OK NOTOK OKRs — 3Ms: Mindset, Mission and Measurement (Europe 2021)

In this session, I will cover - What are OKRs? - The 3Ms of OKRs: Mindset, Mission and Measurement - OK and NOTOK OKRs : patterns and antipatterns - OKR alignment needed when you are a large complex organisation with many people and many products in many business units - How to get (re)started I will be sharing lessons learnt the hard way. A lot of this is common sense, but not common practice. It's easy to say, and hard to do. Because it's mostly about culture, mindset, behaviour.

plenarylondoneurope2021
JS

Jon Smart

Founder, Business Agility Coach and Leader, Sooner Safer Happier

TRANSCRIPT

00:00:13

Thank you, Dr. Westrum. Okay. The next speaker is John smart. Co-author of the amazing book, sooner, safer, happier the book right over my right shoulder here. I love this book and it does such a splendid job in capturing so many of the principles and practices he's developed over the years. It was informed so much by his lessons learned leading the ways of working at Barclays, a bank founded in the year 1635, which actually predates the invention of paper cash. We've heard so many problems, statements being voiced by this community about problems being encountered during the OKR planning process. So John has some pretty brilliant observations on what makes for good OKR RS versus what makes for bad. Okay. Ours, and some incredibly practical advice. I'm a huge fan of John's work. And I think this might be some of his best work yet. So here's John.

00:01:14

Hi, my name is John smart, and I'm going to talk today about OKR lessons learnt in the implementation of OKR is around. Oh, okay. Okay. And not okay. Okay. Oz and the three M's, which are mindset, mission, and measurement. First of all, we will take a look at what our OKR is. Well, then have a look at the anti-patterns and patterns. The lessons learned the hard way. So the, the, uh, the patterns are the Oko chaos and the anti-patterns of the knots. Okay. Okay. These are, like I said, lessons learned the hard way I have experienced of implementing OKR is across tens of thousands of people with multiple business units and thousands of products. Um, as well as supporting organizations across different industry sectors in their adoption of OKR, we will then take a look at, okay, our alignment and in particular, this is relevant when you get into size, scale and complexity.

00:02:15

So how okay I was aligned and we will take a look at how to get started or how to get we started. But before we do that, let's take a look at the rising popularity of OKR is taking a look on Google trends. I looked at the, the number of searches for the term OKR and the number of searches for the term balanced scorecard. Interestingly, around about the middle to the end of 2018, there was that tipping point where, okay, I became a more searched term, the balanced scorecard, also quite some. What surprised me pleasantly surprised me is that there are now more searches for the term OKR and their offer portfolio. And again, that tipping point was towards the end of 2018. So pretty recently we see this, a shift in consciousness around adopting. Okay. And I'm sure it's absolutely no coincidence that the, uh, the rise in the trends that coincides with the DevOps DevOps enterprise summit, London and Las Vegas, um, a symptom of the hype cycle around chaos.

00:03:26

If you type in OKR certification into a search engine of your choice, you'll get pages back of organizations who are very happily take your money to make you a cop, a certified OKR practitioner. So first of all, what are okay, RS, okay. Oz, our objectives and key results. And there are three M's for OKR. Uh, I like to think about them with the three M's they're all equally important. The first M is mindset, and this is having an emergent mindset over a deterministic mindset. This is acknowledging that the future is unknowable, and it's also adopting a stance of empowerment, empowerment, but also taking empowerment. Second M is mission. This is the objective, and this is outcome over output, and it should be both inspirational and aspirational the icon on the left. There is a flag and effectively, this is planting a flag at a point in the future for teams to then experiment as to how to best achieve that goal, that target that mission.

00:04:38

And then finally, the third M is measurement, and this should be measuring movement and behavior. So these are the key results. And if you're not measuring movement and behavior, you don't know whether you're actually going to achieve your outcome. You don't know if you're making progress in particular behavior. If behavior doesn't change, you're going to get the same outcomes so that there has to be a change in human behavior to have a change in outcome, and they should be leading and lagging measures. If there aren't any leading measures, again, you're like, it's like you're flying blind. You've got no idea. If you're making progress on your desired outcome, the better you're leading measures, the more agility you can have to be able to pivot when we look at the history of OKR. So, okay. Ours came from MBO management by objective. Uh, embryos came from Peter Drucker who wrote about them in 1954.

00:05:34

And management by objective has been the, the almost universal way that organizations, large organizations have organized what work gets done. So the characteristics of management by objectives, they are top-down. They are generally focused on output and tasks. They are static, typically annual. They are private and siloed. And typically the objectives are tied into your performance appraisal. They're in the performance appraisal system. So of course, they're that they're private. They're not available for people to see in that context. And because they're tied to your performance, appraisal, your pay and everything else, they tend to be risk averse. It tends to be a case of shooting for mediocrity because you'd rather under promise to be able to over-deliver. And finally, the prevailing cultural norm is one of command and control and benevolent dictatorships where the objectives are, are handed down from the managers to the workers that tends to be the norm.

00:06:40

And that tends to be the starting point. So in terms of OKR is, um, it's Andy Grove at Intel who took embryos and he, he, um, evolved them into what today. We, we know as, okay, ours, he called them IMB embryos, Intel embryos. John Doerr worked with Andy Grove at Intel, and he took the concept to Google in 1999. Um, you know, and, and, uh, Larry is quoted as saying that he attributes the success of Google to the fact that they used, okay, ours today, it's companies large and small unicorn and not unicorn who are using it. Okay. So what are okay? They are top down and bottom up. They are not just a top-down cascade, but they are top down strategy meets bottom up teams and team of teams articulating their own outcomes, aligned to the higher level strategy. The focus is on outcomes and experimentation, as opposed to output and tasks, acknowledging that the future is unknowable, focusing on the outcome to achieve, and then running experiments to try to achieve that outcome.

00:07:51

They are more dynamic. They are multi-year annual quarterly. They have alignment, you'll get feedback. You might get daily feedback and you can feed that back into your outcome hypothesis, what you think of the right outcomes. And you can pivot, you can exhibit genuine agility. So they're much more dynamic, they're transparent and aligned. So you should be able to see the OKR that other teams are working on. So you can see what people are working on. You can clearly identify overlaps or duplication, um, and you can collaborate that they should be aspirational and inspirational. So some of them should be moonshots. Um, and they are, uh, you know, uh, goals to achieve. And the prevailing cultural norms should be one of empowerment and autonomy. As I said before, both giving empowerment and also taking empowerment in terms of doing them well, it's very easy to do anything badly, including OKR and something that come across quite often is all of the characteristics on the left being wrapped up in a rapper called an OKR.

00:09:04

So you've got chaos, but actually they are just projects. They're projects written as, okay, ours, that they are cascaded top down, they don't update. And with a charitable intent, it's kind of not surprising because people have a limited velocity to unlearn and relearn. So it requires coaching and it requires time and to do okay as well to have Oko chaos, they should exhibit the characteristics on the right hand side on this slide. So now let's look at some of the common anti-patterns and patterns of OKR. Let's look at some of the and not, okay. Okay. What are the lessons learned? So, first of all, with an okay, OKR, some of the patterns, this is an annual objective to be achieved in 2021. And the objective is to have number one market share in Latin America. When we look at the patterns. So for the mission for the objective, it's an outcome, not an output.

00:10:06

It's a very clear outcome, which is we want to be number one in terms of market share in Latin America, it is both inspirational and aspirational in terms of measurement. They are all measurable. One to five, every single one of them is measurable. They're articulated as verb measure from X to Y for example, increase net promoter score from plus 40 to plus 60, they are measures of behavior. So for example, number one, double the ad click-through rate that requires a change in behavior increase word of mouth referrals. Number three from 50,000 to a hundred thousand, that requires a change in behavior grow daily. Digital transactions requires a change in behavior. There are leading and lagging measures. So the first four are leading measures. There are an indicator that you might increase your market. Share. The lagging indicator is number five, which is you've increased your market share.

00:11:03

If you don't have leading indicators again, you're flying blind. You don't really know if you were going to achieve your outcome and you can't exhibit genuine agility because you can't pivot because you haven't learned anything. So you need early and often feedback loops to know if you're on the right track, they measure movement towards the objective. So you should be able to plot the trend. So for any of those, you can plot a trend from the, from number to the two number. They should be measures of value. So for example, customer net promoter score, you know, having happy customers is valuable. Word of mouth referrals is valuable. Growing daily. Digital transactions is valuable and no more than three to five key results per OKR and it's business. And it is one it's the organization, not some business, okay. Ours, and some it chaos. No, they are combined the organization together achieving business outcomes.

00:12:00

Now taking a look at, uh, natto K OKR. So the objective here is to deliver project Platypus. So the anti-pattern looking at the mission is its output rather than outcome. Platee what, and you know, this is, um, maybe surprisingly, uh, fairly common where I quite often come across this with organizations where there are projects with names and you might ask teams. We know what's, what's the benefit of this project. And quite often, people don't know because it's been passed down the chain. Not really sure what the benefit case was when this was first put together 18 months ago. And so no, one's really focused on what the, what the, the desired benefits in the desired outcome is. It's not inspirational and there's no time box on this one. The duration is not clear. Is this an annual objective, a quarterly objective, a multi-year objective in terms of the measurement and the key results.

00:12:55

Number 1, 2 11 is a task list. This is an activity list. These are not key results. They're not measurable. They are not measuring a change in behavior. There are no measures of value. There's no leading indicators of value. There are too many key results, which is common. When organizations start on this journey, it's it only as well. Whereas the business value, even for initiatives, which only involve it, there has to be some business value. Otherwise, why are we spending money doing it now onto the mindset? We've looked at the, uh, the mission. We've looked at the measurement now on the mindset and the patterns around the mindset. Um, the background image here is a Japanese Zen garden. And I think it's appropriate for them because okay, ours are as much a philosophy as they are a framework it's culture. Overprocess watch out for new labels on the same old behavior.

00:13:53

Um, you all have not, okay. Okay. Oz. If the approach is to treat them as if they are a process and a framework and leave the culture, unchanged here requires a mindset of emergence, experimentation, and empowerment. Acknowledging that the future is unknowable, maintaining options and optionality, running experiments, learning quickly with empowered teams. They are top down, bottom up and sideways. Less is more, there should be no more than three to five. Okay. As per value stream, there should be a regular cadence of review to reflect and pivot. And again, it's business and it together delivering on a business outcome.

00:14:37

Now taking a look at OKR alignment. So in particular, this is around on S and complexity and large organizations. How do OKR align? First of all, if we do a double click on a quarterly OKR and see what's inside it, how it what's comprised within an OKR, you can break them down into experiments. I like to use the word experiment because the future is unknowable and let's face it. They are experiments. You can equally use the word initiative, or you could use the word epic. When you break that down, you have daily stories. You might have weekly iterations, and ideally you have continuous delivery going up towards strategy. Those quarterly outcomes are aligned to an annual outcome and you'll have multiple value streams. Assuming you have multiple value streams, assuming you have multiple products, you'll have multiple annual outcomes for larger organizations where you've got multiple business units you'll then have multi-year okay.

00:15:35

Ours aligned to the business unit. So if this was a bank, the area on the right might be an investment bank in the area on the left, might be a retail bank. And then you've got the group level strategic objectives. So these are the strategic objectives multi-year across all of the business units. If we looked at a worked example, imagine you're a retailer. Um, before we get to that on the left-hand side, it's both top down and bottom up and it's continuous strategy alignment. So you've got a continuous feedback loop on your multi-year strategy. On the right-hand side, you've got regular value realization and you've got a feedback loop and you can pivot. So you've got typically a monthly cadence on your quarterly outcomes. So at least once a month, you've got a feedback loop on your key results. And that's, that's incredibly powerful to be able to exhibit genuine business agility.

00:16:32

So imagine you're a luxury retailer worked example, strategic outcome, top three most valuable luxury brand. When you then go into the business units, luxury bags and fragrances luxury bags, you break that down. The goal is to be top three market share in China for fragrances top five global brand. Break that down within luxury bags, you've got handbags, the handbag value stream. And the goal here is to increase market share in China within the next 12 months, break that down into a quarterly outcome. The goal is to increase markets market share in Shanghai, break that down into experiments. In the first month, we're going to run an online promotion and we're going to hire some social media influencers to take selfies with our bags and post them on Instagram. So that's how you slice the elephant. That's how you slice it into value and learning. And that's how you align.

00:17:25

And you can align across value streams now how to get started or how to get restarted. So to get going, think big, start small and start, start broad and shallow, which is your strategic top level multi-year outcomes. And then narrow and deep. Don't try to big bang it, narrow and deep pick areas. Uh, go down to your quarterly outcomes down to your monthly experiments in your daily stories, have a bias to action, because the only way you will learn is by doing don't spend 12 months in PowerPoint. I point OKR champions. So have some named people who are okay, are champions to provide support, be patient and be resolute, expect to get it wrong, expect four to five quarterly cycles to be able to fully embrace, okay, ours, it's common sense, but it's not common practice. And like most things it's actually hard to. It takes a lot of unlearning and relearning to do it well, create a community of practice and OKR community of practice for shared learning, expect the reinvention of the PMO.

00:18:32

So this is, uh, the PMO reinventing itself to the VRO, the valuation office to support the organization on OKR. If you're interested in more on that, I did the talk in June, 2018 at the DevOps enterprise summit, which, uh, where, where we have a bit of a case study on that and experiment and enjoy the journey, uh, because it's about the journey rather than the destination in terms of the help I'm looking for. Uh, I'd love to hear your stories, your adventures with OKR. I'd love to hear about your patterns and your AntiPatterns. Thank you very much.