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Frameworks for Success: OKRs and KPIs

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Where and When to Start
Trackable Metrics
The Good, The Bad and The Biased
Grading and Collaborating on Goals
Performance Review Vs. OKR Review
  • Sean Byrnes
    Outlier AI
  • Kris Duggan Photo
    Kris Duggan
  • Francisco Fisher Photo
    Francisco Fisher
10 min

Heavybit had the pleasure of hosting Sean Byrnes, founder of Flurry and Outlier.ai, as well as Betterworks’ Kris Duggan at our weekly Speaker Series. Their talks outline the value of business analytics with OKRs, KPIs and real-world examples of how setting the right goals can guide performance at any level.

Where and When to Start

When will your company be ready for analytics and measuring goals? According to Kris Duggan, the sooner the better.

I don’t think a company’s ever too young to explore a way of measuring success,” he says. “It might be as simple as validating your hypothesis. But I would do it in a data-driven way."

Objectives and Key Results, or OKRs, were implemented at Intel as early as the ‘70s, but that doesn’t mean they’ve lost their shine. These metrics have become increasingly popular throughout Silicon Valley for guiding growing companies to the next stage of their development.

Duggan offers a pair of books that are a great reference point for learning about OKRs, particularly how they helped shape Google to become the powerhouse it is today. “How Google Works” was written by the company’s executive chairman and former CEO Eric Schmidt and “Work Rules” by Laszlo Bock comes from the head of Google’s People Operations.

For more on Google’s use of OKRs, check out Rick Klau’s presentation for Google Ventures.

Duggan shows how OKRs matter whether you’re Google or a pre-revenue company looking to reach out. He even uses Betterworks and OKRs at home with his family to meet goals and literally hit home runs.

For OKRs to be most successful, Duggan says, they should have certain qualities that he calls “The Five Pillars of Social Science.” These goal-reaching processes have the most success when they are:

  1. Connected thinking strengthens the bond between small goals and the overarching mission and culture of your company. This approach to goal development can be done in an transparent, open way that gets everyone involved. See the tools high-growth companies like Stripe use to stay connected.
  2. Supported goal-setting means your team is encouraging and collaborating each other in making decisions and coming up with ideas for what to aim for. Read more about collaboration and grading goals below.
  3. Progress-based OKRs are a good way to allow your company to keep track whether goals are being met with well-defined milestones or progress. This is why having measurable goals is a good thing.
  4. Adaptable initiatives are key in keeping the company’s direction relevant and flexible over time. As values change for your company, so should your OKR strategy.
  5. Aspirational approaches to reaching goals are, as Duggan describes it, what gets you out of bed in the morning. These are efforts that are driven on both a personal and company-wide level beyond everyday business goals. How will your goals benefit your customers? Will your efforts have a positive impact for the future of your company?

Now that you have a direction to go in to successfully reach your company goals, let’s think about what those successes should be. This is where Sean Byrnes and KPIs come in.

Key Performance Indicators are the goals you set to mark success. Byrnes explains how OKRs and KPIs relate. He says while OKRs are the process of reaching goals or milestones, KPIs are the measurements themselves that you should aim for, from three to five markers of success.

Visit Stack Exchange for a look into how developers use KPIs to set goals and measure success.

I recommend your KPIs are informing your OKRs, meaning that you’ve picked milestones that are numeric, that are quantified,” Byrnes says.

Trackable Metrics

However, there are cases in different levels or departments of your company where KPIs can be qualitative, too.

Byrnes points to five categories to look for in choosing successful KPIs as he does in the early stages of his startup company Outlier.ai.

  • Acquisition: Are you gaining new customers? This could be the most basic metric to keep track of, and considering your goal is to grow as a company, it should be the first to track. Check out how Growth Pilots’ Soso Sazesh does conversion optimization.
  • Engagement: Byrnes feels this is the most important KPI and the measurement you should turn to first when delivering a product: “Do people use it? Do they use it a lot? Did they make it a part of how they operate? Because if that’s not true, everything else is academic.”
  • Retention: “Almost anybody will try a new product,” Byrnes says. “They may even try it and use it a lot, but do they continue to use it over time?” This is a continuing marker of success for the long term.
  • Revenue and Cost: These business metrics round out the list as valuable indicators of your company’s success. But beware, these results are less reliable than the others when it comes to reaching goals free from manipulation and bias.

Analytics Tools that Byrnes mentions include what he calls “descriptive analytics” from Google Analytics and Flurry, as well as “event-based analytics” from companies like Mixpanel and Keen IO. Hear from Ben Porterfield of Looker for more on business intelligence.

The Good, The Bad and The Biased

Data is what you make of it, and as Byrnes points out, “numbers lie.

Everything derives from this idea that, if a number is collected in a way that you didn’t expect, that assumption is false,” he says. “If the meaning you’re attaching to it is different than reality, that assumption is false.”

Keeping in mind that biases can affect the data your company collects, not all KPIs are created equal, according to Byrnes. You can set both “good” and “bad” KPIs.

A bad KPI is something that you can actually control, something you can affect yourself,” he says. “A good KPI is something that is what I call a second-order effect, something you cannot, in fact, change yourself.”

Good KPIs include things like conversion rates, profit and total purchases, numbers that are more concrete and cannot be influenced by collection and interpretation biases.

Bad KPIs include numbers that can be influenced such as unique visitors or total downloads, metrics that your company can boost through incentives or marketing. “You just spend money and people go to your website,” he says. “It doesn’t mean anything.”

Grading and Collaborating on Goals

Now that you’ve got some good goals in mind, it’s time to plan out how you can implement them. Kris Duggan explains how to optimize setting “stretch goals” without weighing your company down with trial and error.

Not every company that leverages OKRs is already getting sophisticated around scoring and grading them, but many end up actually taking on an approach to this self-reflection kind of concept,” he says.

Duggan shows how OKRs can be marked by color, smiley faces and/or rankings from one to ten, or zero to one. He points out that Google uses two decimal points for their scores for more precise goal-setting success rates.

60%-70% rates are optimal,” he says. “You took risks but didn’t sandbag other projects to meet unattainable goals.”

Another key element to leveraging OKRs at your company is with collaboration. Duggan points out that achievement rates are 78% higher when your goals are shared with peers. He references the exercise-app phenomenon, one example of how sharing your goals with others can be more motivating and better encourage success.

Goals can certainly be high-level and measured by the team each quarter, but they can also be small, incrementally measured milestones that add up to big success. “Small improvements, small adjustments every day, consistently over the long term, have massive implications on yield, results and productivity,” he says.

Performance Review Vs. OKR Review

While OKR review is an important part of the goal-setting process, it shouldn’t take the place of an overall performance review of your company according to Duggan. “Shift away from the thinking that we do goals for the purposes of performance management,” he says. “The reason we do goal setting is to focus on, ‘Do we all agree on the work that needs to get done? Does everybody have three-to-five things that they’re really on the hook for?’ That’s really it.”

BetterWorks has guides to help you build a deep understanding of OKRs. Check out this Ebook for a more in-depth examination of the framework and then take a look at the guides for goal ideas specific to your role.

Interested in implementing OKRs, KPIs or a new strategy within your company? Whether you’re starting out at an early stage of growth or looking to expand your existing game plan, Heavybit’s library has a range of talks from industry experts with the experience and guidance to help get you where you want to be.