Your manager will make OR break your company

The benefit of having good managers in a company is oft debated. In 2002 Google simply eliminated all their managers, because they believed they were unnecessary.

That step was a disaster, so Google conducted a research project named the “Oxygen Project” to determine the qualities that make a great manager. Their finding highlighted that the qualities that make a manager great are:

  1. Form a clear strategy based on the company’s vision
  2. Ability to communicate
  3. Be a good coach and guide to the team
  4. Help employees grow and develop their careers
  5. Enable team members and not micromanage them.
  6. Care about employee’s well being
  7. Be productive and focused on results
  8. Possess key technical skills that benefit everyone on the team

But all these findings seem very obvious. The real use of the research was that statistical findings directly correlated these qualities to employee performance, customer satisfaction, revenue, and turnover etc. But what do these qualities can these be implemented and executed, rather than simply theorized?

The answer perhaps lies in Objectives and Key Results (OKRs), a tool that Google itself implements along with other big companies like Amazon, Deloitte, Samsung as not just goal-setting framework but perhaps the way to enhance their managers effectiveness.

Setting Team Goals

One of the most important roles of the manager is to set goals or objectives for the team. These objectives need to align the manager’s strategy to achieve the company’s vision. Such objectives can help establish a culture of execution in the company. Further setting aspirational goals can cause the employees to be inspired, strive to perform better, and grow in the process. Using Objectives and Key Results to set a few key objectives quarterly for their teams in alignment with the company’s vision is the best way to ensure productive teamwork.

Ability to Communicate and Coach

The importance of teamwork is not lost on anyone. However, a manager’s individual relation with every team member is equally important.  Statistics show that 69% of managers are uncomfortable communicating with employees. Sometimes it is hard to communicate to individuals the work that is expected of them. Using OKRs to set goals will enable better communication between the team member and the manager. Further doing quarterly OKR reviews will enable all the team members working under the manager to communicate better with one another and see what others are doing and how they can contribute to the progress to achieve company objectives.

 Being Execution and Result Focused.

This is the single most important aspect of management. A company that isn’t execution oriented is definitely one that will fail. As the Harvard Business Review States, visions, revolutionary ideas, and the best of strategies are only as good as their execution. And OKRs are one of the best ways to convert strategies into actionable plans. Setting specific, well-defined objectives, and monitoring the executing based on Key Results, can cause managers to effectively lead their teams to excel.

The role of a manager is indispensable however the attributes that a manager must process to successfully carry out his responsibilities are of even more significance. While training, guidance and support help them perform better, what truly makes them great is the ability to enable their teams to execute aspirational objectives into reality. This can only be possible through a strict discipline of goal setting, execution, and performance reviews.  All these processes are better achieved by technical skills, and adaptation of tools and services. OKRs happen to be one of the best tools to assist managers through this entire process. Managers account for 70% of the variance in employee engagement and are easily the makers or breakers of a company.  Building great managers with the right tools for success is the only path forward for any company seeking to be not just good, but great.

Is OKR a New Management FAD?

Photo by bonneval sebastien on Unsplash

In the last 30 years, many concepts were introduced in the companies claiming to have been that final solution that it will accelerate business growth. As part of these, concepts like Enterprise Performance Management, Business Process Management, Balanced Scorecard, and Knowledge Management where introduced in the market and promoted by consulting companies & leading business schools of the world. But they had a low impact on revenue growth, enhancing customer satisfaction and launching new products faster. And have only increased the revenue of consultants & consulting companies.

Nowadays OKR (a goal-setting framework for CEO and companies to get execution done) seems to be the hot topic. And every CEO is talking about implementing the same in their company. OKR is a part of the debate that companies need to adopt agile management practices; so that companies can respond to changing market dynamics faster.

New entrants, especially from developing markets and technology sector companies are moving into traditional companies and leveraging the power of Software+Hardware to disrupt the existing business models. And this is happening right now.

Let’s look at a few statistics that illustrate these changes:

  • A third of Fortune 500-companies in 1970 were gone by 1983. And many of those that were in the top-10 in 2015, didn’t even exist ten years before that.
  • The attrition in leadership positions in big companies has more than doubled in the past 10 years.
  • Google, Microsoft, Amazon, NetFlix, Uber and AriBnB are replacing the Coca-Cola, Big Retail, Media House and Established Hospitality industry Companies as most valuable companies.

Though these 20 year old new-age organizations are leveraging technology to deliver the product/services, they are also challenging the traditional management practices. They are adopting new agile principles and practices that enable them to remain closer to their customers, build a more transparent company and build a culture of thinking, planning and execution in their teams which enable them to move faster than existing traditional mindset companies.

But does this mean that every organization must adopt agile management practices and implement goal-setting frameworks like OKR. To answer this, we must under from where the “agile” as a concept came from.

The agile as a concept was first introduced around 2001 to better deliver the software. Before the agile practice came to picture, software’s were delivered to customers using the waterfall model of development. With the waterfall model, customers used to get the working software after 9 to 12 months. And by the time, they have received the software, customer requirement and business process to which the software was catering has changed. At the end, customer end up paying millions of dollars for something which was not near to what is required.

Then came the Agile way of delivering the software, in which software was delivered every 2 weeks. The customer gets the working software every 2 weeks. And the software developers adjusted to the evolving needs of customers. This resulted in customer end up spending less money and is more satisfied with something tangible for what he is paying for.

I have personally developed the software under the waterfall model and agile models. Frankly, adopting agile mindset was very difficult and was a change. People resisted it because it forced them to be on their toes, be more focused & accountable and forced then to be more collaborative across various teams. And you are clearly able to identify who is not performing within 2 weeks.

Now let’s look at the organizational age-old practice like “annual practices of budgeting & planning” and how it gets delivered by people in the company. Leadership team meets before the start of the financial year, sales targets are negotiated, CEO and management pushed for higher numbers and sales heads push back the numbers given and tried to freeze targets which can be achieved. New initiatives that needs to be completed are decided and everyone goes back happily to the workplace next day.

Think of your annual budget and planning process as software. Currently most companies are trying to deliver the budget & planning by following the waterfall model. A better way is to follow the agile way of quarterly process which is aligned with the company annual budgets & initiatives to be completed. Objectives (a.k.a goal) & Key Results(a.k.a milestones or action plan) to achieve the annual plan are created executed, reviewed & updated every quarter.

Frankly, achieving business results (sales plan, marketing plan, strategic initiatives) are different from programming a software. Unlike software programming, you might or might not achieve result (0 or 1) in a day, week or 2 week. But creating the OKR plan at the start of every quarter and reviewing it every month, will help you understand that will the outcome be achieved or not. Or enable you to understand that if you are all this time, trying to achieve the wrong outcome. The current execution design followed in companies leads people to focus on outcome rather then focusing on input that will lead to that outcome.

If I connect the dots, I have no doubt that adopting the agile management practices and frameworks like OKR(Objectives & Key Results) are much better approach to deliver the required business outcomes. What you think?

 

Benefits of OKR

We live in a dynamic age, where things are constantly changing, especially for businesses. Companies have had to adapt to ever-increasing customer expectations, adopt new marketing channels, utilize new technologies, and compete at a global level, all in a single generation.

While you focus externally to address these challenges, you need to align people internally with your strategy to move faster. One such way to achieve internal alignment is using a framework called OKR.

OKR or Objectives and Key Results is a simple habit-forming framework for CEOs and companies to build the habit of thinking, planning and executing company objectives and strategy. Few of the benefits your company will get with OKR implementation are

  1. GOAL ALIGNMENT
  2. TRANSPARENCY AND OPEN COMMUNICATION
  3. MONITORING AND ACCELERATING PERFORMANCE
  4. EMPLOYEE ENGAGEMENT

1.GOAL ALIGNMENT

With increasing diversification, employee roles are becoming more and more specialized. With such an acute division of labour, sometimes people can lose sight of what the most important goals of the company are. Employees instead focus on their individual roles within the institution, giving those tasks higher priority. With the help of OKR, setting objectives which highlight the priorities of a company, can help employees work better in pursuit of a common objective rather than compete based on their individual performance.

This also helps in team building. OKRs are more effective at uniting a company than KPIs because they combine qualitative and quantitative goals. The objectives are often aspirational and can create enthusiasm in a certain category of employees like design or customer service departments. On the other hand measurable Key Results create quantitative goals to drive people in the accounting and sales departments. Hence OKR can cause the company to unite around its primary focus so that everyone can be simultaneously working towards the same overarching goals.

2.TRANSPARENCY AND OPEN COMMUNICATION

Transparency and open communication is a very hard concept to achieve. And the challenge only grows as the company expands. Each department within a company becomes an independent unit. While this is great for intra departmental efficiency, what suffers is the realization of common goals, and effective communication. Often the goals of a company are clear, but there is no clear path to communicating these goals. Managers spend majority of their time ensuring that no one is acting on misinformation. OKRs are a great way to communicate and ensure that everyone understands the company’s goals, and how it measures strategies and success. Through OKRs Company goals can be reviewed and set, for a predetermined period of time (example: quarterly or biannually). Once these goals are set they can be percolated down from the executive to individual levels in order to ensure that everyone is working in support of the main objectives. Setting specific and quantifiable Key Results helps to communicate these objectives with even greater efficiency. Since the process is time-bound it creates transparency and eradicated confusion. Key Results also help in breaking down and highlighting small steps in order to achieve a bigger common goal.

3.MONITORING AND ACCELERATING PERFORMANCE

Each individual employee can make a massive difference in the success or failure of a company. That is why monitoring employee performance is crucial. However, there is no clear way to measure this performance or efficiently create metrics that highlight an employee’s work. Most companies simply use financial indicators to determine growth and success. However financial indicators are not enough. Using a meaningful set of rounded performance indicators that can be quantitatively measured is the solution. This is where OKR steps in.  Quantifiable Key Results serve as excellent metrics to judge the progress towards achieving a company’s main objectives. These Key Results are targeted with a specific deadline, and measurable steps, hence clearly indicating the employee’s performance to whom these tasks were assigned.

However ,it is not necessary that OKR is the sole tool for deciding an employee’s value to an organization. Sometimes OKRs can be set as seemingly impossible, but rather aspirational goals to be achieved, to drive people to perform better. Such goals can tend to attract the best people and create the most exciting work environments. Furthermore, when high goals are set, even failing at them can produce substantial results. Google, which is one of the many companies successfully implementing OKR follows such a practice. In their OKR’s they set what are known as ‘stretch goals’ because their achievement is very hard, and unlikely. They then clearly communicate the nature of such goals and create vestibules for success were achieving 70% of the objectives is considered success. And achieving a 100% of these objectives is considered exceptional performance. Because OKRs are always stretch goals, they encourage employees to continually perform the best that they can.

4.EMPLOYEE ENGAGEMENT

Employee disengagement is a very detrimental problem to institutions. The full extent of its impact is only now being understood. Statistics show that 70% of the workforce remains disengaged, and that disengaged employees cost companies roughly $500 billion annually. While the common assumption of why employees are disengaged or dissatisfied is money, studies suggest that more relevant causes could be their bosses, or even not understanding their role within a company, and what their work is contributing to it’s success.

OKR can solve these problems by creating Objectives on central and individual levels, linking these objectives and creating co-dependencies. This will help employees understand their part in the machinery of the company hence creating engagement. It also helps keep executives in check,and prevents them from taking advantage of employees that they are managing by setting quantitative Key Results that measure performance.

To conclude, it is important to remember that OKR is only as good as it’s implementation. It is a flexible and dynamic framework that can provide a lot of benefits for small and big companies, however ,it’s strength lies in adapting it to your company’s needs for maximum success. To blindly follow the OKR practices of some famous companies like Facebook, Deloitte or Accenture can actually be detrimental to your institution. So the best practice would be to follow the scientific method of trial and error, combined with research to generate strategies to implement OKR that best serve your company.

OKR Design Patterns For Successful Implementation

design pattern is a general repeatable solution to a commonly occurring problem. In the context of OKR (Objective & Key Results)  many companies fail at the implementation stage as to how to arrange the OKR’s in a way that can lead to successful implementation and adoption of the framework.

This challenge will come to you when you have understood the basics of OKR and probably have read a couple of books and articles on the subjective. When implementing the OKR in your company, you need to remember that the organization is not made of different parts and pieces but it’s a complex adaptive system. And this system is run by people who have different motives and need to be satisfied at gut, mind and heart level. Any change we bring into the system needs to be carefully thought through.

The question here we are trying to answer is how you will arrange the OKR’s in your hierarchical complex system. There are 4 basic design patterns which can be applied to implement OKR’s

  1. Silo Pattern
  2. Team-based OKR Pattern
  3. Top-to-bottom flow pattern
  4. Top-3-level flow pattern

1. Silo Pattern: Each individual owns the objective and all the keys results are owned by the objective owner herself. Its simple to implement and easy to modify but again encourages silos in the company.

OKR

2. Team-Based OKR Pattern: Its different from silo pattern in a way that the Key Result are either owned by (a) objective owner reports(team members working under objective manager). Or the Key Result are owned by someone else working under a different manager,  but working with the Objective owner to achieve that Objective.

3. Top-to-bottom Cascade Pattern: In explaining this pattern (which means a way to arrange OKR’s) I am assuming that your company has 4 level hierarchy. This OKR design pattern connects the top level execution agenda with the bottom level execution. This means that the agenda of execution is cascaded down till the last mile of the company. But it also assumes that most of the execution is taken care by the bottom layer of the company.

OKR

4. Top-3-level Cascade Pattern: Again assuming that your company has 4 level hierarchy. In this OKR pattern, we connect top 3 levels of the company and cascading stops at the 3rd level of the company. And the 4th level will have their OKR’s based on silo pattern. It is based on the understanding that if the top 3 levels of the company are in sync then we will have a better flow of the agenda.

OKR

If you are struggling to implement the OKR successfully, we will be happy to have a conversation with you and help you in achieving success in OKR implementation. Feel free to drop mail talk[at]qilotech[dot]com

 

Biggest Mistaking in OKR Implementation: Cascading OKR

One of the biggest reasons for failed OKR(Objective & Key Results) implementation is Cascading OKR’s. Cascading means your Line of Business(LOB) Head Key Results becomes the Objectives for the reports of LOB Head. And then the flow of cascading goes own till the last mile in the company. It looks something like this:

OKR Cascading

The 3 major flaws with Cascading OKR’s

  1. If your OKR cycle is quarterly, which means you create and close OKR’s every quarter, then you end up spending too much time going top-to-bottom. What if the cascaded OKR ownership needs to be changed? In 90 days, deciding your OKR’s and then cascading means you end up your entire time in cascading than execution.
  2. Cascading means CXO’s and Managers are not owning any Key Result, which means they are not executing anything. But that’s not true in the real world and should not be true. If that’s what you want to implement, then you are again promoting hierarchy in your company.
  3. Deciding which Key Result to cascade and which to not is not always clear.

We at qilo,  have learned it in a hard way after many implementations. Clients want Cascading, and we have given them what they want. But at the end, any OKR Software success depends on the OKR implementation and adoption by the people who will execute those OKR’s.

That’s why we at qilo, have focused more on 2 things for successful OKR implementation:

A.  Aligning OKR’s with CEO’s Annual Operating Plan or Strategic Initiatives. This approach is bi-directional and works wonderfully. It gives clarity to CEO and his team that as an organization, where we are going, and how we are doing. And for an employee working below the CXO level, it gives them clarity of how they are connected with the big picture. The only trick here is to successfully come up with the set of 3 to 5 business priority statements that don’t overlap and clearly linked with what company wants to achieve in that financial year.

B. Creating Team-based OKR’s: Rather than cascading, create the team-based OKR’s where Key Results are owned by multiple people. These KR’s go beyond the hierarchies and departments.  The concept is bit more difficult to digest at first, as managers want to hold their boundaries and don’t want people coming from different teams and hierarchy coming directly to their OKR’s.  But it beautifully solves the problem of cross-functional communications and collaborations. Mind you, this needs a bit of change management to occur.CEO and/or COO himself has to take the ownership of communicating why we are doing this.

Summary

  1. Cascading OKR’s results in wasting too much time setting OKR’s.
  2. For successful implementation, Align OKR’s with company’s Annual Operating Priorities or Long-term Strategic Priorities.
  3. Creating a team-based OKR’s aligned with the company’s priorities results in better team communication and collaboration.

Objective & Key Results (OKR) for Strategy Execution

Strategy Execution is an Alignment, Accountability and Execution problem. And execution is most of the time a definition problem too. If the company is unable to defining WHAT and HOW of WHAT; how you can expect the execution will happen.

Once CEO and board has decided on the next projects and strategic initiatives to be executed, defining exactly WHAT needs to be done and how it can be done properly and the metrics that will help us measure progress isn’t an easy task.  There are many goal-setting/policy deployment frameworks, but Objective & Key Results (OKR) is one of those frameworks which is simple and easy to implement.

OKR(Objective and Key Results) is a management tool that helps you to translate Strategy Into Goals and Metrics. Andy Grove @ Intel first made the twist to MBO methodology and created the OKR framework when Intel was trying to capture the market. In a way, it is a bit less formal than the balanced scorecard and Hoshin Kanri approach, but it is successfully employed at many companies. Google uses it for example.

There are two components to an OKR, an Objective that specifies what needs to be achieved in the medium or longer term, and Key Results: these are specific shorter term actions that we need to take to fulfill that objective. Key results should be measurable. Since they are used to track progress, they should also be time bound.

Let’s look at an example: Suppose we were managers of a retail chain. Our objective is to open five new retail branches in South East Asia by November. To achieve that objective we’ll need to achieve the following key results.

1) Identify the locations for our new retail outlets. This should be completed by August 1st.

2) After we know in which buildings we’d like to open their new retail outlets, we need to draft leasing agreements, and that should be done by September 1st. We want all our retail outlets to have a similar look, so we’ll need to renovate the buildings a little. For example, painting interior, put the company logo on the entrance, and this needs to be completed by October 15th.

3) We’ll also need to hire new people to work in the new retail outlet. Hiring should be done by October 1st, because we’ll also need to give the new staff some training and so on. This should be completed by October 25th.

4) And finally, we’ll need equipment, computers, POS(point-of-sale) machines. This should be purchased and installed also by October 25th. At any point in time, we’re able to tell how we’re moving towards achieving our objective of opening the five retail stores by November. If it’s October 1st and we still don’t have the locations for the new retail outlet, much fewer lease agreements, we’re in trouble.

By contrast, let’s say it’s October 15th and the managers from our Retail company headquarters are calling to check in about progress.
We’ll tell them that the staff has been hired and trained, and the equipment installed. So we’re done, and actually, we’re ahead of schedule.

This way everyone can see how their efforts fit within what the organization as a whole is doing. OKR framework is a simple, yet powerful framework to align and define what and how of execution.

Watch this video by John Doerr, who introduced Objective and Key Results to Google when they were 40 member team.