02]: sure that they're that you've got them well written and that the right folks are writing

[00:36:45] [SPEAKER_02]: their parts. Part of this also is around measuring progress, right? I can different

[00:36:51] [SPEAKER_02]: organizations, I think have different habits around how often they check in to see things

[00:36:56] [SPEAKER_02]: are I mean, more than anything else is it on track or off track for this quarter or

[00:37:01] [SPEAKER_02]: this amount of time that we've set this OKR for? And what's your preference there if you were to go

[00:37:08] [SPEAKER_02]: in and help someone with measuring the progress of their OKRs? So, you know, in the book,

[00:37:15] [SPEAKER_00]: we talk about OKRs being three things. We say they are a goal setting framework.

[00:37:20] [SPEAKER_00]: And so we've been talking about that, right? Objective and key result.

[00:37:25] [SPEAKER_00]: The second thing they are is that they're a way of working a process.

[00:37:30] [SPEAKER_00]: And you often hear this process called the OKR cycle. We can talk about the third thing in a

[00:37:36] [SPEAKER_00]: moment, too, which is that OKRs also are a culture. But your question is really about that process

[00:37:43] [SPEAKER_00]: of using OKRs. And so there's a pretty well established rhythm for using OKRs. You know,

[00:37:50] [SPEAKER_00]: you set OKRs at an organizational level annually. You check in quarterly, you check in monthly,

[00:38:00] [SPEAKER_00]: and teams should be checking in every week or two. It kind of depends on the team.

[00:38:06] [SPEAKER_00]: And so that rhythm of frequent, we'll call it every sprint or every week

[00:38:12] [SPEAKER_00]: meetings, weekly, monthly, quarterly, annual. That's your meeting

[00:38:19] [SPEAKER_00]: rhythm that kind of is the OKR cycle. And at each one of those points,

[00:38:25] [SPEAKER_00]: you're checking in on progress and you're checking in with kind of a different group of

[00:38:35] [SPEAKER_02]: folks and kind of different roles. And any caution or advice in terms of how do we make these meetings

[00:38:43] [SPEAKER_02]: and check-ins really productive and energizing versus another status meeting that doesn't

[00:38:49] [SPEAKER_02]: necessarily drive any new prioritization or decisions or insights? Yeah. So they,

[00:38:56] [SPEAKER_00]: they sort of the first rule of thumb is you want most of the meeting to be forward looking.

[00:39:03] [SPEAKER_00]: Right? So let's look at the numbers. Let's understand where we are today.

[00:39:07] [SPEAKER_00]: Right? But most of the meeting is about planning what we're doing next. Right? What

[00:39:12] [SPEAKER_00]: are we doing next week? Right? What are we doing next month? And so it's, it's

[00:39:21] [SPEAKER_00]: that's part of it. The second is that it really is, I think people need to understand their roles.

[00:39:27] [SPEAKER_00]: Right? That OKRs are really, really good for problems where we are working to discover the answer.

[00:39:37] [SPEAKER_00]: Right? So we always want to be talking about what we've learned,

[00:39:42] [SPEAKER_00]: what we, what we're deciding based on what we've learned and what we need to learn next.

[00:39:50] [SPEAKER_00]: Right? And I think, you know, if it gets into sort of teams defending what they've done,

[00:39:59] [SPEAKER_00]: then we sort of lost the script. So I think, you know, for a leader in that meeting,

[00:40:07] [SPEAKER_00]: it really is tell me what you've learned in the last week. Let's say tell me what

[00:40:13] [SPEAKER_00]: you've learned in the last month because that's really where the weekly meetings are

[00:40:17] [SPEAKER_00]: for the team. That's it. Right? But it's that monthly meeting where we're sort of

[00:40:23] [SPEAKER_00]: having a more formal presentation to leadership. The questions around leadership are,

[00:40:29] [SPEAKER_00]: what have you learned? What have you decided based on what you've learned and what do you

[00:40:33] [SPEAKER_00]: need to learn next? Right? And then the next question is, you know, how can I help?

[00:40:39] [SPEAKER_00]: Right? But that what do we need to learn next is really the focus of the meeting.

[00:40:44] [SPEAKER_00]: And I think in some ways, if you're, if you've spent any time in the design world,

[00:40:48] [SPEAKER_00]: right? The sort of attitude here is that this is a it's a critique. Right? We're trying to make

[00:40:54] [SPEAKER_00]: the work better. Right? We're not trying to hold the team's feet to the fire. We're not trying to,

[00:40:59] [SPEAKER_00]: you know, prosecute people. Right? We're working together to make the work better.

[00:41:05] [SPEAKER_00]: So what do we need to do to make the work better? And what do we need to do?

[00:41:10] [SPEAKER_00]: Where's the learning focus for the next period?

[00:41:14] [SPEAKER_02]: And speaking of, I think, since we've worked at Pivotal, I'm going to make an assumption that

[00:41:20] [SPEAKER_02]: you're also a believer in the benefits of things like pair programming or pairing on the various

[00:41:25] [SPEAKER_02]: roles. Right? And as opposed to doing pull requests in the case of code. And I think it's

[00:41:31] [SPEAKER_02]: a little bit more, to some extent, it's efficient and tactical. But to some extent, it's really

[00:41:36] [SPEAKER_02]: philis, a philosophy articulation where as opposed to doing a pull request, which might

[00:41:42] [SPEAKER_02]: be a little bit more on the command and control side, you're putting the accountability in the

[00:41:48] [SPEAKER_02]: empowerment closer to the work. And I'm curious when it comes to OKRs, if you've got any thoughts on

[00:41:55] [SPEAKER_02]: peer review within the team or peer review across teams versus management to the teams?

[00:42:02] [SPEAKER_00]: So, you know, I will say like my work on this got started. So more than 10 years ago now,

[00:42:14] [SPEAKER_00]: Jeff and I wrote our first book together, which is a book called Lean UX. And it was trying to solve

[00:42:20] [SPEAKER_00]: the problem of how teams, not just UX people, but designers, product people, technologists,

[00:42:26] [SPEAKER_00]: how they could work together in an agile context to make great products. And so the starting point

[00:42:35] [SPEAKER_00]: there was team cross functional collaboration, we're making these decisions together. Right?

[00:42:41] [SPEAKER_00]: This isn't a product manager writing stories and everybody picking up tickets. Right? This is a

[00:42:46] [SPEAKER_00]: team making plans and executing together. The feedback that we got from went from that book

[00:42:57] [SPEAKER_00]: was sort of overwhelming feedback was, look, we like the idea of working this way. Folks,

[00:43:05] [SPEAKER_00]: I think it generally met with a really positive reception. And people said,

[00:43:09] [SPEAKER_00]: there are things that you write about in this book that we can change

[00:43:14] [SPEAKER_00]: as individual contributors, as teams, things that we control as teams. But there are things that we

[00:43:20] [SPEAKER_00]: don't control in the organization. Right? And so we can be more agile as a team, we can be leaner

[00:43:29] [SPEAKER_00]: as a team, but our organization isn't agile and lean. Right? And so there's only so much

[00:43:36] [SPEAKER_00]: we can do. And so one of the questions that we've been looking for is how do we systematize this

[00:43:46] [SPEAKER_00]: way of thinking collaborative, cross functional, right? Oriented around continuous learning and

[00:43:53] [SPEAKER_00]: improvement. How do we make a system like that that's not just for technology product teams,

[00:44:00] [SPEAKER_00]: but is for whole organizations? And I think in OKRs, we have a system like that.

[00:44:07] [SPEAKER_00]: And so kind of baked into our philosophy is this approach that you're talking about,

[00:44:12] [SPEAKER_00]: which is that it's not about command and control. It's about collaboration. It's about

[00:44:16] [SPEAKER_00]: bringing minds together. Right? So this isn't, you know, my boss writes the OKR

[00:44:21] [SPEAKER_00]: and then I do it. Right? This is, you know, as a team, we have a conversation with leadership.

[00:44:28] [SPEAKER_00]: Right? We understand what's important to leadership because they've written an OKR for

[00:44:32] [SPEAKER_00]: themselves. Right? And then we look at that OKR and we say, how can we as a team best support

[00:44:39] [SPEAKER_00]: that? And we have that conversation with our leaders. Right? We think the best way we

[00:44:44] [SPEAKER_00]: can support that is X. What do you think? Right? You have a two-way conversation. And then

[00:44:49] [SPEAKER_00]: you kind of ratify that. Right? And then you say, OK, good. Now we've got our marching orders.

[00:44:55] [SPEAKER_00]: This is your OKR and this is how we're going to support it. Right? And, you know, it's, I think

[00:45:03] [SPEAKER_00]: it's a viable alternative to command and control that maintains accountability. It

[00:45:10] [SPEAKER_00]: maintains alignment. And if you do it right with this rhythm of check-ins, you're also

[00:45:14] [SPEAKER_02]: creating transparency. And something that I think really can act as a really great lubricant,

[00:45:22] [SPEAKER_02]: but also fairly sophisticated is our ability to predict. Right? How often are we hitting them?

[00:45:29] [SPEAKER_02]: How many of the key results did we hit in service of this objective? And I think it's

[00:45:34] [SPEAKER_02]: just human nature where if there are teams that tend to more likely hit their goals,

[00:45:38] [SPEAKER_02]: we tend to have more trust in them. That all being said, it's estimation is really hard.

[00:45:44] [SPEAKER_02]: And a system where we kind of lose track of the plot, there may be teams out there that are

[00:45:50] [SPEAKER_02]: hitting their goals, but not necessarily doing it in this true spirit of how the goals were

[00:45:54] [SPEAKER_02]: meant to be written. And in terms of overall outcomes, they're not necessarily winning,

[00:45:59] [SPEAKER_02]: but the leading indicators pointed us to the other way. And so what's your take on

[00:46:04] [SPEAKER_02]: this estimation and predictability that OKRs very much are rooted around it?

[00:46:11] [SPEAKER_00]: Yeah. So maybe I have two things, two big ideas to share here. The first is

[00:46:22] [SPEAKER_00]: measuring things is hard in organizations. We say that our measures are human behavior.

[00:46:29] [SPEAKER_00]: And it's often the case that we don't have good measures of what people are doing.

[00:46:35] [SPEAKER_00]: Right. And so being able to build those data systems for collecting all the kind of data

[00:46:46] [SPEAKER_00]: that we need in order to run this system, that's actually a really big challenge,

[00:46:50] [SPEAKER_00]: it's big hurdle for adopting this. And it's part of the reason why OKRs take time to implement

[00:46:57] [SPEAKER_00]: well because one of the things you're going to learn in that first iteration is, oh,

[00:47:03] [SPEAKER_00]: this is an important thing that we want to measure and we don't have a way to do that yet.

[00:47:08] [SPEAKER_00]: So how do we start to build infrastructure for measuring whatever this important thing is?

[00:47:16] [SPEAKER_00]: Usually in the first couple of instances, you can figure out proxy measures or

[00:47:21] [SPEAKER_00]: other ways to measure. But so that's the first thing is that access to data becomes

[00:47:26] [SPEAKER_00]: like a really first class problem. The second thing is you want to try and pay attention

[00:47:34] [SPEAKER_00]: to where and how there are incentives to kind of game the system. And you want to take that

[00:47:41] [SPEAKER_00]: out of the system. So you don't want to tie OKR performance to compensation, for example.

[00:47:53] [SPEAKER_00]: Because then that starts to introduce all kinds of financial incentives that mess up the spirit

[00:48:02] [SPEAKER_00]: of the OKR, which is that this is a way for the team to genuinely learn and get better,

[00:48:08] [SPEAKER_00]: as opposed to a way for the team to get paid. And I'm not saying that getting paid is

[00:48:13] [SPEAKER_00]: unimportant, right? I'm just saying that those things influence each other in complex ways.

[00:48:20] [SPEAKER_02]: Yes, certainly. And I mean, to your point, it is something that is super important as much

[00:48:27] [SPEAKER_02]: as it becomes really complicated when it's tied back to the incentives. If you were

[00:48:31] [SPEAKER_02]: leading a team, I imagine if someone was routinely hitting their OKRs and doing it

[00:48:38] [SPEAKER_02]: genuinely in service of the organization and your team was better, the company was better,

[00:48:44] [SPEAKER_02]: would you argue that that person gets paid more? And what is another way to maybe

[00:48:51] [SPEAKER_02]: incorporate these data points, even if it's not a direct math formula that gets applied to

[00:48:58] [SPEAKER_00]: what their bonus is? I mean, I would say first of all that there are some hard rules, which is

[00:49:04] [SPEAKER_00]: don't have individual OKRs. So only team level OKRs. The second thing is don't tie the compensation

[00:49:16] [SPEAKER_00]: to teams performance against the OKR, because then you're going to encourage them to sandbag.

[00:49:25] [SPEAKER_00]: And so I think you tie team performance to the real value that they're creating in the business.

[00:49:36] [SPEAKER_00]: And as a leader, you have to evaluate that, but I don't think you do it formulaically with

[00:49:40] [SPEAKER_00]: some kind of spreadsheet that ties OKR performance to financial compensation.

[00:49:47] [SPEAKER_02]: Yeah, it's maybe one of the various components that's factored in as that evaluation comes into play.

[00:49:54] [SPEAKER_02]: Of course, some roles is easier than others if you're running a sales team and

[00:49:58] [SPEAKER_02]: is extremely quantifiable, is very different than much more sophisticated work of discerning

[00:50:04] [SPEAKER_02]: the value from a product team. You mentioned the word sandbagging. I'll let you finish.

[00:50:09] [SPEAKER_02]: Sounds like you had a thought about that. And I'm going to come back to it.

[00:50:12] [SPEAKER_00]: Well, just in complex organizations or for big products,

[00:50:19] [SPEAKER_00]: how do you... It may be that I work on a team that's responsible for authentication.

[00:50:27] [SPEAKER_00]: OK, we do a great job. What's the relationship between a great authentication

[00:50:35] [SPEAKER_00]: flow and the product success? It's unquestionably important, right? But how do I write a formula

[00:50:45] [SPEAKER_00]: for that? I don't think I can. And so digital products are really most products and services

[00:50:51] [SPEAKER_00]: that we offer. They're so interconnected that I just think we want to acknowledge that.

[00:50:59] [SPEAKER_02]: Right? That it's... Yeah. Makes a lot of sense. So I want to come back. You mentioned the word

[00:51:05] [SPEAKER_02]: sandbagging. I think the original theory and framework suggested, I believe 80% of the key

[00:51:14] [SPEAKER_02]: results being achieved in order to call it a win. I've heard organizations use anywhere from 70%

[00:51:20] [SPEAKER_02]: to 90%, somewhat 100%. Curious if you have any opinions on that.

[00:51:25] [SPEAKER_00]: Yeah. So I think that that idea of scoring our OKRs is useful for helping us improve the system.

[00:51:39] [SPEAKER_00]: Right? So we hit 80% of our OKR. OK? We consistently hit 80% of our OKR. And last

[00:51:49] [SPEAKER_00]: quarter we hit 40% of our OKR. Right? What does that mean? Right? Like, there's a signal in there

[00:51:57] [SPEAKER_00]: that something is different and we need to pay attention. What does it mean? Does it mean

[00:52:01] [SPEAKER_00]: suddenly we started doing a bad job or that we got something wrong or like it's a question that I

[00:52:08] [SPEAKER_00]: would want to put to the team? What was different about this quarter than last quarter?

[00:52:13] [SPEAKER_00]: Yeah. So I think scoring OKRs are really important for diagnostics, for self-assessment,

[00:52:19] [SPEAKER_00]: for continuing to improve our OKR implementation. And I think that's the most useful.

[00:52:26] [SPEAKER_00]: And because of that it means that set up a scoring system that works for you and your

[00:52:31] [SPEAKER_00]: organization and then stick with it over time so that you can use it to compare

[00:52:36] [SPEAKER_02]: quarter over quarter year over year. And this reminds me of as you talk about your time

[00:52:42] [SPEAKER_02]: at Kensington working on a combination of hardware and software. It's a lot more coordination

[00:52:47] [SPEAKER_02]: and integration across the various work streams that needs to come into play where the,

[00:52:54] [SPEAKER_02]: I'll call it the implication of being wrong about getting something done within a certain

[00:52:58] [SPEAKER_02]: timeframe goes up tremendously because it's harder to be malleable around hardware components

[00:53:04] [SPEAKER_02]: maybe or firmware than it is making sort of high level code changes that we tend to do

[00:53:10] [SPEAKER_02]: a lot more nowadays. And so I'm guessing you got introduced to OKR after you worked at Kensington

[00:53:16] [SPEAKER_02]: reading between the lines, but looking back, anything specific to companies that are doing IoT

[00:53:22] [SPEAKER_02]: or hardware software solutions where OKRs maybe nuanced or different?

[00:53:30] [SPEAKER_00]: Well, I think that this sort of gives me an opportunity to talk about this idea of customer.

[00:53:37] [SPEAKER_00]: And what do we mean when we say we want to be customer centric in our OKRs?

[00:53:46] [SPEAKER_00]: We almost call this book, everybody has a customer. And so when I think about customers,

[00:53:54] [SPEAKER_00]: I would say that the challenge for people is well, I work in a part of the business that

[00:53:59] [SPEAKER_00]: doesn't have customers. We don't talk to the person who signs the check. We don't talk to

[00:54:06] [SPEAKER_00]: the person who puts the $5 bill on the counter. We don't talk to the person who walks into the

[00:54:11] [SPEAKER_00]: store and puts down their money to buy a trackball. But in your role, wherever you work in the business,

[00:54:20] [SPEAKER_00]: you have a customer. There's another person who directly consumes your work.

[00:54:25] [SPEAKER_00]: So the industrial designers, their customers are the product managers, the people who are

[00:54:32] [SPEAKER_00]: designing the mouse enclosure. Their customers are the product managers or the mechanical

[00:54:39] [SPEAKER_00]: engineers. So how can I do a great job as an industrial designer? I mean, I need to keep the

[00:54:46] [SPEAKER_00]: end customer in mind. But I've also got all these internal people whose work my work is consumed by.

[00:54:56] [SPEAKER_00]: So my work, to come back to your question about integration, if I'm going to coordinate the

[00:55:03] [SPEAKER_00]: manufacturing of a complex piece of machinery, I've got to think about, well,

[00:55:08] [SPEAKER_00]: if I'm the designer, how is my work consumed? How do I make it easy for that person to

[00:55:13] [SPEAKER_00]: consume it? How do I make it easy for them to communicate changes back to me? Can we do

[00:55:18] [SPEAKER_00]: revisions quickly? Whatever the markers are of good process, of good customer-centric process

[00:55:26] [SPEAKER_00]: to make that integration easier, I'm going to do. And so I think when we open up our thinking about

[00:55:37] [SPEAKER_00]: who is my customer, I'm sitting at this desk, who is my customer? That opens up a world of

[00:55:43] [SPEAKER_00]: possibility for us in terms of the way we set our goals. Makes a ton of sense. By the way,

[00:55:51] [SPEAKER_02]: what I assume when you say the Kensington trackball is the famous red ball that we

[00:55:55] [SPEAKER_02]: were kind of a member, and what makes the best trackball in the world?

[00:56:02] [SPEAKER_00]: Well, the Kensington one was the one that had that big billiard ball size ball in the

[00:56:07] [SPEAKER_00]: middle of it. And so it was super reliable. It felt really good. People liked it because it had that

[00:56:18] [SPEAKER_00]: big billiard-sized ball in the middle of it. It was really comfortable to use. It was super

[00:56:23] [SPEAKER_00]: reliable, and it was very precise. And for a lot of people who got repetitive strain injury

[00:56:32] [SPEAKER_00]: when they were using a mouse, it reduced the risk of that.

[00:56:39] [SPEAKER_02]: It's hard to sometimes even realize as the user something that just gives you that resonance

[00:56:46] [SPEAKER_02]: or something that just feels so satisfying. It works like you expected it to work without that

[00:56:52] [SPEAKER_02]: human machine interface even. And I'm curious behind the scenes, what do you think kind of

[00:56:56] [SPEAKER_00]: led to that really intuitive product? In those days, now everything is integrated.

[00:57:07] [SPEAKER_00]: If you buy a... There are no more mechanical mice, but there was no standard mouse in those days.

[00:57:15] [SPEAKER_00]: Everybody built their own mouse at different kinds of hardware, and that thing was built out of

[00:57:22] [SPEAKER_00]: skateboard bearings in it. The ball sat on top of these big sealed skateboard bearings,

[00:57:28] [SPEAKER_00]: and it had a billiard ball. I mean, it's crazy and crazily expensive with those components.

[00:57:38] [SPEAKER_00]: And so over time people started figuring out less expensive ways to build these things until

[00:57:45] [SPEAKER_00]: now we ended up with these optical mice. But I think it was just... In those days,

[00:57:53] [SPEAKER_00]: it was mechanical engineers and industrial designers playing around with stuff that felt good.

[00:58:00] [SPEAKER_02]: Yeah, for sure. That's a great story. Tell us a little bit more about the books you've written.

[00:58:07] [SPEAKER_02]: So you mentioned Lean UX was the other one, and what's the third?

[00:58:10] [SPEAKER_00]: So Jeff and I wrote a second book after Lean UX called Sense and Respond,

[00:58:17] [SPEAKER_00]: which has become the name of our training business. And Sense and Respond was written in

[00:58:23] [SPEAKER_00]: response to that feedback that we got from Lean UX readers. They said, look, we want to work in

[00:58:28] [SPEAKER_00]: an organization where we can implement these ideas. And would you please write a book that

[00:58:33] [SPEAKER_00]: explains this stuff to our bosses? And so we tried to do that. In fact, our original mission was to

[00:58:41] [SPEAKER_00]: write a book about Agile that didn't use the word Agile. And we were fortunate to, I think,

[00:58:50] [SPEAKER_00]: reach a good audience. We published that on HBR Press. And so we got the business reader for

[00:58:56] [SPEAKER_00]: that one. And then I wrote a book by myself after that called Outcomes Over Output,

[00:59:05] [SPEAKER_00]: which was exploring this idea of really what is an outcome. And it was sort of written after

[00:59:14] [SPEAKER_00]: I'd hit on this formulation in my consulting work of this notion of an outcome being a

[00:59:20] [SPEAKER_00]: valuable change in human behavior, that valuable and measurable change in human behavior. And so

[00:59:26] [SPEAKER_00]: that's a little book that's all about that idea. And then this book was sort of the natural

[00:59:31] [SPEAKER_00]: extension, which is, okay, how do we now build a system around these ideas that applies

[00:59:39] [SPEAKER_00]: beyond just digital product teams and to really any kind of organization and

[00:59:46] [SPEAKER_02]: organizations of really any size. Awesome. So you got Lean UX, Sense and Respond,

[00:59:52] [SPEAKER_02]: Outcomes and Outputs, and the latest one Who Does What? By How Much. What's the best place for

[00:59:58] [SPEAKER_00]: folks to find these? OKR-book.com. And you'll find links to all of your favorite resellers

[01:00:06] [SPEAKER_02]: for Who Does What? By How Much. And we'll make sure to have links in the show notes to

[01:00:12] [SPEAKER_02]: how folks can find your books as well as yourself. One question that I like to end the interviews with

[01:00:19] [SPEAKER_02]: is around a product that you recently interacted with or service that just totally blew your socks

[01:00:28] [SPEAKER_02]: off, gave you that feeling of complete delight. And I'll take an answer from home or work or

[01:00:35] [SPEAKER_00]: both. I recently had the opportunity to install

[01:00:44] [SPEAKER_00]: a set of office shelves in, not in this office, in another office that I work in.

[01:00:53] [SPEAKER_00]: And they're made by a company called VITSO, V-I-T-S-O-E. And they were designed by a

[01:01:00] [SPEAKER_00]: famous designer named Dieter Rams. And they are an absolute delight from the shopping process to the...

[01:01:13] [SPEAKER_00]: I'm a marginally handy person. I'm not a particularly handy person, but the shelves show up. They come

[01:01:22] [SPEAKER_00]: with an incredible set of tools for installing them. They're incredibly satisfying and easy to

[01:01:30] [SPEAKER_00]: install. And they look beautiful when they're done. So just one of these products where you just feel

[01:01:35] [SPEAKER_00]: like every single detail was beautifully considered. Yeah, I have some experience with the VITSO shelves

[01:01:44] [SPEAKER_02]: myself. I think I've called it organizational porn. Just how... The level of detail that they go into,

[01:01:51] [SPEAKER_02]: including, did you have them mock-up designs for you? Like you can send a photograph of the

[01:01:56] [SPEAKER_02]: wall you want to go it on and they'll send you back some... They'll have a human get involved and

[01:02:01] [SPEAKER_02]: give you some ideas in terms of which combination of shelves to use. It's a really... I like to use

[01:02:07] [SPEAKER_00]: it as an example for designers of designing for the life cycle, right? Because what you describe,

[01:02:13] [SPEAKER_00]: right? There's a component of this purchase which is a service design problem, right? You go to

[01:02:20] [SPEAKER_00]: a website, you start to make your inquiry and you get assigned to a human planner. And so you work

[01:02:28] [SPEAKER_00]: with this planner back and forth. You go through this process that you describe where they actually

[01:02:34] [SPEAKER_00]: design the system for you, right? And then once you're satisfied, you go back to the website

[01:02:42] [SPEAKER_00]: and you click buy and then... They're building them to order. So it takes a while for them

[01:02:48] [SPEAKER_00]: to show up. But then when they get there, they come with... One of the most delightful things is

[01:02:56] [SPEAKER_00]: the shelves only come in two widths. And you want to... What's the problem of installing shelves?

[01:03:02] [SPEAKER_00]: You have to make sure they're level, right? So they come with this measurement tool with a built-in

[01:03:07] [SPEAKER_00]: level that's custom designed for their... To fit their shelving system. It's just...

[01:03:13] [SPEAKER_00]: You know.

[01:03:14] [SPEAKER_02]: And no doubt also just so much more inspiring, especially for a workspace to have something

[01:03:20] [SPEAKER_02]: designed by Dieter Roms around to help inspire the work that you're doing that day, right?

[01:03:27] [SPEAKER_02]: Yeah. Awesome. Yeah.

[01:03:29] [SPEAKER_02]: Well, hey man, thank you so much for making the time. It's awesome for us to get to catch up again

[01:03:34] [SPEAKER_02]: and hear about OKRs and the other work that you're doing. Appreciate it a lot.

[01:03:39] [SPEAKER_00]: Well, thank you so much. You know, it's great to talk. So thanks for having me on the show.

[01:03:49] [SPEAKER_02]: Something that Josh and I got to talk about was losing track of the plot. And by that,

[01:03:56] [SPEAKER_02]: I meant we sometimes get really engrossed in something we're doing today and we forget

[01:04:01] [SPEAKER_02]: why we're doing it in the first place. This is something that I find to be extremely

[01:04:05] [SPEAKER_02]: important both on a professional as well as a personal level. On our product teams, we're

[01:04:11] [SPEAKER_02]: often trying to optimize our efficiency, whether it's implementing lean, agile, OKRs, or

[01:04:17] [SPEAKER_02]: whatever process or framework that you think might help. And I think we can really get caught up in

[01:04:24] [SPEAKER_02]: trying to do it really well, say safe or scaled agile framework. And I think there can be a lot

[01:04:31] [SPEAKER_02]: of wasted effort and energy that goes into perfecting your safe implementation based on what

[01:04:37] [SPEAKER_02]: the framework guidelines, rather than pausing, I think, in making sure that we ourselves

[01:04:44] [SPEAKER_02]: and the teams that we lead understand why we're doing this like safe. What benefits we can expect

[01:04:52] [SPEAKER_02]: from successful implementation and what behavior changes we'll see amongst our product teams and

[01:04:57] [SPEAKER_02]: our customers and how it ultimately helps our business. And I think there's a few risks if

[01:05:03] [SPEAKER_02]: you lose track of the plot. Firstly, I think if we're really busy trying to implement a framework,

[01:05:12] [SPEAKER_02]: especially across a large organization, this can take a lot of investment in time and money

[01:05:18] [SPEAKER_02]: before you see the results. And this can get difficult to justify to business leaders

[01:05:23] [SPEAKER_02]: when they don't see the business outcomes but they're paying the bills and the investments

[01:05:26] [SPEAKER_02]: from your budgets and end up jeopardizing your transformation efforts that might die

[01:05:31] [SPEAKER_02]: on the vine before they see the day of light. Instead, I would much rather advise that you relate

[01:05:37] [SPEAKER_02]: that why loud and clear and share it with your business leaders and share it with your product

[01:05:43] [SPEAKER_02]: teams so that everyone is best enabled to serve this initiative in service of the business

[01:05:50] [SPEAKER_02]: versus serving the framework. I promise you'd much rather win at delighting your

[01:05:55] [SPEAKER_02]: customers or growing your business than getting some kind of Boy Scout badge that says you

[01:06:00] [SPEAKER_02]: implemented safe correctly even if it doesn't necessarily move the needle on building a

[01:06:04] [SPEAKER_02]: better team, a better product or a better business. Another risk is around team engagement.

[01:06:10] [SPEAKER_02]: I'd be willing to bet that a lot more folks on your team will be excited about doing things

[01:06:15] [SPEAKER_02]: on their day to day and week to week when you can tie those activities back to how this

[01:06:20] [SPEAKER_02]: improves the lives of your customers, makes the world a better place or helps build your

[01:06:24] [SPEAKER_02]: business. And this is as opposed to folks who care about how precisely you implemented your

[01:06:29] [SPEAKER_02]: safe at your organization and focus way too much on the framework and lose track of this plot

[01:06:35] [SPEAKER_02]: and the overall reasons that you started here. And I think this creates a lot of confusion

[01:06:42] [SPEAKER_02]: and uncertainty rather than clarity and confidence that can ultimately unlock the

[01:06:47] [SPEAKER_02]: collective creativity on your team. A book that has really shaped my perspective on this

[01:06:54] [SPEAKER_02]: is called The Goal by Eliahou Goldrat. It's a book on operations and theory of constraints that was

[01:07:00] [SPEAKER_02]: written in a fiction format and I probably reread it every couple of years as I need help

[01:07:05] [SPEAKER_02]: crystallizing the underlying why the business we're building, the customers we're serving or

[01:07:10] [SPEAKER_02]: even want a more personal level about why I'm prioritizing my time over one thing over another.

[01:07:16] [SPEAKER_02]: And the last thing I think is that if you can't tie the implementation of the framework back

[01:07:22] [SPEAKER_02]: to the underlying reason why you've chosen that framework and what you expect to happen in terms

[01:07:28] [SPEAKER_02]: of behavior change, it also becomes really hard to pick those places like Josh talked about with

[01:07:34] [SPEAKER_02]: stacking the deck because it's hard to measure where the most meaningful business outcome can

[01:07:40] [SPEAKER_02]: happen if you were to do this thing correctly. So check out the book The Goal as well as

[01:07:48] [SPEAKER_02]: the books written by Josh and his co-authors. Thank you for listening. Check the show notes

[01:07:53] [SPEAKER_02]: for links to all of that and we will see you here at our next episode that goes out next Tuesday.

[01:08:05] [SPEAKER_02]: Thank you for joining me on the Convergence Podcast today. Subscribe to the Convergence

[01:08:10] [SPEAKER_02]: podcast on Apple Podcast, Spotify, YouTube or wherever you get your content. If you're listening

[01:08:18] [SPEAKER_02]: and found this helpful, please give us a five-star review and if you're watching on YouTube,

[01:08:23] [SPEAKER_02]: hit that like button and tell me what you think about what you heard today.

[01:08:28] [SPEAKER_00]: In those days we had the back cover of Macworld Magazine was where we advertised

[01:08:33] [SPEAKER_00]: the Kensington trackball. What's the circa time frame here? So I worked there from 1990 to 1996.

[01:08:45] [SPEAKER_00]: Okay and we had a copywriter on April Fools send us a mock-up ad that said,

[01:08:55] [SPEAKER_00]: it showed a picture of the trackball and the big ball in the middle of it, said

[01:08:59] [SPEAKER_00]: big comfortable balls.