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Goals (OKRs & KPIs)
June 16, 2021

What it takes to be successful with OKR

Zahra Currimbhoy
Marketing, Perdoo
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min read

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Show notes

The OKR framework is designed to set organizations up for success. Yet many organizations that adopt OKR see little to no benefit of working with the framework. Why is that?

Well, a lot of these organizations use what Felipe Castro calls the "Tinkerbell approach to OKR" — they simply continue working the same way they did before and just sprinkle some "OKR" pixie dust over it. That might work if you're lucky, but in most cases it won't.

OKR calls for a fundamental shift in how you approach work and has a few key areas that need attention in order for it to be a huge success. We spoke to OKR trainer and consultant, Felipe Castro, on what it takes to be successful with OKR.

During this episode we'll discuss the 3 things you need to be successful with OKR:

  1. Commitment to OKR from senior leadership
  2. How to use OKR in practice
  3. Unlearn old models

Tune in to get a deep dive on what you need to do to make your OKR program a massive success. Learn from the experts!

Books discussed during the episode:

Resources that can help further boost the success of your OKR program

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Henrik-Jan: I am Henrik I'm CEO of Perdoo. And I'm the host of today's episode with me today is Felipe Castro, an OKR consultant. We'll be talking today about what it takes to become successful with OKR. Felipe, could you give us a quick intro about yourself and your journey with OKR so far?

Felipe: Yeah, sure. So first of all, thanks for having me here. What I do is, I basically help organizations move from projects to outcomes, using a unique approach to OKR.

Over the past years, I've taught thousands of people worldwide, how to write great OKRs, using actual techniques that they can actually use in practice. I mostly work with organizations where technology is key. I ran OKR workshops at organizations, such as Expedia Group, Adobe, Target, The Home Depot, mostly in North America or Europe.

Henrik-Jan: So talking about OKR, of course, OKR has gained massive popularity. And I'm sure you've seen that with the traction that you've been getting, over the past couple of years , and how well that has increased. A lot of the time though, OKR seems to be misunderstood and therefore there are lots of organizations out there that don't really see the impact that they would have originally hoped for. From your experience like what's the main cause for this?

Felipe: Yeah, that's a very common issue, many organizations that they are using OKR, they get little or benefits out of that. And the main reason for that is what I call the "Tinkerbell" approach of OKR. So the "Tinkerbell" approach to OKR — you pick a traditional organization or organization that's using traditional management practices. You sprinkle some OKR pixie dust on top of it and boom! You turn into Google. Just think happy thoughts and you fly away. And that feels like a joke, but many organizations fall into that trap. Right?

I have some real stories of a very large bank. A few years ago they had a KPI dashboard — the same one they'd been using for years. One day to the next they simply changed the label of the dashboard to say, OKR. What else do you have to say? Those are OKRs.. Well, you're using OKR now. True story. Right?

What other stories?

Henrik-Jan: What is it about those organizations then? They just want to do OKR for the sake of doing OKR? Or simply to say they're doing OKR?

Felipe: They simply don't understand how is that different. So for example, one of our enterprise clients we're working with — a business unit inside a very large global enterprise. And one of the Execs from another part of the world reached out to them and say, I got this OKR thing. It's the same thing we always did with goals, right? So I just do it the same way I did with my goal last year.

So the thing with the Tinkerbell approach that they use OKR's name only. They keep working the way they always did. They just call it OKR. Right? And that's very common. They don't understand that adopting OKR is not the goal, the goal is to change how you work.

OKR comes from a very different culture, very different model. And to succeed at OKR, you have to shift, you have to change.

Henrik-Jan: So, what you call the Tinkerbell approaches is organizations just changing some naming conventions inside the organization, but not, structurally changing how they approach work.

Felipe: Yeah, it's using OKR's name only, and continue working in the same way we always did. We just call it OKR. Right? So just sprinkle some OKR on top of it and we move on. Because if you look at the whole history of OKR, going all the way back to Andy Grove, it's always about giving people clarity of purpose and autonomy. It comes from all the tech companies that we know, right. Put an environment where giving people autonomy to deal with innovation is key.

So you've had Stephen Bungay in your podcast, and I love his work — he calls it "Leading with intent". Explained really well, that the idea is you explain to people what we want to achieve and why, and then people have to overcome the "how". To say, hey that's what you're trying to achieve. That's why this is important. And then people have the autonomy to do it.

The problem is many organizations are really far away from that model. The further you are away from that, the harder it is to adopt OKR because you need to change. So many organizations that see Google using OKR and all the other companies using OKR, they believe they are successful because they use OKR. But in fact, they're successful because they work in a different model and use OKR to leverage that different model.

So, to be successful with OKR, we've learnt that you need three things:

1. The first one, you need senior leaders to show commitment and consistency because you need to be committed to changing your organization. They need to show consistency over time because he has to be consistent with all the other practices in your organization.

2. Second, you need to learn how to use OKR in practice. Many people don't have a clue on how to write a good OKR.

3. And finally the third thing, which is probably the hardest one is to unlearn old models. So there's a lot of unlearning required when you adopt OKR. You need to unlearn how to use goals, how to set them. You need to unlearn, goals connected to compensation, you need to unlearn cascading. You need to unlearn many, many things from the traditional model.

Henrik-Jan: That's also related then to what you said at the start with how you approach OKR or how you approach consulting OKR with your clients. Because you mentioned that you help organizations switch from outputs to outcomes is that then reflecting the old and the new model? The old model being focused on outputs, being focused on the things that you're doing, and then changing that to first deciding or focusing on the outcomes that you're after and then start deciding what you need to do in order to achieve those outcomes.

Felipe: Yeah. The way we usually teach people is that OKR doesn't matter, what matters is really learning to focus on the outcomes you want to achieve. Right. That's the real problem. If you simply use OKR to track a bunch of activities, you've got nowhere. What we teach is OKR is a tool to help you focus on outcomes. So in fact, is that to help you apply outcome planning, which is a business philosophy where you deliberately focus or not. So our brain is wired to think about activities. Every time you see a problem, you start thinking about all the things you could do.

So think about the many meetings you've been in your career? You see a problem the first thing people do is "What can we do?" And suddenly you think of ideas, and then it's , "Hey, who can do it?" And, "when is it due?" So you start thinking about projects and dates and owners. You don't think about, Hey, what's the problem statement here? What are we trying to achieve? How do we know if we actually achieved it. Right? So, this is all based on outcome planning from Stephen Covey. Begin with the end in mind. You begin by deciding what you want to achieve and why you want to do that. And only after you start thinking about how are we going to achieve it.

Henrik-Jan: That's from Stephen Covey from the book "The seven habits of highly effective people". You mentioned something interesting, which I quickly wrote down and that is that the human brain is wired to focus on activities. I've also tried to think where this is coming from. And I thought that people find it very comfortable to focus on activities because the only measurement of success there is completion of your tasks and that's fully within your control. Whereas , it might be a lot scarier, to focus on the outcomes that you're intended to achieve. Cause it might be that the things that you're completing are not achieving the desired results, which means you have to go back and figure out why that is the case. What else you should try to achieve these results.

So I think it's, it's a lot harder and therefore, a bit scarier to focus on the outcomes instead of focusing on the activities. Or, how do you see this? Where's that coming from that we're all so naturally focused on tasks, activities, everything that we need to do.

Felipe: Yeah. There are different reasons for it. One of them is, yes it's scarier. When you focus on a activities you can say, Hey, I did it with the project. It's not my fault, right? That's definitely one reason for many people. But even, people who are used to focusing on outcomes like salespeople when they think about the sales quota, yeah they think in outcomes, but, after that it's projects. So they also tend to think about projects, right? So what happens is, there's a lot of scientific studies that show that our brain, we tend to think about the information, which is readily available. So the first thing you think about, which is the fastest thing that you could think about, is usually an activity. Because defining a metric or something you've never imagined before takes a while. But thinking about a project takes a second.

Okay. So thinking about an activity, has the huge advantage of even the feeling of progress Yeah, we're moving forward! We have an action plan. We have the dates and that's it. But you don't know what you're trying to achieve.

Henrik-Jan: Yeah, you're right. It's a lot easier. I mean, everybody can sit down right now and decide and create a list of tasks that they need to complete today. Starting with the end in mind, you need to think a bit further ahead, which is probably also a bit more complicated. And one of the things you mentioned, so you mentioned three things that are really important to succeed with OKR. One, we just talked about that is unlearning the old models and a big part of that, or an important part of that is learning to switch from thinking in terms of outputs, towards learning, to think in terms of outcomes.

You said that you need to learn how to use OKR in practice. That's that's also complicated, of course, but the first thing that you mentioned was commitment and consistency from senior leaders. I mean, it's clear that you mentioned that that's important, but just how important is that? Have you seen OKR succeed coming bottom up within the organization?

So like a few people inside a team or one particular team starting with OKRs and then it's spreading throughout the organization. Or is it that senior leadership buy-in is just mandatory for every organization to succeed with OKR.

Felipe: The minimal thing that you need is a leader that's willing to shield the team from the old way. Right? So I've seen grassroots of OKR succeeding in the longer term, but there's always a leader that's shielding saying yeah, you can work in this new way. That's what never works is. Oh, the team is trying to do a grassroots adoption of OKR and they're trying to change the practice on outcomes. But the leaders are saying, no you need to ship that thing next week. So stop thinking about that. So, working with many organizations where the team is trying to use OKR, they're trying to focus on outcomes, but have so many deadlines, they have so many things to ship regardless if they work or not. So how does it make a difference or not when eventually the model of adoption dies out.

So at the very least you need a leader with the mandate to shield the teams. It doesn't have to be the CEO if it's an enterprise company, but at least a senior leader has the mandate to shield a little chunk of the work from the old ways. That's the minimum. That's it.

Henrik-Jan: Okay. One thing you write about in your blogs and that we also talked about prior to the call, is that mindset change, right? And then again, the thing that came up is for companies to derive value from OKR, they need to stop thinking in terms of activities and start thinking in terms of results and outcomes that they'd like to achieve. If organizations fail at doing that, because you just mentioned that you can adopt OKR in your organization and just use it to keep track of all the projects and tasks that you need to complete, but what will that lead to then, in your view?

So if organizations are taking the Tinkerbell approach that you just described, what's happening to them, what will happen further down the line?

Felipe: First of all, they keep using goals the way they always did and call it OKR. Right. And I read, that the default state of corporate goals is to suck. Okay. So the vast majority of corporate goals are terrible. And if you just, if you call it OKR, they will be just as bad. Right? A few years ago, I was at a conference in Amsterdam, the OKR forum and a group from a very large European bank reached out to me. "Oh, we're trying to adopt OKR. We are failing. It's hard. People can't write good OKRs". And I asked them, okay, how many people are involved? Oh, 8,000 people. Wow. That's a lot! And what type of training have you provided them?

We sent them a one pager document on how to write OKRs. Wow. One page. I wonder why they can't write OKRs.

Because they really believe, no, it's not about changing the names and the mindset, the problem with the mindset. Sometimes it feels like, oh, it's just a shift, it's a switch. I just press a button to change my mindset. But it's about unlearning, many of the things about the unlearning management practices, ways of working, reports, governance, there's a lot of things that need to change.

As for example, if you suddenly tell everyone at Perdoo, no, we need to focus on outcomes, et cetera. Let's do a report, we need to fill out every week saying I shipped that project that day, or how may projects did you have going on? And you can't change them. And so that's the lack of consistency I was talking about. So people don't realize how much they need to unlearn.

Henrik-Jan: Got it! I mean, speaking about the unlearning, you've once said that organizations need to respectfully unlearn output agile. Is that the same? Or is that something else that you meant by that?

Felipe: Yeah. So first of all, taking a step back. One of the things about outcome planning, it brings up precise, actionable language. So there's a very specific definition of outcome, which is an outcome or the manageable, beneficial effect on your customers organization or your employees. If you think about what's your target audience — it can be a customer, it can be the organization itself. Can be a fellow employee. When you think about what are the benefits we want to create for them and how will we measure it? Right. So an outcome is the measurable beneficial effect on the client, organization, or employee. But when you have that precise language, you stop talking about things like value.

Oh, we want to deliver business value. What is value? Value is fuzzy, ambiguous, and nobody has a clear understanding what it is. People often confuse with revenue. So when you change and start using that outcome language, that precise language from outcome planning. You've changed the conversation. So you start talking about, okay, what's the benefit we want to bring here, how will we measure it.

So all about making a difference. It's not about shipping more stuff. It's about making a difference. That's the first concept, the first item is the language, right? The second one is activities, activities are what you do — projects, programs, initiatives, tasks, epics, user story, everything you do. That's the big umbrella of the team.

And, most people get it after five sessions and you've explained it to them. Okay, that's easy. And then we usually tell people, okay the Key Result always has to be measurable and often referred to the famous quote from, Marisa Meyer, former VP of product at Google. "If it doesn't have a number, it's not a Key Result", right? That's a very easy, fast distinguishing factor between an activity and a Key Results. That's the bare minimum, but the problem is we tend to measure what's easy to measure. And not what we should matter. And the easier thing to measure is counting how many activities you did, right? And that's the definition of output.

And the dictionary definition of output is the amount of something produced. So we'd be three podcasts. Yay. This is a measure of output. It's measurable has a number in it. So it gives people that false impression. Yay. We're measuring things, we're doing it right. No, you're not because we're not here to do more podcasts. Right? We do it to make a difference by the podcast that have to have a much harder and deeper conversation around what did you want to achieve with the Goal Diggers podcast? We have to get people to listen to it, just to get people to comment on it, to share it with their friends. We have actually generated leads. What are we trying to achieve?

So shifting from outputs, measuring how many things are shipped to outcomes, the measurable of benefits, the difference you're trying to make that's a big leap for people, right? Because most organizations, you check their strategic goals. It's usually projects, lots of output metrics and very, very few things that are not revenue surveys or things like that.

So these are very easy to measure, right? I'm pretty sure that if you go to Perdoo and take a list of the most of the clients that use your software, you'll see mostly financials and surveys, right? Things like customer satisfaction, employee satisfaction. That's the extent of we see everywhere, but they need to learn how to go beyond that.

Look quickly, look at the data that they have available, right? And then instead of the data that they need to have available. There's a few interesting things that you mentioned, but also related to measuring outcomes. So relating that to the podcast, for example, if you do have it clear what you're expecting from the podcast — from such a podcast that we recently started, of course. Then when you start working on it, I think the learning component is so much more powerful because you're trying different things. And all of a sudden, you see if the things that you're working on are having the desired effect or not.

Henrik-Jan: And I think that that learning component can be so powerful. It can be so valuable, not only for an organization, but I also think for you as an individual employee within such a big organization, because I mean the knowledge that you gain, which definitely would increase your market value is knowledge that you could bring to another organization, should you join them? I think that's, that's extremely powerful. And once you're into it, I think it's very, it can be very addictive. It can be very exciting, right. To see that the things that you're working on, the things that you're doing are actually having a measurable impact on the organization.

However you call that. I liked what you said about value. It being still a very vague term, even though I've been using the term a lot myself.

So you mentioned the second thing, which is probably the most important, which is giving people purpose, right? And you're saying, why are we doing this? And how would we measure it?

Felipe: Given that feedback loop is crucial. But one of the things we need to learn is that measurement is not bad. Measurement is not about punishing people if they don't achieve it. Measurement can be about it, hey, that is our vision, and this is our purpose. This is how we can feel progress. Right? This is how people get feedback.

Say, yeah, what we're doing is working. It's giving me a really powerful thing when you use measurement for the right things in a positive way. Perhaps that's the difference between management and leadership? That what you're describing, that's probably true leadership, but true leadership is about, whereas the other side of that is more people what people would call management, perhaps.

Yeah. It's one of the things we need to unlearn is the idea of the sticks and carrots approach. So all about punishing or rewards where people don't have any treats for motivation. Right. It does a lot of client that shows up where people have increasing motivation when they have a clear purpose, they understand the why. Right? So giving people purpose is a core component of OKR and outcome planning and people love knowing, Hey what I'm doing is making a difference, right? You're more creative, more engaged, satisfied, increase employee retention is that several benefits of giving people purpose, right? And actually people are demanding that.

So if you want to attract and retain talent, giving people purpose is crucial. So we need to unlearn some of the old things. And one of the challenges with when you say, you need to measure things is that most of us, we have a very bad history with measurement. You think about the first way that you, the first time you see measurement is a teacher grading your test, right?

And you see, oh, you did that wrong, Henrik, and you did that wrong. And then you'll get a grade. So basically, the school teaches us that measurement is about showing us where we you're wrong. So it's a bad thing. It's (however) an opportunity. Hey, measurement can be: this is what you learn, this is is how you evolve. Right. So it can be a very good thing.

So you can compare, say bad measurement or bad measurement of performance with how most people react positively with a score board, right? As a score in a game is a measurement, but everybody is motivated by it, right? Yeah, we're winning . We can do that. That's the way you should use measurement. It's not about, Hey Henrik, if you missed three points here in your test and now you have to... Right? So it's a huge leap for an organization, right. And leaders that are successful in adopting OKR, they create that safe environment, right. Where people understand: Yeah, those are just our ambitions. You're not expected to achieve every single one of them. We're dealing with uncertainty here.

So building that safe environment where people will know they can try different things and try and be more aspirational is crucial. So that's part of the role that leaders play in this environment. So, and if you track people, oh, you have to ship the thing — there's a deadline. Think about that term.

Deadline. The origin of that term is the US civil war. It was a prisoner camp.

Henrik-Jan: I never thought about it this way, but now that you say it like this.

Well, that's a true story. The origin of that term is during the US civil war and they had a prisoner camp and they drew a line in the sand and they said, this is the dead line. If you crossed it, you're dead. That's where the term deadline comes from.

If you want to motivate people by saying "Oh, that's the deadline." Maybe not the best way to get people to be ambitious, aspirational, innovative. So, changing the language is important. So I've seen many organizations calling their OKRs their ambitions, but they're not necessarily goals, but we are really committed to those ambitions and we want to move forward. We take it seriously. But it's not a goal in the traditional sense, even though of course, OKR is a goal framework, right? They fall under the general umbrella of goals.

But in many organizations, goals have such a bad reputation. If you say "goals", people freak out. They've been punished so many times, they've been burned by using corporate goals. So again, there's a lot of unlearning around being successful with OKR.

Henrik-Jan:  Yeah. Related to that unlearning. Is there a piece of advice that you have for our listeners? Is there anything that they can do themselves or that they should be doing in order to help them with that unlearning?

Felipe: Yeah, I think we skipped the part on output Agile, right? We should go back to that. So the idea is that Agile, as a movement, is an extremely powerful thing. They changed the world. But the problem that we're trying to solve is: how do we ship better software? So it's about shipping things. And if you're thinking about the cost of output, right? The amount of things that you ship, how many things you did.

And if you think about most of the metrics used in the Agile world is about number of points that you ship, about velocity, how many things you ship and the condition of done.

Henrik-Jan: Is that what Agile is about? Is that more focused on how you're delivering outputs or how would you define Agile?

Felipe: Yeah. So the idea is, first of all, delivering activities is very important, right? So the way we explain to people is that since our brain tends to think about activities, we need to learn how to manage separate buckets. But then keep your activities in one bucket. You keep your Objectives and Key Results in separate buckets. Right? So you ship things, you measure OKR, right? OKR gives you the feedback if your activities are making a difference or not. Right? So you do one thing, you measure it. Oh, if it's working, you do more of it. Right. If it's not working, you do something else. That's the idea. So Agile helps you ship things, keep your activities. It's extremely important thing. But most of the language that people use in Agile is around outputs, right? So that's the bit you need to unlearn. So things like measuring the number of points that you share, measuring velocity, measuring the definition of done. Do we need a definition of done or definition of success?

Because if I ship half the things I expected, but I moved the metric, maybe it's fine. Right? So if you focus on what you want to achieve and not on just a task, we need to unlearn many of the concepts from Agile. And the way many people teach Agile is you have the stakeholders, they decide what to do, they hand it out to the teams, the teams put in the backlog and then they do it. So you can still use Agile. People use Scrum, Kanban and Agile frameworks, but the big change comes when people know: this is what we need to achieve, this is the why, this is important and now the team has the autonomy on the how. Well they can come up with ideas. They figure out what should be built.

Henrik-Jan: So this is then how Agile and OKR compliment each other?

Felipe: Yeah . Every single one of my clients, they use some form of Agile frameworks, of course, but we change the way they use it. So unlearning parts of the output focus of Agile. But one example of that output Agile approach, the title of the book by one of the co-creators of scrum is The art of doing twice the work in half the time.

So about shipping more things faster versus making a difference. So twice the work in half the time is an output measure, right? I'm shipping more things. It's not about are we doing the right things? Are we actually making a difference? What's the outcome we're trying to achieve? So if you ship say, well as a software and half the time, but nobody uses it. For what?

Henrik-Jan: So that's the difference between efficiency and effectivity, right?

Felipe: Yeah. And since you brought it up. I love that quote from Peter Drucker that says "There's nothing so useless as doing efficiently that which should not be done at all."

Being very efficient in shipping a project that doesn't make a difference. So what? We shouldn't have been a project to begin with. So unlearning that mindset of looking at outputs, how many things would ship or shipping more is part of the challenge of OKR. So we all need to unlearn some bits of that output Agile approach. It's not about unlearning Agile, it's not about stopping to use Scrum or Kanban, but tweaking and changing the way you teach it, teaching the way you use it. Right. And that's a big to unlearn as well.

Yeah. So, yeah, basically what you're saying is that that Agile and OKR go perfectly hand in hand and that OKR can add a lot of value to Agile by making sure that the things that you are producing in an Agile way are actually adding value. I fall in the trap of using it now again, I think value to the organization.

Yeah. But it's a good thing that you pointed this out because value is such a fuzzy word. That for many people they believe value is, oh, so Henrik is my boss. He told me to ship this thing. I showed it to him. He approved it. That's value! No.

Henrik-Jan: And I agree to that. So I'm trying to unlearn that, using that one.

Felipe: Yeah, of course. But, that's the part of Agile that we need to unlearn. So OKR and Agile go hand-in-hand as long as you're willing to unlearn some of the bits that are 20 years old, right. So they can go hand-in-hand as long as we're willing to unlearn some of the bits from output Agile.

Henrik-Jan: Yeah, this has been a really interesting conversation Felipe. So thanks so much for joining us, but before we let you go, is there one other piece of advice that you'd like to share with our listeners today?

Felipe: I think that the main piece of advice is that they need to unlearn many things to achieve OKR. My big reference for that is the book Unlearn by Barry O'Reilly. It has the, the definition of unlearning, which is to move away from mindset and behavior that were effective in the past, but now limit our success.

So there are many techniques and concepts like business value, like measuring story points. If we're using the past, like 10 years ago, 20 years ago when they were created, but now they limit our success. So we need to unlearn many of those things. Right. And that's a big big part of doing OKR. So, and of course leaders need to do most of the unlearning, to show that commitment and create that safe environment with teams: we're not going back to the old model, we're trying OKR and integrate it in a consistent way.

Henrik-Jan: I think that's a great piece of advice to end today's episode with. For our listeners, we'll add a link to that book in the podcast description. And Felipe I enjoyed having the conversation with you today, and it was great to reconnect again. I hope you enjoyed it as well because we'd love to welcome you on our podcast again.

But for now, thanks a lot and have a great rest of the day!

Felipe: Thanks Henrik! Thanks for having me.

Henrik-Jan: Thank you. Bye-bye.

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