Some thoughts on “Measure What Matters”

Business goals are a dangerous animal.

On the one hand necessary for top performance, on the other can lead to increased risk taking, narrow focus, unethical behaviour.

I already blogged about the OKR system employed initially by fast-growth tech companies which implemented it to have a meaningful goal setting process and increase transparency. In that sense reading “Measure what matters” by John Doerr added a whole new dimension to my understanding and linked theory with some real-life examples and learnings.

I have put toghether my take aways in the hope that they can help others in implementing OKRs. I strongly recommend that you read the book as it is by far the best I could find on the topic.

OKR requires commitment and time

  • OKRs are a tool, not a weapon – do not use them to force on people.
  • Dare to fail – won’t work out in the beginning and probably never gonna be perfect.
  • Be patient: it takes at least some quarters to get it going.

Implementing OKR the right way

  • Ask the question: what is most important for the next 3 months, where should we concentrate our efforts?
  • Set hard goals as they drive performance more effectively than easy ones. Specific hard goals yield better output than easy ones.
  • Less is more – better have a few but well chosen objectives.
  • Set goals from the bottom up – about half of the goals should come from employees.
  • Collective agreement is essential for getting buy-in from colleagues and subordinates as no dictating is allowed.
  • An OKR can be modified or scrapped at any point in time, sometimes it takes months in the process until the right key results are identified.
  • Pairing OKRs – pairing quantity and quality results in getting key results better aligned with value creation e.g. Sales of 50M + Maintenance contracts of 10M.
  • OKR for new features could be tied to a deadline till data is available and results can be quantified.
  • Having cascading in OKRs allow employees to see the objectives up to the top management and clarifies how the objectives of employees down the hierarchy contribute to the mission of the business.
  • Implementing OKRS requires the whole organization to participate – no opt-outs are allowed. In order to ensure that one or two shepherds can be designated (e.g. for some years this task at Google was done by its SVP Jonathan Rosenberg).
  • Commited vs. aspirational goals – committed are generally goals such as revenue, users, bookings that are to be achieved in full. Aspirational are on the other side dare and future looking but with a high risk of failure.

OKR alone is not enough, you also need CFR

The introduction of OKR requires a change in HR practices where annual reviews are the standard. The alternative to annual reviews is called continuous performance management. Its tool is CFR – Conversations, Feedback, Recognition.

  • Conversations stands for regular and open exchanges between a manager and contributor.
  • Feedback: provided among peers in order to track progress and future improvements
  • Recognition: is given in 1:1 to deserving individuals for  their contribution

Interesting point around CFR is that it is decoupled from compensation unlike with annual reviews (for most companies).

CFR foresees a semiannual professional development conversation where discussion is around career trajectory.

In sum, the old practice which still rules in many companies sees goals, compensation and performance management to be tightly intertwined. The new model engages a different view, namely that 1) OKR, 2) CFR and 3) Compensation & Evaluation are separate areas with a bit of overlap.

“Culture eats strategy for breakfast”

Once said … Peter Drucker.

You get leaps in productivity when stretch for amazing. A typical example is the Google’s 10x rule whereas incremental OKRs are being replaced with exponential ones.

OKRs are usually marked with red (behind plan), green (going well) and yellow (somewhere in between). Companies often have particular strategies how to deal with tracking OKRs. They remove the yellow/orange and mark the ones in danger as red. At OKR reviews they concentrate only on the reds and discuss which objective is most important therefore should get extra attention and eventually resources. This is known as „selling the reds“.

This is what a typical OKR cycle looks like

  • Define annual OKRs and Q1 e.g start in November practically several weeks ahead of Q1.
  • Announce company-wide OKRs for the year and Q1 and e.g. mid-December.
  • Announce team Q1 OKRs – the team develops their own OKRs and shares them in meetings e.g. at the beginning of January.
  • Provide employee Q1 OKRs e.g. end of first week of January.
  • As the quarter goes, OKRs are being tracked and toward end of Q1 also being scored. In the mean time about 6 weeks before next quarter starts the brainstorming of company-wide OKRs for Q2 and the cycle repeats.

If you want to get systematized and proven guide into the world of OKRs I cannot emphasize enough the importance of laying your hands on “Measure what matters” by John Doerr. I consider it a must have in every library and will be happy to hear some funny stories from your experience.

When is the last time you reflected on motivation and how to build lasting perfomance in your team?

Over the last years I have repeatedly encountered 3 words defining the current notion for motivation: 1. Autonomy, 2. Mastery, 3. Purpose. This notion has often appeared in presentations about tech culture, notably at Zalando (thanks Eric Bowman) but also often emerges in company cultures such as the one at Solvemate (thanks Christian Blomberg).

So I carried the notion with me till I felt urgency to go beyound the simple words. Ultimately I landed at presumably the source of it: the book “Drive” by Daniel Pink.

Without telling you too much and spoiling the read here are some of my takeaways for motivation:

  • Motivation 2.0 in the form of carrot and stick (rewards based) is inefficient and unpredicatable.
  • Motivation 3.0 defined by the 3 aforementioned words offers the ruleset for maintaining performance and job satisfaction of a present day person.
    • Meaning of Autonomy – to hold your life/job with your hands and direct it the way you deem necessary.
    • Meaning of Mastery – to constantly learn and improve on a subject that matters.
    • Meaning of Purpose – to dedicate to something bigger than our own self.
  • Motivation 3.0 seems to almost always outeprform Motivation 2.0. Even in the short term.
  • FedEx days at Atlassian. Nowadays called ShipIt this is a day long retreat for evey engineer in the company to create a new solution or fix something that annoys them. Execution matters but best idea wins.
  • The concept of ROWE – results only work environment, or else said no time keeping (check in/out).
  • Super clear and stripped down to the basics insights from Jim Collins (by the way also a great author) about self-motivation – 4 simple rules how to instigate such culture.

On the matter of ROWE quite curious how many companies run this model, it seems to be getting good traction in creative industries. Yet, wondering whether teams do not alienated by not spending time together.

Anyway, I highly recommend this book and plan to revert to it from time to time. Have you read it and what do you think?

IdeaFox – an innovation management platform for teams to co-create and implement solutions

In the process of building new digital business models I often revert to the business canvas template and generate a ton of MS Word/Excel docs and series of email threads in that process.

IdeaFox seems to deal with all that. I knew about the platform quite some years ago but got to lay my hands on it just recently (should have done earlier though). It has managed to put away most of the aforementioned overboard and gave quite an orderly look to my creative chaos.

IdeaFox is cloud based and covers all steps from collective ideation, co-creation and evaluation, to idea realization. It is simple and easy to use platform. I started a new project within minutes and is quite intuitive (whoever knows me, would sigh how rarely I actually say this).

But just in case you need a tutorial, here is one.

It can actually do more than I do with it. IdeaFox allows idea challenges, idea realization in a stage gate processes, or collection of best practices.

Typical users seems to be innovation and digitization teams (like I am), but also teams collecting ideas for operational improvements.

In sum, IdeaFox solves three needs of organizations that want to get better:

  • Get better solutions by efficiently connecting a broad group of participants
  • Improve realization of ideas and get up to 20% quicker (claim by IdeaFox)
  • Increase employee engagement and foster transparent communication

I also tend to know the two lovely people behind the platform so this is yet another argument for me to give IdeaFox a try if you need such a platform.

Meet Dörte and Aron

Looking forward to your feedback and please share your impressions.

If you want to learn more about IdeaFox, check out ideafox.io or follow them on LinkedIn or FB.

You can find the rest of my articles either on LinkedIn or on my website: https://starkfounders.com. Enjoy!

How technology champs set goals – the power of OKRs

I find it increasingly challenging to stay aligned with the company and team goals of a modern business organization. The reason is simple, I believe we live in super fast paced times and it has become imperative for a business to make swift turns on its path to success. This is why OKR seems to be an excellent (and proven) system to align and quickly adapt to change while at the same time measuring results.

OKR is an abbreviation for Objective & Key Result. The concept comes initially from Intel Corporation and is well known for being used amongst the biggest technology companies like Google and Uber.

OKRs are meant to set strategy and goals over a specified amount of time for an organization, teams and individuals.

At the end of a set period, the OKRs provide a reference to evaluate how each piece of the organization did in executing the objectives.

If you have an hour and half I recommend to watch Rick Klau’s video on the topic. If you don’t, take a look at my notes on the topic. Credit goes to Rick but there is plenty of examples and resources on the topic.

Rick Klau about OKRs at Google

The OKR starter hints:

  • Works well if OKRs are publicly available to the entire company.
  • Do not turn them into performance evaluation.
  • Set, reviewed, and revised quarterly (and annually).
  • Initiated or at least supported by the management.
  • Try to do with ready tools. There are plenty of them e.g. Perdoo (Made in Berlin), BetterWorks, 7geese.

Objectives (the WHAT you want to achieve):

  • Cannot exceed 5 in total.
  • Must be strategic.
  • Not necessarily measurable (e.g. grow profit margins).
  • Should cascade – relate to the OKRs one level up and same time to what the individual wants to work on.
  • Mostly (60%) set by the individual.
  • Should get a score.

Key results (the HOW you know you have achieved your objective):

  • Must be measurable (e.g. launch a new feature; reduce defects by x%).
  • Should be hard to achieve so there is a substantial effort.
  • Are graded quarterly (should average 0.6 or 0.7 so it is fairly hard to get 1; 0.4 or below is bad, but a learning opportunity, not a failure)
  • Max. 4 key results per objective

Jason Carlin summed it up quite well:

The most useful thing I was ever told about writing effective OKRs is “Key Results must describe outcomes, not activities. If your KRs include words like ‘analyze’, ‘help’, ‘participate’, they’re describing activities. Instead, describe the end-user impact of these activities. ‘Publish latency measurements from ADR ad serving study by March 7th; is better than ‘assess ADR latency’.”

If you want to see further example OKRs just go to 00:07:36 and 00:36:32 of Rick’s video.

As said there is plenty being said about the topic. If you are sensitive on your spend, try to work out your OKRs using tools like the Startup OKR template. For established businesses I would recommend getting a coach and a good tool to get you started (Perdoo, BetterWorks).

The Netflix culture – a myth or a must for company growth and sustainability

This time my topic is around company culture and in particular the culture of Netflix. Also big apologies to those expecting my next post on blockchain, please have some more patience, it is almost there, and I just could not hold on to share this Netflix jewel.

My personal experience and believe is that culture does not come from senior management or below but is set by the founders and the CEO (if not the same). In that respect, Reed Hastings, CEO of Netflix, gave a stunning example on culture and leadership by putting it altogether in a not so short presentation (you will find it below). He published the actual presentation in August 2009 when most of us were worried about the financial meltdown and existential topics. May be this is why it took so long for people to actively talk about it (or maybe it is just my humble me noticing it just now).

Reed Hastings made it clear that instead of nice sounding values (and often fake ones), he has designed the actual ones for his company. And so that there is not too much interpretation involved, he added plenty of examples :-).

“The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.”

Takeaway I: The nine Netflix values are as follows:

  • Judgement
  • Communication
  • Impact
  • Curiosity
  • Innovation
  • Courage
  • Passion
  • Honesty
  • Selflessness

Reed has explained pretty well what each one means so please take a look in the deck, below you will find just my own takes coupled with a bit of commentary.

Reed Hasting’s Netflix Culture 2001

For me values such as Judgement and Communication point towards resolving the plague of each business – employees NOT being empowered to make decisions and communication flowing efficiently. But there is a catch – this of course is only possible if the people in place are AAA professionals. Else said (Takeaway II):

“Great workplace is stunning colleagues”

and

“Unlike many companies, we practice: adequate performance gets generous severance package”

and

“We are a team, not a family – we are like a prosports team, not a kid’s recreational team”

Takeaway III: Reed also references to The Keeper Test manager case. This is something I have vaguely practiced but never managed to summarise it so crisp: if somebody tells you he/she will leave, are you going to fight hard to keep the person?

At Netflix internal attitude such as “cutthroat” or “sink or swim” are not tolerated. Yet, this can apply only for a AAA team that will tolerate fast learners or otherwise

“Sustained B-level performance, despite “A for effort”, generates a generous severance package, with respect”

“Sustained A-level performance, despite minimal effort, is rewarded with more responsibility and great pay.”

The focus on high performance comes on a seemingly scientific measure:

“In procedural work, the best are 2x better than the average.”

“In creative/inventive work, the best are 10x better than the average.”

Takeaway IV: The Rare responsible person – yet another ingenious concept. Reed is referencing to the rare type of attitude towards self improvement, self motivation and that can even be spurred in people that pick someone else’s trash in the office and throw it away.

Takeaway V: When company grows, it often fails to add proportionately top talent to its workforce. Sometimes I even believe managers are afraid to surround themselves with top people and see them as a threat. The solution – grow talent density faster than complexity. In other words outgrow complexity created by growth by hiring top talent at a faster rate than the growth itself (as much as you can).

Takeaway VI: Netflix is not in a safety-critical market such as running nuclear plants so it rather focuses on rapid recovery. This for me translates quite clearly to the Facebook’s Motto

Move Fast and Break Things

But at Netflix, also Fix fast. 🙂

Takeaway VII: Another interesting point is the Netflix approach to working hours and vacation: No 9am to 5pm work policy, no vacation policy. Practically no tracking, yet people are actively encouraged to take generous retreats and come back with fresh ideas. And on top

“Career “Planning” Not for Us”

Netflix has dismissed formalised planning including mentor assignments, rotations, multi year career paths.

“High performance people are generally self-improving through experience, observation, introspection, reading, and discussion.”

Takeaway VIII: Managing through context

High performance people will do better work if they understand the context. Highly Aligned, loosely coupled … approach for corporate team work.

and

Investing in context means – frequent department meetings, being open about strategies and results.

Takeaway IX: (Last one 🙂 Always pay top of the market and do not connect payment with the well being of the company as times change but you can be successful only with top talent.

payment is aligned with what the market pays and what would cost to replace such a person.

and

… side effect is that rarely there will be a higher offer if somebody wants to leave.

and

it is tolerable to talk to other companies and then talk to your supervisor about your actual market value

This is all from me for today. Hope enjoyed the read and I will follow up soon with my next article.

P.S. All citations above are courtesy of Reed Hastings.