You have probably had the experience of teaching someone how to drive a car. If not, imagine the scene.
Your objective is to teach enough basic skills so that your loved one can drive away. You start by teaching safety protocols like “wear your seat belt” and “always keep two hands on the steering wheel at “9 and 3.” Then you explain the functions of the gas pedal, brake pedal, gears and all those shiny buttons on the dashboard. Then you offer encouragement as your loved one shifts into gear and drives from 0 to 30 mph within a minute. Your Key Results (KRs) often follow that formula “from x to y by date.”
Objectives are defined as “what you do.” They are qualitative and each person in the organization can write their own.
Key Results are defined as “how you measure that objective.” They are quantitative and answer the formula “as measured by.”
OKRs are defined as “a management methodology that helps people focus efforts on the same important issues throughout the organization.”
For a 3-minute excerpt of a keynote presentation on OKR Leadership that I provided in December, 2019 to over 700m business leaders in Denver, CO, click here.
The “Father of OKRs” title is attributed to Andy Grove, the founder and CEO of Intel. You may know that Andy literally wrote the textbook on semiconductors in 1967, well before Silicon Valley attracted the largest migration of assets in human history. You may also know that Andy wrote “Only the Paranoid Survive” in 1996, as a reminder of market volatility and the need to measure the details. His father was killed at Auschwitz, and he fled Nazism with his mother at age 20.
John Doerr worked for Andy. John learned how to implement OKRs. Then, in 1997, John made an $11.8M investment in 12% of Google when working as a venture capitalist at Kleiner-Perkins. The co-founders of Google wanted to organize data globally. When John introduced OKRs to Google, Larry Page said, “Well, we need to adopt some management approach.” The rest is history. I recommend John Doerr’s book, Measure What Matters, (2018) for examples ranging from the Gates Foundation to Bono.
Here are my examples of teaching OKRs to leaders in a small business and a large business.
I was consulting the CEO and owner of a $40M retail business that required succession planning to transition the next generation of leaders. At a management meeting I observed that the managers did not describe their business using any metrics. I asked the owner, “Where are the metrics that these managers are using to drive their business?” He sighed with fatigue, like so many small business owners. I provided OKR definitions and templates and a free course on OKR leadership skills that you can access here. Then I worked with several key managers. One manager’s objective was to increase profit margins by 6% Y/Y. KR1 was to identify current measures for sales, expenses, overhead, profit within 30 days. KR2 was to distribute a one-page business summary to all other managers within 40 days. KR3 was to track and reward increased profit margins within 60 days. The result of his OKR leadership was that he modeled accountability, transparency and business results for the other managers within 60 days.
I was consulting the president of a Fortune 500 business with $5B in annual revenue and over 10,000 full time employees in North America. Their 20-year-old company grew quickly as a result of acquisitions. The result was that silos of trust and information sharing were preventing consistent accounting practices. I asked, “How are you measuring your desired results?” He stuttered and said, “Not well. We increased revenue and retained a lot of good people but sometimes I wonder if we’re measuring what we need to be measuring.” I provided some OKR definitions and templates and vendor resources. Then he defined his OKRs and shared them with his top 60 leaders in a training that I delivered. Then I provided team coaching for those top 60 leaders so that they could cascade OKRs throughout their organization for three months. The results were uneven, as we expected. People were experimenting with the OKR language as if they were new vocabulary words. Three months of uneven applications passed. The OKR process gained momentum in the annual meeting when the president spoke to 650 of their top leaders. He declared, “As long as I’m in this role we are going to implement OKRs and increase our profit margins.” He shared his business OKRs. Minutes later, I followed him onto the main stage to introduce OKRs to those 650 leaders. I led demonstrations with 6 of his top leaders. Then I lead workshops to practice implementing OKRs within their organization. His KRs included training, technology, and rewards tied to increased profit margins. We are still assessing the impact of that OKR process.
The challenge of OKRs is not in introducing them as an initiative. Anyone can introduce an evidence-based initiative.
The challenge in the OKR process is adopting an ongoing cadence of accountability and rewards. Learning requires feedback. Managers, by definition, need to maximize the productivity of others. The core skill of managers is coaching. We trademarked the AD-FITTM coaching process to teach managers the required steps to provide feedback to others. Our experience is that those managers who adopt the AD-FITTM process accelerate the performance and behavior outcomes of others. For a free course on how to apply the AD-FITTM process for Managers click here.
Smart managers and leaders typically understand OKRs pretty quickly. The challenge is “in the details” as Andy Grove reminded us. Over 30% of the companies on today’s NYSE and F500 did not exist 20 years ago. There is no reason to assume that your organization should exist 20 years from now.
We should talk about your organization if you need to respond to market changes. If you would like a free course on OKR leadership skills with definitions and templates, then click here. We would be delighted to work with you.
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