Welcome to part 2 of how to reach your goals (check out part 1 here).
As entrepreneurs we face the challenge of managing our time and deciding what to work on. “Objectives and Key Results” (OKRs) are a way of setting our goals and focusing on tasks that deliver the best results.
Anatomy of an OKR:
- Objective: What’s the goal and what’s the timeline?
- Key Results: How will we measure completion of our goal?
- Key Actions: What steps will we take towards our goal every day / week / month?
Objective: Launch minimum viable product (MVP) in 3 months
Key Result 1: Spec out MVP — Month 1
- Key Action 1: Hold 25 problem interviews with potential customers — Week 1 & 2
- Key Action 2: Design a mock-up and hold 25 solution interviews and validate pricing with potential customers — Week 3 & 4
Key Result 2: Develop and deploy 5 key features — Month 2
- Key Action 1: Run two-week sprints — Month 2
Key Result 3: Test and fix bugs — Month 3
- Key Action 1: Run 5 in-person testing sessions — 2 weeks
- Key Action 2: Run one-week sprints starting — Month 3
How do we set our objectives? Aiming low delivers poor results. Failing at a 10% goal may mean only 5% growth.
So aim high! One strategy is to set your goals so that you have to stretch to reach 70%. This forces you to go beyond your comfort zone. If you hit 100% then you’ve set your goals too low. And if you only hit 40% then you’ve set your goals too high.
But this leads to the uncomfortable situation where people regularly miss their goals. You may want to include a few that you can crush—because no one wants to be a “C” student all the time.
Nick Ushkoff recommends:
“Stretch for some goals, but keep some within reach. No employee would be satisfied with getting a 70% all the time; that’s why you need to balance your ambitious OKRs with [achievable] ones.”
Also consider using “the 10x Rule:” what if you have to do ten times your current revenue in the next three months? You’d be forced to re-evaluate all of your assumptions. Aiming this high can have a dramatic effect on growth.
Failing at 10x might mean a 2x or 3x improvement, while failing at a 10% goal might mean only improving 5%.
Be careful of the “Wells Fargo effect,” where people are incentivized to break the law in order to hit objectives. And some metrics don’t work well for stretch goals. Setting an aggressive cost cutting goal, for example, may force you to reduce product quality below what your customers will tolerate.
OKRs can cascade throughout an organization. Google has overarching objectives, supported by each division’s objectives, which are in turn supported by each employee’s objectives. Google, each division, and each employee all have key results that support these metrics. Everything is transparent so colleagues can look up each others’ OKRs. They quickly see how they can help, reducing wasted effort. And teammates have the perfect excuse to refuse to take on side projects—because they would be a distraction.
Suggestions for teams are to set the proper expectations, and to not use a 70% outcome against someone in a performance review.
Another OKR Example:
Objective: Sign first B2B customer in 3 months
Key Result 1: Prep sales materials — Weeks 1 & 2
- Key Action 1: Draft phone and email scripts — Weeks 1 & 2
- Key Action 2: Draft website — Weeks 1 & 2
- Key Action 3: Set up CRM — Weeks 1 & 2
Key Result 2: Give 2 product demos per week to potential customers — Months 1–3
- Key Action 1: Reach out to 25 prospects per week via email/phone — Weeks 3–10
- Key Action 2: Speak at 1 industry event per month
Want a crash course on how to scale your business, along with one-on-one mentoring every week? Join our next Accelerator program. Learn more at miami.venturehive.com.