From Strategy to Value Realization with OKRs

Overview

Introduction to OKRs and Their Implementation

This video delves into the topic of OKRs (Objectives and Key Results), focusing on their effective implementation and the strategic alignment necessary for achieving business goals. Viewers will learn about the OKR process, including how to set and manage OKRs, and understand the benefits of using Scaled OKRs for organizational performance.

Key Points Discussed in OKR Implementation

The video covers several critical aspects of OKR implementation:

• The importance of aligning OKRs with strategic goals and business strategy.
• The role of quarterly operating rhythms in operationalizing OKRs.
• How to create a roadmap for achieving key results and ensuring successful OKR execution.
• The steps involved in an OKR workshop and the best practices for setting effective OKRs.

Expert Insights on Scaled OKRs and Strategic Planning

Expert insights in the video emphasize the difference between OKRs and Scaled OKRs. Scaled OKRs involve a more detailed approach to strategy and alignment, providing “jet fuel” for effective OKR implementation. Key messages include the necessity of aligning team efforts with organizational goals and ensuring that OKRs drive meaningful results.

Practical Applications of OKRs in Business Strategy

The information from the video can be applied in real-world scenarios by integrating OKRs into business strategy and performance management. Examples include developing clear roadmaps for key results, prioritizing work based on strategic alignment, and using OKRs to manage cross-functional team efforts and resource contention.

Conclusion and Takeaways for Effective OKR Management

In conclusion, the video highlights the importance of a structured OKR framework for achieving strategic goals and improving organizational performance. Key takeaways include the need for thorough OKR training, the benefits of certification, and the practical steps to operationalize OKRs effectively. Viewers are encouraged to explore OKR best practices and consider further training for implementing OKRs in their own organizations.

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Transcription

Speaker 2
(0:12) Well, guys, welcome to Value Realization with OKRs, and today I’m tickled, number one, to be here myself, and number two, to be here with Larry LaSalle. (0:26) I am your host today, Tom Perry, and my background is in coaching and transformation, and I am super happy to co-develop this presentation largely with Larry’s help and with Larry LaSalle here, and Larry, can you give us a quick introduction?

Speaker 1
(0:51) Yeah, absolutely. (0:52) So welcome, everybody. (0:53) Good afternoon or good evening, depending on where you’re dialed in from.
(0:58) I’m Larry LaSalle, and I’ve been a long-time technologist, turned into a process consultant in the Agile space, and then that came, complemented that with getting into OKRs in 2019, and I’m looking forward to this presentation today. (1:19) I think one thing I’d(1:20) add as we jump off here is this is, you’re coming at kind of a 301 level course, if you will, (1:28) so it’s a little bit higher level than what you would expect from a pure X’s and O’s, if you will, (1:34) from an OKR perspective, but I think Tom and I will do the best we can to not go too high level (1:42) without ensuring that there’s some sort of foundation, but if you come in with a working (1:46) knowledge of OKRs, you’re in good shape, particularly if you’ve been trying, so thank (1:52) you again and welcome.

Speaker 2
(1:54) Excellent, excellent, and just so you know, at the end of this slide deck, we do have some references to the other classes on OKRs that we offer, so if you do find that as you go through this, there are some areas you feel you need to explore further, we’ll have some opportunities to share those with you. (2:17) That said, the material we have today is fairly brief, we don’t have a whole bunch of slides, so we’re going to keep it short and to the point, and as always, happy to answer questions, so please jump in, feel free to ask questions as they come up, and with that said, I think if there are no objections, I’m going to go ahead and move forward. (2:47) All right, let’s see, so the first thing to know about OKRs is our definition, and our definition of OKRs are that they are a strategy and alignment framework that seeks to ensure organizational clarity by creating an environment of common goals and shared commitments.
(3:14) Now the first thing to call (3:15) out here is that that definition is not exactly the same definition that you might find in, for (3:24) instance, Measure What Matters, you know, if you’re familiar with that book on OKRs, that definition (3:31) is a little bit different, or perhaps if you’ve read the OKR field book, and that reflects (3:38) the fact that one of the things that we commonly find is that it’s not enough (3:47) just to define what an OKR is.
(3:51) When we’re looking at OKRs, we need to put them into a framework (3:55) that helps us apply them within the larger organization, and so without that framework, (4:03) without that underpinning, we have a hard time necessarily implementing OKRs, and so (4:13) one of the things you’re going to see as we talk through this is that we are looking for ways to (4:20) help you apply OKRs within your organization, and just like applying Agile in an organization(4:28) requires a framework, applying OKRs also requires that we have some supporting(4:36) iterations, if you will, or cycles that we go through and activities that we go through(4:43) in order to make OKRs successful, and that’s kind of the secret sauce, if you will, (4:51) to applying scaled OKRs, is how are we going to get this out across the whole organization,(5:00) because it’s intended to be an organization-wide sort of thing. (5:06) That said, (5:10) we’re looking for ways to help people with rolling this out and finding the right environment,(5:20) if you will, that will support the application of OKRs, and so one of the things that we’re (5:27) going to talk about today are what are the underlying capabilities or what are the(5:33) underlying organizational support matrix, if you will, that needs to be there in order to(5:41) help us be successful with OKRs, so we’ll be talking in terms of capabilities and the kinds (5:48) of things your organization needs to be able to do in order to be most successful with an OKR (5:56) rollout, so with that in mind, that’s kind of how we’re getting started.
(6:02) How am I doing so far, Larry?

Speaker 1
(6:04) You’re good, buddy. (6:05) I’m going to add a couple of things on this because the other thing I would like people to take from this quote-unquote definition is it’s really to help you all with being able to position OKRs in your organization. (6:19) I’ll put in air quotes, the right way.
(6:21) What do I mean by that? (6:22) It means that as you start to talk about OKRs as a (6:27) possibility of something we might try for whatever the motivation is, if you’re focused in on the (6:34) construct, what is an objective and what is a key result, and that is your sort of jumping-off point, (6:40) the risk that you have is that we’ll be too focused on the tactical aspects of writing (6:46) versus really stepping back and asking ourselves what’s possible with OKRs.
(6:52) Now, the definition is important because if you look at, say, the Measure What Matters definition, they will say that OKRs are a collaborative goal-setting methodology. (7:06) The OKR field book will refer to it as a critical thinking framework, an ongoing discipline for teams to work together, focusing on outcomes. (7:16) Those definitions, in my mind, start to look like OKRs that an executive would think OKRs are something somebody else can do if you use those definitions.
(7:26) This definition is meant to get our executives and our leaders to the table so that we can understand, let’s peel apart what does it mean to say that OKRs are a strategy and alignment framework because this is the only definition that’s going to help you to start to orient yourself at that level of your enterprise, if you will. (7:46) Whether that’s a 100,000-person enterprise or a 100-person business, the importance of establishing strategy and alignment is a secret sauce for competitive advantage. (8:01) So we can go far on that, but for the time being, that’s what I want you to understand with the OKR framework is you can kind of think of it as an enterprise-level understanding versus a team-level understanding.

Speaker 2
(8:13) Perfect. (8:13) Perfect. (8:14) Thank you, Larry.
(8:15) So with that in mind, let’s take a look at our first capability, and that is strategy. (8:22) And the thing we have to be able to do is come up with some sort of coherent strategy that’s really going to be the input for the work that we’re going to do with OKRs. (8:34) So thinking of strategy as kind of our input, we need to be able to do it in at least some basic fashion.
(8:42) So it could be that you’re using Porter’s Five Forces or you could be using balanced scorecard strategy maps, maybe something just as simple as SWOTs. (8:58) All of those techniques are the kinds of techniques that we need to be fluent with in order to start using OKRs. (9:09) One or more of those techniques, I should say.
(9:11) Now, some of them I think are better than others. (9:16) So I mentioned the balanced scorecard, the strategy maps, and the SWOT. (9:21) Those tend to be a good, very fundamental approach that gives us what we need to help build OKRs or get started on the process.
(9:34) However, there are some other frameworks that may be a little bit less appropriate or have some limitations, and that would be things like McKinsey’s 7S, which tends to be a little bit more internally focused, or Porter’s Five Forces, which are focused on sort of assessing the competition. (9:57) So we want to be careful that the strategy approach that we use is something that we can use across the whole organization to address a wide range of different needs, whether it’s growth or the customer, the competition, the people, the operations, the innovation. (10:21) We need something that is going to be holistic in nature.
(10:26) So we want something that’s going to cover a lot of things, not a very narrow strategy that only focuses just on our competitive needs, for example. (10:37) So that’s kind of where we start.

Speaker 1
(10:40) The risk of not taking an approach where we pause and look holistically is that our OKRs will more likely tend to look like whatever our burning platform of the day is. (10:54) So for example, if you set aside the notion of a holistic look, internal and external, of a company like a SWOT would do, then you’re likely going to go into OKRs with more big initiative mindset as opposed to business outcomes. (11:13) So the exercise of going through and creating a strategy is to get us to be able to reveal the areas, both internal and external, to ourselves where we should be focusing on our attention.
(11:28) If we don’t do that, then we’re likely going to, like I said, focus on some big initiative or goal. (11:35) Now, you don’t have to have the enterprise strategy per se in order to establish that view, that holistic view that we’re talking about. (11:47) But you do need to be high enough up into the level of the organization that you control your own destiny, meaning a P&L owner or a portfolio owner or something like that is an adequate level of the organization to set the strategy that is input to OKRs.
(12:06) The reason being is at that level, we actually control where we allocate the resources and the people in order to achieve the goals. (12:15) So if, for example, somebody is of the thought that we’re going to set OKRs to get something done because we’ve never been able to get it done, no matter how hard we try it, we just can’t get it done. (12:28) So let’s do an OKR.
(12:30) That’s not what OKRs are. (12:31) They’re not a silver bullet like that, meaning if you put OKRs head to head with another priority in the organization, it’s going to compete on its own merit regardless. (12:43) So if, for example, we didn’t do a high enough level thinking with our strategy and we had OKRs at a project initiative level, they’ll be impacted the same way projects and initiatives are impacted today.
(12:56) And you won’t have any way to stop that because you didn’t orient at the right level of understanding to appropriately express business outcomes versus projects. (13:11) And if you’re too focused on projects and initiatives as the input for your OKRs, your OKRs will look like mini project plans where all the tasks and milestones are captured in the OKRs because the OKRs in a situation like that aren’t out to accomplish the big business goal. (13:29) They’re out to accomplish the project.
(13:32) And there’s a stark difference.

Speaker 2
(13:34) So organizations have to have sort of the right start at the strategic level. (13:39) And if they don’t, then that can undermine your ability to really be successful with the OKR.

Speaker 1
(13:46) And be mindful also of getting into a room to do this and having a senior executive who is only focused on growth or only focused on one element. (13:58) That is why we offer coaching, because OKR coaching is what has the abilities and the tactics and the know-how to be able to unstick that mindset or that way of thinking, meaning they’re going to say, OK, I hear you expressing the need for growth, and you’re passionate about it. (14:18) Let’s discuss that.
(14:20) Let’s discuss our people. (14:22) Let’s discuss operational excellence. (14:24) Let’s discuss all of the things that are required to make our company work and make sure that we don’t end up using OKRs, which creates blind spots for us.
(14:35) Meaning, let’s say we have a super aggressive sales strategy this year. (14:40) So we leverage OKRs, and we double down on that sales strategy. (14:44) And unfortunately or fortunately, depending how you look at it, it’s successful.
(14:49) If we didn’t consider the operational aspects of fulfilling these now spiking orders because of the sales strategy, then our company was none the better, because the customer is going to be impacted. (15:01) They expected two-week fulfillment, and it took six, because we went from 100 people in the queue to 1,000. (15:07) So that’s why it’s super important that when we’re creating OKRs that we have the right level of leadership involved, and it’s capturing the right holistic view such that the complementing OKRs can then enforce the business outcomes we’re trying to achieve.
(15:26) And then we figure out what projects we’ll do later on.

Speaker 2
(15:30) Wonderful. (15:31) Wonderful. (15:32) Excellent.
(15:32) Let’s go ahead and move on then to our second capability and really getting towards that point. (15:40) We’re talking about our strategy at this point and how we roll this out across the organization. (15:48) So Larry, do you want to take us through how this plays out?

Speaker 1
(15:53) This is more of a sub of capability one, because this is your first chance to start to get part of the OKR framework right on our hands as we discuss this, because we’re going to talk about not just strategy as an input, but we’re talking about having the OKRs and the relationship of those OKRs in the cascading element. (16:17) So cascading becomes sort of one of the first framework attributes of the OKR framework is cascading. (16:25) What is cascading?
(16:26) Cascading is when we have goals that align across different levels of the organization. (16:32) That’s how we actually establish alignment. (16:35) Now, a lot of mistakes are made in the cascading space.
(16:40) A couple of them are here. (16:41) Here they are. (16:42) One, we don’t use strategy as an input.
(16:45) That would be an anti-pattern we’ve talked about. (16:48) The second thing that we don’t that we do, and you’ll see this on the next slide as well as we talk through this, is we don’t have a good enough understanding of how to cascade and how to align, or we depend too much on the organizational hierarchy for our guidance. (17:06) What do I mean by that?
(17:08) Organizational hierarchy in their very structure is more to achieve functional domain excellence and handle communication pathways through the organization. (17:19) That’s what the hierarchy. (17:20) We don’t look at it like that per se, but it really does capture who we are in terms of functional operational excellence or operational purpose as well as the other things that the organization does.
(17:36) Oftentimes, we see organizations implement the notion of company OKRs and department OKRs. (17:44) Go ahead and flip to the next slide, Tom, real quick. (17:47) What we’re talking about when we are talking about cascading anti-patterns here is that we are relating, we’re not actually using the OKRs as a way to align.
(18:04) What do I mean? (18:06) Let’s talk about this. (18:08) If we use the bottom, well, let’s look at the top example.
(18:13) You can see on the other side we had strategy at the top and tactical. (18:18) That would represent strategic OKRs at the top that look out roughly a year and tactical OKRs at the next level down that look out roughly a quarter. (18:28) You can flip back to the other slide.
(18:31) Sorry, Tom.

Speaker 2
(18:31) No problem.

Speaker 1
(18:33) If you look at the right here, you have vision and purpose and strategic input. (18:40) Then we purposely use this terminology. (18:42) Our annual strategic OKRs are the top.
(18:45) Then the next level down is the tactical level that’s three months. (18:50) Those are hugely important as we continue through the other capabilities. (18:53) Go ahead, Tom, go back to the new one.
(18:55) Because the mistakes that people make here are two things. (18:58) If we go company and department, then what actually tends to happen at the leadership level is you have, if you will, like a CEO objective and then each of the leaders of the CEO that are typically department heads or product heads or something, they will also go do their OKRs. (19:16) This is what gave cascading a bad name because there was this notion that that was water folly for one level of a company to then decide what the big goal was and then align the key results to departments.
(19:31) Then those departments would then try to achieve the key results. (19:35) Hopefully, that brings the big goal together. (19:38) What happens is as we assign out the OKRs to departments, they become selfish little silos, which is what departments typically do anyway.
(19:48) But with OKRs, we actually make that worse because now you create a condition where people are safeguarding their own OKRs and not wanting to really help or contribute or potentially, in many cases, even know what another department’s OKRs are. (20:04) Because what we’re doing with OKRs in an environment like that is we’re reinforcing a lot of the bad practices that already exist in our organization like silos. (20:16) In order to prevent either of these two pictures you see on the right is to share OKRs together.
(20:25) Like a leadership team, for example, doesn’t do the idea of CEO sets it and then each individual leader sets goals. (20:33) Instead, that whole group of people comes up with the three to five OKRs we’re going to do for the year. (20:39) That’s what gets that top level aligned correctly.
(20:45) If you hit us up after this webinar, we’ll give you more resources on how to establish that alignment with your leadership at the top. (20:56) That can be the CEO level or not.(20:59) It can be other levels of the organization.
(21:02) But remember, we’re trying to get to a level where we make the decisions that control our own destiny. (21:07) Like a P&L level, portfolio, things of that nature. (21:11) You get that across functional strategy and OKRs and now you have more focus being handed into the organization because they’re only pursuing three to five and all the leaders worked on those three to five.
(21:25) If each leader contributes three to five and you have a leadership team of 10, then the first line of OKRs that you’re jumping off with is 30 to 50 siloed OKRs that are at the leadership level. (21:40) There becomes a massive multiplier effect when you get to the next level down of OKRs. (21:45) You want to have that strategic level done.
(21:48) That’s why the definition, we go back to the definition so important, creating an environment of common goals and shared commitments. (21:55) That is why we want to break down silos, get people in a room, set goals together and do that at each level. (22:03) If you did it at the top level, product level as an example, then the next level down, you’re going to get all your delivery leads in a room together, working together to set the goals that we’re going to achieve at the quarterly level to achieve the higher level.
(22:19) You do that and now you can now start to reap the benefit of tight alignment where we’ve actually used business outcomes to construct what we’re doing together. (22:37) The collaboration that you would have seen on the prior slide where it has the icons in the middle, it’s showing that there’s communication that’s happening between the levels of strategic and tactical OKRs. (22:50) That’s really important that you can see that there is no handing off or assigning of something to a department.
(22:59) Real collaboration is happening. (23:02) That’s really important. (23:04) Go ahead.

Speaker 2
(23:04) Yeah. (23:05) That also implies that the way the organization is structured is going to really affect how we do this. (23:11) If you have really well-formed value streams in the organization, that’s going to be very different from your typical siloed organization where you might set up OKRs for development or product that are focused on innovation.
(23:26) Then the operation side might be focused on stability, sort of the exact opposite.(23:33) If you had those two groups operating in isolation like they often are, then you’re going to go nowhere with those goals. (23:42) It’s really interesting.
(23:44) The more you do this, the more you start looking at this and saying to yourself, wow, I need to find ways to create flow and collaboration across the organization and promote that conversation using tools like OKRs to help people start to see that they’re going to have to work together in order to deliver on the promise.

Speaker 1
(24:10) There’s questions on the next slide. (24:12) I could nail them real quick. (24:15) The questions are to explain these two.
(24:18) The red chimney icon is really meant to just represent a brick wall. (24:23) It’s the best I could do. (24:25) What it means is there’s no need for that vertical communication like we saw on the other side.
(24:31) In this top example, the use case that we’re kind of descripting is that there’s a notion of a company-level objective. (24:40) Then the key results are assigned to those departments, which is one of the reasons Cascading got a bad name because people implemented it incorrectly. (24:50) If you assign it now to Department A and another one to Department B, there’s in the OKR framework, the notion of vertical and horizontal alignment are critical terminology and taxonomy because when you are trying to establish the alignment, you need that flow.
(25:09) The horizontal flow between departments on tactical level OKRs is uber critical.(25:15) That’s why the example on the bottom would be the notion of, hey, this company down here in the corner, they’re doing OKRs. (25:24) Every team does OKRs, but there’s no horizontal or vertical relationship between the OKRs.
(25:31) In a situation like this, I assure you, people will not only not know what the other department’s OKRs are, they won’t even know how they’re being tracked, scored, maintained, or anything because they didn’t use OKRs with the notion of alignment as a key value that they need to obtain as a result. (25:52) That’s why we’re calling these capabilities.(25:54) When we call these capabilities, we’re saying these are things that companies need to be able to do, so it needs to start to align with who they are.
(26:03) The bottom example would show teams that are just going in different directions, thinking they don’t even recognize it, but in fact, they’re all doing OKRs. (26:12) Cascading is super important in terms of understanding how we are actually achieving that alignment with cascading. (26:22) Excellent.
(26:23) I hope that solved the question.

Speaker 2
(26:25) Let’s go ahead and move on to our next section here. (26:31) The OKR cycle. (26:33) This really lays out how we propose that we roll out and manage the process of introducing OKRs in an organization.
(26:46) Number one is starting with the strategy, starting with the senior leaders, getting them aligned to what their plan is going to be. (26:56) This is looking at the big picture.(26:59) Step two, co-creating and localizing OKRs.
(27:03) This is where we start communicating out OKRs across the organization and getting folks to start thinking about and developing OKRs, the quarterly OKRs within their particular areas. (27:19) Then we start developing action plans. (27:22) Step three.
(27:24) Once we have those lower-level OKRs, it’s time to start putting together some action plans that really lay out how we’re going to collaborate across these different groups. (27:38) It’s going to require negotiation. (27:41) We’re going to have to compare each other’s OKRs, look at them together, and talk about how collectively we can be successful.
(27:50) Step four, we have to start checking in. (27:54) This is where we use those OKR measurement mechanisms to assess how are we doing. (28:02) This is where we’re really building the feedback into the system and checking ourselves to say, okay, how successful are we in terms of our execution on the OKRs?
(28:17) Then on a quarterly basis, scoring the OKRs, doing a self-assessment, and reflecting on what’s been done. (28:26) Then again, sharing that across the organization broadly.(28:31) That’s the high-level loop that we use.
(28:36) We go through this annually and then on a quarterly basis to build OKRs into a repeating framework that’s predictable, that creates a cadence for the organization as a whole. (28:55) The whole organization is planning together and then reflecting on the delivery of what they’ve done and asking the question, how did we do, how successful were we, and where do we need to go next? (29:10) Larry, anything you want to add to that?

Speaker 1
(29:13) I’m going to add by answering a question that came up in chat. (29:18) Somebody’s asking, can we give some specific examples of what falls into each section? (29:24) On the OKR cycle, what I would tell you is a lot of people miss that there is this notion of a PDCA, plan, do, check, adjust, which exists in the OKR framework, meaning it is a learning framework, much like Scrum or others that have that notion of plan, do, check, adjust.
(29:48) Establishing enterprise context, what we’re talking about is reflecting on that strategy that we developed and making sure that there’s alignment between strategy and our top-level OKRs and our quarterly OKRs. (30:02) What we’re saying here is that we want to persist in that. (30:11) I’ve worked in plenty of organizations, and I couldn’t tell you what our strategy was versus all of the initiatives we’re working on.
(30:18) What the cycle is meant to do is capture that. (30:22) If you’ve heard the notion of strategic agility and stuff like that, this becomes the foundation bricks for that kind of stuff.(30:31) If we want to be able to keep our eye on strategy, we have to make it relevant to us on an ongoing and persistent basis.
(30:40) Step one, enterprise. (30:43) We’re always orienting and calibrating to our strategy.(30:46) The second step there is the co-creation and localization.
(30:51) That’s meant to represent teams working together to develop their OKRs, both as a team localizing as well as with other teams co-creating. (31:01) That’s the vertical and horizontal alignment aspect. (31:05) We build it into the cycle.
(31:07) That becomes the behavioral change that we start to experience as a side effect of adopting a framework like OKRs. (31:16) It’s meant to get to that place like Agile does, where you land at this place where you’re like, it’s a mindset. (31:24) Along the way and along the journey, we’ve got to pick up specific habits and start to make them habits such that we can actually start to see the attributes in our organization that we want to see as a side effect of following these ways of working.
(31:44) Action plans is a super, super critical step, particularly early on in your experience with OKRs, because even though we talk about creating the strategy and then creating the strategic OKRs and things, let me tell you, that in and of itself is a great exercise to go through because it’ll change the conversations that are happening in your organization.(32:07) However, (32:09) at the end of it, there is a point where you end up looking at all of the work we’re doing, (32:15) and now there’s an event that occurs when you’ve done this right, and that is this notion of (32:21) reconciling work to OKRs, because what happens as soon as you really do those steps that we’ve (32:27) talked about, setting the top level and doing the strategy work, is you’ll get that hyper focus that (32:34) we talked about, because it’s going to show you right away as that group work together exactly (32:39) what the things are they should be focused on. (32:41) I regret to tell you, when you then go and you look at your project roadmaps and project plans, even stuff in progress, you will see that there is stuff that doesn’t align strategically to the OKRs you just created.
(32:54) So it starts to create this sort of sense that our OKR is not right for our company because they don’t align to the work. (33:04) Actually, it’s not the case, right? (33:06) The OKRs actually did what they intended to do or needed to do, which was reveal all of the work that we should and should not be doing.
(33:15) So that’s not to say that there’s ever a time when all work in the organization should align to OKRs. (33:21) That’s a different topic to discuss because it’s not necessary to go to that extent. (33:27) But what we will see is that there will be work that is not aligned to our OKRs, and in larger organizations, even any organization, a lot of times, even though you’re staring that reality in the face, you might not be able to do anything about it.
(33:45) So what happens as you get into OKRs is there’s a period of time when your OKRs are, some of your OKRs are out of alignment with your actual work in progress. (33:57) And everybody sees it. (33:59) Everybody knows it.
(34:00) We acknowledge it. (34:01) And what they’ll typically do is start to re-scope that work because now we’re sort of, OK, well, if we have to do it, we have to do it. (34:08) It doesn’t align to our strategy, but we’re going to do it anyway.
(34:10) So now this is what I call emergent agility starts to happen because the actual question they’ll start asking is, well, then how much of it do we actually have to do? (34:20) Because if it doesn’t align and we’ve got resources on it that we need to allocate to work that does align, how much of that work do we actually need to do? (34:28) And they ask the million-dollar question we’d like as Agilis, we’d like all organizations to ask.

Speaker 2
(34:33) Larry, there were some great examples in the Measure What Matters book that were specific to like the pizza company that did the robotic pizza delivery and others. (34:47) Are there specific examples people are asking for, detailed examples? (34:53) And we don’t have a lot of time to work with here, but I’m wondering if there is a quick example of a customer you may have worked with lately that kind of illustrates maybe some of this process.

Speaker 1
(35:09) Well, I mean, all customers that we work with are going to adopt this type of a process, as you’ll see with the next capabilities we talk to. (35:17) There was an example that I saw very recently. (35:22) I’ll share it with you guys because it was like a perfect example.
(35:28) So it’ll give you an example, but it’s actually going to demonstrate a different point.(35:33) But just today, I was reading that in the state of New Jersey, they did away with all one-time use plastic bags at grocery stores, and they made everybody have to use a more durable, reusable plastic bag. (35:48) So had they done OKR, let’s think about it like this.
(35:51) They didn’t obviously likely do OKRs, and so they would have created some lofty goal, though, because it’s environmental to say get rid of one-time use plastic bags. (36:01) So they did that. (36:03) In order to make a more durable plastic bag, however, they require more plastic.
(36:10) And so what actually happened when this whole thing unfolded for them is they’ve noticed a 3x increase in the amount of plastic being used in New Jersey because people are throwing out these more expensive, more durable. (36:27) So here’s the example I’m trying to show you is that’s an example of something that could be a goal, right? (36:34) It’s minimize waste to save the planet.
(36:38) And so we think of things we can do. (36:39) Key result, well, we can eliminate 100% of all single-use plastic bags. (36:45) The reason it’s not the perfect example, it does give you something, but the (36:50) point that I would teach you if we were in a coach class is you need a balancing key result to (36:55) actually accomplish the goal that we’re talking about, meaning we would want to make sure to set (37:02) some sort of complementing goal to ensure that the one-time use plastic bags aren’t being thrown away (37:09) or that, I’m sorry, the multi-use plastic bags aren’t just being thrown away. (37:14) And because the outcome of what New Jersey literally did, and it’s in the news now, is they actually made plastic consumption worse by doing what they did. (37:23) And that’s what they’re talking about.
(37:26) So it’s sort of an example.

Speaker 2
(37:29) Yeah, that’s fabulous. (37:31) I want to keep us moving because we have to get through the rest of this, but if people want to spend some time with us afterwards in the Q&A section to talk more about specifics, totally appropriate. (37:43) We’ll do that then.
(37:45) So with that in mind, I want to go ahead and move us to capability number two, which is really looking at things from a portfolio management perspective because all of this, once we have strategy, portfolio management is usually where we’re going to take the strategy, the plan that we’ve agreed upon, and try and turn that into execution. (38:09) So this is really, you need a capable portfolio management group within your organization that is able to deliver on building visibility around the work being done, being able to align to those strategic objectives, and then making effective decisions on projects as they’re being delivered and moved through. (38:37) So a lot of this depends on our ability to have a functioning portfolio management organization that’s able to track and deliver on this.
(38:53) So if you don’t have this part of the organization, if you don’t have this capability, you’re going to struggle with the sort of execution and delivery side of the OKRs, which is also critical. (39:09) Anything you’d like to add to that, Larry?

Speaker 1
(39:13) You know, terminology-wise, the only thing I would say is if portfolio management is something that’s not landing well in your organization because of PMO type of people related to that, I understand. (39:28) And so what Tom’s really describing when we’re talking about portfolio management, it’s however you want to achieve it, achieve it. (39:38) What we are talking about here ultimately is the notion of operationalizing our OKRs, meaning we’ve now got our OKRs, they’re driving people to do stuff.
(39:51) What is it that we’re doing, and who’s keeping track, and how are they telling the story of how we’re doing our OKRs, right? (39:57) So what this is really meant to say as an organization is you can’t necessarily sort of leave it to all these individuals. (40:05) You know, if you go back to the cascading slide and think about teams going in different directions, they don’t, in that context, they don’t have the sense of what sort of holds them all together, okay?
(40:16) And that’s the portfolio management function. (40:20) But again, call it what you want, but we need people that are making choices around what we’re going to do and how we’re going to respond to the things that we need to do to continue to drive our business relative to the things we’re working on with OKRs.

Speaker 2
(40:35) Excellent, excellent. (40:37) So we need to have this in place to sort of have the execution side of the OKR equation. (40:44) Capability number three, we need kind of a quarterly operating rhythm.
(40:49) And so that’s built into all of this. (40:52) Up front, we have the process of introducing the strategy and then working across the different groups to achieve alignment, establish our priorities. (41:07) So this is where we’re going to be working on our capacity and what we can and cannot do.
(41:14) And then finally, we’re going to introduce this to the teams and the teams are going to be delivering on some sort of quarterly cadence. (41:26) Now that can be any kind of quarterly cadence. (41:30) Safe could be one way of doing this, you know, the traditional PI planning that we’re probably all very familiar with.
(41:38) And of course, when you go into PI planning, who is the person who leads with the vision? (41:45) That’s usually product management, right? (41:48) And so product management is going to be going into quarterly PI planning with a vision, which really is kind of analogous to the OKRs that we’ve been talking about.
(42:01) So they’re walking in, in a sense, with this objective that they want the group to achieve. (42:08) And then the teams are going to break that down, work out amongst them how they’re going to deliver on that. (42:16) And then what they’re going to do is they’re going to use, in the language of Safe anyway, they would use PI objectives, right?
(42:24) To express what they’re going to deliver. (42:28) And so those PI objectives are kind of analogous to a team level OKR. (42:34) It’s a different language.
(42:36) I’m definitely waving my hands a little bit when I do this, but it is, this is how OKRs blend very nicely into some of the frameworks that are out there. (42:48) So we have a lot of the mechanism here for executing this on a quarterly basis, sort of built into some of the frameworks that are commonly used for execution. (43:02) So you can see through the vision of the product manager, and then the PI objectives that the teams deliver on, we’re using a very similar language that mates quite well with the overall picture of OKRs.
(43:21) Anything you want to add to that, Larry?

Speaker 1
(43:23) I think two things that I want to add. (43:25) So obviously the portfolio management function that we were talking about on the last slide, as a capability, is now consumed into what helps drive that quarterly operating rhythm. (43:35) But I want to point out, though, is on the right hand side of this, where you see PI planning and to the right, when Tom talks about the fact that they would do PI objectives or some other way to reflect what their plan encompasses, it begs the question of whether or not teams should do OKRs at that level, because many people come to OKRs and they assume that they should go top to bottom, right?
(44:01) Lottie, dottie, everybody, right? (44:03) Going to do OKRs. (44:04) But think about it.
(44:06) Be mindful of the fact that agile is ubiquitous today, right? (44:11) It’s table stakes for many, many organizations like we’re doing it. (44:15) And so that meaning that that framework will be in that organization.
(44:21) Those frameworks like Scrum, whether it’s Scrum on its own or Scrum within the context of SAFe, it is a goal setting framework. (44:29) I mean, it does a lot, but ultimately those teams are taught that when they’re done with their sprint planning, they have to set a sprint goal. (44:38) When they’re done with their PI planning, they set those PI objectives.
(44:42) So you don’t have to add to the teams and take from their velocity the added step of further doing OKRs because they’re consuming work that the portfolio management function is ensuring how much of that needs to align or not. (44:58) So it’s not like if teams aren’t doing OKRs, they won’t get the excitement of working on this purpose-driven work because they will by way of the fact that they know that that work is delivering to the larger organizational goals by way of its relationship to the OKRs.

Speaker 2
(45:17) Fantastic. (45:17) Thank you. (45:18) I’m going to go ahead and move us on to our last capability here, our fourth capability.
(45:23) And Larry, why don’t you just walk us through this?

Speaker 1
(45:25) Somebody has got a question on the, they’re asking a circular arrow on the straight arrow. (45:31) Can you go back to the last slide real quick? (45:35) The, oh, that would be representing sprints.
(45:38) Mm-hmm. (45:40) And if I’m understanding, that’s just representing a cadence, teams delivering on that cadence? (45:48) Yeah.
(45:49) Yeah. (45:50) And now capability four is, yeah, value realization. (45:55) So what we’re, so a lot of organizations today, when they venture into agile or safe or other types of frameworks, one of their goals is to answer the question, are we producing value?
(46:07) And if so, what value are we producing? (46:09) So the challenge with answering that question in a traditional environment, i.e. let’s say projects, is that we don’t necessarily, at least consistently, ask questions of a project of, you know, what are your measurable outcomes that we’re going to evaluate after we deliver this project? (46:31) Instead, we sort of build a problem statement, add scope and not scope, and we justify an investment, and then we try to achieve it by a date.
(46:41) And so that way of working doesn’t necessarily result in work where it’s easy to figure out what we’ve achieved such that we can make decisions on whether to continue doing that work or not, right? (46:55) And that’s the goal. (46:56) If you think about anything to do with safe or the notion of lead startup, it’s all about doing a little bit of work, figuring out if that work produced the results we want, and then choosing to do more, the start, stop, continue scenario, right?
(47:15) Stop that work, do more of that work, or pause that work. (47:18) So what we want to do, though, in terms of value realization is understand how we can achieve it with OKRs, okay? (47:25) So if you look at, we’re going to pretend there’s a line right down the middle of this slide, and on the left is an OKR paradigm, and on the right is an Agile paradigm.
(47:36) So on the left, so what we’re going to do is follow an OKR all the way through the process, okay? (47:42) So you start with a strategic outcome on the far left. (47:45) The objective is to increase recurring revenues.
(47:49) It has those four key results that you see there. (47:52) The top key result is the one we’re going to watch. (47:55) It says reach monthly recurring revenues of $250,000.
(47:58) So that’s their goal for the year. (48:00) Now, the next level down, you can hit enter, yep, is our tactical level. (48:07) This sort of, if you think of the top as being more strategic, where it’s expressing business outcomes, the next level down will start to look more familiar to us because it’s the stuff we can actually touch.
(48:20) It’s that solution level, okay? (48:23) And so that level down now, they want to try to achieve the higher level goals, and so they start to think of what objectives they can do, and we’re going to look at objective two, where this solution group in this example is saying, hey, we’ve been wanting to expand into the southeast region. (48:38) That will help us to achieve those monthly recurring revenues and the higher level goal of increasing revenues.
(48:44) So they say, we’re going to do that, and here’s the measurable outcomes. (48:48) The first one is obtain 1,000 new customers because we know that each customer has a value, and we can determine and quantify how much recurring revenue we’re making as we acquire new customers. (49:01) So they have that key result.
(49:03) At that point, we now know what we’re trying to achieve. (49:07) We haven’t discussed a project. (49:08) We haven’t talked about what it is specifically we’re going to do or whether we’re already doing it or not.
(49:14) We just know at two levels of the organization in this example what we’re doing, and now we can go into the solution level, I mean the implementation level, and we could actually describe hypothesis-driven experiments we’re going to do if you are following good epic processes to achieve that key result. (49:38) And so this is where you start to see OKRs matching up or joining hand in glove with real work. (49:45) So we define a couple of experiments we’re going to do.
(49:47) The top one is a referral program. (49:50) Our leading indicator metric that we’re now applying at the next level down is to get new customers. (49:58) New customers there is the same.
(50:00) It’s a like-for-like metric with the key result at the higher level. (50:05) So we’ll be able to give the feedback on how much progress we made to that key result based on the work we’re doing. (50:12) So you can see that the referral program in this example, we did that work, and the three-month bundle on the bottom, we did that work in both of those examples, we delivered it, and then we evaluate the outcome.
(50:23) This would again be that sort of portfolio management function that’s looking at actual results so that they can make decisions based on actual results. (50:33) In this example, we’re laying out that the referral program was a bust, but the bundle with Apple Music was good. (50:42) And so those on the far right, the red letters, you can see those are the performance metrics.
(50:49) They informed us of how we actually did relative to what we believed we could do.(50:53) And so now they can make those decisions and determine how we’re achieving the OKRs with the real results. (51:01) But now we’ve actually got the data for us to determine value delivered.

Speaker 2
(51:07) I really love this particular diagram because it really kind of walks us through top down from the very beginning, from the executive, the strategic alignment and work on the OKRs at the executive level to the business level, right down to the teams. (51:26) And so this is a fantastic illustration of that, and kind of helps me think about how I might apply this within an organization. (51:36) Thank you very much.

Speaker 1
(51:38) Go ahead. (51:38) One thing to note on this, and if you can think back on all of the capabilities, is the strategy comes before the OKRs, and OKRs come before the work. (51:50) If we get into an OKR workshop, or we’re getting into the creation of OKRs, and we already know what work we’re going to do, we’re sort of off on the wrong foot in a way.
(52:03) It may not even be a good place to start, meaning you might think, well, we’re just going to do it like this anyway. (52:08) Well, the reason that’s risky is because if it turns out that all other priorities are trumping the work that you’re trying to do for your OKRs, then you won’t have a good experience, and you’ll think that OKRs won’t work in your environment.

Speaker 2
(52:22) Excellent. (52:23) Thank you, Larry. (52:24) So with that, we’ve covered, you know, like we said at the beginning, some pretty high-level stuff.
(52:31) There’s a lot to this, and fortunately, we offer four different classes right now. (52:37) We start off with OKR Foundations. (52:40) We also have OKR Implementation, Strategic Agility with OKRs, and Operationalizing OKRs.
(52:49) And so we offer training and certification for all those different elements to delivering and working with OKRs. (53:00) That said, I just want to thank Larry. (53:04) Every time I work with Larry, I learn something more, so this has been a fantastic experience for me.
(53:11) Thank all of you for showing up, and really, I want to open things up for questions here. (53:16) We’ve got a few minutes, and so if you have some questions for Larry and I, let’s have it. (53:21) Otherwise, thank you very much.

Speaker 1
(53:25) Thank you all. (53:26) Yeah, happy to hang back for questions. (53:28) Yeah.
(53:38) Was it that clear? (53:40) Man, we’re good. (53:43) What’s the difference between OKRs and Scaled OKRs?
(53:46) So really, there’s not a, like, we’re not saying that Scaled OKRs and OKRs are, like, totally different. (53:54) Like, you might think of Safe and Agile or something like that. (53:57) It’s not really that.
(53:59) Scaled OKRs comes with that higher level definition, meaning we orient toward and we favor strategy and alignment, common goals, and shared commitments. (54:08) So we’re going to emphasize that point, and we’re going to help operationalize that type of a system.(54:14) So Scaled OKRs is more about approach on implementation versus other ways.
(54:20) So we have the guidance to help ensure that we know how to put OKRs into action, and we know how to get them to deliver real value. (54:29) And so that’s what I would say, is we add the sort of the jet fuel behind just OKRs with the know-how. (54:37) I like that.

Speaker 2
(54:38) I believe the recording and the deck will be made available. (54:47) We typically do that with these webinars, so I certainly have no problem with that. (54:56) Will you explain the pink, green, and blue sections of the quarterly operating rhythm?

Speaker 1
(55:04) Oh, yeah. (55:05) That right there is just literally color coding to sort of segment out each of those pieces. (55:12) So on the far left, we’re saying red.
(55:16) This is where you can see the bullet items in there. (55:19) And the arrow, the gray arrow, represents that it’s input, right? (55:22) So all of that stuff on the left becomes the input into our system, whatever, our system of delivery.
(55:30) And then we have a function. (55:31) In this case, it’s the green function that is able to consume that strategy and determine, to develop a roadmap of the opportunities that we can pursue in order to achieve that strategy. (55:44) So that’s that function, right?
(55:46) So you can see the icons in there that represent it. (55:48) They should be focused on capacity planning, roadmaps, flow, reinforcing the learning, etc. (55:55) And then the final step is that execution side where teams are consuming that work, but they have an input, right?
(56:02) They have an input of the good work of that portfolio team of getting a clear path on where we’re going and why. (56:09) So that’s the input now into the PI plan. (56:11) It’s not just random work.
(56:13) It’s work that is targeted and specific. (56:16) So that’s all the colors we’re meant to represent.

Speaker 2
(56:20) And that’s where you’re going to find those areas of resource contention like with UX, where UX may have had certain plans that they felt were important at the time, but now that they have the demands of all of these other teams that may have projects that relate to the OKRs, they may find that they have to completely change or restructure their backlog of work, their plans. (56:49) And that can happen to any of them and probably all of them as we go through this process. (56:55) So this is where I think there’s a lot of sort of, I’m going to call it creative destruction that takes place, where you have the OKRs and you go back and you look at your plans and there’s a mismatch.
(57:09) We’re going to need help from other areas and we’re going to have to reprioritize things to make sure that we can deliver on the organization’s goals, not just our own division or our own departmental goals. (57:28) And as Larry is pointing out, the blue side is really this is where we’re into execution. (57:33) This is basically where we’re translating the objectives and key results into deliverables at that point.

Speaker 3
(57:48) That’s right.

Speaker 2
(57:49) All righty guys, any other questions?

Speaker 1
(57:56) I want to make one correction to something I wrote in the chat. (57:59) It’s not north.io, it’s the north. (58:03) It’s if you’re looking for a platform, but it’s called the north.io. North.io is something else. (58:14) But it’s a great entry level tool. (58:16) I mean, and I frankly would even call it more than an entry level ultimately if you’re looking for a platform to help with because it’ll do a lot. (58:23) Now there’s bells and whistles that enterprise tools will have that an entry level tool like the north won’t, but it’s a great place to start.

Speaker 2
(58:35) All righty guys, with that I think we can call today a wrap. (58:39) Thank you everyone for attending. (58:41) Thank you for those great questions and best of luck with your OKRs in the future.