2.1: Develop and Implement Objectives and Key Results (OKRs) - Video Tutorials & Practice Problems

<v ->Welcome to lesson two.</v> We will start this lesson with the review of objectives and key results framework. What do you need to start with objectives? Or in other words, with your why? In lesson one, I mentioned the book of Simon Sinek, who is a bestselling author. He wrote the book Start With Why and described the power of starting with the goal. Does this logo sound familiar to you? Maybe not so much. And there is a reason for that. In his book, Simon Sinek shared an example of TiVo, a great product that did not address the why. It was launched in 1999 and marketed as a digital video recorder that could pause live TV, skip commercials, rewind TV and memorize an individual's viewing habits. It was a high quality product, truly revolutionary for its time and well funded. However, commercially it did not succeed. Some analysts thought it was a few years ahead of its time, but that's not so. The primary reason was that instead of a vision, the product description contained a list of features. The vision should have been the marketing message rather than just the product description telling potential buyers about the features. What it should be? Something like we want to give you full control over what you watch and how, and this tool provides you with the ability to be in control. So with this why, they could have listed the same features, pausing live TV, skipping commercials, and others, but they failed to do that. Establishing why is the first step in positioning your product for success. What do we want to achieve and why is it important? Every product should have a set of well-defined, quantifiable objectives shared across all the stakeholders so that everyone has a common understanding of the true north, how success will look like. A popular framework for doing this is referred to as OKRs which stands for objectives and key results. As with everything else in agile project and product management, OKRs may change if the market situation changes or any major enterprise level decisions are made. However, OKRs usually are quite stable year to year with change being discussed across the company the group communicated and aligned to a broad group of stakeholders. OKRs have been around since Intel in 1970s. The concept was invented by Andy Grove who said leaders have to act more quickly today. The pressure comes more faster. He realized that OKR could be the driver that fuel that made Intel able to respond quickly to market needs and align the company on a joint set of objectives. Then, from Andy Grove, John Doerr took over the concept. And as one of the early investors in Google, he implemented OKRs at Google and they quickly became an important focus for Google and many other leading companies, such as LinkedIn, Twitter, Dropbox, Spotify, Airbnb and Uber. This is all well described by John Doerr in his famous, I can definitely say that now, book Measure What Matters. John Doerr suggested the falling template to use when setting OKRs. I will, then you state the objective, as measured by, and then you mention the key results. So as the name implies, there are two components, objectives and key results. As Marisa Mayer, a former Google vice president, said if it does not have a number, it is not a key result. The objective should be simple, aspirational, easy to relate to and easy to memorize. There is a rule that if you have to catch your breath when reading your objective, it's not a good objective. Also, OKRs are cascading throughout the organization from company level to divisional product and team. Some companies even introduce individual OKRs. Those are usually related to employee performance and their professional growth. Most companies use Google self grading scale which is from zero, no progress has been made. Notice, we not saying no tasks have been done. Maybe there was a lot of busy work, but no progress, still is zero. And one, means objectives and key results are fully achieved. A good result is 0.6 or 0.7 or higher obviously. All of it is a success. OKRs have to be very aggressive and hard to achieve. That's why 0.6 or 0.7 are already a good result by itself. OKRs are usually presented as a tree. Look at this hierarchical structure. What does it remind you of from lesson one? I'm making a pause. Try to recall what you have discussed in lesson one. Obviously it's the work breakdown structure. Similarly, objectives break down to smaller objectives at every next level up to the team level. And each of them has its own key results. How this group is contributing to the success of the whole organization. There are four steps in the annual OKR setting and alignment process. But again, let us start with the concept that any level objective is meaningful. This is a set of my personal OKRs. Personal OKRs are very helpful in achieving personal objectives over a period of time. I set those every year and every quarter I look at those in my personal board. The tool is called Trello. It's a free for individual use tool that I use to manage my OKRs. There are four steps in the annual OKR setting process. Once you set your OKRs, you have to align on them. And the goal of this process is to identify any dependencies and resource constraints and have the teams engage in a meaningful dialogue to resolve any resourcing, budgeting, or prioritization conflict. Then it comes to OKR refinement. The table below is based on the alignment conversation and it is related to quarterly review of key results. If key results are working, this is an indication that the right measures are taken. If not, the team needs to pivot and select other means of achieving this OKRs. And then the final step is to iterate. OKR iteration means that once OKRs are set, aligned and refined, a review cadence is established. And this allows the whole organization to review progress against OKRs with full transparency and traceability at the organizational level. This sequence is referred to as SARI framework based on the first letters of each of the four steps you see on your slide, setting, alignment, refinement and iteration. It's important that SARI framework for OKRs is not sequential, it's cyclical. All steps repeat on a regular basis allowing for continuous alignment and as a lean ongoing value delivery. By the way, OKRs are frequently used for personal objectives, as I have shown you, as well as company objectives. So if you want to learn about OKRs first hand, what are you waiting for? Set up your OKRs today and you will experience the power of this simple and very impactful framework.