The Power of OKRs and how to get started
In this blog post, we outline the opportunities that come with OKRs and also the challenges getting started. Objectives and Key Results (OKR) is a great and lightweight framework for goal setting and tracking.
- Great, because OKRs have the power to unlock the enormous potential of your teams reaching very ambitious goals. The framework drives alignment, transparency, and motivation.
- Lightweight, because it is easy to understand and (quite often) difficult to master, at least at the beginning.
Here are some things you should consider when starting using OKRs, looking at the easy and the difficult (I would say challenging) parts.
Easy to understand:
You define Objectives, and you identify the corresponding Key Results. That’s it. Yes, quite easy to grasp.
You can use OKRs on every level, from Company Level ( Company OKRs) to Department level (Department OKRs) to Team level (Team OKRs) to the individual level (Individual OKRs). When defining OKRs, we recommend triggering a top-down and bottom-up approach. That assures you get the buy-in and the best possible OKRs. We will post an article about top down bottom up very soon.
A good Objective answers the questions: what do we want to accomplish (as a team or organization).
A good question starting an OKRs session is:
- What would be great to achieve in the next quarter?
- What would you be proud to deliver, and why?
Start thinking bit. I am German, and I know we Germans tend to have some issues with thinking BIG 🙂
Good Objectives are ambitious, inspiring, and qualitative. Here are some examples:
- Accelerate our recurring revenues
- Build a kick-ass product/tech/leadership team
- Implement a user-testing process
- Become a data-driven company
- Continuously delight our users
If you would print it on a t-shirt, that is a good sign.
If you want, you can add the “why” to the “what,” but then the t-shirt thing might not work as it is too long.
- Become a data-driven company to build a product our users/customers love.
The “to” is the why part.
Good Key Results answers the questions: how do we know that we accomplished/achieved the objective and how good are we. It is measurable and quantifiable, lead to objective grading. It does not tell you how to reach it. A good question in an OKRs session is:
How do we measure our success?
Here are some examples:
- Decrease our churn rate to under 2%
- Increase our conversion rate by +6% (from x to y)
- Increase our App store rating +4,3
Take the example:
- Decrease our churn rate to under 2%
It can be measured; you can update it regularly as you make progress. But it would be best if you started thinking about how to move the needle. What initiatives you need to drive to have an impact on that number.
Difficult to master, here comes the tough part.
Defining OKRs
Defining the right Objectives and corresponding Key Results is one of the hardest things to do and requires a great deal of thinking. It has a simple rule: shit in, shit out.
Identifying your blind spots
OKR sessions trigger healthy discussions as you need to agree on what you want to focus on and whatnot. Quite often, you realize that you do not have numbers to track your progress. If a team needs a couple of sessions to define proper OKRs that indicates a misalignment within the group. In the beginning, it is normal that it takes some time to align. Along the way, the process should improve. Ideally, it would help if you had an hour to come up with your OKRs. Yes, be ambitious.
You are overestimating your capacity as a team.
You can read quite often that:
- You can have up to five Objectives per Goal Cycle.
- Each Objective can have up to 5 Key Results.
I would say a good number is to have 2-3 Objectives and up to three Key Results per Objective. I came across a useful reference for having three Key Results per Objective. To ensure a good GPS signal, you need to have three measurement points. Meaning three satellites track your position at the same time. I hope that helps.
If you like to start, considering starting with one good OKR with three Key Results and see how it works for you.
Here is why:
- The more Key Results, the more complicated it gets. Please have in mind each Key Result triggers a couple of initiatives to move the needle of it. Will do the math in a minute, and you will see what I mean 🙂
- Focus on what is essential, as you will have many (operational) topics that need to be done on top of your OKRs and eat up a good portion of your time
Many teams run through an entirely frustrating process. They define their OKRs. Let’s say 4 with 4 Key Results per Objective. That leads to 16 Key Results you need to track and update. Then you kick-off, let’s say three initiatives for each Key Results with lead to 64 activities. That is a lot to coordinate.
When you grade your OKRs at the end of the Goal Cycle, let’s say three months the teams realize that some of the Key Results have not moved.
Thought on timing
Quite often, you can read that the OKR should be achievable in one Quarter (typical goal cycle). We will post an article about the OKR Goal Cycle very soon. However, you can define your goal cycle.
Here is my view on this. I would say especially at the beginning it takes more effort to come up with good OKRs and one-quarter flies by quite quickly, especially Q1. I think that if you find an OKR that you and your team feel comfortable with, makes sense, and spans over more than one goal cycle, that is fine. You can update the Key Results for the next goal cycle(s). The beauty, you can see the progress as you update the Key Results, and you have an Objective that is motivating. If it spans across more than one goal cycle, I would say it will be ambitious, which is good.
The best way to get used to OKRs is to get started. Do not try to master OKRs from the beginning. See this as a journey with an enormous learning curve. Let’s get started!
We have designed two OKR Vi-Boards that help you to get started. You can find them here
The benefits of WIP Limits, Lead Time, and Policies in Kanban
Kanban is an adaptable framework used to enable agile and lean ways of working. It fosters real-time communication of capacity and visualizes full transparency of the teams’ workload. Work items are represented visually on a Kanban Board, allowing team members to see the state of every piece of work at any time.
Three powerful features that enable teams to manage and optimize their flow.
Set WIP Limit (Work In Progress Limit)
Define Process Policies (also known as Policies),
Measure your lead time (another word is cycle time)
WIP Limit:
Defining your WIP Limits per column refers to the number of items allowed in each column at one time. WIP Limits enables teams to focus on getting things done. They get to know their real capacity, can visualize blockers, bottlenecks, and inefficiencies. Most important, prevent them from being overburdened or lax.
It seems to be counter-intuitive to limit your work in progress, especially when work is piling up. But here is the trick. As you focus on less, you increase the output. In the end, you get more stuff done. To proof this, you can measure your lead time for each item.
Lead Time:
When an item (ticket) gets on your board, you start measuring the time, and you stop the timer when the item moves to your “Done” column (the ticket is closed). Measuring the Lead Time of all your items gives you a good understanding of your average delivery time. If you have different sizes of items/tickets, a grouping makes sense to get a more realistic picture.
With that data at hand, you can manage expectations as you can provide an outlook. The discussion is more data-driven and focused.
Process Policy:
Visualizing your process policy for each column at the bottom on the Kanban Board on a post-it make them explicit and visible. They act as a reminder of rules for the team to be followed for a sustainable flow of work. Policies increase productivity by reducing the think-time needed for decisions and discussions when a ticket can move to the next stage.
Start with Kanban by using our Kanban Boards.
How to use the Business Model Canvas in the right manner
The Business Model Canvas is a great tool to visualize your business model (existing or future) on one page. It outlines how your business creates, delivers, and captures value. It has nine building blocks that are all interconnected. If you are not yet familiar with the Business Model Canvas and the nine building blocks, we will post an article soon.
Understanding your business model is crucial to focus on activities that drive your business in the right direction.
The benefits of the Business Model Canvas in a nutshell:
- It creates a shared visual understanding within minutes
- Everyone can contribute and enrich the content as interactivity and interactions boost the team’s IQ
- It enables speed and agility, if used in the right manner, we get to that in minute
- It lets you make decisions based on facts, not beliefs or ego
In this article, we outline the biggest mistakes we see when using the Business Model Canvas and how to avoid it.
Very often, a group gets together and fills out the Business Model Canvas, ideally in one session. A lot of thoughts and ideas are shared, which is excellent to get started. Eg. Who might be your customers/users (Block Customer Segments). What values your product/service is providing (Value Propositions).
The outcome looks like this:
The session is over, and the group feels energized by creating much input.
Then the following often happens.
This is how the BMC looks in let’s say three weeks:
And like this in 3/4/8 months.
Yes, less or no progress, no learning, no validation based on data.
The problem teams are facing is that no concrete actions derive from the input. That is a waste of time and stickies.
How it should like is the following:
Yes, a graveyard of stickies that turned out to be wrong. And that is okay. That means you validated (ideally with data) why the idea was not suitable for your business model for now.
Here is how you drive action using the Business Model Canvas: Apply the Lean Startup approach – Build – Measure – Learn.
That means, every sticky presents a hypothesis. You define acceptance criteria. That means you know when to accept the hypothesis as a real fact, and when do you decline it. Then you test each hypothesis with an experiment that delivers data that you can look at to make this decision.
We will post articles about how to set up proper and pragmatic experiments soon.
Here is an example:
Let’s use the building block Customer Segments. You think one of your customer segments are project managers in IT database projects in mid-sized companies (200-1.000 employees). That is a concrete describion. You can look them up on LinkedIn. You can decide how detailed you want to be. You can start with project managers as well, less specific, and a broader customer segment.
Then you define and execute the experiment gaining data. By analyzing the data, you can make a decision and update the sticky in the Business Model Canvas.
By testing each hypothesis, you gain learning based on data, and therefore you know what works as of today and what does not. That is crucial as you like to work on topics that move the needle. It might sound like much work. Yes, but the time is wisely invested. Too often, we focus on issues that seem to be easy or suit over beliefs. That often fools us. From my perspective, nothing is more frustrating than spending time, resources, and energy on something that is not working.
Happy experimenting and validating!
The leangile transformation
Lean and Agile methods are quite easy to understand and difficult to master. But, as soon as the transformation gets traction, completely new opportunities for teams and organizations open up.
A leangile transformation happens on different levels, beginning from an operational, tactical, and strategic level as well as on individual, team, department, and enterprise levels. We will provide additional insights in separate posts.
See a transformation as a journey where everything needs to come together to unleash your full potential. To master your transition, you should be aware that four steps are essential.
- understand lean and agile values and principles
- understand and use lean and agile methods/frameworks/tools
- adapt them to your specific needs and circumstances
- use failures as learning opportunities
Apply the Lean Startup approach: Build, measure, learn. As mentioned above. You will fail, properly quite often. That is okay and part of the transformation. You conquer uncharted territory. Change or adaption (as I prefer it) is challenging. It costs time, resources and creates some pain. If you recognize this, then you know your team/organization is evolving.
I encourage you to always remember and communicate in challenging situations, all these steps and experiences lead to building YOUR leangile framework.
One word or more on leadership (We will post more on leadership, servant leadership, lead by intent, etc). It is crucial that the senior leadership leads by example. Or like Ghandi phrased it “Be the change that you want to see in the world.” Well you might switch world with company, at least for the start.
Disclaimer: We get inspired by great folks around the world. We build on their knowledge and insights and adapt it to our needs. Therefore we acknowledge them.
