How OKRs fuel innovation
I recently met with a new CEO who had read my previous blog post about OKRs as superpowers, and she was particularly interested in getting to the results I promised: “Faster execution, less confusion, and a founder who’s freed up to focus on growing her business.”
Her business and headcount were growing, but teams were frequently focused on their own goals, unaware of what others in the company were doing. This CEO’s time was increasingly spent refereeing discussions, connecting the dots, and trying to make sure groups weren’t inadvertently working against each other.
Could OKRs help this leader and her company? We talked through what was most important to the company – both for the next quarter and for the next year. As is common in these conversations, both lists started off with too many items. Their quarterly goals were an overwrought laundry list of everything the CEO wanted accomplished to demonstrate progress. And the pile of annual priorities mixed moonshots and the mundane, confusing the scope of the company’s ambitions.
After a tough conversation and serious considerations around tradeoffs, the CEO had a short set of focused OKRs that outlined the company vision and communicated to her teams what their roles were in realizing that vision.
I’ve seen this situation played out countless times at different companies. OKRs can give your organization a framework for finding a way through this challenge. How do they do this?
By explicitly identifying what you’re not doing. OKRs force you to declare the few priorities that the company is focused on. By extension, anything not on that list is something you’ve chosen not to focus on. OKRs help teams avoid distraction, and the odds of delivering on the set of goals you initially committed to go up.
By aligning teams on what’s most important to the company. A typical OKR process involves the company leadership agreeing on high-level company goals, then each team thinking through what they can do in service of those goals. OKRs help teams understand explicitly where the company is headed, and how their work connects to that direction. Gone is the confusion from team members who can’t understand how their project is connected to the company’s goals; gone are the challenges that come from teams failing to understand that others in the company are depending on them to deliver something by the end of the quarter.
By accelerating innovation across the company. When teams know what they’re doing and why, and are equally aware of what they’re not supposed to be doing, the odds of achieving the company’s priorities increase dramatically. As execution improves, the pace at which goals are achieved speeds up – and teams increasingly believe that they’re capable of even more ambitious outcomes.
By establishing metrics to measure progress. Objectives alone don’t achieve the clarity that companies need – key results are the specific measurements that reflect the successful achievement of those outcomes. Those metrics are predetermined, objective, and need to be an honest representation of success. No sandbagging or misrepresenting!
By creating a shared vocabulary for talking about priorities. Once a team understands (a) what the company wants to accomplish and (b) how those accomplishments will be measured, everyone in the company understands how to discuss decisions, trade-offs, and obstacles. When a change in course is necessary, everyone involved knows how to frame the discussion in a way that keeps the focus on the company’s ultimate goals.
When teams see clearly where the company wants to go – and how they’ll know when they’ve made progress – the see-and-feel momentum builds. Few things are as rewarding as predicting an accomplishment and then delivering on it. A huge benefit of committing to OKRs as your goal-setting framework is the clarity of vision that comes naturally to the entire company. With that clarity comes the confidence – for the CEO as well as for the teams – that that vision can (and will) become a reality.
Rick Klau leads the partnerships team at GV, where he connects the largest companies in the world to GV’s portfolio. His workshop on OKRs has been viewed more than 500,000 times around the world.