Speaker 1: Hello, this is Richard Winfield speaking and today's webinar is based on this book, Measure What Matters, by John Durr. And he talks about OKRs. Well, OKRs, he says, are the simple idea that drives 10 times growth. You can see it's quite a fat book. It's 300 pages into the index and it tells us lots of stories and examples of how he or other people developed the concept of OKR and how effective they've been. So very useful case studies if you'd like to read the book and I recommend it. But I'm going to summarise this in just a few slides so you can take notes of the content. But if you read the book, you'll get much more understanding of what it's about. So let me start off by sharing my screen. Right. So let's start off, Measure What Matters. And here's the book cover again. Now, before I start talking about OKRs, I thought I'd like to talk about KPIs, key performance indicators, because these are probably what you will already understand as the means of measuring, or at least one means of measuring performance. So key performance indicators, KPIs, refer to a set of quantifiable measurements used to gauge a company's overall long term performance. And they've been around for many, many years. KPIs specifically help determine a company's strategic, financial and operational achievements, especially compared to those of other businesses within the same sector. So they can be used not only for measuring performance, but also for benchmarking against the performance of others. Now, let's just think of what might be some typical KPIs that you might choose. Monthly sales, new customers, monthly leads, new prospects, average customer spend. So this is from a sales point of view, how effective are you? Staff turnover, now we're looking much more to do with the HR side, and how effective you are at keeping people. Quick ratio is one of the measurements you might use for your financial performance, and particularly looking at your liquidity. And debtor days, the effectiveness of collecting money. So these are different approaches, and you would like to have a mix of these, I think. Also complaints are another means of measuring how effective your organisation is in terms of customer service and satisfaction. So how do you define a KPI? Here are some questions for you to ask typically, when setting up a KPI, what is your desired outcome? Obviously, very important. Why? Why does this outcome matter? How are you going to measure progress? And how can you influence the outcome? Who is responsible for the business outcome? And how will you know that you've achieved your outcome? And how often will you review progress towards the outcome? So this, I think, is probably nothing new to you. It's just a summary of key performance indicators that you've probably been using for some years. So why bother to read this book? What's the benefit of reading 300 pages to extract these lessons of OKRs? Now, John Derr claims that this will help you drive growth by 10 times. Well, let's see how we get on. So let's think firstly, an OKR, he claims a simple idea that drives 10 times growth. Now, it's actually only half the story, because the other half is CFRs, he loves these terms, conversations, feedback, and recognition. So this is a key part to ensuring that setting up your OKR system actually brings results. So OKRs, objectives and key results. An objective. The objective is what is to be achieved, no more, no less. They're significant, concrete, action-orientated, and inspirational. They express goals and intents. They're aggressive, yet realistic. They must be tangible, objective, and unambiguous, and should be obvious to a rational observer whether an objective has been achieved. A successful achievement of an objective must provide clear value. Seems to make sense. Now, key results benchmark, as opposed to objectives, benchmark and monitor how to get to the objective. Key results are specific, time-bound, aggressive, realistic, measurable, and quantifiable, verifiable. You should either meet a key results requirement, or you don't. And you can express measurable milestones which, if achieved, will advance objectives in a useful manner. It must describe outcomes, not activities. Must include evidence of completion. This evidence must be available, credible, and easily discoverable. Now, whereas an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. So the idea is you'll have a changing range of key results on your path towards achieving your objective or your goal. So there are two sorts of OKRs he refers to. Committed, these are ones you're definitely going to do. And as aspirational, these are ones that you would really like to do. Now, commitments are OKRs that we agree will be achieved, and we will be willing to adjust schedules and resources to ensure that they are achieved. Aspirational OKRs express how we'd like the world to look, even though we have no clear idea how to get there, and all the resources necessary to deliver the OKR. So let's look at some in practice. Each goal should have three to five key results. Three to five crops up in all sorts of things, because it's the sort of number that the mind can cope with. It maintains focus and saves overwhelm. So here's a typical example. Now, I've taken these examples from the book. They're not my examples, and they are very specific, and they're historic, and they are American. So this is an objective to demonstrate the 880's superior performance as compared to the Motorola 6800. Some of this was developed in the early days by Andy Grove. So the key results can be measured by, so deliver five benchmarks, develop a demo, develop sales training materials for the field force, and call on three customers to prove that the material works. So the objective is to demonstrate superior performance. So how do you go about it? Well, these are the things that you need to do, and which we are agreeing to do. And you'll see as it goes on that this is an agreement within the organisation. Now, this is a sports case, and it shows how you can cascade these down through the organisation. Head coach has an objective, which is to win Super Bowl. Obviously, that is aspirational. And the key results in order to do that, we will know that we're on the way if our passing attack amasses 300 or more yards per game, defence allows fewer than 17 points per game, and special teams unit ranks in the top three in punt return coverage. So that's for the organisation as a whole, the team as a whole. Now, within the team, he's got three coaches. He's got an offensive coach, a defensive coach, and the special teams coach. And each of these has their own objective. And then within those, they set down the key results. So for example, the offensive coach, his objective is to generate 300 yards per game passing attack. So if you look at the head coach above his key results, passing attack amasses 300 plus yards per game, that becomes an objective for the offensive coach. And then the key results for the objective coach achieve 65% pass completion rate, cut interceptions to fewer than one per game, and hire a new quarterbacks coach. And then similarly, the defensive coach, his objective is to give up fewer than 17 points per game. And again, if you look above the key head coach, one of his key results is defence allows fewer than 17 points per game. So the head coach's key result becomes the objective for the defensive coach. And then the key results for the defensive coach become allow fewer than 100 rushing yards per game, increase number of sacks to three plus per game and develop a Pro Bowl cornerback. And then similarly, the special teams coach, if you look at the third key result for the head coach, that becomes the objective for the special teams coach, which is reworded as to improve to top three ranking for punt coverage. And the key results here are to allow fewer than 10 yards per punt and to block four plus punts over the season. Now that sets up your structure. Now for each individual, there is an object, there is opportunity now to review success. And the interesting thing about this success is that in a way, it's nonlinear, because it's realistic. So if you look at the first one to bring in 10 new customers, this is a different example, obviously, again, progress of 70%, the score of point nine. So due to a slump in the market, the OKR was significantly tougher to achieve than I thought. Our seven new customers represented an exceptionally good effort and outcome. So the objective, the OKR was to bring in 10, but in fact, they only succeeded in getting 70. But nonetheless, the conclusion was this is quite a good performance, because in fact, the market was more difficult than anticipated. Whereas in the next case, bring in 10 new customers were 100% success, but a score of only point seven. And the conclusion here was the commentary was when I reached the objective only eight weeks into the quarter, I realised that I'd set the OKR too low. So you can see this giving you the beginnings of a management structure. In this case, these are individual conclusions, but they could well be the basis for an appraisal with the manager. And then the next one, next case, again, similar case, bring in 10 new customers, progress 80%. In other words, they brought in eight, but a score of only point six. So when I signed eight new customers, it was more luck than hard work. One customer brought in five others behind. So in other words, this person did well, but it was really more luck than good judgment. So let's talk about reflection. We don't learn from experience. We learn from reflecting on experience. So here are some of the questions based on what we've been talking about just now in the previous slide. Did I accomplish all of my objectives? If so, what contributed to my success? And if not, what obstacles did I encounter? So we have a learning process, a developmental process going on here. If I were to rewrite a goal, which I have achieved in full, what would I change? And what do I learned that might alter my approach to the next cycle? So it's a cyclical system. And as you work through each stage, and it is built into it with the proper reflection, that it can be a learning exercise as well. Now, we talk now about continuous performance management, where we bring in these CFRs. And the CFRs I mentioned before are conversations, feedback, and recognition. So none of these concepts is new, I guess, but it's the way it's put together. And obviously, with all these things, it's really good common sense. So CFRs champion transparency, accountability, empowerment, and teamwork at all levels of the organization. Conversations are an authentic, richly textured exchange between management and contributor, aimed at driving performance. And if you think back to those three scoring examples we gave, you can see how they can be the basis for a discussion between a manager and contributor. And then feedback, bidirectional or networked communication among peers to evaluate progress and guide future improvement. Now, you could read what I've told you so far in terms of an individual, our individual and his or her direct report. But the concept, if you go back to the sports example, shows how it breaks down. And you can have these discussions across. The benefit of this is that the various OKRs fit into a pattern, into a package for the company or the organization as a whole, so that it encourages people to work across silos. And then recognition of expressions of appreciation to deserving individuals for contributions of all sizes. So here are five critical areas of conversation between a manager and contributor. Goal setting and reflection, where the employee's OKR plan is set for the coming cycle. So this is at the beginning of the cycle to discuss. The discussion focuses on how best to align individual objectives and key results with the organizational priorities that I've just been mentioning. The purpose of this done properly is to fit it together so that everybody is contributing as part of the same organization and network. Ongoing progress updates. The brief and data-driven check-ins on the employee's real-time progress with problem solving as needed. So these are opportunities for the manager and the employee, they call it contributor here, to have a chat along the way just to see how things are going and whether any help is needed. And then two-way coaching to help contributors reach their potential and managers do a better job. So it says two-way coaching. So part of it is what do I need from you to enable you to do the job better? And what do you need from me so that I can support you better and how can I learn? Career growth. To develop skills, identify growth opportunities, and expand employees' vision of their future at the company. And lightweight performance reviews a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting in the context of the organization's needs. And what John Doerr claims is as workplace conversations become integral, managers are evolving from taskmasters to teachers, coaches, and mentors. So in conclusion, the single most important element for OKR success is conviction and buy-in by the organization's leaders. And again, if we go back to the sports example, you'll see how the OKR system scales down, cascaded down through the organization. And it should be clear for anybody in the organization to understand how their contribution fits in with the whole. So when leaders openly admit their missteps, contributors feel freer to take healthy risks. So basically, this is a standard thing, nothing really to do with OKRs. In any organization, if the leaders can become role models as learners and if role models of taking risks and sharing and exposing and discussing their successes and failures, that passes through the organization. OKRs and CFRs provide a blueprint for defining and building a positive culture. By aligning teams to work toward a handful of common objectives, then uniting them through lightweight, goal-orientated communications, OKRs and CFRs create transparency and accountability. So that's basically the justification for the simple idea that drives 10 times growth. Healthy culture and structured goal-setting are interdependent. They're natural partners in the quest for operating excellence. So there we are. This is the book. The bits and pieces in the book are very simple, and I've made them out here. But I guess you'll need perhaps to work with some paper and pencil to see how you might apply this in your own organization. So it's a function, really, of deciding where you're going and then breaking it down so that each individual team or individual parts of the organization have objectives of their own and they can fit together. And then this ongoing relationship, which you would expect in all good management of communication and feedback. So that's from me, Richard Winfield. I look forward to speaking to you again. Thank you.