- Joe Fernandez is an entrepreneur, and previously was CEO and cofounder of social media analytics app Klout.
- Fernandez says setting quarterly OKRs can be challenging, but it doesn't have to be.
- Less is more, so pick no more than three objectives — one if you're an early-stage startup — and focus on quantitative results to measure whether you've hit those goals.
- Pour your efforts into growing revenue, not launching a product. It's easy to lose track of your goals if you don't.
- Roll out a plan with the necessary resources to ensure the goals are realistic. Once that's finalized, have each team create their own goals to tie into overall company OKRs.
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Who would have guessed that setting quarterly goals would be so f–king hard?
I've been a venture-backed CEO for over 12 years now, so I've gotten nearly 50 swings at getting this right. I would say 35 or so of those quarters suffered from bad goal setting. Here is a small sample of things I've done wrong:
- Set goals too late so quarter is a month over by the time you roll them out
- Too many goals
- Stretch goals that were never realistic
- Goals that are too easy
- Goals that can't be measured easily or the measurement is unclear
- Unclear owners of various goals
Here are five lessons I've learned that have made this process a lot less painful.
1. Less is more
As CEO, you have a vision of where the company is going. The gap between that future state and the current reality creates a long list of what feels like ultra urgent initiatives. When setting company level OKRs you need to fight the temptation to try to move everything forward at once. It's not going to work.
I recommend you pick no more than three objectives. If you're an early-stage company, you're probably best served by focusing on just one. After a few quarters of consistently hitting your single OKR, you can expand with confidence. What's the one thing you really need to nail? Focus all of the company's energy on that.
2. Launching is not an objective
One of the most common mistakes I see startups make (and that I've fallen victim to multiple times) is setting a company objective of "launch X new product." This is backwards. You launch a new product to help you hit a specific objective. Your objective might be "grow revenue." Your key result might be "50% revenue growth over last quarter." Launching a new subscription product (for example) is a tactic to hit your key result and achieve your objective.
Growing revenue is what matters here, not the product launch. This is an important distinction because you'll often find that the product improvements you think are going to change your trajectory often don't. Losing focus on the results you need to drive is a way for your company to quickly end up in a bad position.
3. The art of picking the right key results
Less is more with key results as well. I never like to have more than two key results for any objective. Most of the time a single key result will do, but a second one can be helpful in keeping the company from doing something dumb . For example, you might have an objective to "grow revenue" with a key result of "50% revenue growth over last quarter." Adding a second key result of "90% of new revenue being annual subscriptions" will keep the company from chasing "bad" revenue just to hit the goal.
This should go without saying, but your key results should always be quantitative with extremely clear measurement parameters. There should be zero confusion on whether you hit the goal or not.
4. Build a model
After your leadership team selects potential OKRs, it's important to build a model to make sure there is a realistic path to hitting them before rolling them out to the team. This doesn't at all mean that the goal should be easy to hit. Just that there is at least one potential path where you have the necessary headcount, paid marketing spend, retention, etc. to stretch into that goal.
Unachievable goals that feel like they are pulled from thin air will undermine confidence in your leadership team and cause people to not take the goals seriously. With a well built model you set your team up to surface where your assumptions are wrong, have the right conversations, and ultimately buy in. Once this process is complete you then have a model you can use for weekly metrics check-ins during the quarter to track progress against your OKRs.
5. C.D.R.E.A.M (Cross dependencies rule everything around me. Sorry, I had to try it)
Each team will then go through a process of creating their own (hopefully) one to two OKRs. At that point, you need to lead a meeting with all of your team leads to make sure that their OKRs tie directly to the overall company OKRs. You want each of your leads to call out what cross dependencies they have in hitting their goals.
For example, you might have a product pod that is counting on a big launch to hit their growth OKR. They likely have a cross dependency on marketing for press support. If marketing can not commit to providing the resources to help the product pod, while still being able to hit their team OKR, then one (or both) teams need to adjust their key results down.
Bonus – The roll out
Now you need to get the whole company excited about the OKR's. I love doing a big company OKR kickoff at the start of each quarter. This is usually a two or so hour meeting with something social after it. I will give a state of the company address and roll out the top level OKRs.
Each team will then go through and present how they performed against last quarter and what their current quarter OKRs are. No one wants to stand in front of the company and say they flopped last quarter. Public accountability is a powerful motivator.
Setting the right goals and really leveraging OKRs is still very much something I am learning and evolving. I would love to hear what you've found successful in your companies.
Joe Fernandez is a Los Angeles based entrepreneur who cofounded and was CEO of Klout and Joymode.
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