How to implement OKRs at your small business

OKRs represented by darts on a target

Every time I struggle with my parallel parking, I’m reminded of the movie Austin Powers. During this classic scene, Powers is trying to “course correct” his parking job, by pivoting inch by inch in a narrow corridor. Yet despite his herculean effort, he makes zero progress.

With my road test firmly ensconced in the past, the Austin Powers parking fiasco now reminds me of something else: Being an entrepreneur. It’s frigging hard. You have imperfect information. You have limited resources. You have infinite decision-making paths. You have countless stakeholders to please.

And you need to constantly balance where you want to be in 5 years, versus what you need to do tomorrow.

The challenge becomes exponentially harder as you grow your team. Here’s how the lines of communication multiply as you go from 3 employees to 14 employees:

Source: The GetLighthouse blog

And as a CEO (or manager) the number of hours that you “become responsible for” also grows. I manage five employees on 30 hour work weeks. Therefore I am responsible for the direction of 150 hours of work a week.

The average manager has 7 direct reports (and assuming 40 hour work weeks) is responsible for the direction of 280 hours a week.

Jane Fraser (the CEO of Citigroup) sits atop 210,000 employees for a whopping 8.4 million hours a week.

Now if there are people below who depend on you, you must avoid one thing at all costs: Being Austin Powers. Yet how do you ensure that everyone rows in the same direction?

Why should you even bother with OKRs?

“If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.”

Steven Covey

I became an entrepreneur to escape the world of bulls*t process, meaningless policies and bike shedding that never moved the needle. Yet as we grew our RadReads team, I quickly came to the realization that one of my most important roles was to set the direction to ensure that our ladder was leaning against the right wall.

Yet this was more than just a well-crafted mission statement. Our mission is to help people lead more productive, examined and joyful lives. This is fine-and-dandy, but it doesn’t say anything about products, strategy, milestones, metrics and prioritization. Furthermore, when I was by myself as a solopreneur, I could just change my plans on a whim. With zero consequence. Now, the cost of Austin Powers-ing it is devastating.

And that’s a good thing.

For our growing company, I wanted to utilize a framework that could support our broader vision while keeping us accountable on a much shorter time frame. For this system to succeed, it needed to be:

  • Lightweight
  • Actionable
  • Easy to maintain
  • Understood by everybody
  • Supportive of experimentation and pivots

We landed on a modified version of OKRs that was deeply inspired by Christina Wodkte’s approach from Radical Focus: Achieving your most important goals with Objectives and Key Results.

OKRs: An Introduction

Objectives and Key Results (OKRs) is a goal setting framework for organizations. The purpose is to take a longer-term goal (i.e. an Objective) and pair it against some measurable milestones (i.e. some Key Results). The Objective is meant to be broad enough to enable strategy and implementation “pivots” – yet the Key Results are measured with enough frequency to ensure that you don’t drift and succumb to Shiny New Project Syndrome.

What makes a good Objective?

We followed Wodtke’s “one Objective them to rule them all” approach. This picks one objective that is big, aspirational and communicated in simple (non-jargony) language that everyone on the team can understand and easily remember.

For our direct-to-consumer business (Supercharge Your Productivity and the $10K Accelerator) we used the following objective:

Establish Supercharge Your Productivity as the sustainable engine of RadReads’ growth.

Now you’re probably reading this and saying, “man that sounds like a lot of fluff.” So let us explain:

Supercharge Your Productivity is our longest-standing and most profitable product. It generates the lion’s share of our revenue and given its digital nature is our highest-leverage (and highest margin) product. And as a bootstrapped company, if we can get this product right, then we can grow our team and product line.

But the product doesn’t have clear product-market-fit. The marketing strategy, while effective, isn’t cohesive. And most importantly, if we injected more resources (time, money, people) into the product – it’s unclear if we’d generate more revenue. So all of these things need to get resolved, as part of the objective.

(Lastly, every time we use the phrase “growth” we precede it with the qualifier “sustainable.” This is a reminder that our team has ZERO appetite for burning out.)

In choosing the Objective, Wodtke recommends asking a few questions:

  • Why is this OKR important to the company?
  • How will the company be changed if we succeed?

She encourages you to look for a “unifying theme” that will spread across departments:

[Everything might be about] getting ready for a round. Maybe all the goals are about moving into a new market, or establishing dominance, securing your lead, etc etc. If you find an OKR set that really is about the company’s success, other teams will find ways to make it happen as well, from customer service to legal.

If you’re still stuck picking the right Objective, Perdoo’s blog recommends three types of Objectives:

  • Build: Create something that didn’t exist before (like an onboarding sequence)
  • Improve: Make something that already exists better
  • Innovate: Do something drastic, on your product, marketing or organizational structure.

What makes good Key Results?

With the Objective set, your team clearly understands where they’re going. But now you need to pull in the timeline with metrics. These metrics need to be measurable (and ideally on a regular basis) so that when your strategy zigs and zags, the Key Results will ensure you’re still heading in the right direction.

One of the trickiest parts of Key Results is that they need to be outcomes, not outputs. While it’s very tempting to reward effort, ultimately inputs that don’t translate into results are worthless. These are a few poor key results:

  • Interview 5 CTO candidates
  • Make 20 outbound sales calls
  • Ship 3 new features

Instead, you’d want to measure the outputs of these efforts:

  • Make 3 new hires
  • Generate $10,000 in new sales
  • Increase time user engagement to 30 minutes a day

The focus on outcomes provides strategy flexibility, while ensuring accountability.

How we implement OKRs in practice

Having defined our OKRs in Notion, we report weekly on our progress in a dedicated Slack channel.

We add Health Metrics which are qualitative measures of the health of our product and team. And then we simply list the Week’s priorities. Not everything we’re doing, but just the main priorities that move us towards the objective.

It’s far from a perfect process

We made the commitment to incrementally assess our OKR process each quarter and then fully re-underwrite it after a full year of tracking. Already, we’ve uncovered a few issues. The biggest challenge is that for product lines with lumpy revenue (like Supercharge Your Productivity), the weekly tracking loses some significance. Next, as the CEO I mistakenly believed that measuring things via OKRs was identical to having a strategy. (Spoiler alert, it’s not!) And lastly, OKRs only work if you have the right Objective or Goal. Our business is pretty simple right now, but as we expand the framework could become exponentially more complicated and convoluted.

Yet for now, it’s working. We’re rowing in the same direction. And we’re definitely not Austin Powers.

If you’re a small business looking to implement OKRs, The Rad Studio would love to work with you.

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