Making OKRs Work with Jenny Herald

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Jenny Herald is Vice President of Product Evangelism at Quantive, where she champions their vision and helps customers achieve better business outcomes using their strategy execution platform based on the OKR methodology. She also hosts the Dreams with Deadlines podcast, interviewing business leaders on aligning teams and organizations around a common purpose.

The Operations Room podcast is hosted by Brandon Mensinga and Bethany Ayres, focusing on topics relevant to Chief Operating Officers and operations professionals.

The OKR Challenge

Brandon: We've got a very substantive topic for today, which is making OKRs work, and a very special guest in Jenny Herald, who will be joining us in a few minutes, and she's a phenomenal expert in OKRs.

Every time I talk to CEOs and other leadership folks, everyone seems to have this pervading sense of disappointment around OKRs that OKRs really aren't delivering what they need to deliver, and they're not really quite sure why, and they feel like they're running a process for the sake of running a process.

Bethany: Exactly the same. When we were first starting this podcast and Brandon had the list of all of the potential topics, one of them was making OKRs work. My immediate comment was, is this possible? Because in my experience over 20 years of OKRs and pre-OKRs and objectives and smart objectives... I have never seen one work, unite, and align a workforce and be properly carried through throughout the full 12 months.

And so I'm starting to think that OKRs are the new emperor's clothes. And so I ask everybody, do you have OKRs? They go, "Yep, have OKRs." And they're like, "All right." And are they working? "Yep, they're working." I'm like, "Ah." So if I ask somebody on your team what your OKRs were, they'd be able to tell you. "Yeah, maybe not."

The Why Behind OKRs: Beyond Process

Brandon: When I think back over the past decade of OKRs for myself, I've seen a lot of OKRs not go well for all sorts of different reasons. And I did have a couple thoughts here that I wanted to bounce off you, and one was OKRs are very good at the question of what, which is what is the objective, what are the results that we're gonna focus on. They're kind of OK at the how. What they're not good at and what they're not designed for is really this question of why.

And when you think about it, that why question is the single difference between a process and something that transcends the process and really becomes something that truly is imbued in people's feelings towards what's going on, whereby they actually care about the opportunity, they care about the challenge, they care about the team, and they care about the outcome.

When I say why, this is really getting back to basics, which is, does the company really understand the strategic context of the business? Does the business really understand the company strategy in a very clear, palpable way, and the operating model of the company by which we do things, is that really understood?

Bethany: It also leads to another question for me, which is, we've had a lot of debates over the years on should OKRs be for everyone? Should they just be for some teams that are actually driving that key metric?

And often it comes down to, well, if not everyone has an OKR, will they feel aligned to the business? And will they care? And I think your insight around understanding the why is critical to that. If you can really trust that you share and explain the why, which is also like the why of the strategy, then if the finance team or the people team doesn't have direct OKRs, they understand and know how to prioritize anything that comes across their desk.

Brandon: I think there's a very clear difference between performance and alignment, and they're very different things. Conflating the two, or confusing the two somehow is, I think a mistake in my view.

OKR Expert and Evangelist

Brandon: I'm pleased to welcome our guest Jenny Herald. Jenny is a guru when it comes to OKRs. Jenny Herald is vice president of product evangelism at Quantive, and in that role, she champions their vision and helps customers achieve better business outcomes, using the world's most powerful strategy execution platform based on the OKR methodology.

And then, as I'm sure many of you know, Jenny also hosts the Dreams with Deadlines podcast, where she interviews business leaders on aligning teams and organizations around a common purpose, the ups and downs of goal management and strategy execution.

OKRs as Strategic Thinking Framework

Jenny: I can tell a really quick story. I was in a room full of like C-level executives at a conference, and they were very interested to hear the same thing, like, what are we doing wrong or why should anyone do this? Actually, a CIO raised his hand and he said, "Jenny, cool, why should we do this?"

And I looked at them and I said, "How did you all get here? How did you get in this room? It's because that you had a goal that was meaningful for the business. You aligned and rallied people around that goal. You achieved it, and you gained outsized impact, most likely based on the resources, the people, the plan that you had in place, correct?" And all of them nodded head, yes.

And I said, "I imagine then that you give a framework on how to think more strategically to your whole organization and you give them the breathing room to do the very things that you know work and you teach them and you coach them to do that. What would happen?" And everyone kind of stunned, silent, stared at me and I said, "That's what you're doing."

I think the reason why people get OKRs wrong is because they think that it's a performance management tool. I would argue it's bigger than that. We are helping raise up levels of the organization to think strategically and not just operationally.

Common OKR Implementation Failures

Jenny: My Dreams and Deadlines podcast has evolved into a community. We are now the Dreams of deadlines community and several of our founding members contribute to what we call the failure prevention guide. Like what did we see wrong happen out there in the adoption of OKRs?

Failure #1: Poor Justification for Why

The first was jumping immediately into, "we're doing this." Inevitably, there's somebody who probably read the book. They come into the organization and they say, "I read this book, it's amazing. Everyone's doing it, let's do it." And then the team has to scramble to actually get it done, whatever that means, but there's no actual justification for why any of this matters to this organization.

Leadership needs to come in there and say, "We're being challenged in the market because of blah, we could die. And unless we focus on this and figure out a way, and we think OKRs are the best tool to get us to focus on this so that we can survive," good reason. People can stand behind that.

Failure #2: Missing or Unclear Strategy

Number 2, this is on leadership. You don't have a strategy, or at least people don't understand it. They don't have access to it, hasn't been communicated effectively. Those are the foundations of the business, the mechanics of the business, they need to be understood by everyone so that everyone can understand their role and how they're going to contribute to that idea.

Several of our founding members talk about "zero strategy" - it's like, do OKRs, and it's like, great, we have goals, but for what purpose and to support what?

Failure #3: Big Bang Rollouts

Pitfall 3, this big bang approach to OKR rollouts. Everyone gets an OKR like Oprah, and I'm like, no, don't do that. I actually interviewed the VP of product at Netflix, Gibson Biddle, and I was surprised. He was like "90% of my time is spent with 10% of that work." I was like, "What?" He's like, "Yeah, I work with the highest performing team."

When someone asked me, where do we start, I'm like, you can start with your leadership team aligned around OKRs L1, L1 and 2, if you want, or you find the most highly performing part of your organization, and you have them do it.

They're going to get attention, they're going to get recognition, they're going to get funding for the things that they think are awesome. And the other departments, the other teams are gonna look at that and be like, "Why are we not doing that?" And then there's like this organic thing that happens with OKRs, rather than a mandate.

OKRs vs KPIs: Running vs Changing the Business

Bethany: If you have a good strategy, and everybody understands the why, what is the incremental gain for the OKRs? Like I have definitely seen really clear strategy. Everybody understands what's most important and why. And then a lot of the normal business KPIs are enough.

Jenny: That's a good question. I harken back to the reason why we do this - we're trying to change the business. Here's the truth, and this is what I've talked to a lot of C-levels about. At any given point, you have to both run the business and change the business. That is a foundational truth. And so OKRs are a means to change the business, whereas the KPIs are meant to run it to make sure we're OK.

OKRs are complement to KPIs. People need to understand the difference. I think when people conflate them is when people get into trouble, they belong together, but they're not meant to replace one another because we know that we must run and grow the business at the same time.

Practical OKR Implementation

Jenny: So, one of our earliest customers at Quantive was Eric. He's the CTO of TomTom, and I was like, "Why are you doing this, Eric?" And he said "Because I'm effectively wanting everyone in this organization to be like an economist. Every team needs to understand what the function of success looks like for their team and have explanatory variables, or at least hypothesis of what the explanatory variables can be and are watching those numbers and making them move."

I talked to Lucas Gauzi, and he told me about using proxy metrics to drive behavior change. They had the sales organization and product organization, they wanted them to work together and what they wanted them to do was to figure out a way for there to be more installations from their customers for the product they were building.

One of the key results was about the number of installations that the sales team could drive. What the sales team found out is they couldn't drive them because the product wasn't all that great, at least at that time. So now the sales team is going back to the product team and saying, "The product experience is awful. I can't get people to install this to save my life. Here is the feedback we're getting. How are you going to respond to what they need?"

And now we have essentially like a tiger team working together to get the business where it needs to be.

Involving Support Functions in OKRs

Brandon: This core question of should you involve the entire organization as part of an OKR process, does that make sense? And in particular when I asked that question, I'm thinking about the back office, which is the people function, the finance function, the talent function as an example.

Jenny: What's fascinating now, I think is we went through this worldwide pandemic and we had to change how we ran our businesses. For many of the organizations that we get to work with at Quantive, that transformation is still ongoing. That transformation may include back office functions.

My father-in-law is so awesome. I remember talking to him once about something, and I was kind of at a loss at what to do, and he's like, "Jenny, you can always sweep the floor." This idea that you can clean up after mess. That is something back office can do. There's probably a lot of legacy things that are kind of weighing them down that needs to be cleaned up, you know, they can focus efforts aligned around, "You know what, we're going to Marie Kondo our processes."

Personal Example: Military Pay Processing

Jenny: When I was a long time ago deputy comptroller, I realized that because I was responsible for military pay and travel pay reimbursement, we were paying people a little later than they probably would have wanted to and sometimes incorrectly.

My objective was "we take care of our people, they are going to take care of the mission." I knew if we took care of our airmen's pay, it was more likely that they would be focused on the mission for the United States Air Force.

One of my key results is reducing the reimbursement window from 57 days down to like 2 to 3 days. And can we change it so that they don't have to go back and forth with us because people do not like it when you mess with their money. By the end of my tenure, we had indeed reduced that and improved our accuracy rating on reimbursements and timely pay. Everyone won. My organization got recognized for this.

Avoiding the Cascade Trap

Bethany: Are you looking at those loose couplings where the OKRs for the finance team are not directly tied, like literally tied to the overall one, but you know that if you're more efficient and therefore free up cash or have better operating cash, that in effect is always going to support the business?

Jenny: So you're talking about cascading. I hate cascading. What happens is the amount of obscurity that happens - if we were to look at an OKR tree, if you cascade, can you imagine what happens at level 6 or 7 and how obscure their key results will look compared to what happened at the root? It gets really weird.

One of the foundational things you need for goal setting to work is commitment. So if someone's committing to a cascade that they don't believe in or is highly obscure or unreasonable because the targets are unreachable as far as the team is concerned - it's not even about like, are we nervous about and do we have a fifty-fifty shot, like that's impossible, is how they feel. It's dumb. Don't do it.

The Simplicity Principle: One OKR Approach

Jenny: That's why if you're starting new, maybe you want to check out Christina Wodtke's approach, one OKR just one.

I did this exercise actually with a safety lead for construction business, and he was like, "Jenny, there's so many irons in the fire. I don't know what to do." And I was like, "I'm gonna talk to you. And it's gonna feel a little hard right now." And he's like, "OK, I'm ready, Jenny." I said, "If you got fired today, what would your replacement do? What is the first thing they do?" And he told me. I was like, "Well, that's your objective, that's your goal. How do you measure success against that thing that you're trying to achieve?"

The beauty of OKRs again, is it's in its simplicity, but it's amazing to me how many OKR rollouts stray away from the idea of its simplicity. The objective is what we're trying to achieve, and our key results are a definition that we agree to of what success looks like.

Cultural Prerequisites for OKR Success

Bethany: I think there ends up being this red herring around the OKRs rather, and it's like basically just a framework to help you do the right stuff, but it doesn't have to be that framework. I could have seen organizations that are functioning well that are not using OKRs, and I have seen organizations not functioning well that are using OKRs.

Jenny: I would suggest that it is the best evolution of the things that we have known for a long time to do. We have created a bunch of tiger teams effectively using an OKR frame where measures are a smart thing to do and creating a cadence of communication and a common language around success.

But to your point also, there is a cultural element that people aren't talking about, and the leadership element, like it's about good leadership. It's about having a culture that can support this kind of way of working because you're trying to change the business, and you're hypothesizing how it's gonna work, and it may not. Can you stomach that as a business?

Organizations that do this well will take that as learning and end up being true learning organizations and then feed that learning into future cycles, and continuously try to adapt, figure out new ways to approach the opportunity or the problem set. It's just good business.

Getting Started: Practical Implementation Steps

Bethany: We've all read Measure What Matters and Radical Focus. We're still doing it wrong. We're not rolling it out. Those are clearly not the books to go to to make it work. If you want to roll it out, if you want to learn how to be a better leader, if you want to be simple, where do you start?

Jenny: Start small. That's the first. Get in a room with a senior leadership team. You all need to get aligned. Go in a room with a senior leadership team and ask them what are the priorities for the business, and if all of them give you a different answer, that's where you start. Start from the top.

If you get that, we start small again with the highest performing team in the organization - they're killing it and everyone's like, but how can they do even better? How can we frame this in a way so that we can continue to scale success with the other parts of the business?

Highly recommend, I cannot explain enough. Get a coach, get somebody in that has seen countless implementations, have them work with you to figure out what are the parameters upon which you're going to run your program? Because every program will have its nuances. There is no one size fits all solution.

Resource Allocation is Critical

Here's the thing, people are like, oh, but we're going to do OKRs. I'm like, well, how much time does the team actually have to spend on this? They're like, oh, their time is already accounted for. And I'm like, oh, so you're asking them to work overtime, basically, to try to achieve something that you haven't properly supported.

The degree in which the team has ownership of their own time is highly correlated with their ability to actually deliver on their OKRs. Give them more time, they're going to be more likely.

Bethany: It's not 100% business as usual and then another 30% making change. It's making change should be what, 70, 80% maybe, and the rest is keeping the lights on. If that's where you want to make transformations in your business, you have to make the space for it.

Jenny: Exactly, and you have to fund it. If they need education and training, give them education and training. If they need additional funds, tools, give them additional funds and tools. Organizations that do this well, support with the operations portion of the business in funding and resources and time.

If I can recommend one book to read, read the OKR Field book by Ben Lamorte. It is for internal and external coaches to practically run an OKR program. He talks through how they should relate or potentially relate to performance management, cause that's a management practice that already exists. It talks about where do you start? How do you train? What are the 10 universal parameters for even running a program? It's all in there.

We talk about this monthly at Quantive. We have the OKR office hour with Ben Lamorte, where we talk about the subjects from his book. You have free access to him via this webinar series, hopefully you can join us every Thursday of the month.

Key Takeaway: Running and Changing the Business

If our listeners could only take one thing away, what would that one thing be?

Jenny: When you think about using OKRs, really be thinking about how you are running and changing the business at the same time. The application of OKRs are really about changing and transforming a business. You gotta get that straight.