OKRs is a term that gets thrown around a lot these days, but what exactly does it mean? Andrea Lineham, CMO of Zai, is here to shed some light on the magic of OKRs and how they can help drive your business’ performance.
We originally spoke to Andrea on an episode of CMO Diaries, but for fans of the written word, the highlights from our conversation are available as an article below.
Read on to find out all about:
- What are OKRs?
- Why choose the OKR framework?
- The practicalities of rolling out OKRs
- Using OKRs in an agile business
- Key learnings from rolling out OKRs
What are OKRs?
Hi Andrea, welcome back. This chat’s particularly relevant to a lot of CMOs and marketing leaders because it's on a term that gets thrown around a lot these days: OKRs – objectives and key results.
A lot of people have heard how effective this framework can be, but they're not necessarily familiar with what it means to institute it across an organization. That's something you're working on right now right?
Yeah, exactly. Just to provide a bit of context, we’re merging two companies that had a lot of different performance management systems. This has given us an opportunity to take a step back and see what’s going to be the right program for us going forward, rather than just try to repurpose what both companies are already using.
So OKRs, for anybody who is not familiar, stands for objectives and key results, and it’s actually an initiative that came from Google. It’s a program they developed for themselves, and now it’s become pretty standard practice in a lot of places.
But what does it actually mean? It means that you set a number of objectives for the company as a whole, and you measure them by a certain number of key results. Generally, you would set your objectives for the entire year or six months, but your key results might be done on a monthly or quarterly basis. Having those quarterly or monthly key results is a great way of keeping a rhythm going and keeping the Northstar in focus for everybody.
Objectives tend to be a bit loftier than key results. An example of a company objective might be to gain market leadership in the UK for a particular cupcake flavor within a year. There's no specific number around that because you don't have a measurable perspective for the objective. It's more of a vision.
The measurable part is the key results. How are we going to make our cupcakes the number one in the UK? Here are the things that we need to achieve this quarter to get us part of the way there.
For product, for instance, a key result might be to overhaul the recipe. For marketing, it might be to push out ten pieces of top-of-funnel content around recipes for red velvet. All of these key results are very measurable, and achieving each of them helps you on your journey to having the number one cupcake in the UK.
So it's a bit like having company-wide KPIs that people have got to hit?
Why choose the OKR framework?
OKRs can apply to pretty much any kind of business. We've seen them working in startups; we've seen big multinationals using them too. It's not restricted to any particular business size: anyone can benefit from having OKRs.
So what inspired you to take this approach?
We were looking at other companies that were similar to us and what worked for them. We’re a FinTech of 230 people, spread out across the States, Asia, Europe, and Australia, so we needed something that was incredibly transparent, that everybody could have visibility over.
That’s super important to us because when you're not together in person and you’re working across multiple time zones, communication can be quite challenging. The last thing you need is a really complex performance management system; you need it to be as simple as possible.
From the research we were doing this was probably the simplest system. It's ironic because the OKR system is actually quite complex in its thinking, but what Google is really good at is turning complex ideas into very simple, usable initiatives. So that was the drive: the fact that OKRs are really simple to implement and measure, and they’re something that everybody can understand.
The practicalities of rolling out OKRs
Let's talk about the practicalities of developing these objectives. How did you decide on your OKRs and roll them out at Zai?
One of the conversations we’ve had was around our leadership team coming together and defining our brand, our vision, our mission, and our values. We actually used those as the foundation for our objectives – each of our four main objectives links back to our mission and vision.
Then we took each of those objectives and broke them down into a certain amount of key results to be achieved at the leadership team level. Those were then trickled down into our departments as an array of initiatives and activities that would enable us to achieve each key result.
Each team member owns one of the key results that leads to the objective. That executive owner has to assign who they are dependent on to achieve that result, and honestly, when we started breaking it down, it was just a long list of tasks for marketing.
Now, I knew marketing did a lot, but it's only when something like that is put in front of you that you realize that we have a finger in every single cupcake in the business. It's been a real challenge, but it’s also created a lot of really positive debate and a lot more cross-departmental understanding of everything that marketing does.
Everybody's dependent on marketing. There are other departments that you're dependent on for lots of things, but when we looked at our key results, there was this red thread of leaning on marketing for literally 90% of them. Marketing might not be leading that particular key result, but by god are they your number two, and you’ve got to be friends with them if you want to make it happen.
It's been super positive from that perspective, but a real eye-opener for me and my team. We’re everywhere, but we don't really showcase that that's the case or how important we are, quite frankly.
It comes up a lot in my conversations with CMOs how difficult it can be to show the value of marketing, particularly for certain marketing activities that aren't very attributable, so that sounds like a very positive exercise.
It’s a lot of pressure too though: you've made people realize just how reliant they are on marketing, so they're going to expect more from you. How are you managing those expectations?
This is another really positive thing about the OKR model. If we agree at the leadership level that marketing is going to deliver these six pieces for a particular objective, we have to accept that marketing is not going to have the time to deliver pieces seven, eight, and nine. There's this collective acceptance that we have to deprioritize other things, instead of expecting marketing to do it all.
It really shines a light on what's practically deliverable in any time period and gets everybody to sign off on that. It comes back to transparency, and it's not that marketing people hate doing all of these things; ironically, we just don't shout about ourselves and what we're doing. The cobbler never has a decent pair of shoes, right? It's the same thing in marketing: we're not good at marketing ourselves, and this is essentially what OKRs have allowed us to do.
Using OKRs in an agile business
We like the idea that OKRs give you permission to prioritize things that are going to have an impact.
What happens if you fail to make those impacts? I know you're early doors with OKRs, so you might not have had them running long enough for this to come into effect, but what’s the plan if you fail to meet a key result? Do you have to completely reassess your objectives?
I love this question because it was a debate throughout the whole journey of setting up OKRs. This is actually a really beautiful thing about the model: the objectives for the year remain static, but you adjust the key results on a monthly or quarterly basis in order to get there. This is great because there will be macro and micro scenarios that impact the achievability of your objectives.
Let’s go back to the cupcake analogy. Your objective is to be number one in the UK for a particular cupcake flavor. Maybe you’re trying to lead the red velvet cupcake market, but if you then realize that people in the UK hate red velvet, you can change courses and go after chocolate cupcakes instead.
What you're not changing is that you want to be the number one UK company for a cupcake flavor. You went through quarter one, you developed the new recipe, you did the taste testing, and people were just not into it. So then you have to pivot. That's why this system works so well for Google and we know it’ll work well for us too – we’re an agile company and OKRs allow for that.
We need our performance management system to be agile with us. So if new learnings come in, we can give ourselves the collective permission to change our minds because the market is forcing us to.
Key learnings from rolling out OKRs
Are there any key learnings that you've taken away from your experience of getting the ball rolling with OKRs?
Definitely. We tend to be the type of team that comes up with a new idea and just sprints down the road with it. So the learning for us, particularly in the LT, was to take a moment to really make sure that we understand how the system would work for us going forward and what some of the stumbling blocks might be along the way.
That's definitely something I'd recommend you do: take a moment and really learn how it works first, then you’ll be in a much better place to roll it out in a way that's going to work for your business and your team.
The other thing I'll say is that OKRs don’t necessarily need to be company-wide. Just because your whole company isn’t using them yet, that doesn’t mean you can’t. Had I known and really understood this process beforehand, I would have introduced OKRs just within my own team much earlier on.
It's a very manageable system, and it’s something that good old Google Academy can help you figure out. There are so many articles and videos about it. You could introduce OKRs in a very small way, and you might end up influencing your wider organization to adopt the system too.
Now, if you decide to introduce it in your own department and it’s not linked to overall bonuses, you might be challenged around the incentive piece. But if you're at or near the CMO level, you should certainly have the influence to do something about that. Even if you’re not yet at a very influential level, you can certainly introduce the concept to your manager or CMO.
Thank you very much, Andrea, this has been great. As we said earlier, OKRs are something that people hear about a lot these days, but they might not be familiar with the practicalities of them being rolled out. Hopefully, this conversation has helped with that.
Are you utilizing OKRs? Got any advice or insights to share? Or maybe you want some questions answered. Head to the CMO Alliance Community Slack channel to join the conversation with CMOs and marketing leaders around the world.