This article was created from an episode of CMO Diaries with Andrea Linehan. You can listen to that episode right here.
Diving headfirst into the realm of objectives and key results (OKRs), I found myself navigating an exciting landscape filled with possibilities and potential for organizational growth.
I’m Andrea Linehan, CMO of Zai, and I've had the unique opportunity to implement this powerful framework, and I'm eager to share my insights on the transformative impact of OKRs on driving business performance.
From its origins at Google to its practical implementation within my team, join me on a journey as we unravel the complexities and demystify the magic of OKRs.
Introduction to OKRs in company management
In the dynamic world of business, several performance management systems exist. Recently, I've been part of a process that required merging two companies, each with their unique systems. This situation provided an opportunity for us to evaluate what program would be most suitable for our unified operation.
We didn't want to merely repurpose what each entity was using before. After careful consideration, we found our answer in OKRs.
The basics of OKRs
OKRs is a term that originated from Google. It has since become a standard practice in numerous organizations. But what does OKRs mean, and what does it entail?
Fundamentally, this system involves setting several objectives for the entire company and assessing them using specific key results. Typically, these objectives cover a time frame of a year or six months. However, the corresponding key results are usually tracked monthly or quarterly.
This practice of assessing key results periodically is an effective way of maintaining a steady work rhythm while keeping the company's overarching goals (the 'North Star') in view for everyone.
The difference between objectives and key results
It's worth noting that objectives and key results have different characteristics. Objectives tend to be loftier, more visionary. For instance, a company objective might be to become the market leader in the UK for a specific cupcake flavor within a year. This goal doesn't have a measurable perspective; it's more of a broad vision.
On the other hand, key results are quantifiable and trackable. They answer the question: How are we going to make our cupcakes the number one in the UK? Key results are the milestones we need to achieve within a quarter to move us closer to our overall objective.
For instance, a product-related key result might involve overhauling the recipe. For marketing, it could be to generate ten pieces of top-of-funnel content on red velvet recipes. Each of these key results is measurable, and accomplishing them contributes to achieving our larger goal of having the most popular cupcake in the UK.
In essence, you can think of OKRs as company-wide KPIs that every team member should strive to achieve. They provide a clear and measurable pathway to reaching our lofty goals, ensuring everyone is aligned and moving in the same direction.
Why choose OKRs: The driving factors
The decision to adopt OKRs was inspired by a thorough observation of other similar businesses and identifying what worked for them. Our organization, a 230-strong FinTech company, operates across the United States, Asia, Europe, and Australia. Hence, we required a system that promotes transparency and ensures that everyone could have visibility over our goals and progress.
In our line of work, where physical distance and different time zones are realities, communication can pose a challenge. The last thing needed is a complex performance management system. Simplicity was our watchword, and our research pointed towards OKRs as the simplest, yet effective system.
Despite the complex thoughts behind OKRs, Google has a knack for transforming complex ideas into straightforward, implementable initiatives. Hence, the primary attraction to OKRs was their simplicity, ease of implementation and measurement, and universal understanding.
The development and implementation of OKRs at Zai
The development of our OKRs at Zai was a carefully planned process that began with our leadership team defining our brand, vision, mission, and values. These components served as the foundation for our objectives – each of our four main objectives links back to our mission and vision.
Next, we broke down these objectives into a series of key results to be achieved at the leadership level. These key results were then further disseminated into our various departments as initiatives and activities, facilitating the achievement of each key result.
A critical part of our implementation process is the assignment of each key result to an executive owner. This executive has to assign who they are dependent on to achieve the desired result. This process led to a revelation: marketing was involved in nearly every task.
As we delved deeper into the process, we found that marketing plays a significant role in achieving our key results. While we were aware that the marketing team was heavily involved, it was surprising to see that they have a part in virtually every aspect of the business.
This realization sparked a positive debate and fostered cross-departmental understanding of the extensive reach of marketing. Almost every department depended on marketing for a significant proportion of their key results.
This realization wasn't just an eye-opener for me and my team, it served to highlight the importance of marketing and the extensive roles it plays. The crucial lesson is that while marketing may not always be in the lead, it's a critical player and a valuable partner in achieving company-wide objectives.
Managing expectations and showcasing marketing's value through OKRs
The implementation of OKRs in our organization also helped manage expectations towards the marketing team. One unique aspect of the OKR model is the necessity of mutual agreement at the leadership level about what marketing is expected to deliver for a particular objective.
For instance, if we agree that marketing will deliver six specific elements for a certain objective, we concurrently acknowledge that the team won't have the bandwidth to deliver additional elements. This model helps cultivate a collective understanding about the need to deprioritize certain tasks and deters the expectation for marketing to accomplish everything.
This approach shines a light on what is practically deliverable within a given time frame and ensures that everyone is in agreement with it. It fosters transparency, which is particularly beneficial for marketing teams. Typically, we marketers often fail to advertise our work and contributions. Just like the cobbler who doesn't have a decent pair of shoes, we sometimes fall short in marketing our own efforts.
However, the implementation of OKRs has served as an effective platform to highlight and showcase the essential role we play in the organization.
The ability to adapt and adjust with OKRs
A significant benefit of the OKR model is its inherent flexibility and allowance for adjustments. This characteristic is particularly handy when set objectives aren't met. Despite this, our yearly objectives remain the same. However, the key results - the steps to achieving these objectives - can be adjusted monthly or quarterly.
Various macro and micro scenarios can impact the achievability of objectives, making this adaptability invaluable. To illustrate, let's revisit the cupcake analogy. Our objective is to achieve market leadership in the UK for a specific cupcake flavor. Let's assume we initially aimed to lead the market with red velvet cupcakes. However, upon realizing that red velvet isn't favored by the UK market, we can pivot and target another flavor - say, chocolate.
What remains unchanged is our objective to be the leading company for a cupcake flavor in the UK. Our failure to win the market with red velvet cupcakes simply means we need to pivot. This illustrates why OKRs work so well for organizations like Google, and why we believe it will work well for us.
Being an agile company, our performance management system needs to adapt as we do. If new market insights necessitate a change in strategy, the OKR system gives us the collective permission to adjust our course accordingly. This is a fundamental strength of OKRs - the model is agile, allowing us to pivot and adapt in response to market demands.
Key insights from implementing OKRs
One crucial lesson we learned from our initial experience with OKRs is the importance of taking a step back to fully understand the system before rushing to implement it. Like many other teams, we are inclined to hit the ground running when a new idea comes up. However, in implementing OKRs, it proved beneficial to spend some time comprehending how this system could benefit our operations and foreseeing potential obstacles.
I would strongly advise others to spend some time learning about the OKR system before rolling it out. This approach will position you to utilize OKRs in a way that best suits your business and team.
An additional insight is that OKRs do not have to be implemented company-wide right off the bat. If your entire organization isn't ready to adopt OKRs yet, that shouldn't stop you from introducing them within your own team.
This system is highly manageable, and numerous resources, such as the Google Academy, provide guidance on its implementation. Starting with a small introduction of OKRs could even inspire the rest of your organization to adopt this system over time.
There might be some challenges around incentive alignment if OKRs are introduced within a single department and aren't linked to overall bonuses. However, individuals at or near the CMO level should have the influence to address this issue. And even if you're not in a particularly influential role yet, you could still introduce the concept of OKRs to your manager or CMO, paving the way for broader implementation.
To conclude, the adoption of OKRs is a transformative step in an organization's journey, enhancing transparency, allowing for agility, and promoting a culture of measurable objectives and results.
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.