We started qilo with the purpose of – “How we can help the organizations perform better, every day”. If the market conditions are good, demand for your product/service is there, but your company is not able to perform better and increase the market share, your work culture might be the core problem, that needs to be fixed.
With organization culture, we mean – a culture where people look forward to coming at work every day- even on Mondays, a culture where employee put company performance as a top priority and a culture where every employee can feel and behave like a CEO.
Fixing the culture cannot be achieved in a day or a month or a quarter. It will take years if you have messed it up already. And changing the culture, starts with addressing 3 basic pillars
Intent: The intent of change comes from the CEO. If the intent to change is not there, nobody can do anything.
Communication: When the intent is there, the next step for the CEO is to constantly communicate the intent of the change in the form of stories.
Technology: The third pillar is to utilize the technology to implement the change at scale.
We were getting nostalgic when we watched the below video today. And we are proud that we are still sticking to our core purpose and helping our customers in implementing the culture change at scale.
What is stopping the CEOs, Functional Heads and managers to get work done faster? And why CEO’s are constantly frustrated that people in the various teams are not collaborating but sitting in silos; resulting in the slow movement of work and business outcomes?
It’s all because of the operating system(a.k.a the way work gets done in the company). The company Work Operating System(WOS) is pending for update for a long time. The legacy organization can become more smart, ready for the new era and more dynamic by improving or even overhaul your current Operating System.
Here are the top 5 ways you can re-inventing your Work Operating System(a.k.a the way work gets done in the company):
Give more autonomy to people to define the plans and KPIs they should be chasing. Your job as a team head is to give directions and make people learn how to define the actual “business-impacting” metrics and action plans. And to review the same every week/month. So make sure that teams are “loosely coupled but tightly aligned.”
Adopt Agile principlesin the way you execute your annual operating plan and strategic initiatives. Move agile beyond IT function, and implement it in your sales, marketing, HR and operations.
Replace internal emails with tools like Slack or Microsoft Teams. The average employee checks their email 36 times an hour and receives 304 emails a week. Emails are now used by people to showcase how busy they are and lead to more bureaucratic culture.
Set the cadence of business reviews across the company, not just at top level. And run the meetings in the data-driven way by implementing frameworks like OKR.
The average manager spends up to 210 hours preparing for and doing annual appraisals, a process that makes employees spectators in their development. Ditch your annual appraisal process and implement the new-age agile PMS where goals are set every quarter and feedback and coaching session between employee and manager are done more frequently.
Any company where teams are not able to define robust metrics, move very slow on the learning and growth. In most of the companies, the metrics defined and tracked at team levels are not relevant at all.
But there are companies who are able to define the relevant and robust metrics at the team level, and Amazon is one of them. At Amazon, metrics are defined and established before every initiative and objective is taken up. The progress on those metrics are measured on a real-time basis. Every initiative is a genuine scientific experiment focused on whether it will deliver value to the customer or not. As the metrics are tracked and monitored on a real-time basis, the company knows exactly what is happening on a daily basis.
There are many aspects that needed to be addressed to define enable your teams to define proper metrics within every team. The first is to understand the type of metrics:
4 type of metrics
“Feel Good Metrics” – These are defined when enough influential people within the company believe that defining and tracking these metrics will have some benefits. The definition of the metrics are vague. In the worst-case- these metrics are promoting the interest of the specific group within the company.
“Internal Focused Metrics” – There are metrics which are specific, better than “Feel Good Metrics”, and in no-way related to impact on improving customer experience, revenue and profit of the company(means improving something external), but focused on improving something internal.
“External Focused Metrics” – More focused on improving the external things such as NPS, Revenue and Profit. But its impact on supporting the overall growth of the company is still not that relevant.
“The Impactful Metrics” – These are metrics which truly impact your revenue and profits by improving the customer experience or changing the customer behavior in an expected way. They will truly delight the customer- examples such as availability of the item, speed of delivery, absence of returns and complaints, re-purchases of the product and related products.
Amazon tracks the execution on the fourth metrics – “The Impactful Metrics”. But why most of the companies fail to define and measure the “The Impactful Metrics”. The simple reason is defining and measuring the progress of execution on these metrics on a real-time basis is hard. But winning organizations understand this, and in every early in their stage of evolution, set the guidelines to define them.
Here are the 5 steps that Amazon takes to define and measure the progress under the “The Impactful Metrics”
Obsession with customer value and not stakeholder value – This results in defining the right kind of metrics that enhance customer experience and value.
The discipline of not starting execution on any project/initiative, without defining the metric to measure success. Sometimes the leaders and manager spend their days and weekend on what could be the right metrics before they jump onto executing the project/initiative.
Work is done in small teams working in short cycles
Reviews are around the “The Impactful Metrics”
Linking compensation with achievement of “The Impactful Metrics” . Especially the executive compensation at Amazon is aligned with the core value and principle of “Obsession With Customer Value, Not Shareholder Value”.
It’s true, Strategy execution is not rocket science. The problem is that consulting companies who want to own the keyword “strategy”; wants to show this as a big complex thing in this world that they can bill their clients with millions of dollars by putting the army of consultants.
In a nutshell, Strategy its about “where you will earn money from” and “how you will earn it” in present and future. Your strategy largely depends on the stage of your company. As Ried Hoffman puts in, every company goes through the following stages:
1) Family 2) Tribe (3) Village (4) City (5) Nation
When you are family or at the tribe stage, your strategy is to
(a) Validate that your product or service has demand in the market
(b) Generate revenue to survive OR raise the money from bank/VC to survive for the next 12 to 24 months.
(c) Try to find the repeatable sales & operational model for your product/service
When you are at the village stage, your strategy is to
(a) Create a repeatable model to do sales and service your customer
(b) Keep doing it faster and better
And when you are at the later stage of company growth, ie at “City” stage or “Nation” stage, your strategy is not just to generate the cash from existing product/service, its also about creating new products/services adjustment to your existing market OR to creating new products/services that will diversify your business.
But, is there a guarantee that your strategy will help you to become the market leader. No, because it also depends on the market/economic cycle and conditions. But if your execution cycle matches with the market/economic cycle(means your timing is right), your company will be the part of the those few success stories.
To deliver your strategy at any particular stage, you have a model with 4 standard steps: 1) You identify your vision(the big-arrow) for 12 months(when you are at “Family”, “Tribe” or “Village” state) or next 36 months vision(when you are at “City” or “Nation” state) 2) Once you define your vision, you identify the 3 to 5 major company-level goals(also called focus areas or strategic objectives) that will help you to achieve our vision(the big-arrow) 3) The 3rd step is to identify the major project/programs/objectives that will help you to achieve either of our company-level goals. And define metrics & milestones that will help us to achieve those project/programs/objectives. 4) And the 4th and last step is to follow the review cadence(process) to make sure that work gets done on the defined milestones under the defined project/programs/objectives.
In most of the companies today I talk to or work with at qilo, the above stated 4 simple steps are not followed or followed partially. Coming from the software development background, where today software is delivered in Agile fashion; its a surprise for me. If a small to complex piece of software can be delivered nowadays with high predictability; what stops companies from delivering their annual or 3-year strategy in the agile fashion?
I see 3 major reasons for it:
1. The CEO, Strategy Head/PMO/Chief of Staff is unaware that there could be a better way to deliver the 12 months or 36-month strategy.
2. The CEO, Strategy Head/PMO/Chief of Staff knows there is a better way, but reluctant to try and do the required change management.
3. The CEO, Strategy Head/PMO/Chief of Staff knows there is a better way, but don’t know the exact know-how.
In case of option 2 & 3, companies either hire an independent consultant or hire a big consulting firm to help them. Today with the help of technology backed solution, companies can deliver their strategy on a year-on-year basis without much external help. The only thing which is required is the willingness to change and try – because “if you will not change, nothing will change”.
The current process of yearly goal-setting practice in most of the companies is dead. The 3 major reasons for this dead-end process are:
It doesn’t make sense to employees, managers, and management.
It doesn’t help in getting work done on business objectives which the company wants to achieve the next 12 months.
It only states WHAT needs to be achieved, the HOW part is missing.
Let’s look at how this traditional process works in a typical company
Why it’s done in a way it’s done: The current goal-setting is done to get the annualized rating of an employee & take that rating to decide who will get how much money this year. Against every goal, the employee declares how much she has achieved, and the manager reviews and correct the rating based on his perception. And them someone sitting at the top does normalization(adjustment of the rating) to put people and their rating in bell-curve shaped.
I am not saying that these activities are not important. Differentiating people based on their performance is important; otherwise how someone who is performing average will aspire to perform better. And how the company will come to know who is not performing and need coaching to perform better.
Being an employee & manager while working in corporate, I never liked the process; it was too theoretical.
Someone who is good at acting & driving perception in the last 3 months of the year will get the maximum benefit of the current goal-setting & rating process of the company
The future of the goal-setting process should be business-centric & data-driven; it should support in getting work done on the business objectives which the company wants to achieve in the next 12 months
The high-level process of this future goal-setting process should be something like this
The progress on these goals is driven by the milestones that define the method of achieving that goal. And these milestones are defined, achieved and refined every month or quarter. I call them as Agile goals, and few companies call them OKR’s. And those of you who have not heard about OKR, they are invented in 1978 at Intel and used by leading companies like Google, Walmart, Uber, and many others leading new-age companies.
How the future ready goal-setting can be implemented successfully:
Create a core team: This can be implemented successfully then the company creates a core team of a senior business person who understands company business horizontally + a human resource professional.
Spend time in coaching people on how to set agile goals/OKR: For the first 2 years, invest in coaching employees and manager on how to set the agile goals/OKR. Don’t consider to generated score in the final employee rating for 2 years.
Why the company should take this pain(what’s the business case): Why someone in human resource or CEO should think of changing this current approach of goal setting; here are a couple of reasons
Implement the new approach of goal-setting to achieve your yearly sales & operational targets. If done right, it can increase your top-line by 3% to 8%.
It can help the CEO and company to achieve a higher level of alignment across teams.
It will help HR to get this activity closer to company 12-month strategy and contribute towards company growth.
The future of goal-setting has already arrived. The new-age goal-setting process should create the habit of thinking, planning and executing goals that will drive company agenda & growth ahead.
The traditional goal-setting process leads to a bureaucratic culture in your company
The traditional goal-setting process is not data-driven
To implement the new-age goal-setting process, create the core implementation team which is a mix of business and HR.
We often hear the term ‘Business that isn’t growing is dying’. But is it really true, or is it just a way to create an unnecessary hype around the culture of expansion and commercialization?
The truth is that no business can survive in stagnancy. It must constantly change, evolve and keep up with market expectations and industry trends. As Jeff Bezos (founder of Amazon) mentioned,
“In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it.
Because nothing else is sustainable, everything else you create, somebody else will replicate.” So it is clear that no company can just create a product and service, and expect lack of competition. The only way to survive in a competitive environment is to constantly grow and adapt to changes, but what does growth really mean? Is it only revenue growth and expansion, or can is it a more holistic form of growth?
Let’s look at different dimensions of growth that a company needs:
The most common concept when anyone thinks of growth regarding business is revenue growth. Revenue growth for business is extremely important. It’s a competitive age. Businesses not only have to compete with each other to stay ahead of the curve, but they also have to compete to hire the best and most productive and talented employees. To hire and even retain such talent, their salaries should be lucrative with constant raises and benefits. With growing inflation, revenue growth is an absolute necessity. Furthermore, the lack of revenue growth can lead to declining profits, equity, employees, goodwill or a combination of all.
While revenue growth is extremely important it’s not the only factor of growth in a business. It is equally important that each individual within the company grows in terms of skills, expertise, and productivity levels. This highlights the growth culture within a company, and growth culture is crucial. Consider this: employees join a company for salary, and benefits, but also to learn, grow and improve. If a company does not challenge its employees to strive, learn and constantly perform better, then they lose interest, and the work atmosphere becomes stagnant. The best and brightest minds don’t even want to work at such a company, and if this situation occurs, you will see all your talent flocking to change jobs. That is why a growth culture with constant challenges and aspirational objectives is a must in every organization.
Every business that needs growing revenue, can only achieve it by growing customers. Businesses need to grow their marketing strategies, sales efforts, and overall performance to attract new clients while retaining old clients. But that isn’t possible if your customer outgrows your company’s ability to meet its demand. Often market demands for certain products increase, and if a company cannot grow to scale their supply, they lose their clients to a competitor. This is especially true for B-to-B models.
GROWTH OF TECHNOLOGY
We cannot consider any advancement in today’s age without talking about technology. Going digital and constantly evolving technologically is essential for every company. More than a billion people are connected on social media platforms, one-third of the population uses smartphones, and Millennials and Gen Y are all about technology. If a business doesn’t constantly keep up with the latest innovations, then it stands to lose an immense number of potential customers. Technology provides the benefits of higher engagement, increased data security, better time management, and detailed analytics, just to name a few. The importance of digitization is so widely recognized that most companies are expected to have a Chief Digital Officer soon. And the only way for a business to survive in this environment is to follow these trends or lead in creating new ones through the adaptation of the best and latest technology.
Now that we have looked at the different aspects and dimensions in which an organization has to grow, we can see that they are all interlinked, and crucial to the survival of any business. But how can such growth be achieved?
The simple(but not easy) way is execution. Any company that isn’t focused on the discipline of execution cannot grow. But how can a business instill a culture of execution? The answer lies in OKRs (Objectives and Key Results). OKRS are a tool or a framework used to define the main goals or focus of a company and measure the performance based on the execution of these defined objectives. But how should these objectives be defined? The same goals are often not necessary for every individual as they are for the company. One of the ways to implement OKRs is to do it in various levels.
These can be:
What is the vision of the company? Why was it founded and what is its purpose? This is what the driving focus of everything should be in the long run. This decides what your company’s primary objectives are, in alignment with the vision of the owner or founder, which truly defines the purpose of that company. Some key aspects of these are:
Summarizes the vision of the company.
Set for 1 to 3 years aligned with your vision
We don’t define the Key results for company objectives.
These are objectives set for the CEO They can be objectives like revenue goals, minimum growth targets, expansions, acquisitions, increased goodwill etc. They must be in alignment with one of the company objectives.
These are objectives set separately for every team in the company. They are created in tandem with the annual objectives of the company, in order to ensure their execution. Every team through it’s own set of objectives and key results works together to contribute towards the company’s annual goals. These OKRs are monitored by executives and can help them quantitatively judge the progress towards the company’s objectives. Some key aspects of these are:
Objectives set quarterly.
Managers own the objective and key results are owned by people under him or in different teams.
Growth initiatives which need cross-functional collaboration can also be created as OKR’s.
Used to align the aim of every team to the aim of the company.
Individual Learning OKRs
These are objectives set for every individual employee which fulfills the learning agenda of the individual. If every employee works towards its success, through individual learning goals, it clearly enhances their professional growth and in turn their skills & capability. This allows for smooth execution and easy monitoring of performance. Some key aspects of these are:
Very precise in nature; Easy to understand.
Very short term, perhaps monthly.
No company is formed with a static vision or purpose. Every company has a vision of expanding and growing. Hence growth is not only aspirational but, as the article highlights, essential for every company. As business leader & author, Jack Welch states in his book Winning, ‘Change before you have to’, so that you can remain ahead of the curve and grow. But the only way to consistently achieve growth is to maintain the discipline of execution.
With varying departments, competing employees, bureaucratic processes, execution becomes increasingly hard. That is why a strict framework is necessary to maintain an upward trajectory. There is no better or more customizable tool for this than OKRs. If your business isn’t growing in this fast paced competitive age, it surely is dying. OKRs can be the weapon to stop this stagnancy and ensure constant growth.