The 10 most used KPIs that every CTOs in FinTech need to monitor and influence

Key Performance Indicators (KPI) often function as the main framework for the many metrics that your organisation collects or otherwise keeps track of. But which KPIs will actually help you answer the critical questions that will help your company increase revenue and reduce costs?

In short, all of your KPIs should be able to give you crystal clear answers to these three simple questions:

• Are we achieving our target or goal?

• Are we improving?

• What do we need to know to improve?

Based on my experience working with FinTech companies, my guess is that you might be falling short of the mark based on the above questions. Many companies don’t measure key metrics at all, nor do they have the correct baselines in place. They are lagging behind by several months, cannot connect metrics together and are likely analyzing ineffective data.

How this guide helps you

When it comes to software product development, there are hundreds of metrics you can keep track of, picking the best ones for you is an art. With the 10 KPIs presented in this guide, you can measure what matters. Use these as a starting point and select only a handful of them to monitor the performance of your organization. You can then extend and build upon them. Measuring these 10 KPIs can help you:

• answer the questions stated above

• prove what your gut feeling was already telling you

• provide clarity on what actually moves the needle

• remove the uncertainty of validating your decisions.

Download the PDF with the 10 KPIs that every CTOs in fintech product-led companies need to monitor and influence in order to improve their performance in 2021.

Since 2015, Moving the Needle has supported hundreds of leaders in B2B SaaS software startups and scale-ups, to identify their true north, set up processes to become autonomous, entrepreneurial and pragmatic in achieving their goal. I know first-hand about the struggles of managing a B2B SaaS company. I understand how difficult it can be to get to the core of what really matters and the boldness it takes to motivate everyone to focus on what’s needed to get there. Every company is unique and there is no cookie-cutter solution to every context-specific problem.

Beyond these 10 metrics, Moving the Needle has a vast library of metrics which might be even better for your specific situation. Interested in getting to know what actually helps you move your needle? Get in touch for a free Discovery Call.

OKR Check-In Learning Curve - What to Expect in the First Year (Quarterly Cadence)

You’ve recently started with OKRs, defined company-level OKRs and your teams already have linked OKRs. You are ready to start your first OKR cycle. What things can you expect when you perform your OKR check-ins? Let’s look at different stages of your OKR implementation.

Photo by Denys Nevozhai

The First 90 Days

The first couple of cycles through your weekly OKR check-ins, it is vital to keep expectations in check; there are no overnight miracles. This initiative takes time, so start simple. Furthermore, chances are that within your first quarter of implementing OKRs, your team won’t have much to share when it comes to scoring and providing updates, but it is still a good idea to schedule in the weekly check-in for a number of reasons.

The Check-in

• Work out the kinks of planning an event: making sure that there is enough seating, appropriate A/V and other equipment (screen, whiteboard, etc).

The Data

• The first 90 days will be messy. You are learning a lot about how to collect data, finding outcome metrics that make sense.

• While it is too early to have much usable information with the KRs, the team can still meet to reaffirm initiatives, report on any early outcomes and to catch any early roadblocks.

• Define early on the difference between activity measures (Did it get done?) and outcome measures (For what benefit?). This helpful idea comes from Dan Montgomery’s book “Start Less, Finish More” which I highly recommend.

The People

• Developing the routine early-on will get your team in the habit of meeting weekly. This way, when these weekly check-ins are in the 4th quarter, it will be a well-oiled machine.

• The first couple of weeks, set an agenda reminder for attendees 15 minutes before the start time to set the tone that being prompt and prepared is expected.

• Getting used to the idea of transparent goals and outcome measures are often a big cultural shock, and this is to be expected at this stage.

• Be prepared for some early adopters and others that will push back or reject. In the early stages of OKRs, not everyone will be open to experimentation and out of the box thinking in order to move the needle.

• Manage expectations: you will need to go through a full-year cycle to see the full effect of this new way of working. One of the root causes why OKR implementations fail is giving up too soon.

• I recommend you get coached by a seasoned OKR coach to get you started soon and avoid beginner mistakes.

Tip: When starting out, pick just one (or maybe two) OKR, something achievable, to build confidence. Creating the outcome measures will be tricky enough, so better to start out with training wheels.

The Problem Areas

• This is the learning phase so you can most definitely expect some issues (which is completely normal). It is important to deal with these issues before they become bigger problems leading to severe drawbacks, like demotivated people. Watch out for:

  • Too long (longer than 30 minutes)

  • Too boring (only reporting on status)

  • People show up late

  • No data available

  • Progress isn’t seen or felt after a couple of weeks

  • Team member(s) isn’t committed to his/her task(s)

  • Forget to talk about Health Check Metrics (this will be a future blog post)

  • Tech problems with remote check-ins (ie. no sound or screen sharing doesn’t work)

  • Data that is shared is not relevant nor linked to higher-level OKRs

Tip: If you have software development teams in your organization, you will notice that these teams pick up the OKR check-ins more naturally. Therefore, starting in these teams often helps to start training your “OKR muscles”. Later, these teams can help spread your OKR knowledge throughout the organization.

After Six Months...

The Check-in

• The major growing pains are out of the way and your check-ins are more structured, time efficient, and you’re seeing that discussions are focused resulting in improved metrics.

• If you have remote teams you probably figured out a way to run the check-ins more smoothly. I’ll cover remote check-ins in a later blog post.

The Data

• Now’s the time to implement a “moonshot” or two. A moonshot is a stretch goal that seems almost impossible to achieve. They force teams out of their comfort zones. This is much more challenging that the “roofshot” OKR(s) from your first quarter that are much more within reaching distance.

• You have collected some historical data from your first quarter, so you will begin to see some significance in your data. With these data points, you can now also plot this data in charts, resulting in rich dashboards.

• Scoring Confidence Levels is becoming easier with each passing week with the colours green, yellow or red assigned to KRs indicating that everything is on track or that there are roadblocks that need to be addressed to stay on track or that there is a need for immediate intervention

• Encourage flexibility; there isn’t per se a deadline at the end of a cadence. Sometimes issues or challenges or opportunities emerge as time passes.

The People

Photo by History in HD

• The introduction of a moonshot into the mix will have teams facing preconceived notions of the status quo and they will be challenged and pushed into unfamiliar territory. As a leader, now is the time to step up, be patient and repeat the overarching Objective. Encourage your team to be experimental.

• Teams understand that after 25 weeks of check-ins that this is the new way of working. People are now used to OKR check-ins and will not easily fall back to old habits. They are accountable and committed and supported by senior leaders, modelling the desired behaviour.

• What is important from leaders at this stage is that you keep the check-ins alive. Enriching the OKR check-ins with new elements often helps, like discussing process improvements on a weekly basis as well, introducing new colleagues or combining it with celebrations or Friday wins.

After a Year

The Check-in

• Most organizations see the positive return on investment of OKRs after one year.

• The cycle becomes more predictable and the teams have now improved their skills to focus on outcomes and learning.

• Perhaps the cadence of the OKR cycles needs to be adjusted from quarterly to something more/less frequent.

The Data

• You will notice a big shift in your OKR check-ins as well. Instead of focussing on the confidence score and commitments you will get more focus on experimentation and obstacles.

The People

• You observe that other teams will adopt the experimental and agile mindset sooner.

• This is often a huge cultural shift. Now management can decide to increase the “OKR temperature” and try to challenge the teams on “moonshot” OKRs.

The Future

It will be only after two or more years that an organization utilizes and feels the full potential of OKRs. While some organizations will never reach this level of fluency and are already happy with the alignment and focus results that OKRs bring, others will want to push the envelope. Very ambitious organizations will want to go for the bold 10x goals, that is to say in the words of Larry Page, co-founder of Google: “OKRs have helped lead us to 10x growth, many times over.” This requires the organization to take a full scientific experimental approach when it comes to OKRs. This can be often so hard that people never reach this stage, but when they do, the results are long-lasting and the effect on the bottom line is felt company-wide.

Keep this in mind: OKRs are, at the core, about creating commitments, facing challenges, ongoing dialogue and adaptability. This isn’t a sprint, it’s a marathon.

Would you like to become fluent in OKRs? Why not schedule a call with me?

What To Do When Every Priority is Critical

Status: Urgent

Photo by Connor Betts

I often come across companies where everything is a top priority. Let’s take a look at a fictional corporation, Acme Bank, where revenue was low last quarter. Like many, their natural response is to cut expenses. At the same time, customer satisfaction is at an all-time low and employee engagement is rapidly decreasing. Adding fuel to the flame, auditors are becoming increasingly critical (which, of course, they technically should be in such a highly-regulated market). Staff are complaining about a lack of clarity, direction and focus. So, which areas would you recommend Acme Bank to focus on to bring the ship back on course? How can they start using OKRs the next quarter?

No Piece of Cake

OKRs demand leaders to make tough choices. OKRs are about the (often extreme) focus that helps employees understand what is most important right now. In today’s 24/7, “always on” culture, your employees are bombarded which large amounts of information. Company goals, team goals, individual goals, innovation trends, social media, news, private lives, raising children. All that information needs to be processed and humans have limited cognitive capacity. Their mental hard drive is full. They aren’t the only ones.

As an executive or manager, you’re also faced with a constant barrage of choices ranging from Do we stop with product X? Do we hire that star engineer with the bad reputation? Do we green-light the new marketing campaign? Basically, how can we stop the hemorrhaging? There is a ceaseless procession of questions that must be answered: yes or no? Each question and answer has its own domino effect; if this, then that.

It is the responsibility of today’s leaders to make these tough choices and put only the most important goals into your OKRs. By putting a spotlight on your bottomline priorities, you’re winning on two fronts: identifying what matters most, and by default, providing yourself with the appropriate ammunition to say no to the many initiatives that, while tempting, are not in line with your goals.

Be Bold: A Single OKR to Rule Them All

In the case of our fictional corporation, Acme Bank, it certainly seems impossible to set priorities and create focus. Of course, OKRs won’t magically solve your prioritization problems, however the do provide a critical thinking framework; a special lens through which to see what is the most valuable thing you should be focusing on. As you might know, I’m an advocate of having one single OKR [Wodtke, Radical Focus, 2016] at the corporate level. This will force you to devote attention to one thing at a time, even when you and your employees are put under pressure. How can you select a single OKR in such a challenging scenario?

Get to the Root of It

First, you will need to do a root cause analysis. Let’s unravel the Acme Bank case mentioned earlier. The top priorities for Acme Bank are: reducing cost, customer satisfaction, and employee engagement. Are there relationships between these areas, dependencies, or both? My favorite tool is the five whys technique from lean manufacturing; it is my Swiss Army knife in most of my coaching engagements. Other techniques I often use are from the systems thinking domain. The Fifth Discipline by Peter Senge is a great introduction for managers into systems thinking. So, which area should the folks from Acme Bank concentrate on? Let’s zoom in on the three areas indicated above and examine them these lenses on.

Balancing the Books

When you look at cutting costs, one of the root causes could be that costs weren’t managed properly. According to Paul Leinwand and Vinay Couto, Principals at PwC USA, there are five big mindset shifts that can help you and your organization manage costs in the right way.

1. connect costs and strategy

2. rethink costs in terms of capabilities

3. list all the expenses related to the activities of the enterprise, move them into a metaphorical “parking lot,” and then, one by one, decide whether to let them back in

4. make your cost-management plan sustainable

5. be proactive; fix the roof while the sun is shining

Developing a company’s value framework could help here. I like how Joshua Arnold divides the Opex vs Capex. In the context of a bank, he mentions four buckets; increase revenue, protect revenue, reduce costs and avoid cost buckets. Most banks focus on increasing revenue (changing the bank) and reducing costs (operating the bank). Instead, it might be better, for example, to avoid costs like avoiding data breaches, fines, and negative branding experiences. Understanding value can help tremendously in choosing priorities.

One Star out of Five

Looking at low customer satisfaction, a potential root cause could be poor customer experience which invariably leads to high customer turnover. If we analyze the Acme Bank, we are not surprised to notice a typical vicious cycle: low customer satisfaction -> high customer turnover -> lower profits). So how can we break the cycle? The short version: get the basics right, remove obstacles for your customers and quit trying to “delight” your customers.

Inconsistent communication

Low employee engagement will inevitably cost Acme Bank big bucks. A few things that you can count on will be whispered complaints between colleagues at the water cooler, followed by a lag in meeting deadlines and finally, your star employee will either leave or give you an ultimatum.

An article published by the Harvard Business Review titled The High Cost of Lost Trust by Tony Simons puts it perfectly: “We hypothesized that when employees sense an inconsistency between what their bosses say and do, it triggers a cascade of effects, depressing employees’ trust, commitment, and willingness to go the extra mile. These effects, we reasoned, would reduce customer satisfaction and increase employee turnover, harming profitability.”

Decide what to do next

Let me be clear: your people are not the problem. The problem is woven into the fibres in the system. If you understand the system, study and understand the root cause, you can shift focus to that area specifically and stop the hemorrhaging. Ask yourself “if every other area of our operation remained at its current level of performance, what is the one area where change would have the greatest impact?”.

Revisiting Acme Bank, their focus will be internal. The leadership team at Acme Bank decided to first attend to improving customer satisfaction by providing excellent customer support, rather than the knee-jerk reaction of slashing expenses. They are going to protect revenue by keeping existing customers onboard. Also, they decided to implement weekly OKR check-ins to communicate, share the current status openly and honestly, create Objectives together, and track the new direction of the company.

OKR Check-ins: Consistent Clarity

Once you have decided on your number one priority, your single OKR, use the weekly OKR check-ins as a vehicle to communicate priorities consistency. This massively impacts employee engagement as well because people will get progress updates on a weekly basis. Consistency is key here. Make sure as a manager you don’t change your mind on your goals.

The effects of clear, consistent, open and honest communication will be felt rippling through your business and will most definitely reflect in revenue. Psychological safety is reinforced when managers follow through on their promises and demonstrate the behaviour and attitude that they expect from their staff and teams. It seems strange to say that such a hazy concept can lead to sustainably more profit, but it’s a trend that we see time after time and furthermore, is a concept at the top of the list of effectiveness.

Prioritizing OKR Initiatives

Photo by Stefan Steinbauer

Many product development organizations have issues deciding on which OKR initiatives to work on. Even organizations that operate with some form of “Agile” aren’t spared. Scrum doesn’t address which projects to start nor about when to stop and move on to something else. In all honesty, the same applies for selecting tactical OKRs or OKR initiatives and that is why, as mentioned earlier, developing a value framework is key (watch Joshua Arnold in a recent interview speak about this topic).

Sometimes the prioritization problem lies deep in your organization. More often than many would like to admit, prioritisation is driven by the Highest Paid Person’s Opinion or HIPPO. Even if you are using other techniques like Eisenhower’s prioritization matrix, Value and Effort matrix, Value and Risk matrix and Value and Complexity matrix to name a few. Most famous is the MoSCoW prioritization model and the Diagram prioritization model. However, these models won’t solve your HIPPO problem.

In a product development domain, there are some other interesting prioritization techniques available for you can look into. One of them is Cost of Delay Divided by Duration, or CD3. CD3 is a way of expressing the impact time will have on the outcomes (or for us, Objectives). Think of it in terms of this commonly asked question at boardroom tables: “What would doing x,y,z cost us if we delayed by a month?” or perhaps, “Would it be worth it to us to have this accomplished one month earlier?” Personally, I use this as a mental model when helping clients with setting priorities on OKRs and initiatives. What about you? Let me know what your favorite technique is.

Recap

• Making tough choices: 1) pick what matters most and therefore 2) ammunition to say “no” to tempting options

• Consider one single overarching OKR that will guide other OKRs

• Analyse the root cause using the Five Whys technique

• Develop your company’s value framework: increase revenue, protect revenue, reduce costs and avoid cost buckets

• People are not the problem; the issue is often more subtle and will require creative thinking ie. improve customer satisfaction by providing excellent customer support to generate increased revenue rather than slashing expenses

• Clear, consistent, open and honest communication (specifically at weekly OKR Check-ins) is unequivocally the best method for increased profit

• Consider different prioritization models: Eisenhower’s prioritization matrix, MoSCoW prioritization model and Cost of Delay Divided by Duration to name a few

Could You Use Some Help?

Would you like me to help you with setting OKRs and prioritization? Schedule a free 30-minute chat with me to explore how I can help you achieve remarkable results.

OKR Check-ins: Making Consistent, Meaningful Progress

Uncertainty

Photo by Aarón Blanco Tejedor

People hate uncertainty. Research has proven that people can experience stress and illness when dealing with ambiguity and obscurity. Our brain appreciates certainty the same as food, sex, and social connections. We humans are rather predictable creatures, ruled by genetics and time-honoured survival mechanisms. There are few things that give us more satisfaction than having a firm sense of control over our environment, safety, and working towards a goal (acting with purpose). In a word, progress. Only above that, making progress in meaningful work where even a small win can defeat multiple losses. However, over the course of a day, week or month, if we consistently have a sense of overwhelming defeat, then a win of any magnitude will lose its power. The best antidote to this: a clear plan of action and a methodology to track progress. Without these things, we feel unhinged, we lose track of our progress (and purpose!) and worse yet, our motivations quickly dwindle as we spin-out into doubt, insecurity and deeply rooted discomfort.

Why Goals Alone Aren’t Enough

While goal-setting reduces uncertainty, a vague goal can still have just as much of a negative, undesired impact as no goal (or objective) at all. The common questions raised when an unclear goal is introduced are predictable: But how? What needs to get done and in what order? How will we know if we are on track? What’s the timeline? Who will do what? This is the reason why effective goals contain measurable and appropriate metrics.

In a modern, digital age, with access to technology, apps, and boatloads of information at our fingertips at any given moment, it is likely that you have heard of “the addiction to busyness”. Spinning our wheels, distracted by a constant flow of digital notifications, and the perception that the busier we are, while being pulled in every direction, the more effective we must be! Jocelyn K. Glei is a writer and also the creator of RESET and of the podcast Hurry Slowly. In her writing, she notes that “we work tirelessly but rarely feel like we’re accomplishing anything of import. What’s wrong?’ She introduces some key factors that maintain the status quo:

• Addiction to meaningless progress;

• Failure to define meaningful goals;

• The lack of a method for tracking our progress.

That is why I like to work with OKRs in most of my client engagements. With OKRs, you can overcome the tragic story of “status quo” working habits and replace that with measurables; tracked progress that moves clearly and with purpose towards a goal that represents conquering a real problem or issue.

In the experience of making progress, our bodies release the feel-good hormone, dopamine, which makes us feel happiness, contentment and even joy. We are motivated by our wins, regardless of how minor the milestone, to continue on in our pursuit of satisfying performance and enjoying the results. The effects of that hormone are also addictive, so as you are crossing off items on your To Do List by charting out your goals (Objectives) with dedicated indicators (Key Results) on how you will know if you’re on your way to achievement while also measuring your headway on a regular basis (Check-Ins), you can enjoy visually tracking your baby steps and also gather the momentum to continue on.

Now, ask yourself this: What if your whole company was doing this? What would or could that look like? Put simply: You would get one big, happy workforce.

Let’s explore the power of progress.

Making Headway

“The power of progress is fundamental to human nature, but few managers understand it or know how to leverage progress to boost motivation” wrote Teresa Amabile and Steven J. Kramer in their Harvard Business Review article titled The Power of Small Wins. They continue, “In fact, work motivation has been a subject of long-standing debate. In a survey asking about the keys to motivating workers, we found that some managers ranked recognition for good work as most important, while others put more stock in tangible incentives. Some focused on the value of interpersonal support, while still others thought clear goals were the answer. Interestingly, very few of our surveyed managers ranked progress first.”

For OKR check-ins, this reflects a very real misconception between what factors managers perceive as being effective, and which actually satisfy the very real human desire in all of us for advancement, development and growth. In the personal sphere, we feel rewarded when we have met a goal; in the business world, we feel rewarded when, likewise through discipline and commitment, we have seen a project come full circle. In our personal lives, we track progress with apps that keep track our fitness progress, sleep rhythms, and even time spent meditating. In the business world, we do this through daily, weekly and quarterly check-ins that set the tone and pace based on confidence scores.

Progress Takes Priority

In a 1968 issue of Harvard Business Review, Frederick Herzberg published a now-classic article titled “One More Time: How Do You Motivate Employees?” The findings of today, more than 50 years later, are consistent with his message: People are most satisfied with their jobs (and therefore most motivated) when those jobs give them the opportunity to experience achievement.

Looking back at the research of Amabile and Kramer, who reviewed diary entries of more than 230 employees from seven different companies, pouring over more than 12,000 diary entries of workday highs and lows, what they uncovered as the underlying mechanism of a sense of achievement, taking priority over recognition for good work, incentives, and interpersonal support (and by this point, their conclusion should come as no surprise to you): making consistent, meaningful progress.

The Progress Loop

Like most things, we find that our lives have a cyclical pattern. Day in and day out, we are working or thinking about work related matters; this behaviour is influenced by and influences our performance, in a cycle, or loop. A “good day” (or bad day or mediocre day) where we feel satisfied (or dissatisfied or ambivalent), drives our performance which gives a new set of results which in turn has the power to enhance (or diminish, or otherwise impact) our work life; this reveals the potential for self-reinforcing benefits. Basically, the “self-fulfilling prophecy” where our thoughts and beliefs impact our actions which in turn enforce our beliefs and then actions, and so on.

So, in relation to OKR check-ins, the concept of progress is illustrated nicely by the words of Amabile and Kramer: “By supporting people and their daily progress in meaningful work, managers improve not only the inner work lives of their employees but also the organization’s long-term performance, which enhances inner work life even more.”

Weekly OKR Check-ins

If facilitating consistent progress is the key to good performance, then why is it that most managers don’t set a constructive progress loop in motion? Well, mainly because it requires a significant shift in behavior but also because most companies lack a method for tracking progress towards meaningful goals. Most organizations have by now adopted a KPI system, but that isn’t enough. This is where OKR check-ins come into play, the most underestimated tool within the OKR tool-suite.

OKR check-ins are your “sanity check”. Without them, OKRs are almost certainly doomed to failure. As mentioned above, consistency and discipline are vital: Check-ins are usually held at the beginning of the week, every week (Monday morning is a great time) and last ideally 15 to 30 minutes max. In the OKR world, we called this a weekly cadence and it is very important for a successful OKR implementation. If the check-in falls on a public holiday, postpone it by a day, but it needs to occur. This is your team’s most important meeting from now on and you (and other leaders) need to be there to help the team to take action.

The participants of the weekly check-in are typically all members of a cross-functional team or department. Everybody in the team or department needs to attend – no exceptions, no skipping. If your department has 120 people, find a place where everybody can see, hear and chime in. For virtual teams, Google Hangout or Zoom can work.

Weekly Check-in Agenda

Photo by Belinda Fewings

The agenda of the OKR check-in will let teams show and track progress towards their key results. An example agenda can look like this:

• Good news, celebration, appreciation

• OKRs, Look at previous commitments to “move the needle” and provide confidence scores.

• Customer/client and employee feedback.

• Go over the health metrics of your team and company (for example, KPIs)

• Tap into the Collective Intelligence to generate ideas on how to create headway – the key results – this week. Track progress on running initiatives and make new commitments. Limit the number of topics you discuss. A skilled facilitator can help here.

• Who, What, When summary. Describe who will take up which action items and record the results.

• One-phrase close. Wish everybody a nice week. Use some motivational language here.

Daily OKR Check-ins

Are you crazy? Daily check-ins? Most successful teams I know like to do a daily 10-minute check-in in addition to the weekly check-ins. Maybe you are familiar with the daily huddle or daily stand-up from Scrum. The concept of a daily meeting is used in all sorts of industries. A recent case study in the Rotterdam Eye Hospital in the Netherlands revealed improved patient safety by having a regular 10 minute team meeting every day. The goal of the daily check-in is to craft a plan for the day.

A crucial element of daily OKR check-ins are the daily metrics and they are what will set this kind of activity apart from a status meeting. In status meetings, when you huddle with your team, people tend to look at the past (yesterday I did this or that). OKR check-ins look at the present (the next 24 hours). Defining daily team metrics is an art but so critical for any high-performing team and organization. If you can track progress on a daily basis towards your key results, the objectives seemingly fall into place, and you can enjoy the added benefit of increased performance and enhanced inner work life.

Daily Check-in Agenda

The daily check-in needs to happen at a fixed time every day. This will ensure the meeting becomes habitual. The agenda of a daily OKR check-in can look like this:

• Goals of today. What is it you want to achieve at the end of today? What is the #1 priority?

• The key results of today. Can we give a confidence score for each? Can we move the needle on the key results today? If you use quota or activity metrics in your KRs, what do you need to today to make those numbers?

• Hurdles. Are you blocked by anything, anybody? Can someone help you to remove this challenge?

Like with the daily huddle, the daily OKR check-in needs to be a standing meeting because it increases the productivity of the group.

Dull OKR Check-ins

Both weekly and daily OKR check-ins can become dull at times, mainly because “business as usual” kicks-in. It requires some discipline to keep the meetings running with motivation and passion. Dull check-ins will demotivate people and eventually people will abandon their weekly or daily habits and the status quo will win out again.

One of the keys to a successful OKR check-in are good metrics. Good metrics inside your key results will track progress on a daily or weekly basis towards your objective. Try to avoid vanity metrics like Net Promoter Score or Monthly (Recurring) Revenue as the numbers will not be updated on a weekly or daily basis. Also metrics that are not or cannot be influenced by the team will demotivate people. A mixture of outcome, quota and activity metrics is recommended. Finding the perfect metrics truly is an art and developing them requires patience and often the assistance of a certified OKR trainer to help get the ball rolling in the right direction.

Power of OKR Check-Ins

I have seen teams do OKRs check-ins in the past years and the results are remarkable:

• Reduction in uncertainty

• Increase in accountability

• Highly engaged workforce

• Clarity on goals and strategic direction

• Fast feedback and learning (as compared to grading OKRs)

• Seeing meaningful progress for managers and employees alike

Recap

• Uncertainty is the source of deep discomfort

• Progression makes us happy

• Consistent progress enhances inner work life

• Inner work life drives performance

• OKR Check-ins track weekly or daily progress

Could You Use Some Help?

Schedule a free 30-minute chat with me to explore how OKR check-ins can help you achieve remarkable results.

Slingshot your OKR success

Last week I was a guest in the Fit Bots webinar where I talked about “Slingshot your OKR Success”. In the end, there was also time for me to answer some questions regarding OKRs. No worries if you missed it, the talk is recorded.

If you cannot watch the whole video, the key implementation tips to slingshot your OKRs success are:

• Mission, vision & strategy are clearly defined

• “Introduce OKRs as a vegetable” ~Henrik-Jan van der Pol (Perdoo)

• Don’t overstretch in the first cycles

• Patience

• OKR Life-cycle

• Iterate and learn

You could use some help

Schedule a free 30-minute chat with me to explore how I can help you to start with OKRs.

Clarity with a single OKR

“Focus is the thing that makes the difference between excelling and flailing about in mediocrity” ~ Christina Wodtke.

The problem (and it’s a big one…)

Photo by Paul Skorupskas

Research has found that “on average, 95% of a company’s employees are unaware of, or do not understand, its strategy”1, and two-thirds of managers can’t name their company’s priorities2. And if your people don’t understand your strategy, how can they execute it?

As a result, the following are true of too many organisations (you may recognise a few):

• Your OHI3 or similar employee survey results indicate a lack of clear direction;

• Employees say they miss clarity and focus, and don’t know where the company is going;

• Lack of purpose makes employees less motivated;

• There are little or no innovation or learning initiatives going on;

• Repeated change initiatives fail;

• Too many, constantly changing, priority projects distract people from the strategy;

• Too many ad hoc issues and too much firefighting.

But we’ve told them the strategy time and again…

If you’ve had your strategy for some time now, you’ve almost certainly communicated it to employees many times via various different channels. So how the heck can they not know about it, let alone understand it? Why, despite your efforts, do you see so little progress on this front?

Various studies4 suggest that unclear direction and lack of purpose are often major culprits. Worker performance tends to improve when the employer commits to a single strategic goal. Moreover, when each employee is set specific, relatively demanding goals they become more committed to achieving them5.

According to Google research6, who the members of a team are is not the key issue. Instead, they found that their most successful teams shared four key attributes:

• Psychological safety: people felt safe and empowered to take (appropriate) risks;

• Dependability: they could rely on one another to deliver timely, quality work;

• Clarity: goals, roles and execution plans were clear;

• Meaningfulness: people felt they were working on something that was important to them and mattered in some wider or more fundamental sense.

But how do you get to this point? I believe a tool called OKRs (Objectives and Key Results) can help you clarify, focus and communicate your strategy – and if used properly, with amazing results. Giving your people the clear goals, purpose and meaning that will improve company performance. But first we need to go back to the beginning.

What is your strategy, actually?

In my experience, when you ask a leader for their current strategy, responses typically fall into three categories:

• “We don’t have a real strategy” – honest, but hardly reassuring.

• “We’re doing/aiming to do X”. Where ‘X’ can be anything from “move to the public cloud” to “transition to agile” to “launch a new product”. These may be useful things to do, but they’re not a strategy.

• Ten fluffy rambling sentences that no one (including the leader themselves) can quite remember. So no surprise the ‘strategy’ isn’t having the desired impact.

As Porter says, a “competitive strategy is about being different, it means deliberately choosing a different set of activities to deliver a unique mix of value.”7 This also means saying no to a lot of things. In other words:

Business Strategy = Choice

Short and sweet

The best strategy statements fit on a single page. In his book Scaling Up, Verne Harnish suggests several strategy one-pagers. You can also look at Business Model Canvas or Lean Canvas. All cover the basic elements of a strategy:

• Objective

• Scope

• Advantage

So let’s explore each of these a little further.

Define your objective

According to Collis and Rukstad, “it is the single precise objective that will drive the business over the next five years or so”8. In other words, you need to make your strategy tangible: define a clear finish line, which can be defined as an objective. An objective shouldn’t be too easy to reach, nor should it be so hard people feel it’s impossible9. Ideally, you want a 50% chance of achieving it.10

In addition, the objective must be emotionally motivated and trackable. Emotionally motivated because not everybody likes numbers and this helps keep objectives memorable.11 Trackable because you should be able to report progress against the objectives on a weekly basis. This, as we’ll see, is why OKRs are so powerful in defining strategic objectives.

Define the Scope

There are three dimensions to strategy scope: customer or offering, geographical location and vertical integration. In other words, what you want to ‘sell’ to whom; where you want to sell it; and which components of the value chain you will run. You must create boundaries to make it clear to leaders which activities they should, and shouldn’t, be focusing on. A great tool here is a list of No’s. Or you can just explain why you’re not going to do certain other things.12

Apple, for example, clearly targets high-income customers with high-end priced products. The company chose not to offer low-priced products to customers, although it could have increased market share by doing so.

So in the scope part of your strategy statement, define the decisions you have made.

Defining the Advantage

“The essence of strategy is choosing to perform activities differently than rivals do.”  M. Porter.

Defining the advantage is one of the most important aspects of strategy, but many forget to make it explicit. “Clarity about what makes the firm distinctive is what most helps employees understand how they can contribute to successful execution of its strategy.”13

You need to be very specific about which activities you are going to do differently, and find the right ‘fit’. Let’s take Southwest Airlines as an example. Southwest’s competitive edge derives from a whole range of activities, and ensuring these fit and reinforce one another.

The right strategic fit creates a chain that’s as strong as the strongest link.

Ensuring the right strategic fit prevents imitation by creating a chain that’s as strong as the strongest link. A strong strategy ensures Southwest’s activities complement each other to genuinely add economic value. The cost to the company/value to the customer of one activity is lowered/enhanced by how other activities are carried out. In other words, the strategic fit generates competitive edge and increases profitability.

This combination of closely-linked, mutually-enhancing activities make it difficult for competitors to copy you. Such a set of tightly-linked differentiating activities is also called a ‘strategic theme’. For example, in his paper on strategy Porter lists the strategic themes of IKEA as:

• Limited customer service

• Modular furniture design

• Self-selecting by customers

• Low manufacturing costs

One way to identify the strategic activities you should be doing differently or better than your competitors – your strategic fit – is by using an activity mapping tool15 or strategy map16. But even better is to put it on a one-pager as part of your Business Model Canvas (e.g. resources, channels) or Lean Canvas (Unfair advantage).

Meet your new best friend: OKRs

So we now have great tools for defining our strategy’s scope and advantage, but what about defining our objective? Many organisations, including Google, Intel and LinkedIn, use OKRs (objectives and key results).

OKRs were developed by Andy Gove in the late 1970s to fill the gap between strategic objectives and execution. They are a powerful way to help you define clear finish lines for your strategy and boil your strategy statement down to a succinct one-pager. Let’s have a look at the key elements:

As discussed, an objective is a short, memorable, qualitative description of what you want to achieve.

Key results are a set of metrics and KPIs that measure your progress towards the objective. Research shows the more specific your goals, the better your organization and teams can perform against them.17

A handy rule of thumb: if you can report on the progress towards your objective in a weekly email, then it’s a well-defined key result. If not, try to learn more about your data and metrics: it takes practice and patience. The following formula can help: From [X] to [Y] by [WHEN], where X = your baseline metric and Y = your goal.

Flowing out of the strategic objective there are likely to be various subordinate goals that can serve as useful metrics to monitor progress, and against which individual employees can be held accountable. But there should always be one strategic OKR: a single clear, overarching objective to drive business operations over a number of years.18

And if OKRs seem the basis of a very simple goal-setting system, don’t worry: they are – and that’s their strength!

Strategic OKRs

An objective and its key results can be used to formulate your strategic objective as a strategic OKR, which shouldn’t have a horizon longer than 5 years, or it becomes too abstract. Here’s a couple of examples of Strategic OKRs:

• Youtube: Reach 1 billion hours watch time per day.

• Google Chrome: 20 million weekly active users by year’s end.19

In both cases, the objectives are ambitious, focused and clear. Every employee at Google Chrome or YouTube will instantly understand the strategic direction. To reach that goal, they needed to say ‘no’ to a lot of things, runs tons of experiments, think outside the box and change certain key activities within their business. With a single OKR, everyone can keep their eye on moving the company towards its single overarching goal. Because a well-formulated Single OKR is compact and easy to communicate to employees, it will create strategic clarity20 and a shared vision within teams. Which, according to McKinsey, has a huge positive impact on organizational health, setting the foundations for a high-performing organization21.

WARNING: OKRs are not KPIs!
A classic pitfall is to use OKRs to monitor your KPIs. The balanced scorecard is a perfect tool to monitor your company’s health or the status of competitive activities, but that is not the same as measuring progress towards a single ultimate objective.

Keep it simple: Define a single objective.

Everything should be made as simple as possible, but not simpler. ~ Albert Einstein

If the beauty of OKRs lies in their simplicity, why do we need OKR experts to integrate them into our daily operations, and why do most OKR implementations fail?

Probably because, despite all the warnings, the single objective the company sets itself still isn’t short, clear and/or simple enough. Clarity is more important than a nuanced and detailed description.

With the best intentions, many leaders and employees also tend to set too many goals22. A radical focus requires one single objective23. Leaders are often shocked the first time I ask them to define a single company objective. Common responses include, “We have too many top priorities” or “It’s a balancing act, we need to focus on both topics”. And there’s always the temptation to try to please multiple stakeholders: shareholders, customers, regulators…

And beware: your single goal shouldn’t be multiple goals in disguise. “We want to grow profitably.” sits on the fence: what’s the priority, growth or profitability? Sales, for example, will need to know when deciding how hard ball to play on price24.

Let’s face it, if your company achieved more than two goals last year, it did well. So let’s do the maths: it is said there is an 80% chance of successfully achieving a single goal. So if you have two goals, that means an 80% x 80% = 64% chance of success. And with three goals it’s an 80% x 80% x 80% = 50% chance of successfully achieving the three goals.

Ask the right questions

With goal-setting initiatives, people often ask the wrong questions. If you ask “What’s the most important goal to focus on?” you’ll get different answers from different departments. Quality, digitalization, customer satisfaction, financial stability…

A good OKR is one that can make a real difference within and across your organization. Ask yourself this: If every other area of our operation remained at its current level of performance, which is the one area where change would have the greatest impact? The right answer to that question can drive the behaviour change crucial to achieving your x10 growth, implementing your new organization model, or exploring new markets or business models.

Avoid the dangers

There are dangers involved in goal-setting25, so OKRs must be used with care. You need product-based metrics to ensure you create an environment where people feel psychologically safe26 so teams can fail without fear. People need to learn a lot on the journey to achieving your ambitious strategy. They need to experiment, and mindsets and behaviour sometimes need to change. And all that means you must provide people with an environment in which they can excel.

Initially, don’t make your OKRs too stretched27. Instead define a few small tactical goals. This will create a sense of victory28 for your teams. Setting a single OKR doesn’t mean neglecting daily operations (or business as usual). When running a marathon, you want to keep an eye on your heartbeat, hydration, pace, etc. Similarly, when working towards your OKR, keep an eye on your organization and teams’ health. If your vital systems start to fail, stop, fix them and only then continue.

Frequent communication a must

Defining your single OKR alone isn’t enough. You must also communicate it as often as you can. Repetition is your best friend here. Use town halls, all-hands, weekly emails and any other channels right for your organisation to ensure the message gets through and sticks. In my experience, a weekly communication cadence works best29.

And don’t just communicate your OKR but also the rationale behind it – its scope and the advantage it will bring. Explain the metrics in your key results and update on progress weekly to all employees: where are we now, where do we want to be. Over and over again. I prefer using a company or team’s whiteboard for this, but I’ll save why that is for another post!

Summary

To grow30 and increase employee engagement; to improve organizational agility; to lift company performance or customer satisfaction… In short, whatever your biggest challenge is today, you need to communicate your purpose, vision and strategy with clarity. With clarity and focus your employees can embrace the strategy, thrive in their work, and deliver what you need of them.

OKRs are a great tool as part of your strategy; but only a tool. And as they say, ‘A fool with a tool is still a fool’. However, use OKRs wisely and you’ll achieve great results. Because once you and your employees ‘get’ it, amazing things start to happen. Like that 10x growth, amazing innovation, happier customers and more engaged employees.

So if you want clarity and focus for your people, don’t wait till your next strategy off-site. Start today with a single OKR as part of your strategy statement and communicate progress weekly.

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Resources

1. The Office of Strategy Management

2. Two thirds of senior managers can’t name their firms’ top priorities

3. OHI

4. Locke and Latham and Pink D, Drive

5. Setting goals with OKRs

6. Google research

7. What is strategy?

8. Can You Say What Your Strategy Is?

9. Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting

10. Wodtke, Introduction into OKRs

11. Tell Employees What You Want Them to Strive for

12. Can You Say What Your Strategy Is?

13. Can You Say What Your Strategy Is?

14. What Is Strategy

15. What Is Strategy

16. Wikipedia: Strategy Map

17. Goal Setting Theory

18. Can you say what your strategy is

19. You’ll have noticed neither example complies with the advice to exclude numbers from your objective, but in a data-driven culture like Google’s people probably like their numbers.

20. Lean Strategy

21. McKinsey on Organisational Health

22. Shah, Friedman, and Kruglanski (2002), DontSetTooMany

23. Wodtke, Radical Focus and one single objective

24. Harvard Business Review https://hbr.org/2008/04/can-you-say-what-your-strategy-is]

25. Goals Gone Wild

26. Westrum, Google

27. HBR

28. sense of victory

29. Leaders Should Strive for Clarity, Not Transparency and Eight Ways to Communicate Your Strategy More Effectively.

30. Want to drive business growth? Instill a sense of shared purpose
    
    
    

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