I’m often asked how to set “good” OKRs (Objectives and Key Results) and how these should fit around a business’s KPIs (Key Performance Indicators). These concepts are often confused or conflated and it’s easy for the meaning to get lost in the jargon.
KPIs are measures of the health of a business, but OKRs are more than this – they are measures of change and ambition. They tell the story of where you want the business to go and over how long.
Take Jay. He’s been glued to his desk for the last six months, fuelling himself with doughnuts and coffee. His dad died last year from diabetes complications, and he doesn’t want to go the same way.
Jay has been tracking his weight, his daily step count and his resting heart rate since he got a fitness watch last year. (He thinks of these as his KPIs, since they’re ongoing measures of his health.
But he’s realised that simply monitoring these isn’t enough. He isn’t getting any healthier.
Jay decides to set himself a goal – he’s going to take up running and get fit. He’s going to set himself some OKRs.
He decides on the following:
He proudly tells his family about his plans over dinner (takeaway pizza again – the fitness kick isn’t starting until tomorrow). His teenage daughters, Abby and Kat, barely look up from their phones.
Jay has already run into problems!
An Objective (i.e. the “O” in the OKR) should be inspiring. Nobody is going to be motivated by a “who cares?” Objective.
And Key Results should be ambitious, outcome-driven and specific, communicating where you want to get to over a specified time period (e.g. hit £100m in sales by Q3, or become the city’s best-rated hotel on Tripadvisor by the end of the year).
Sally, Jay’s wife, thinks he could push himself harder. She has heard that OKRs should be slightly scary. What if he worked towards running the London Marathon later in the year?
Jay has a nagging feeling about this and is not sure why. But he follows Sally’s suggestion of making this his Objective - it certainly ticks the box of being scary!
He starts off well, and even manages to find some tasks for the first week that don’t involve getting off the sofa – he orders some designer running gear and creates a spreadsheet to keep track of his progress towards his Key Results. He invests in some “smart” kitchen scales that will sync to his fitness app to track his calorie intake in real time.
In the second week, he goes out running twice. He manages four times the next week. His running speed increases by 0.1 km/hour. He fills in his spreadsheet and feels a virtuous glow.
But when he goes to weigh himself, he is horrified to see his weight has gone up. While he’s having a beer to drown his sorrows, his daughter, Kat, comes in and asks what’s up (she knows a bit about fitness since she plays for the school hockey team).
When he explains, Kat rolls her eyes and gives him one of her trademark withering looks. Doesn’t he even know the basics about fitness? She explains that if you are building muscle, your weight can actually go up at first, since muscle weighs more than fat. Also, the amount of water in the body can cause weight to fluctuate from day to day. She says he should measure body fat ratio instead. And he should stop obsessing over calories – that’s so last year.
Jay doesn’t want to fork out on a new set of scales that measures body fat ratio. He decides the quickest way to move towards achieving his Key Result would be to try intermittent fasting.
The next week, Jay’s spreadsheet shows that he’s dropped half a kilo in weight, and he completed seven runs. But the numbers don’t tell the true story - that he only ran round the block once each day! His drastic calorie-cutting has affected his motivation and he has no energy to do big runs. But since he’s only running a hundred metres or so, he can sprint round, so his speed in km/hr is looking pretty healthy.
Jay has fallen into a classic trap. If Key Results become merely a box-ticking exercise, this doesn’t help a business to move forward towards its goals and it can even store up problems for the future.
Take the example of a company that has developed a fitness app. They adopt a fantastic marketing plan and manage to achieve their Key Result of 1000 downloads by the end of Q1, but there is a known issue that it can be tricky to sync the app with certain older fitness watches.
They’ve been too busy to recruit people for their customer support team, so support queries are going unanswered. Their customer satisfaction rating nosedives.
A blow comes when Jay doesn’t get into the London Marathon – he hadn’t realised it was a ballot system. He tells Sally he’s going to forget the whole thing.
Sally suggests he could try and enter another marathon – the New York or Boston one maybe? He says he can’t be bothered – it would be too time-consuming and expensive. Sally asks an interesting question – why did he want to take up running in the first place?
Jay does some soul searching. He realises that running the marathon was never really the point. The outcome he really wanted was to have more energy and feel more positive about himself. Sally suggests he should reframe his Objective accordingly.
When deciding upon an Objective, keep asking “why?” until you find the answer that resonates; the one that tells the story of why you’re doing what you’re doing.
For example, a mental health charity might initially decide its Objective is to increase the money it raises each year. But if they ask “why?” they might end up reframing that. Maybe they want to be the mental health charity that helps the greatest number of people. Or the mental health charity that has succeeded in raising public awareness of a particular issue.
Jay decides he should change his Key Results to align with his new Objective. His younger daughter, Abby, tells him about an app where you can chart your mood and energy levels and he decides to incorporate this into his plan.
Then something strange begins to happen... Jay finds he actually likes running! He has more energy now he’s stopped counting calories and he discovers some beautiful running trails through the countryside. He enjoys the headspace and listens to calming mindfulness tracks from his mood tracking app. He enters the Edinburgh marathon and is excited when he receives confirmation of his place.
This transformation has come about because Jay has successfully reframed his Objective and aligned his Key Results with this.
He has invested his attention and focus in feeling more positive about himself, as well as improving his physical fitness, and he’s even come up with some new tools to help his progress.
Jay checks in on his progress towards his Key Results. He’s consistently completing longer runs and his mood has improved – helped by the fact that he can almost squeeze into his University jeans now! He’s starting to feel like his old self again.
He realises that his KPIs (the ones he’s been tracking with his fitness watch - weight, daily step count and resting heart rate) could be better aligned with his OKRs. Choosing the right ones to monitor will help ensure he ‘locks in’ the progress he has been making through his OKRs.
He decides on the following:
Jay is now so confident about achieving his OKRs that he decides he’s going to set himself a second Objective – to get sponsorship for running the marathon and raise money for charity in memory of his dad.
He knows he can’t do this by himself – he’s going to need a really strong, motivated team behind him.
Who can he possibly ask to help…?
TO BE CONTINUED….
In Part Two, we will consider how to empower teams to achieve OKRs, as well as pitfalls to avoid.
If you’d like to talk in more detail about how to set OKRs and KPIs that will improve innovation, efficiency, productivity, morale and ultimately profitably in your business, contact Matt Little at Blue Ocean Insight.