Without knowing the basics, OKRs can be a serious headache. Here’s how to conquer them.

In every business there comes a point where, as CEO, you recognise the need to think about objectives.

Usually that point comes as a result of one of three things happening:

1. You raise a lot of money, and suddenly have to meet a lot of expectations.
2. Things are growing quickly and chaotically. As CEO you begin to lose your reach and realise you can’t be across everything.
3. Things aren’t growing quickly at all.

In response, most teams will try and implement the OKR methodology – be that the full version or an abridged one. And most teams will struggle with it.

When consulting with companies during this phase, I hear a few common pain points:

• The terminology is confusing and the methodology cumbersome.
• How do we prioritise when there’s so much to be done?
• Do individuals or teams own objectives?
• Does every team or individual need an action?
• How do we get all teams on board?

Senior teams can spend so long working through these pain points that they’re left without enough time to get where they need to get to (which, if you’re an early-stage business, is 100% year-on-year growth).

The methodology itself is not necessarily to blame here. These pain points usually crop up because the senior team is collectively unsure of which metrics matter, what a metric says, which metric to change, and how to change that metric (for the better).

So the real problem with the OKR model is that it assumes that you are sure of the above to start with. It’s then down to you to figure out the methodology and terminology, along with the what, how and why.

Back to basics

To get “good” at OKRs, and to actually start nailing your OKRs, your senior teams have to be experts in metrics and prioritising. I’ve created a ‘Company Metrics & Action Plan’ framework (not a very sexy name I know) that might help with this, and I encourage you to work through it before tackling OKRs.

Once you’re comfortable using this, then you may (or may not) want to give OKRs another go.

Following a commonly known methodology is not what’s important. What’s important is that you’re clear on what needs to be done to get from A to B, you’ve worked out how to get there, and you have measures in place for monitoring results and iterating tactics in order to change those results.

The Company Metrics & Action Plan framework is divided into four components.

1. What

Here I’ve listed the metrics I think are important for a SaaS business. I’ve categorised them under the following pillars:

• Revenue: make money.
• Retention: keep clients or else making money will get hard.
• Scalability: grow effortlessly and profitably.
• Employee engagement: keep staff happy or they’ll leave and you won’t achieve anything.

Feel free to change these as you see fit.

First, agree on an owner for each metric. The owner is not the sole person responsible for changing that metric, they are the person responsible for measuring it and leading others to improve it.

Next, work out what your actual figures are, and what you need them to be each month or by the end of the year. If you aren’t sure, leave the targets blank for now, or use your network and ask similar companies.

Your management team should be updating the actuals each month. Even if you aren’t yet working to targets, you’ll be able to monitor progress and spot trends i.e. are the metrics improving or becoming worse?

2. Why

In this tab I’ve listed what the above metrics tell you and why they’re important, e.g.

• Function: revenue
• Metric: opportunities (outbound)
• What: qualified sales lead
• Why: effectiveness of your outbound sales team

Again, update as you see fit.

3. How

This is a summary of what you’ll do differently each quarter in order to reach your targets.

The challenge is picking just five metrics to focus on. That’s going to be tough, and you’ll likely need to set aside a couple days with your senior management team to argue over what’s important and what most needs fixing. This is a good kind of argument; it’ll bring you to agreement on the company’s priorities.

I keep it narrowed to five quite simply because you can’t do everything. If you try to tackle every metric you’ll end up with everyone prioritising their own instead of working together on what’s important. And you’ll probably fail. I find it effective to ask individuals to adopt the perspective of what the company needs to achieve, not what teams need to achieve.

Once you’ve agreed on the five metrics to focus on (and salted your wounds), decide on the initiatives (the “hows”) and record them in this tab.

Again, assign owners. In a sense, each owner “project manages” that initiative. Lots of teams will undoubtedly need to work together to achieve the end result, but having one senior person organising it and reporting on progress is helpful.

4. What Else

There are two additional “pillars” I believe every company needs to consider. They may not be linked to a metric, or define what success looks like over a year, but they do define broader, longer-lasting success:

• Expansion: you can’t just think one year at a time. Some projects won’t pay off in 12 months, but it doesn’t make them not worth doing – keep an eye on long-term goals to avoid being outpaced by the competition. I’ve added some prompters to get you going.
• Impact: every company has an obligation to better the environment and society (or at least not damage it).

Pick just one initiative for each and record it in this tab.

Going live

Once the template is complete, you should begin recording, measuring and interrogating. You’ll want to discuss barriers on a weekly basis, report on the metrics monthly, align on priorities quarterly, and review everything yearly.

As CEO, your role is to investigate, remove barriers, hear people out, make decisions, and keep your team motivated and on track.

If you notice any metrics slipping, ask:

• Why has this happened?
• Should I care? What’s the implication?
• Do I need to respond or do anything differently?

This might lead you to add that metric to next quarter’s focus, or to take immediate actions if a quick win is possible. Just don’t try and be a hero. It’s important to stay focused on the top five metrics and give teams the space to do that well. This inevitably means that some other metrics will be neglected, but you literally cannot do everything and it’s better to tackle five at a time than stress your teams out by asking them to fix everything.

But do make a habit of investigating – because diagnosing whether there’s a problem, what the implication is and how to fix it will enable you to formulate next steps. It’s important you understand why you are and aren’t improving metrics. If you are, plan how to replicate what you’re doing. If you’re not, work out why and plan to change.

This framework versus traditional OKRs

Unlike this framework, the OKR model works backwards. It requires you to come up with the end result, then rely on the measurement of metrics to assess if you’re getting there.

But I find that many companies struggle with mapping out end results without a baseline, or without first getting the hang of metrics, and certainly without teams understanding how to change those metrics.

This framework aims to get you thinking about and playing with metrics. It trains you to be tactical and reactive – monitoring the metrics that are doing well, taking actions to change those that are doing kinda crap.