Speaker 1: Hello, and welcome to another playbook. This one is going to be on implementing OKRs. It's a question that's often asked to me, how do we implement OKRs in our organization? It's a tough task. It's not an easy one. Of course, some of the largest companies in the world have implemented OKRs very successfully over the years, but a lot of small to medium-sized organizations actually struggle to implement OKRs. We're going to talk a bit about this in this video. I encountered OKRs for the first time back in 2010 when I used to work at Zynga. Zynga as a company was phenomenal at implementing OKRs, and OKRs were implemented across each game team, and I think were, in one way, sort of very responsible for giving structure to the team, giving very clear goals and targets to the team. OKRs have been around for a really long time. They started out at Intel, but John Doerr essentially sort of wrote, literally wrote the book on OKRs, Measure What Matters. If all of you, if any of you are interested in reading up more about OKRs, please do check out the phenomenal book. It has a lot of really great insights. A lot of the definitions and the things that I would be discussing here are actually examples taken from the book. Plus, I'll also share my own sort of experience in implementing OKRs across different organizations, both small and large, and the lessons that I've learned, sometimes the hard way in implementing OKRs. I have to say, it's not that I've always been successful in implementing OKRs. I think it's been a mixed bag. When OKRs have been implemented well, they've worked really well for us as an org, and sometimes just the entire process was quite disastrous. So you have to take OKRs with a pinch of salt. It's one of those things, you can't do it in a half-hearted way. You have to either go completely in and commit yourself to it or not do it at all and use a different method, use a different framework. So let's jump in. We'll start with definitions, objectives and key results. That's OKRs. It's a collaborative goal-setting tool, right? Used by teams and individuals to set challenging ambitious goals with measurable results. Now, each part of this definition is very, very critical. Teams and individuals, it's the first part. Do not miss out individuals. The goals have to be challenging, ambitious and measurable, right? Any of these things sort of are missed out and this whole framework loses its efficacy, right? Next up. An objective is simply what is to be achieved, no more and no less. Again, by definition, objectives are significant, concrete, action-oriented and ideally inspirational, right? When properly designed and deployed, they are the vaccine against fuzzy thinking and fuzzy execution. I think the name says it all, fuzzy thinking, fuzzy execution. When there is lack of clarity, that's when fuzzy thinking happens and that's when fuzzy execution happens. But objectives are very, very simply what is to be achieved. Key results are how it will be achieved and that's another difference which a lot of people forget. And finally, key results. They benchmark and monitor how we get to the objective. So effective KRs are specific and time-bound. In the next three months, we will move from X percentage to Y percentage. That is how specific KRs are and how time-bound KRs are. They are also aggressive yet realistic. Most of all, they are measurable and verifiable. So you cannot put a metric or you cannot put a key result which you actually don't even measure and which you can't even verify, right? Now, the other great part about this is that you either meet a key results requirements or you don't. It's usually very black and white, but there is a nuance there. Most key results are not zero or one. There is a way of grading them and we'll talk about it. So, but usually in terms of what has to be achieved, you should have no doubt about what needs to be achieved. So you should know what success looks like and you should know what failure looks like. So there should be no room for doubt. Let's talk about a few best practices, things that have helped me implement this correctly and things that have backfired and have not gone down well, right? OKRs are not connected to salaries and bonuses. A lot of people implement OKRs and then think that OKRs are a form of, it's a sort of a report card. It's an assessment tool to see if your teams have done well. Of course, it's a way to measure that you as an organization have done well or not, but it's actually not a way to measure individual contribution to company goals. So it's a really poor way of measuring sort of connecting it to salaries and bonuses and giving out increments and doing people's assessment based on this. It's a really terrible practice. Please don't fall into that trap. Implementing OKRs is time-consuming. One of the other big things which a lot of teams do is that they get into this exercise and then suddenly it hits them how time-consuming it is and that's where they flounder. For really, really small teams, this is an exercise which would take you a minimum one week, as your teams get larger, as your organization becomes larger, this could take a couple of weeks. So if you want to set OKRs on a quarterly basis or on a six monthly basis, you need to start this a couple of weeks before the quarter starts. So if you're setting OKRs for October to December, this is an exercise you should kick off beginning of September. And again, as I said, this is time-consuming, so please be prepared for it. It takes away valuable time from your team. So if you're a very small org, you may be better off not doing OKRs, but as you become larger, setting up OKRs correctly and well will pay rich dividends. The other big mistake that I see a lot of orgs make is that they just set top-down OKRs, which means that there is a company OKR and perhaps leadership sets OKRs for each of the functions and that's it. This is where things falter. OKRs are not just top-down, they're bottom-up also, which means first the organization has to set its OKRs, the leadership has to set its OKRs, but then each individual team has to set up its OKRs and bubble them back up. And based on that, the company OKRs change. So it is a multi-step process and not just a single step process. And it's a two-way street, not a one-way street. OKRs can be of two types. They are committed or aspirational. And let's talk about the difference between these two. And the fact is that you need to distinguish between the two. Committed OKRs are just that. There's a very, very clear specific metric that you have set. And it is sort of zero to one. It's zero or one. You either pass or you fail. We'll add a nuance to that in a bit. But aspirational OKRs are moonshots, right? Success is literally sending somebody to the moon, but you are able to get something going around the Earth. That's when you're able to put up a space station in the sky, great. You're able to send people there on a regular basis, phenomenal. And then you sort of make your way towards getting to the moon. So the fact is an aspirational OKR is something that could go on for many years, right? Teams could change, individuals could change, right? So there are aspirational OKRs which are also set. If you were a sports team, say if you are a team in the IPL, an objective for you could be to win the IPL and it need not happen in one season. It could take you multiple rounds of bidding, multiple seasons to build the right kind of team, get the right coaches, get the right kind of all-rounders, bowlers, batsmen. And only then with a very clear, concentrated focus, maybe across two or three seasons, you could win a tournament winning team, right? So these are, and by the way, sports organizations have very famously adopted OKRs. And these are sort of the kind of aspirational OKRs that teams set out for themselves, winning the Super Bowl, winning the World Cup, right? So you have to do distinguish between these sort of committed and aspirational OKRs. Now, talking about committed OKRs, on one point we are saying that they have to be aspirational. If they have to be tough enough and they have to be difficult to achieve, they should not be easy to achieve, which means we should set grades. It's not just pass or fail. Maybe there is a grade. You get an A for doing this and you get a B for doing this. So your targets then you should talk about what is it that you can achieve with 80% confidence, which is that you're very confident that you would achieve this target. And then what can you achieve? What is a stretch target, which you can achieve with 60% confidence? So you're less confident about it, but it is a stretch target. If you hit your stretch target, you get an A, you get an A plus probably. If you hit the 80% confidence target, you probably get a B, but at least you did well. It's not that you didn't do well, right? And just on the previous point, before I move on to the next point, it is very, very important that you make sure that your teams don't get all their OKRs each time, because if that's the case, that means your teams are low-balling their OKRs and they're taking very easy to achieve KRs. And that's why on all their OKRs, they get a pass each time. You should fail on some of your OKRs or you should get a B, a passing mark on some of your KRs. If you're always hitting your KRs, that means you are low-balling. The last one is another mistake that teams make. So say the sales organization in your B2B SaaS company decides to set OKRs, but the product team refuses to set its OKRs. Now, the sales team has set itself these beautiful OKRs and very waked up, they wanna increase revenue by so-and-so, but here's a catch, they need a couple of features to be built so that they can go and achieve their targets. Now, if the product team is not aligned to building these features, then these features don't get built and the sales team actually never even gets a realistic chance of getting their OKRs. So this is a mistake a lot of organizations make, that they think that within one function, they could implement OKRs and then test it out and then see if they want to implement it across the board. It usually comes back with a mixed sort of results and you would essentially blame the process as opposed to the fact that you didn't implement it across the organization. So it's much better if you implemented it across the board, right? So now I'm just gonna quickly jump into how you would implement it in different types of organization. We're gonna talk about small organizations first and by small orgs, I mean less than 50 people, early stage to sort of mid-stage. Now, the org and the leadership would set OKRs for them and in a small enough organization, the org and the leadership's OKRs are essentially the same on every single objective and every single KR, they are just, there's a CEO and sort of maybe a CTO and a COO and maybe they're just two, three sort of, the leadership team is not very large, in a 50 people team, it's probably three or four people. So all their objectives are aligned to the company's objectives. Under them, there might be a couple of boards or a couple of teams and then each team will set its OKRs based on the company's OKRs. But then it will take a realistic look on, towards the fact that, hey, are these OKRs actually achievable? And this would create a loop. So you get the, you inherit the company's OKRs, you use them to build your OKRs and then there's a feedback loop which goes back and says, you know what? We need to change this, this is not realistic. And each team does this and which is, this is why this process is time consuming. If it was just top-down, it would have been straightforward. You know, the team and the leadership, sort of the company and the leadership builds their OKRs and gives it to everyone else and you're done, but it's not done till that point. Each team has to then take parts of the objectives which are closer to them. You know, so again, going back to the sports example, you know, you're a hiring team, right? In your sports or we'll take on the task of like, hey, how are we going to build? Which are the players we're going to get? Your batting coach will take on, your coaching staff will take on a very different set of OKRs about sort of, hey, you know, per player, we're going to increase our output by 10 runs or per bowler, we're going to reduce the average runs that we give by two runs, right? So these are the kinds of things that each team would individually do, but it has to feed back. And the teams could say that, you know what? Winning the World Cup this time around is not going to be possible, but we should change it to perhaps making it to the semifinals, right? And this is how sort of the team's OKRs will change based on the realistic view, that the company's OKRs will change based on the realistic view that the team is giving to them, right? And then as you see each team now, once it has its completed OKRs, each individual within that team, so every engineer, every product manager, every designer would then build out his or her personal OKRs based on what the team is going to do, right? And personal OKRs can actually, will of course have direct impact on what the product is, but would also have things like, hey, I want to learn this new thing which would help me become a better product manager, or I want to learn, I want to work on a new sort of infrastructure, or I want to learn a new technology which will help us build better products, right? I want to read more, I want to learn more, I want to help the team out more, right? Now let's talk about large organizations because this process is slightly different. Now in a large enough organization, large enough organization is any org, bigger than 50 people, but you could have thousands of people also, the org as a whole sets up its OKRs, but its OKRs are so wide that individual leaders might take on different, might inherit different aspects of objectives. What that means is you have a chief business officer, and you have a CEO, and you have a COO, and you have a head of sales. This leadership team might take on certain aspects of the objectives, and then under each of them, there might be several teams, right? So you have your org, you have your leadership, within each of, under each leader, there are a number of teams. And this loop, the org sets the OKRs for the leaders, the leaders set their OKRs, and then each team sets, under them, sets up their OKRs, gives the feedback back to the leader. The leader then gets this feedback, improves their OKRs, sends it back to the org, and then the org again improves its OKRs. So as the organizations become larger, doing this entire process, it becomes even more time-consuming because now there are three layers in which a feedback loop has to operate, right? And then once each, once the org's OKRs are set, the leadership's OKRs are set, and the team's OKRs are set, then the individuals set up their OKRs, right? Now, I know that this seems a lot, this seems like a tough process to sort of establish, but I think if you're a small org, then you should try it. It is straightforward, it should take you about a week or two. In a large org, this could take an entire month sometimes, right? Be prepared for it, but as I said, if you do this well, you do this quarter over quarter, every six months over six months, you start seeing the results and you start seeing things improve. What are you gonna do in the next part is just cover a few examples of OKRs. And again, these are from John Doerr's book, Measure What Matters. Here's an example of a great personal OKR that John set for himself, which was he wanted to spend more quality time with his family. So that was his objective, plain and simple. Have more quality family time as measured by, so what he wants to do and how he's proposing to do it. He wants to be home by 6 p.m., 20 nights a month to have dinner with his family. So very clear KR. As you see, it has a clear metric driven goal, 20 nights a month, right? 6 p.m. So very, very clearly, crisply defined. And KR two, being present by turning off the internet router to eliminate distractions, right? Like I wish all of us could implement this KR once in a while, but essentially this right here shows you like a great example of how an individual could set a clear objective and the KRs which help them measure how they will achieve this spot, right? The next example is actually a city called Syracuse in New York state in the US, which had a clear objective, achieve fiscal sustainability by reducing the general fund budget variance. So year over year, they had a lot of budget variance. They wanted to reduce that from 11% to 5%. Second KR, spend 95% of the authorized capital, right? So they realized that they were not spending the budget that they were allocating, the authorized capital that they were allocating. So they want to spend it in each fiscal year. And last, the grant dollars that were left over from the previous fiscal years, they wanted to ensure that 95% of them were allocated and were given out, right? So again, very, very clear KRs, very metric driven. Clearly the scope is one year. So they are all time bound, right? And a very simple, well-stated objective. So as you saw, you can set it up for an entire org, you can set it up for individuals. Now, just as an example, in this state, for example, the team which handles grants can just take this last KR and build their objective out of this, right? So this is how you take a team's OKRs and you pick one, one KR out of that. And you figure out how are we going to contribute to the overall team's objective? What are the things that we should do, right? And again, typically most organizations set two to three large objectives and under each objective, you should set maybe three to five KRs and not more than that. Setting 15 objectives and 10 KRs under each, that's not ideally the right way to do. Remember, this is about what will you do and how will you do it, right? What is your target and how will you get to that target? There's a third aspect of it, which is that you will build out a roadmap, right? What are the specific features that you will build that would help you achieve those targets, the key results, helping you achieve the objective, right? So don't miss out on that. Don't use the OKR exercise. The KRs are not the features that you're building. The KRs are not your roadmap, right? Your roadmap is not, you could spend 95% of grant dollars by doing five different things, establishing a new grant, making sure that funds are given out, right? By funding a few more art galleries. So there are a whole bunch of different initiatives that you can do. Initiatives are not key results. This is a distinction that each team has to make, right? So I think that's it. I hope there is just a lot of material available out there on OKRs. It's an endless, bottomless pit. I hope some of the things that I described here would help you implement OKRs in your organization. If it works out, do let me know. If it doesn't work out, do let me know how I can help and what questions you would have, which you feel should be answered perhaps in a subsequent video. Take care and best of luck.