okr-handbook

A better way to align teams and get execution done for faster growth

To accelerate growth and get results faster, CEO’s & companies need a simple, repeatable & scalable recipe (a.k.a process) to drive execution on company objectives. The recipe that puts the discipline of thinking, planning and executing WHAT needs to be achieved and HOW it can be achieved in your teams; every quarter.

OKR is one such recipe used successfully by many fast growing companies. qilo “OKR Implementation Handbook” gives you step by step recipe (a.ka. process) to implement OKR in your company.

What’s inside

qilo's OKR Implementation Handbook is goes beyond the basic introduction of Objectives and Key Results. We are sharing a valiable lessons from our number of implementations and failures we have seen during our journey till date.

You'll learn

  • How to start with qilo implementation give brings focus, speed and agility
  • Priciniples of successful OKR implementation
  • Mistakes to avoid
  • Case Studies

Table of Content

  1. Introduction
  2. Why you are implementing OKR’s
  3. Building your core OKR team
  4. Drafting your Company Objectives
  5. Getting buy-in from your business heads & beyond
  6. 4 Principles of successful OKR implementation
  7. Stages of OKR Implementation
  8. OKR design patterns
  9. Apply Principle-1: Define Few Important Objectives every Quarter
  10. Apply Principle-2: Define proper mix of LEAD and LAG indicating Key Results
  11. Apply Principle-3: Create the routine of review to drive execution on OKRs
  12. Apply Principle-4: Enhance managerial effectiveness
  13. Linking OKR with Performance & Rewards
  14. Frequently asked questions

1. Introduction

Most companies today are running on practices & principles defined around 50 years back, invented & promoted by Ford and GE. But many new age companies like Google, Amazon and Netflix have adopted new practices and principles (sometimes called as Agile management practices) that enables them to grow faster. Google, Amazon and Netflix are todays Fords and GE’s. These new age giants might have different products, services or business model, but if you look at their new practices and principles, they can be applied & adapted in any kind of organization.

Adopting these new agile management practices are imperative because new entrants and companies from emerging markets are arriving on the scene and challenging once dominant players. Technology sector companies are moving into all industries and increasing the speed at which traditional competitors need to respond.

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

  1. A third of fortune 500 companies in 1970 were gone by 1983
  2. Many of the top ten companies in 2015, were just born around 1995
  3. Leadership attrition is all time high. And new generation workforce is not staying in a company for more then 2 to 3 years and constantly looking to learn and grow faster.

Few of these principles are around

  1. How they can move fast based on what customers need.
  2. How to build a highly transparent, less bureaucratic and hierarchical company.
  3. And how to build processes that enable their people to think, plan, execute & course correct “inputs” that leads them to achieve desired outcomes.

Outcomes are the results you want to achieve, “inputs” are what will lead to those outcomes. To give you a sports analogy, if you are a coach, and want to win a cricket championship, your “inputs” will be “how you recruit your players”, “conduct player training sessions”, and “enhance effectiveness of assistance coaches”.

Similarly, when you want to grow your company & revenue 10x, your “inputs” will be “your strategy”, “how you recruited your people”, “your plans to achieve your strategy, “your plans to achieve sales & marketing numbers”, “your plans to enhance customer satisfaction”, and “plans to launch & test new products”.

When a company wants to grow its business, the CEO and leadership makes educated bets to achieve the desired growth. If CEO & management team can sense what’s coming in future and remain radically open-minded, they will be able to come up with the better bets. In management jargon these bets are called strategies or company objectives.

But where most companies fail is to get execution done against those company objectives. Execution fails or moves slow in most companies because they don’t have a recipe (a.k.a process) in place to

  1. Link the execution plan(inputs) with company objectives(outcome).
  2. Enable people to create quality execution plans.
  3. Set the cadence of review to keep people focused & drive execution.

Few examples of these execution plans are:

  1. Sales & marketing plans to achieve your sales numbers.
  2. Plans that will help you enhance customer satisfaction/experience.
  3. Plans to launch new products and services in the market.
  4. Plans to enhance the operational efficiencies.
  5. Plans to launch new product/service in new geographies.

Every year, most organizations spend much of their time in discussing these strategic bets aka company objectives. This is followed by the sales targets to be achieved and cascading of these targets for each region and sales manager. Few companies go beyond sales targets and put plans to achieving execution on these company objectives. And they die a slow death in excel sheets or legacy system in next 2 to 3 months post the yearly planning session.

The main reason why those plans die:

  • The plans are not designed for delivery & execution. Hardly few people beyond leadership can corelated & act on them.
  • The recipe (read as simple-repeatable-process) of creating these plans doesn’t existing in most of the companies.
  • And even if the recipe exists, it’s not flexible and agile enough to adjust the external market condition changes and internal company changes.

“Objective & Key Results (OKR) is a framework for CEO’s and companies to build the habit of thinking, planning & execution across teams to accelerate company growth”

Once the leadership defines & finalize the company objectives, it needs to set and communicate the process of implement OKR’s across teams.

  • Every quarter, every team & manager to define OKRs(“inputs”) linked with company objectives.
  • Steps and recipe to create quality Objectives & Key Results.
  • Frequency of reviews on execution. We suggest doing at-least 2 review sessions per OKR cycle. More about this shortly.

OKR Stands for Objective and Key Results.

An Objective defines “What I should achieve”

And Key Result defines “Steps to achieve what or how I am going to measure progress that I am trying to achieve”.

Here are few examples of OKR’s:

OBJECTIVE: Enhance Sales Effectiveness by Q3 end
KEY RESULTS
1. Develop the sales training module by Oct, 15th.
2. Complete training of all filed sales executives in north zone by end of Nov,30th
3. Conduct assessment of all sales executive by Dec,31st.
4. NPS of new training module >=8
OBJECTIVE: Acquire 3500 leads (or signups) by end of Q1
KEY RESULTS
1. Launch 3 targeted online campaigns to achieve 1000 leads by end of Q1.
2. Launch 4 new nurture and email marketing campaigns to achieve 500 leads by end of Q1.
3. Deliver 1000 leads through direct mail campaigns by end of Q1.
OBJECTIVE: Close Leadership Hiring Positions by Q2
KEY RESULTS
1. Interview at least 3 candidates for director of finance & operations position by July ,31st
2. Hire 1 director of finance & operations by Q2 end
3. Interview at least 3 candidates for director of product management

Key Learning: OKR is a framework for CEO’s to align people with company objectives. And build the habit of thinking, planning and executing what it takes to achieve company objectives.

2. Why you are implementing OKR’s

We have seen the two primary reasons why companies what to implement OKR’s:

  1. to get execution done on company objectives and support growth.
  2. Or to do goal-setting exercise 4 time in a year.

Most of the CEO’s who hear the concept of OKR’s, want to implement it because it’s a better way to align people across teams with company objectives and get execution done on it.

But most of the time, CEO’s are unable to drive the implementation of OKR’s in their company. And the people who end up getting the responsibility for implementing the OKR’s implements it in a way that its perceived and implemented as goal-setting exercise; now done 4 times an year. And after few months, people start felling it as another monkey on their head.

At qilo, we have learned it in a very hard way after failing number of times. And we firmly believe that implementing OKR should be to get execution done & support growth, not to do the goal-setting exercise 4 time in a year.

In the sense, much of this handbook is about implementing OKR in a way to support growth and to create the overall culture of discipline within the company. And it all starts with disciplined people. Remember, OKR is a framework for CEOs and companies to build the habit of thinking, planning and execution across its teams to accelerate company growth.

As Jim Collins author of Good to Great says “Every company would like to be the best, but most companies are unable to create a culture of discipline where people across the teams can figure out with egoless clarity WHAT they can do best. And the will to do whatever it takes to achieve the WHAT”.

Key Learning: Implementing the OKR in right way enable you to bring agile management practices in your company.

3. Building your core OKR team

Once the OKR framework makes sense to you, then next step is to define the core team of implementing OKR across the company. The ideal core team should have 3 members:

  1. CEO: Act as the influencer & sponsor for the OKR initiative
  2. Program Manager: Responsible for the adoption of the OKR initiative in the company.
  3. Process Execution Owner: Responsible for executing plans to implement OKR’s.

Ideally, a CEO should be the mandatory part of OKR implementation (at least for the first 15 to 18 months). At the core, OKR solves the challenge of alignment and accountability on executing the company objectives. And who else is more interested in getting execution done on company objectives to accelerate company growth then CEO.

A program manager should be someone who understand company business & operations horizontally and have enough authority to get work done across company. A program manager can either be the Strategy Head, or CHRO, or Chief of Staff or COO. The mistake to avoid here is, if you are still a growing company & your HR head is day-in and day-out busy in closing the hiring positions, don’t nominate your HR head has Program managers. Hiring right should be the 1st priority for HR and she should be completely focused on it. Remember, creating the culture of discipline starts with hiring right people.

A process execution owner can be a team member under program manager who execute the plans to implement OKRs successfully. A process owner will be the one who will be interacting with your people. This person should possess leadership qualities, should be assertive, be an excellent executer and articulator.

As a company if you don’t have the strategy head or business performance team, it’s time to hire a person who will work closely with the CEO to take care of “business performance”. And this new person can be the program manager for running OKR’s across the company. But unless you don’t put a program manager accountable for running the OKR show & making it successful and expect it to run on auto-pilot by a software tool, your implementation will never succeed.

Key Learning: Defining your core OKR team is the first step towards successful OKR implementation.

4. Drafting your Company Objectives

Once you have finalized your core OKR team, it’s time to draft your company level objectives. These company objectives should summarize your “strategic bets” in a way that a lowest level employee can also relate with it.

In our experience, most companies struggle to get these company objectives right first time. When we ask most companies what their Company Objectives are, all they have is their revenue projection and sales target plan.

A typical sales & financial budget plan looks something like below. The problem with just preparing those sales target plans is that it does not providing the enough guidance to the team on how they can achieve these targets.

Your company objectives should not to be a long laundry list like below. The problem with this is because its too long and you are trying to achieve too many things.

And the Company Objective should also not to be a detailed 5 to 10-year plan. Because no plan survives by the time you go to market and try to execute that.

The value of your company objectives is inversely proportional to the number of pages required to express it. Your Company Objectives should be based on your

  1. The strategic bets you are chasing
  2. Your competitive landscape,
  3. Technological & market condition changes.
  4. And above all, what all it will take to enhance your product/service & company to be more customer-centric.

Many companies call their company objectives as strategic priorities or strategic objectives or areas of focus. Regardless of which term you are comfortable with, the intent is to come up with 3 to 5 Company Objectives that can give the entire company the guiding force, focus and tell the people about kind of outcome you are trying to achieve as company in next 1 to 3 years.

Answering below questions might help you in drafting your 3 to 4 company objectives. Your core OKR team should be coming together and should answer these questions together:

  1. What’s the core purpose of your company? Why you are doing what you are doing? For example; For qilo, the core purpose is to “Help CEO’s and companies accelerate growth & empower people working in them unlock their true potential & perform better every day. And to help in creating a world of bit more conscionable organizations”.
    Your purpose must be strong enough that it helps you to connect your people emotionally with your company and help them understand that the company stands for more than just making money.
  2. How your company, your products/services is unique from your competition?
  3. What your company can potentially do better then any of your competitors in serving your customers? And what’s missing to achieve that potential.
  4. What are the gaps in moving your products and/or service effectively and efficiently to the customer?
  5. What are the top 3 barriers for your company to achieve higher sales & margin growth?
  6. What you want to achieve as company in next 2 to 3 years?
  7. Above all, what insights you need to get or hypothesis you need to validate to effectively generate sustained cash flow & profitability.
  8. Let’s look at below screenshots and see which company objectives are more effective and can be clearly understandable.

General guidelines to draft your company objectives

  1. CEO should create a list of all possible company objectives and discuss them with the other leaders to refine them and come up with final 3 to 5 company objectives.
  2. All the company objectives should be mutually exclusive.
  3. Drafting and putting company objectives is about choices. You must do trade-offs when drafting them.
  4. These company objectives should be concrete enough that business heads, managers and individuals in the company can decide what to focus on and what not to do. People in your company should be able to articulate them even if company objectives are not in front of them.

Mistakes to avoid

  1. Avoid putting company objective that if you remove your company logo and put-in your competitor logo, the statements still make sense.
  2. Your company objectives should be simple that even a junior most person in your company can understand it.
  3. Don’t define more than 3 to 4 company objectives.
  4. As a CEO, don’t just tell everyone these are our company objectives, brainstorm it with your leadership team before that.

For further understanding on how to define your company objective, there is a great video from MIT you can watch.

Key Learning: Your company objectives defines your company and leadership priorities and the overall outcome that needs to be achieved in a financial year.

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