How to measure OKRs - The OKRs Owl part 3/4
How will you know if (and when) your implementation of OKRs have been successful? The good news is it’s all down to you! The bad news is it’s ALL down to you!
The way you measure OKRs is made up of a myriad of factors from their impact on your company objectives, to their effect on your clients. While it’s tempting to set up simple, easily achievable success metrics, this may only tell half the story.
In the latest blog of our OKRs Owl series, we’ll discuss how to measure OKRs for success.
The astrophysicist, Sir Arthur Eddington, came up with a parable to explain how humans tend to only gain insights from information that is immediately visible to them:
“What I cannot catch with my net lies beyond the bounds of ichthyological knowledge in principle; it does not refer to an object of the kind defined as an object in ichthyology.”
In simpler terms, what Eddington referred to was the art of fishing (‘ichthyology’ is the branch of zoology that deals with fishes). He discussed that the success of the day’s catch would be measured by the number of fish acquired. But that number was dependent on the size of the holes within the net, for who knew how many more fish we could have counted, if the holes were smaller?
The same idea can apply to success measures in the modern digital age. If you only measure success based on the obvious success measures, who knows what valuable insights you might miss? So, when you set up your success measures before starting your OKRs journey, make sure they incorporate future ideals and additional metrics beyond what you measure today.
Otherwise, who knows what possible nuggets of value you may miss?
Have you ever heard the expression “Don’t rob Peter to pay Paul”? It applies to measuring OKRs too!
When setting up metrics to measure, you’ll need to think holistically about your OKRs. Try not to focus so much on one area that it’s detrimental to another.
For example, you might set a goal of increasing customer numbers, and decide to do this by offering a significant discount. This would no doubt help you achieve your goal of increasing customer numbers, but may lead to a high cost per acquisition. Or it could mean you’ll miss your commercial targets.
Set up perimeters for success that don’t negatively impact other targets.
How do you determine what to measure on your OKRs journey?
It’s important that you include a mix of metrics to give a well rounded view. For example, if in the past your success has been measured purely by commercial gains, you may only be pleasing one set of stakeholders.
Creating a loyal client base is a more well-rounded and future-proofed metric than increasing profits alone. If you focus on making your customers and end-users happy through innovative products and fantastic customer service, the profits will follow.
Your Net Promoter Score (NPS) will help you determine the proportion of your client base who are advocates for your brand. It also allows you to track those who are less enthusiastic, or worse, could be detrimental through poor word of mouth. Whilst NPS is a less tangible metric than revenue or website performance stats, it’s certainly valuable.
You might also like to conduct annual customer surveys or make regular courtesy calls to obtain feedback and testimonials from your clients.
Of course, it’s equally important to measure OKRs using ‘hard’ metrics. For example, if you integrate your Epics and User Stories in JIRA (or other software backlog systems) to your OKR software, you’ll be able to determine the impact of your team’s work on helping to achieve the overall company Objectives.
Once you know what you want to measure, it’s important to determine the benchmark for success.
In the world of OKRs, we’re all about stretching. There’s a popular school of thought that suggests stretch targets are more motivating to teams.
Consider this; let’s say you decided to set a goal of running a 5 km race. With 5 km as your target you would train accordingly. You might download the ‘Couch to 5 km’ app and start by running a short distance and then extend your sessions until you’d reached the 5 km mark. Then perhaps you'd stop as you’d achieved your goal. But what if you could’ve ran further?
Imagine if your original goal was to run a 10 km race? With your eyes firmly on the 10 km prize, your training schedule might look a little different. Perhaps you’d reach your goal, perhaps not. But we’d bet you would have run further than 5 km by the time you were done.
Setting a bigger target upfront inspires, motivates and enables us to achieve more.
Now there’s a caveat about our stretch target point. You first need to consider your relationship with ‘failure’.
If failing to reach your 10 km target would floor you, destroy your confidence and ruin your love of running for good, maybe don’t stretch yourself too far. On the contrary, if you’re a ‘glass half full’ kind of person who sees failure as an opportunity to learn, reaching 8 km out of your planned 10 km would feel like a huge achievement!
The same principle applies to how you measure OKRs. If your work environment is one that celebrates failure as an opportunity to learn, then stretch targets will suit you. However, if the ‘F-word’ is strictly banned in your office (failure, that is) then you’ll need to address this culture conundrum first.
In many large enterprise organisations, a hierarchical structure and strict aversion to risk means that nobody wants to fail. OKRs won’t really work in this type of environment. Not least because OKRs require teams to have autonomy to set their own goals. OKRs are successful for inciting change, growth and innovation within your business, unlike Business As Usual (BAU) style metrics (e.g. KPIs) which aim to maintain the status quo.
From the CEO to the most junior employee, everyone needs to feel safe to fail before you can begin your journey with OKRs. That’s not to say you should intend to fail! It’s more a case of feeling bold enough to experiment with ideas and initiatives without the threat of failure hanging over your head.
Want to learn more about organisations who aren’t afraid of failure? Read this.
How to start
In the previous blog post in our OKRs Owl series, we discussed how ‘forcing function’ can help you commit to your OKRs journey. If you’ve ever asked anyone when is the right time to buy a house/start a family/nab that dream job/move to Barbados/swipe right, they’ll probably tell you that there isn’t one.
If you’re waiting for the stars to align or for your company to be in a ‘better place’ before you begin your journey with OKRs, you may be waiting a while.
Instead, you could start enjoying the benefits of a more transparent, collaborative and productive work environment right now. You just need to jump in!
Accept that it won’t be perfect straight away—it takes time to refine, make changes and improve the process. But if everyone is committed to giving it a go, eager to learn and experiment without fear of failure, it will transform your business!
Eager for the next part in the series?
Part 4 in the OKRs Owl series is all about "goal-gradients", which are a smart motivational approach based on behavioural science that can really benefit your OKR progress.
Here are the other parts of the series:
- Practical examples of OKRs
- How to get started with OKRs
- How to measure OKRs (that's this one!)
- Goal-gradients and motivation
We can help
Whilst life is filled with uncertainty at the moment, one thing we can guarantee is that you won’t be alone as you start to use OKRs in your business. We’ll support you and provide all the tools and guidance you need to implement OKRs successfully.
Get in touch to arrange a free trial or find out more about how to measure OKRs.