We're okay with OKRs - Part One
Rob and Jay are joined by Lead Product Manager Nick Alexander for an in-depth survey of OKRs (that’s Objectives and Key Results); what they are, what they aren’t, and how to use implement them in your practice of product management.
Hosted By
Jay Cosgrove
senior product manager
Special Guest
Nick Alexander
vice president of product management
Episode Transcript
Rob Hall: This is the experience lab, the official podcast of digital scientists from Atlanta, Georgia. We’re an experience lab that explores and builds digital products. My name is Rob Hall, and I’m the Senior Director of Product at DS.
Jay Cosgrove: And I’m Jay Cosgrove, senior product manager.
Rob Hall: Thanks for listening.
Alright, so Jay, you’ve had some projects going on lately around the house, haven’t you?
Jay Cosgrove: Yep. We have a second kid on the way. And so we are in the process of finishing a basement.
Rob Hall: Nick, did you know he had a kid on the way?
Nick Alexander: That’s pretty fantastic.
Jay Cosgrove: Yep.
Rob Hall: I think so.
Jay Cosgrove: It’s exciting and terrifying all at the same time.
Rob Hall: Do we know if it’s a boy or girl?
Jay Cosgrove: We don’t, so we’re at like 14 weeks? I think now. And I think the second ultrasound is scheduled for 25 weeks. So in a couple months.
Rob Hall: That is very exciting.
Jay Cosgrove: Yeah, very excited. Like I said, slightly terrified.
Rob Hall: You sent me a picture the other day you were working with a planer in your shop?
Jay Cosgrove: Yeah. I’ve been looking for a webinar for a long time.
Rob Hall: Yeah. For people out there who are more into technology and not into woodworking.
Welcome to the experience lab where we talk about all sorts of things. Would you explain what what a planer actually does and why you should own one?
Jay Cosgrove: Yes, I mean, I’ve just owned one. So I don’t know if I’m an expert to speak here. But it’s going to have a rotating blade in it, that’s going to take off a layer, an even layer from from your board that you run through it. So I’ve got a really old deck that is on the side of my house. It’s more of a stairwell. And I bought it for that pretty much because the boards are two by fours or inch and a half thick. And so I’m planning them down instead of buying new lumber, and it’s awesome. It was mostly an excuse to just buy a planner though, if we’re honest.
Rob Hall: Well, sure. planners also, like if you buy really rough hewn lumber, and you’re wanting to prep the surface of the board for use on decking or, you know, if you’re building furniture cabinetry or things like that.
Jay Cosgrove: Yeah.
Rob Hall: They they come in handy. Nick, you’ve had some projects going on too lately, haven’t you?
Nick Alexander: Yeah, just just a few. We’re always always remodeling.
Jay Cosgrove: You finished your house up in South Carolina. So what is the current project?
Nick Alexander: Of course, because the first renovation we did on our own master bath was not good enough, we decided to do a take two and after six or seven years, we’ve learned a lot to make it a lot nicer. So that’s what we’re going after.
Rob Hall: That’s exciting. It feels like during the quarantine, a lot of people that have had deferred maintenance or various projects that just weren’t getting done have suddenly found lots of time to do them.
Jay Cosgrove: Yeah. And they’re sitting around staring at their house being like, I want this to be better.
Rob Hall: Exactly. Yes. Yes, I know, at least for me, living in a log cabin in the middle of the woods, fighting off nature is always a constant battle. The latest thing for me has been re staining the house and replacing some rotten wood and re cocking old joints and things like that. Always spraying for bugs.
Nick Alexander: Yeah, good for you. I’ve got that cedar siding, and I’ve got all kinds of wood. And I just need to go around the house.
Rob Hall: That’s the other thing. If it’s not carpenter bees, it’s the woodpeckers coming up after them. So you get the carpenter bee that drills the hole into the side of the house and lays their eggs and then the woodpecker instead of you know, waiting for them to hatch. They just obliterate the side of the house to get to the larva.
Nick Alexander: Yes, they do.
Rob Hall: And it’s a disastrous mess when they do that.
Jay Cosgrove: That happened to my house this year, too. They’re like, pest guy, right at the beginning of the season was like, yeah, you should definitely get some wood bee traps. And I was like, I don’t know if it’s that big of a deal. And then literally right in front of my eyes on my back porch. I see this like Carpenter bee digging this huge hole in my frickin rally.
Rob Hall: That’s it, man. Whenever I’m walking around the house, and I see a little pile of sawdust somewhere I just know. Like, All right, let me find it. Where’s the bug spray?
But we’re not here to talk about house renovations today. Today, we’re joined by our esteemed colleague, Mr. Nick Alexander, who is our lead product manager on the pm team at Digital scientists. Hello, Nick.
Nick Alexander: Hello, everyone.
Rob Hall: Nick, you’ve been doing this for a few years, haven’t you?
Nick Alexander: Yeah, just a couple men focused in the software industry for the past 10 years and really the product side of the world the past six.
Rob Hall: Nick and I have kind of a funny history together this last decade. It’s been interesting because you and I actually went to high school together. We may have been band nerds.
Nick Alexander: It may have been.
Rob Hall: Ironic that after high school, we went our separate ways. Went to college, got into different careers, and somehow over a decade later managed to find our way into product management. And then here we are working at the same company.
Nick Alexander: It’s crazy how to stray paths that were nowhere close to each other ended up near the same.
Rob Hall: Yeah, exactly.
Jay Cosgrove: You guys are cute.
Rob Hall: I know. Thanks, Jay. It is odd getting confused that, you know, people think we’re related.
Nick Alexander: Yeah, that is. That is weird.
Jay Cosgrove: Why is that?
Rob Hall: It’s not as bad, at least to me. I think the resemblance is stronger between Nick’s brother, Jason and I.
Nick Alexander: I would agree with that.
Rob Hall: It’s actually quite stirring.
Jay Cosgrove: I don’t know what that means. But
Rob Hall: Yeah, awkward. Anyway, today, we want to talk about okrs. That is sometimes a concept that’s buzzwordy in the product management realm. But okrs, meaning objectives and key results. They serve an important purpose in the life of many product managers, some don’t ever really encountered them. Or it’s very likely the case that you have encountered them as a PM, and you may not have known exactly what it was you’re dealing with. So today, we want to have a conversation about okrs, what they are, how they work. What are the pros and cons of implementing them? What are the things that that makes sense, in a product management process, where okrs could be helpful, and maybe where they might be not so helpful.
Jay Cosgrove: Okrs are fairly new to me, I would say in the last like three years, and actually is right around the time that I started at DS, that I was running into some issues with plotting product roadmaps and using something other than okrs. And the roadmaps. I think probably at the time, it was just in general initiatives or features, that we’re kind of plotting the course. But as we all know, in our beautiful world of product management, that is very agilely things change. And one of the hardest things is if you put stuff on paper, like a roadmap, and that changes is re explaining to all the stakeholders why that changed, you know, who may not be very tight to the process, and are just looking at a quarterly basis at something. So I had actually reached out to a former senior pm that had kind of mentored me back in the day. And she works, at indeed now. And she was like, hey, you should really check out these things called okrs, we’ve switched to them. And it makes it a lot easier to align everyone. And she said that one of the issues they were combating is certain stakeholders would get attached to a feature, and not to the actual result that they’re trying to create. And when you need to pivot from that specific feature, but it was becoming very difficult. But when you switch to using key results or objectives that you’re tracking towards, it becomes much easier to have that conversation. Because then you can say, hey, that feature didn’t quite produce the result we’re looking for. So we’re switching to something else. So that was my intro. She wrote me, she sent me a couple articles online. And then I think shortly after that we were reading through, inspired, and as a team. And he makes a kind of a deal about halfway through the book about okrs. And yeah, we implemented it.
Rob Hall: And inspired Of course, being the book from product management guru, Barney Kagan.
Jay Cosgrove: That’s right.
Rob Hall: I want to frame this by saying like the concept of the OKR itself is really not new. As an acronym. That model has developed over decades, I think they really kind of evolved into the model that’s defined today at Intel during the 60s and 70s. But in terms of being part of the product, modern, what we consider modern product management, I think that’s probably more recent, they were utilized quite a bit at google over the last decade or so.
Nick Alexander: Yeah, they definitely have a history to them. I think the world is confusing in terms of abbreviations, and whether it’s okrs, and we’ll talk a little about KPIs or smart goals. I mean, there’s so many different metric driven items out there. But I think what of all of us have clung to, especially in modern day and product management is the fact that it’s objective based. And that it’s a stretch goal. And I think that’s key for as we talk about okrs. Because without those two things, you have one of the other acronyms. And when Jays already briefly mentioned results, but it’s not just the result itself, but it’s the making sure that it’s outcome oriented. And so as I think about okrs, they’re used as performance indicators to stretch the business, and not necessarily for employees. And so that’s how I differentiate it from some of these other metrics and tools. If you end up tying okrs to performance reviews and other things like that, then you become too safe to lock down. Safe goals will never really help your business breakout or be a star in anything and so okrs really need to stretch your team and I just want to spend a minute on that. It’s a stretch goal, right? If you got a manager or you’re in the business to hit an okr dead on, then you’re okay or is wrong, or you’re doing KPIs or you’re doing one of these other items. But it’s making sure that you have an inspirational statement, that can lead to an outcome that you’re looking to field or that you desire as a business.
I think there’s a lot that goes on with okrs, especially that there’s also different deviations of okrs. So I see okrs, it’s very much a hierarchy within the company, you can have project okrs, you can have team okrs, you can have company okrs. And then you can have like a board or executive team vision, okr and results, because that’s what all this is about results, we want to increase in the performance or the results of the company to make sure that we hit an objective. And results are never achieved at the top, but they’re achieved at the bottom and filtered up.
Rob Hall: Right.
Nick Alexander: So that’s, that’s the key. But in order to start at the bottom and filter up, you got to set it at a very clear pace from the top. And so that’s where you get this, whether it’s sinusoidal, or this up and down, but you got to have a clear directive at the top that sets these okrs, it has to follow the hierarchy all the way down, so that you can have those results and filter it back up.
Rob Hall: So essentially, leadership has to say, this is the vision and in very concrete terms, we’re going to shoot the moon.
Nick Alexander: That’s right.
Rob Hall: And we’re gonna do it before the end of the decade. Ready, set, go. Now to figure out exactly how we’re going to achieve that, that goal, that objective in measurable chunks.
Nick Alexander: And it has to be clean, I’ve seen plenty of deviation from those okrs if they are not clean and understandable.
Rob Hall: I think that’s an example of where trying to apply it. And this is something I’ve been seeing a lot lately of trying to take the OKR model and applying it to HR. So personnel management, personnel reviews, performance reviews.
Jay Cosgrove: Is that where it started in HR?
Rob Hall: No, I don’t believe so. But I think when you’re dealing with more, more abstract concepts, so when and when you’re talking about performance reviews, you’re dealing often in the abstract, especially when you’re dealing with a more creative type of person or a more creative discipline. It’s very hard to measure success in a quantitative way. And so I think that’s where that need for clarity can become very difficult to achieve, and where okrs may not be the best fit.
Jay Cosgrove: Now, I think that’s fair. And what I think might be helpful for, especially for any listeners that are like brand new to this concept is maybe laying out an example of clear versus unclear. I don’t want to put anyone on the spot. But Nick, do you want to take a stab at that? What would an objective with some good clear key results look like underneath them?
Nick Alexander: Let’s come up with one here. So I think if you start at the vision for a company, and so let’s start at the highest level here. And let’s say you’re a seller of let’s go with educational software, you know, one of your goals, your vision, your mission might also be around you want to become the largest seller of that educational software. And in order to do that, you need to make up 30% of the market. So immediately, we’ve clearly stated that our objective as a company is to become the largest seller of educational software. In order to do that we need to make a 30% market share. So that could be a three to five year vision, right? That could be 10 year vision. But then the company’s OKR for that annual year might be all right, well, let’s become the largest regional seller of that educational software. Right. And by increasing, let’s say, market share by 10% year over year, or increasing win ratios, or hitting quarterly revenue of 20 million, whatever million, right?
Jay Cosgrove: So the key result, there would be the percentage increase then, right? That’s what it was. Right?
Nick Alexander: Yeah, you’re being very clear and direct about which part of the largest seller you’re going after. And that helps your team define. So then, as you said that as a company, right, you’ve got that percentage increase. And now, let’s say you’re on the support team for that company. And, you know, this is what a lot of companies struggle with, you know, how do I how does what I do matter? How does it relate to the overall business objectives and that transparency, and that’s the key for okrs is the transparency for the organization. And so now the support team knows, okay, well, we want to increase market share by 10% in order to become the largest provider of educational software. Well, what can I do about that? It’s probably around customer retention and making sure let’s say over the next quarter, and this is where we get to the quarterly objectives that, you know, I can increase customer retention by 20%. And that’s in order to build stronger relationships with my clients. So now you’re reducing churn, you’re keeping a stronger customer retention number, so then your sales team can go out and help the other side of that okr and get that new sales. And so it’s just that clear, transparent line throughout the organization, from top down, where everybody’s after the same objective.
Rob Hall: On the issue of transparency, right there. Nick, could you dig in a little bit more into how you’ve experienced organizations both succeed at setting those goals from the top down? Because I feel like alongside the issue of transparency, there’s also an issue of accountability and alignment?
Nick Alexander: Yes.
Rob Hall: And okrs to me, they’re an excellent tool to achieve alignment but I do agree that there’s an inherent need for transparency for them to even have, like a chance of being effective.
Nick Alexander: Yeah, I agree with that. And I do think it starts with focus, I think a lot of what executive teams suffer with is focus. You know, they can set three or four great goals for the year or goals for the business or objectives for the business and whatever they want to call it. But honestly, focusing on one, two, max three objectives. Without that focus, then you’ve got even less of a focus as you disseminate that transparency down throughout the organization. And so you can think of it as an exponential effect, as you increase your objectives. Think about the number of objectives that that creates on your company and organization. And so I just see this, this tree expanding. And without that focus and clarity from the top, I’ve seen executive teams go very different directions. And all of it was under the right assumptions. Everybody was trying to do the right thing by the company. But without that focus, without that executive leadership to say all of these ideas are great, but we’re going after these two, then it just trickles down throughout the organization, it causes a lot of confusion, a lot of wrong direction, and just makes it harder.
Rob Hall: Right. How do we effectively differentiate between okrs and KPIs?
Nick Alexander: So I do see KPIs is a little more project or employee focused, very clean, simple reporting measures that can be tied to performance. So if I need to increase throughput, let’s say I’m in some type of logistics firm, or if I’m in a manufacturing facility, and, you know, I need to increase daily throughput by 50. car batteries. Right, right. It’s very clear, I need to go after that. There’s different KPIs, there’s input and output and leading and lagging and qualitative and quantitative, but all of them go after the same key thing of I needed a clean, simple, measurable reporting, that I can, I can help time my –
Jay Cosgrove: Yeah, I like that a lot. Because I think KPIs are really the metric that are being tracked. Whereas like the key results inside of okrs is tracking an outcome. So it’s using the KPI metric, potentially, but it’s, it’s more outcome focused. That’s how I’ve always understood it.
Rob Hall: So on one hand, you may have the battery manufacturing facility, your KPI may be we need to increase production of lithium batteries. And we need to, we need to ship 1000 more units by the end of the quarter. So while the KPI may be we’ve increased battery production by 1000 units per quarter. The overall OKR is we have increased manufacturing efficiency by 25%.
Jay Cosgrove: Yeah, potentially. So because like the individual KPIs can ladder up to it, you know, but I think in general, when you say KPI, it’s like Nick is saying it’s like it’s tracking the number of batteries created, right, but that’s not really like an outcome. That’s just a number.
Rob Hall: No, it’s not yeah, that’s right.
Jay Cosgrove: And so when you get into okrs, I think one of the big things I discovered is they’re freakin hard to write. Like, they’re hard to write really good ones, because you have to get into the actual outcome into the actual objective that you’re doing. Which gets you out of the granular like, individual metric or individual feature in it takes you up a level to say, what outcome are you hoping for from your user? What outcome are you hoping for your business? And that is definitely a mindset shift.
Rob Hall: Right? How do you approach applying that principle to something that is not necessarily as obviously measurable as software developers mean? We could say well, you know, development needs to push out x number of points worth of code per sprint or whatever, how do you approach applying those principles? Because in software development, we’re not necessarily shipping units. We’re not shipping batteries. We’re not cranking out auto parts. It’s not a conveyor belt.
Jay Cosgrove: Yeah, you know, your okrs should never be story points, I think you’re doing it wrong if that’s if that’s the key result that you’re tracking. I think, you know, for example, one overarching objective we had for a quarter was like increase the number of potential candidates to use the application. And that involved quite a few different things. But the key results were underneath it, we’re tracking kind of individual areas that we’re opening up sources for. And so that had nothing to do with story points, had nothing to do with individual features, even was really just about allowing the developers and the product managers and the designers to be the problem solvers that they are and attack that goal of how do we increase the number of users within kind of the set metrics that we’re going to put in place underneath it? And that gives them freedom to explore freedom to fail and change? And I think that’s really where the power comes.
Nick Alexander: I’m glad you mentioned design. I mean, if we want to talk about abstract okrs, and how do we hone those in, I think, really going after, if you think top down from a design organization, for design managers out there, if you want to, let’s say improve the performance of your team, right, the question is, okay, well, what key results you put on the back of that, and maybe it’s removing three key bottlenecks that caused delays, or reducing the time of interviewee acquisition by week for research. But making sure that you still get creative with that okr enough. So you can put that measurable result on it. If you’re part of the team, and you need to design a product for a client, then is it delivering a functional prototype by the end of q1? Is it have a beta validated by 20 users? Or you can take it a different direction? And if it’s really you know, you’re nearing the end of your product design lifecycle? Is it making sure that you deliver new product designs that produce, let’s say, five key product testimonials within the first 30 days of launch? So you’ve influenced, you’ve experienced delight and a product, and now you’re getting a testimonial out of it. And that’s really going up the chain of command to helping the marketing team and other parts of the business.
Jay Cosgrove: Yeah.
Rob Hall: It’s really effective. Because you’re not just tying the delivery of the thing. You’re wrapping in a measure of value to the customers. Oh, that’s right, then that’s, that’s the point. You’re focusing on the outcome.
Jay Cosgrove: Yep and think about even the concept of user stories, right? So if you’re, if you’re getting into the world of agile, that’s one of the first things you’re going to come along and spend time crafting is how do you write a good user story? And one of the first things that Rob even used in my interview, as like a litmus test a little bit for me was like, would I attach a value statement to the end of a user story? You know, when when I, I think you had me write, or say one based on like a cap for a bottle of water or something like that? I can’t remember. It was ridiculous. But like that value statement is so critical, because it tells you is that person focused on the individual feature or, and what the user is going to benefit from that feature, because that’s really what matters at the end of the day. And okrs, in my view, is, if done correctly, are kind of the big brother to user stories, because they’re written in a way where they just attach everything we’re doing to the users value, rather than the individual feature that we’re going after, or even then the number of work products that we produce.
Rob Hall: And that’s that’s really important when you’re trying to get away from a feature based mindset.
Jay Cosgrove: Exactly.
Rob Hall: Thank you for listening to the experience lab from Digital scientists. To learn more about our team and the great work we do or even hire us, visit our website, digital scientists.com
Rob Hall: This is the experience lab, the official podcast of digital scientists from Atlanta, Georgia. We’re an experience lab that explores and builds digital products. My name is Rob Hall, and I’m the Senior Director of Product at DS.
Jay Cosgrove: And I’m Jay Cosgrove, senior product manager.
Rob Hall: Thanks for listening.
Alright, so Jay, you’ve had some projects going on lately around the house, haven’t you?
Jay Cosgrove: Yep. We have a second kid on the way. And so we are in the process of finishing a basement.
Rob Hall: Nick, did you know he had a kid on the way?
Nick Alexander: That’s pretty fantastic.
Jay Cosgrove: Yep.
Rob Hall: I think so.
Jay Cosgrove: It’s exciting and terrifying all at the same time.
Rob Hall: Do we know if it’s a boy or girl?
Jay Cosgrove: We don’t, so we’re at like 14 weeks? I think now. And I think the second ultrasound is scheduled for 25 weeks. So in a couple months.
Rob Hall: That is very exciting.
Jay Cosgrove: Yeah, very excited. Like I said, slightly terrified.
Rob Hall: You sent me a picture the other day you were working with a planer in your shop?
Jay Cosgrove: Yeah. I’ve been looking for a webinar for a long time.
Rob Hall: Yeah. For people out there who are more into technology and not into woodworking.
Welcome to the experience lab where we talk about all sorts of things. Would you explain what what a planer actually does and why you should own one?
Jay Cosgrove: Yes, I mean, I’ve just owned one. So I don’t know if I’m an expert to speak here. But it’s going to have a rotating blade in it, that’s going to take off a layer, an even layer from from your board that you run through it. So I’ve got a really old deck that is on the side of my house. It’s more of a stairwell. And I bought it for that pretty much because the boards are two by fours or inch and a half thick. And so I’m planning them down instead of buying new lumber, and it’s awesome. It was mostly an excuse to just buy a planner though, if we’re honest.
Rob Hall: Well, sure. planners also, like if you buy really rough hewn lumber, and you’re wanting to prep the surface of the board for use on decking or, you know, if you’re building furniture cabinetry or things like that.
Jay Cosgrove: Yeah.
Rob Hall: They they come in handy. Nick, you’ve had some projects going on too lately, haven’t you?
Nick Alexander: Yeah, just just a few. We’re always always remodeling.
Jay Cosgrove: You finished your house up in South Carolina. So what is the current project?
Nick Alexander: Of course, because the first renovation we did on our own master bath was not good enough, we decided to do a take two and after six or seven years, we’ve learned a lot to make it a lot nicer. So that’s what we’re going after.
Rob Hall: That’s exciting. It feels like during the quarantine, a lot of people that have had deferred maintenance or various projects that just weren’t getting done have suddenly found lots of time to do them.
Jay Cosgrove: Yeah. And they’re sitting around staring at their house being like, I want this to be better.
Rob Hall: Exactly. Yes. Yes, I know, at least for me, living in a log cabin in the middle of the woods, fighting off nature is always a constant battle. The latest thing for me has been re staining the house and replacing some rotten wood and re cocking old joints and things like that. Always spraying for bugs.
Nick Alexander: Yeah, good for you. I’ve got that cedar siding, and I’ve got all kinds of wood. And I just need to go around the house.
Rob Hall: That’s the other thing. If it’s not carpenter bees, it’s the woodpeckers coming up after them. So you get the carpenter bee that drills the hole into the side of the house and lays their eggs and then the woodpecker instead of you know, waiting for them to hatch. They just obliterate the side of the house to get to the larva.
Nick Alexander: Yes, they do.
Rob Hall: And it’s a disastrous mess when they do that.
Jay Cosgrove: That happened to my house this year, too. They’re like, pest guy, right at the beginning of the season was like, yeah, you should definitely get some wood bee traps. And I was like, I don’t know if it’s that big of a deal. And then literally right in front of my eyes on my back porch. I see this like Carpenter bee digging this huge hole in my frickin rally.
Rob Hall: That’s it, man. Whenever I’m walking around the house, and I see a little pile of sawdust somewhere I just know. Like, All right, let me find it. Where’s the bug spray?
But we’re not here to talk about house renovations today. Today, we’re joined by our esteemed colleague, Mr. Nick Alexander, who is our lead product manager on the pm team at Digital scientists. Hello, Nick.
Nick Alexander: Hello, everyone.
Rob Hall: Nick, you’ve been doing this for a few years, haven’t you?
Nick Alexander: Yeah, just a couple men focused in the software industry for the past 10 years and really the product side of the world the past six.
Rob Hall: Nick and I have kind of a funny history together this last decade. It’s been interesting because you and I actually went to high school together. We may have been band nerds.
Nick Alexander: It may have been.
Rob Hall: Ironic that after high school, we went our separate ways. Went to college, got into different careers, and somehow over a decade later managed to find our way into product management. And then here we are working at the same company.
Nick Alexander: It’s crazy how to stray paths that were nowhere close to each other ended up near the same.
Rob Hall: Yeah, exactly.
Jay Cosgrove: You guys are cute.
Rob Hall: I know. Thanks, Jay. It is odd getting confused that, you know, people think we’re related.
Nick Alexander: Yeah, that is. That is weird.
Jay Cosgrove: Why is that?
Rob Hall: It’s not as bad, at least to me. I think the resemblance is stronger between Nick’s brother, Jason and I.
Nick Alexander: I would agree with that.
Rob Hall: It’s actually quite stirring.
Jay Cosgrove: I don’t know what that means. But
Rob Hall: Yeah, awkward. Anyway, today, we want to talk about okrs. That is sometimes a concept that’s buzzwordy in the product management realm. But okrs, meaning objectives and key results. They serve an important purpose in the life of many product managers, some don’t ever really encountered them. Or it’s very likely the case that you have encountered them as a PM, and you may not have known exactly what it was you’re dealing with. So today, we want to have a conversation about okrs, what they are, how they work. What are the pros and cons of implementing them? What are the things that that makes sense, in a product management process, where okrs could be helpful, and maybe where they might be not so helpful.
Jay Cosgrove: Okrs are fairly new to me, I would say in the last like three years, and actually is right around the time that I started at DS, that I was running into some issues with plotting product roadmaps and using something other than okrs. And the roadmaps. I think probably at the time, it was just in general initiatives or features, that we’re kind of plotting the course. But as we all know, in our beautiful world of product management, that is very agilely things change. And one of the hardest things is if you put stuff on paper, like a roadmap, and that changes is re explaining to all the stakeholders why that changed, you know, who may not be very tight to the process, and are just looking at a quarterly basis at something. So I had actually reached out to a former senior pm that had kind of mentored me back in the day. And she works, at indeed now. And she was like, hey, you should really check out these things called okrs, we’ve switched to them. And it makes it a lot easier to align everyone. And she said that one of the issues they were combating is certain stakeholders would get attached to a feature, and not to the actual result that they’re trying to create. And when you need to pivot from that specific feature, but it was becoming very difficult. But when you switch to using key results or objectives that you’re tracking towards, it becomes much easier to have that conversation. Because then you can say, hey, that feature didn’t quite produce the result we’re looking for. So we’re switching to something else. So that was my intro. She wrote me, she sent me a couple articles online. And then I think shortly after that we were reading through, inspired, and as a team. And he makes a kind of a deal about halfway through the book about okrs. And yeah, we implemented it.
Rob Hall: And inspired Of course, being the book from product management guru, Barney Kagan.
Jay Cosgrove: That’s right.
Rob Hall: I want to frame this by saying like the concept of the OKR itself is really not new. As an acronym. That model has developed over decades, I think they really kind of evolved into the model that’s defined today at Intel during the 60s and 70s. But in terms of being part of the product, modern, what we consider modern product management, I think that’s probably more recent, they were utilized quite a bit at google over the last decade or so.
Nick Alexander: Yeah, they definitely have a history to them. I think the world is confusing in terms of abbreviations, and whether it’s okrs, and we’ll talk a little about KPIs or smart goals. I mean, there’s so many different metric driven items out there. But I think what of all of us have clung to, especially in modern day and product management is the fact that it’s objective based. And that it’s a stretch goal. And I think that’s key for as we talk about okrs. Because without those two things, you have one of the other acronyms. And when Jays already briefly mentioned results, but it’s not just the result itself, but it’s the making sure that it’s outcome oriented. And so as I think about okrs, they’re used as performance indicators to stretch the business, and not necessarily for employees. And so that’s how I differentiate it from some of these other metrics and tools. If you end up tying okrs to performance reviews and other things like that, then you become too safe to lock down. Safe goals will never really help your business breakout or be a star in anything and so okrs really need to stretch your team and I just want to spend a minute on that. It’s a stretch goal, right? If you got a manager or you’re in the business to hit an okr dead on, then you’re okay or is wrong, or you’re doing KPIs or you’re doing one of these other items. But it’s making sure that you have an inspirational statement, that can lead to an outcome that you’re looking to field or that you desire as a business.
I think there’s a lot that goes on with okrs, especially that there’s also different deviations of okrs. So I see okrs, it’s very much a hierarchy within the company, you can have project okrs, you can have team okrs, you can have company okrs. And then you can have like a board or executive team vision, okr and results, because that’s what all this is about results, we want to increase in the performance or the results of the company to make sure that we hit an objective. And results are never achieved at the top, but they’re achieved at the bottom and filtered up.
Rob Hall: Right.
Nick Alexander: So that’s, that’s the key. But in order to start at the bottom and filter up, you got to set it at a very clear pace from the top. And so that’s where you get this, whether it’s sinusoidal, or this up and down, but you got to have a clear directive at the top that sets these okrs, it has to follow the hierarchy all the way down, so that you can have those results and filter it back up.
Rob Hall: So essentially, leadership has to say, this is the vision and in very concrete terms, we’re going to shoot the moon.
Nick Alexander: That’s right.
Rob Hall: And we’re gonna do it before the end of the decade. Ready, set, go. Now to figure out exactly how we’re going to achieve that, that goal, that objective in measurable chunks.
Nick Alexander: And it has to be clean, I’ve seen plenty of deviation from those okrs if they are not clean and understandable.
Rob Hall: I think that’s an example of where trying to apply it. And this is something I’ve been seeing a lot lately of trying to take the OKR model and applying it to HR. So personnel management, personnel reviews, performance reviews.
Jay Cosgrove: Is that where it started in HR?
Rob Hall: No, I don’t believe so. But I think when you’re dealing with more, more abstract concepts, so when and when you’re talking about performance reviews, you’re dealing often in the abstract, especially when you’re dealing with a more creative type of person or a more creative discipline. It’s very hard to measure success in a quantitative way. And so I think that’s where that need for clarity can become very difficult to achieve, and where okrs may not be the best fit.
Jay Cosgrove: Now, I think that’s fair. And what I think might be helpful for, especially for any listeners that are like brand new to this concept is maybe laying out an example of clear versus unclear. I don’t want to put anyone on the spot. But Nick, do you want to take a stab at that? What would an objective with some good clear key results look like underneath them?
Nick Alexander: Let’s come up with one here. So I think if you start at the vision for a company, and so let’s start at the highest level here. And let’s say you’re a seller of let’s go with educational software, you know, one of your goals, your vision, your mission might also be around you want to become the largest seller of that educational software. And in order to do that, you need to make up 30% of the market. So immediately, we’ve clearly stated that our objective as a company is to become the largest seller of educational software. In order to do that we need to make a 30% market share. So that could be a three to five year vision, right? That could be 10 year vision. But then the company’s OKR for that annual year might be all right, well, let’s become the largest regional seller of that educational software. Right. And by increasing, let’s say, market share by 10% year over year, or increasing win ratios, or hitting quarterly revenue of 20 million, whatever million, right?
Jay Cosgrove: So the key result, there would be the percentage increase then, right? That’s what it was. Right?
Nick Alexander: Yeah, you’re being very clear and direct about which part of the largest seller you’re going after. And that helps your team define. So then, as you said that as a company, right, you’ve got that percentage increase. And now, let’s say you’re on the support team for that company. And, you know, this is what a lot of companies struggle with, you know, how do I how does what I do matter? How does it relate to the overall business objectives and that transparency, and that’s the key for okrs is the transparency for the organization. And so now the support team knows, okay, well, we want to increase market share by 10% in order to become the largest provider of educational software. Well, what can I do about that? It’s probably around customer retention and making sure let’s say over the next quarter, and this is where we get to the quarterly objectives that, you know, I can increase customer retention by 20%. And that’s in order to build stronger relationships with my clients. So now you’re reducing churn, you’re keeping a stronger customer retention number, so then your sales team can go out and help the other side of that okr and get that new sales. And so it’s just that clear, transparent line throughout the organization, from top down, where everybody’s after the same objective.
Rob Hall: On the issue of transparency, right there. Nick, could you dig in a little bit more into how you’ve experienced organizations both succeed at setting those goals from the top down? Because I feel like alongside the issue of transparency, there’s also an issue of accountability and alignment?
Nick Alexander: Yes.
Rob Hall: And okrs to me, they’re an excellent tool to achieve alignment but I do agree that there’s an inherent need for transparency for them to even have, like a chance of being effective.
Nick Alexander: Yeah, I agree with that. And I do think it starts with focus, I think a lot of what executive teams suffer with is focus. You know, they can set three or four great goals for the year or goals for the business or objectives for the business and whatever they want to call it. But honestly, focusing on one, two, max three objectives. Without that focus, then you’ve got even less of a focus as you disseminate that transparency down throughout the organization. And so you can think of it as an exponential effect, as you increase your objectives. Think about the number of objectives that that creates on your company and organization. And so I just see this, this tree expanding. And without that focus and clarity from the top, I’ve seen executive teams go very different directions. And all of it was under the right assumptions. Everybody was trying to do the right thing by the company. But without that focus, without that executive leadership to say all of these ideas are great, but we’re going after these two, then it just trickles down throughout the organization, it causes a lot of confusion, a lot of wrong direction, and just makes it harder.
Rob Hall: Right. How do we effectively differentiate between okrs and KPIs?
Nick Alexander: So I do see KPIs is a little more project or employee focused, very clean, simple reporting measures that can be tied to performance. So if I need to increase throughput, let’s say I’m in some type of logistics firm, or if I’m in a manufacturing facility, and, you know, I need to increase daily throughput by 50. car batteries. Right, right. It’s very clear, I need to go after that. There’s different KPIs, there’s input and output and leading and lagging and qualitative and quantitative, but all of them go after the same key thing of I needed a clean, simple, measurable reporting, that I can, I can help time my –
Jay Cosgrove: Yeah, I like that a lot. Because I think KPIs are really the metric that are being tracked. Whereas like the key results inside of okrs is tracking an outcome. So it’s using the KPI metric, potentially, but it’s, it’s more outcome focused. That’s how I’ve always understood it.
Rob Hall: So on one hand, you may have the battery manufacturing facility, your KPI may be we need to increase production of lithium batteries. And we need to, we need to ship 1000 more units by the end of the quarter. So while the KPI may be we’ve increased battery production by 1000 units per quarter. The overall OKR is we have increased manufacturing efficiency by 25%.
Jay Cosgrove: Yeah, potentially. So because like the individual KPIs can ladder up to it, you know, but I think in general, when you say KPI, it’s like Nick is saying it’s like it’s tracking the number of batteries created, right, but that’s not really like an outcome. That’s just a number.
Rob Hall: No, it’s not yeah, that’s right.
Jay Cosgrove: And so when you get into okrs, I think one of the big things I discovered is they’re freakin hard to write. Like, they’re hard to write really good ones, because you have to get into the actual outcome into the actual objective that you’re doing. Which gets you out of the granular like, individual metric or individual feature in it takes you up a level to say, what outcome are you hoping for from your user? What outcome are you hoping for your business? And that is definitely a mindset shift.
Rob Hall: Right? How do you approach applying that principle to something that is not necessarily as obviously measurable as software developers mean? We could say well, you know, development needs to push out x number of points worth of code per sprint or whatever, how do you approach applying those principles? Because in software development, we’re not necessarily shipping units. We’re not shipping batteries. We’re not cranking out auto parts. It’s not a conveyor belt.
Jay Cosgrove: Yeah, you know, your okrs should never be story points, I think you’re doing it wrong if that’s if that’s the key result that you’re tracking. I think, you know, for example, one overarching objective we had for a quarter was like increase the number of potential candidates to use the application. And that involved quite a few different things. But the key results were underneath it, we’re tracking kind of individual areas that we’re opening up sources for. And so that had nothing to do with story points, had nothing to do with individual features, even was really just about allowing the developers and the product managers and the designers to be the problem solvers that they are and attack that goal of how do we increase the number of users within kind of the set metrics that we’re going to put in place underneath it? And that gives them freedom to explore freedom to fail and change? And I think that’s really where the power comes.
Nick Alexander: I’m glad you mentioned design. I mean, if we want to talk about abstract okrs, and how do we hone those in, I think, really going after, if you think top down from a design organization, for design managers out there, if you want to, let’s say improve the performance of your team, right, the question is, okay, well, what key results you put on the back of that, and maybe it’s removing three key bottlenecks that caused delays, or reducing the time of interviewee acquisition by week for research. But making sure that you still get creative with that okr enough. So you can put that measurable result on it. If you’re part of the team, and you need to design a product for a client, then is it delivering a functional prototype by the end of q1? Is it have a beta validated by 20 users? Or you can take it a different direction? And if it’s really you know, you’re nearing the end of your product design lifecycle? Is it making sure that you deliver new product designs that produce, let’s say, five key product testimonials within the first 30 days of launch? So you’ve influenced, you’ve experienced delight and a product, and now you’re getting a testimonial out of it. And that’s really going up the chain of command to helping the marketing team and other parts of the business.
Jay Cosgrove: Yeah.
Rob Hall: It’s really effective. Because you’re not just tying the delivery of the thing. You’re wrapping in a measure of value to the customers. Oh, that’s right, then that’s, that’s the point. You’re focusing on the outcome.
Jay Cosgrove: Yep and think about even the concept of user stories, right? So if you’re, if you’re getting into the world of agile, that’s one of the first things you’re going to come along and spend time crafting is how do you write a good user story? And one of the first things that Rob even used in my interview, as like a litmus test a little bit for me was like, would I attach a value statement to the end of a user story? You know, when when I, I think you had me write, or say one based on like a cap for a bottle of water or something like that? I can’t remember. It was ridiculous. But like that value statement is so critical, because it tells you is that person focused on the individual feature or, and what the user is going to benefit from that feature, because that’s really what matters at the end of the day. And okrs, in my view, is, if done correctly, are kind of the big brother to user stories, because they’re written in a way where they just attach everything we’re doing to the users value, rather than the individual feature that we’re going after, or even then the number of work products that we produce.
Rob Hall: And that’s that’s really important when you’re trying to get away from a feature based mindset.
Jay Cosgrove: Exactly.
Rob Hall: Thank you for listening to the experience lab from Digital scientists. To learn more about our team and the great work we do or even hire us, visit our website, digital scientists.com
