CEO’s and companies who want to implement Objective & Key Results(OKR) as goal-setting framework are often in the dilemma on how OKR is different from traditional yearly KPI/goal setting methodology. And Why they should invest in a change that comes with OKR implementation. There must be good reason for implementing OKR over KPI(Key Performance Indicators).
The similarity between them is that both are the goal-setting approach but with different purpose, starting points, and execution ownership.Here are 3 major differences in both the approaches:
The purpose of OKR is to achieve and improve Alignment and Execution across the company. The purpose is to enhance the accountability. The purpose is to improve the discipline across the company for how we can grow better & probably faster.
The purpose of annual KPI’s/Goal setting is to measure the performance of the individual at the end of the year. At the start of year, KPIs are set and than are put in under the carpet. At the end of the year, dust is removed from the KPI’s and people are asked to prove themselves as how good they have performed against those KPI’s.
The starting point for OKR is the CEO’s/business Annual Operating Priorities(AOP) and/or Strategic growth & innovation priorities.
The starting point of KPI are the Job Description of the person or should I say the role to which that person belongs to or should I say Google.
OWNERSHIP AND WAY OF EXECUTION
For OKR the execution ownership lies with the CEO or COO or Strategy Head of the company and HR. You have to create a team who understand the business horizontally and a team which can put stretched objectives and the team that can teach people across the company how to set OKR’s which are directly aligned with company’s operational agenda and strategic priorities.
In Objective & Key Results(OKR) framework, you define WHAT needs to be achieved(Objective) and HOW you are going to measure the progress on your Objective(Key Result). The Key Results can be owned by either the Objective owners or team members of Objective owners or team members from other departments. This results in breaking silos and accelerate the execution. Further Objective and Key Results are agile in nature and are not fixed for year. They gets adjusted based on business conditions.
The ownership to set the KPI’s across the company lies with the HR. KPI’s sit in the silo without any context to an individual as how its impacting the company growth or help in achieving the operating plan. KPI approach worked when the organizations were simple, cross-functional collaboration was not that critical and bureaucracy & hierarchy was the acceptable norm. KPI’s are usually fixed for a year and remains static even if business conditions change.
- Purpose of OKR is alignment and execution, whereas the purpose of KPI is to measure the performance at the end of the year.
- CEO or people who understand the business horizontally drives OKR implementation, whereas KPI’s execution are owned by HR.
- The starting point of OKR is your Annual Operating Plan or your Strategic Priorities/Themes, where are input to KPI’s are your Job Descriptions.
This is my ninth blog on the notes and my interpretations on the Blitzscaling sessions. In the fall of 2015, Reid Hoffman began taking session called Technology-Enabled Blitzscaling at Stanford University.Blitzscaling is what you do when you need to grow really, really quickly. It’s the science and art of rapidly building out a company to serve a large and usually global market, with the goal of becoming the first mover at scale. And its also about why organization culture is important for Blitzscaling . Because when you’re growing an organization very fast, you have to make people accountable to each other on a horizontal or peer-to-peer basis, and not just vertically and top-down through the hierarchy.
Session 2 notes can be found here. Session 3 notes can be found here. Session 4 notes can be found here.Session 5 notes can be found here.Session 6 I haven’t covered. Session 7 notes can be found here. Session 8 notes can be found here. Session 9 notes can be found here. Session 10 notes here.
Patrick Collison is the co-founder and CEO of Stripe that allows both private individuals and businesses to accept payments over the Internet.In session 11, Patrick shared learning of being a CEO and production guy. Here are the session notes and my interpretations on the insights shared.
- For your hiring and other processes, people just copy paste processes of bigger companies.People keep following it assuming that it will work for them. For example- Google hire’s people from top universities with highest GPA’s . This might work for Google, but probably will not work for your company. Even ex-CPO of Google accepted this that there is no correlation between higher GPA and higher performance at work.
- Think and take as much time as possible in hiring right guys. Effort spent is worth because that way you will hire the one’s that will suit your organisation culture.
- If you get one great A player, there is a high possibility that your next hire will also be an A player.
- If you are an engineer and don’t know how to do business development, hire or get a guy on board as a co-founder to do that. At Stripe, because co-founders didn’t know how to sell, they hired BD guys very early who has helped them crack big accounts.
- CEO and founding team needs to be involved in the day to day decision’s on the product, at least for the first 5 to 7 years. Because no one else can better understand what should go in the product to solve customer need than founders.
- The reason why product innovation stops in growing start-up is that of people who you hire to support growth adds complexity to the system called the organisation. With more people comes slower decision making and its lowers down the sense of accountability of innovation.To support innovation and keep building new things, create a separate small team of 3 to 4 people to execute the new innovations. And the decision of what kind of new product, idea or feature should this team focus on should be based on NPV or net economic value of that new thing.
- Talk to your prospective customers base as many times as possible before you start building or before you ship the product out of the building. At Stripe, for every new line or feature of the product, they talked to the developer community(their customer base) before the new things go in production.
- As you grow, most of your time as a founder will be spent on communicating with your different teams and defining priorities for them. The transitioning from “Thinker + Doer” to “Thinker + Getting People Think + Getting People Do” is very difficult. And that’s where you have to invest your time in defining processes.
- As company grow, founders and CEO need to shift the way they communicate. You can no longer put all those people in the room to talk to them. You have to pick up the habit of writing in an informal way about what you are thinking, how business is going, what are your learning and even failures that you are encountering in your journey. Written words have much more clear and longer impact. And it gives your employee more one-on-one feeling than those town halls and virtual meetings.
This is my eighth blog on the notes and my interpretations on the Blitzscaling sessions. In the fall of 2015, Reid Hoffman began taking session called Technology-Enabled Blitzscaling at Stanford University.Blitzscaling is what you do when you need to grow really, really quickly. It’s the science and art of rapidly building out a company to serve a large and usually global market, with the goal of becoming the first mover at scale. And its also about why organization culture is important for Blitzscaling . Because when you’re growing an organization very fast, you have to make people accountable to each other on a horizontal or peer-to-peer basis, and not just vertically and top-down through the hierarchy.
Session 2 notes can be found here. Session 3 notes can be found here. Session 4 notes can be found here.Session 5 notes can be found here.Session 6 I haven’t covered. Session 7 notes can be found here. Session 8 notes can be found here. Session 9 notes can be found here.
Selina Tobaccowala was President and chief technology officer at SurveyMonkey. She has contributed alot in taking Survey Monkey global. In session 10, she shared the insights on how she managed the technology and tech people @ SurveyMonkey.Here are the session notes and my interpretations on the insights shared.
- When you architect your software application, not only it should scale on handling traffic, but it should also be able to handle more developers working on it. This basically means that if tomorrow you have to add more technology people in the team, they should be able to work on your code.
- Even if you have ended up with software code base which is monolithic( All software layers are mixed), rather than re-creating the system in new technology, pick up the part of the system which is most difficult and try to rearrange and refactor those blocks in existing architecture.
- When you have to take your SaaS platform globally
- Localisation- which means displaying data and numbers in local language, number system, and currency
- Integrating different payment gateways
- Your messaging
- More technology and customer support people
- A/B testing is important part to validate & improve the user experience of your web and mobile app
- For subscription-based businesses like SurveyMonkey, important metrics to measure is (a) Number of free subscribers (b) Number of subscribers converting from free to paid
- While hiring, focus on behavioural interviewing to reduce bias in selecting candidates. The question in behavioural interviewing aims at learning about your past behaviours in specific work situations. In a traditional interview, you ask general questions such as “Tell me about yourself.” In behavioural interviewing, questions will be like “How would you handle XYZ situation?” Try this in your next interview. At qilo, we have adopted this and it has helped me pick up really good team members.
- Finding up people who can help you scale up the things is damn hard. Pick up people who have both start-up and big company experience.As your company grows, keep people motivated, focused on their role/job & engaging them for the next level of the journey is a challenge.
- To reduce the churn rate, look at the insights from the data produced by your customer. And present that on the continues basis to right stakeholders in your company.
- A tech engineer looks for following qualities before joining a technology lead company:
- The product(s) should excite them as they will be spending many years in building and maintaining it.
- They will be getting the right mentor or people there to work with.
- Other that engineering, what other things they will learn their.
- Anything that is critical to run your business should be in-house. If its outsourced, bring it in-house as soon as possible
- Once you have money, hire a BI analyst who looks at the data and tells you: “what you have built”, “how well it was doing” and “how well its is doing”
- Service oriented architecture helps you to scale the software system. And as well as helps you to strcture your backend and frontend engineering teams in the proper way.
- People management is not for everyone. Put only those people to managerial positions who can serve their teams by acting as servants. For people who want to remain technical, define a roadmap so that they can see how they will grow in your company.
- Successful manager’s get satisfaction by influencing people. Technology people get satisfaction by deliverng the product.
- Plan every quarter what you want to achieve. And track the progress on that every week.If you don’t do it when you are small, adopting that when you will scale will be much more difficult. On tool to implement this is OKR.
- Reduce the time it takes to take your code from keyboard to production. To achieve this automate the deployment process.
Feedback is breakfast of champions. Feedback is for those you are hungry for success. Feedback is for those who never settle on ordinary. Feedback is for those to want to strive for growth.
If feedback is so good, why does it lead to conflicts?
It’s because people do not know how to give feedback and people do not know how to receive feedback.
Behaviours expected from the feedback givers are off coaching, leadership, and empathy. Behaviour expected from the receiver is of learning.
Wherein in reality behaviour exhibited by giver is like an authoritarian and of an assessee is; I know it all.
The problem is much bigger than just receiving or giving feedback. The challenge is of lack of trust and belief between leader and subordinate.
Leaders have to first display a coaching behaviour and lead by example before even giving feedback. You have to pitch yourself as a leader first and ensure that you succeed in pitching.
The day you do correct this core and build managerial effectiveness – You will have a culture of constructive feedback conversations.
Build leaders first before building feedback culture…
Over the weekend, I was discussing with my friends how critical it is to define goals in the organization. The discussion became more meaningful as in few organizations where my friends are working , mid- year goal defining exercise has started. And every time goal setting and performance activity come up, this entire exercise seems to be meaningless and wastage of efforts. Our discussion became more intense when we started seeing specific goals & KRA’s assigned to them in their organization.
One of the friends who is working in one of the top 5 IT MNC highlighted that following KRA’s are assigned to him :-
Help delivery managers in selling services to clients.
Focus on retention of existing clients.
Enhance CSAT score.
Enhance quality of technical solutions.
One of the friends who was working in a software product development company highlighted following KRA’s:-
Deliver excellent quality in deliverables
On time delivery
Contribute in innovation at organization level
Another friend was working with a manufacturing organization has following ones:-
Meet quality targets on monthly basis
Regularly check the physical quality of the raw material
Enhance supplier relationships
And one friend was working in a consulting organization has following KRA’s:-
Develop and inspire people by sharing experience and insights
Enhance operational efficiency by managing timelines and profitability
Contribute in business growth by spending time about industry trends and competitor movements
Achieve high CSAT score by developing new methodologies and processes.
There are 3 major problems with the above defined KRA’s:-
- These are NOT KRA’s, but parameters on which employees should be assessed.Throughout the year, employees are involved in different engagements . In the case of ITES, Software product development and consulting organization, they are involved in different projects and consulting assignments.Their actual goal should be those projects and those consulting assignments. And probably when these assignments are over, they should be evaluated on parameters currently defined as KRA’s:-
- “How much they have contributed in consulter delight”(Rating on the scale of five)
- “Have they done deliverables in-time, on-time or delayed those”, or
- “Have they done any innovate in this assignment”
- “Did she contributed towards process improvements while executing these goals”
- For employees, it’s difficult to give data points against above defined goals that how they have performed on these KRA’s.
Think from employee perspective that if you have to enter details about what you have done throughout the years to achieve these goals, what all points you will enter? And will you be able to collect all those data points which will justify that you have performed well in achieving those ? This is precisely the reason employees give them highest scale when putting data against their achievement against goals which are not defined properly.
3. For manager, it doesn’t enable them to evaluate and give feedback to employees properly .
Consider this, as an employee if I have worked on two assignment through the year, I will keep mentioning same points in above KRA’s. Will this give enough data points to the manager about how his team member has performed with respect to that KRA. Will it give manager enough data on which things she should recognize the employee or coach the employee on for her better performance. Again employee will be evaluated on the basis on perceptions and not on actual data.
Every problem has a solution. Here’s what I think few solutions for the above problems:-
- Define KRA’s and KPI’s which employees are able to correlated with their day to day work. Or why can’t the KRA’s be same as project or assignments which employees get involved in. These KRA’s should push employees to aim high. When aiming high, even failed goals tend to result in substantial advancements.
- Left the exercise of defining KRA between manager and employee. As an HR leader, you should focus on enabling the team on defining the relevant KRA’s. Off course, you need to keep an eye on whether KRA defined are relevant or not from organization respective and within defined boundaries or not. Leaving these exercise between manager and employee will also enhance the employee engagement.
- Use a proper tool to automate the entire process of defining KRA,KPI. And monitor the progress on those in real time basis.
Goal setting and defining KRA impacts talent engagement the highest level, as it impact how employees should perform their jobs and are evaluated. Making KRA more meaningful will NOT only help engage employees but will impact overall organization growth.
In all these years , I have been part of many projects and deliveries. Most of them succeeded, few of them failed. But in most cases,it’s been rare that execution has finished on time or even in time. Off course, in addition to poor planning, changing business condition was also part of the problem. But let me put in bullets what are the exact reasons when projects got delayed or failed overall.
- Multiple managers for the team :-You always want to utilize most of their resources . But somewhere during this utilization, you stop thinking about how to organization teams for faster and better execution. Putting two managers means no one is responsible. Each of them will wait for other to perform.
- Not selecting team members carefully :- How many times managers evaluate people skills carefully before inducing them into team. Or worst, how many times manager provide adequate training to people before the execution starts.
- Team manager giving more importance to specific team member(s):- Manager might be primarily doing it because he/she want to play safe. But then not giving enough opportunity to everyone will demotivate other team member and will impact the team dynamics.
- Not focusing on building trust but execution from day one:- Execution will happen if you take care of softer part of team building. Building trust within team member will enable them to execution in a more collaborative way.They will discuss their problems with each other more freely by putting aside their insecurities.
- Not taking complex problem upfront :- Focusing on the easy part of problems leads to delay at the end when complex problem start getting more complex.
- Doing more meeting with team members with no specific agenda:- Managers love to stand in front of whiteboard and talk about things which are not specific and actionable. Stop doing that and stop getting status updates in meeting. You can use 10,000 tools out there for that. Decide agenda and stick to time limit of meeting.
- Team fails to execute because of manager:- I firmly believe in this. Projects or deliveries fail if you are not on top of your execution. It will fail if you are INTO the execution , but not ONTO the execution. It will fail if you keep working with people who are not performing even after giving number of chances. It will fail if you as leader don’t appreciate team members efforts or put yourself first as compare to your team.
Best of luck for your next execution!!!