One of the most crucial misconceptions of OKR is that the Key Results reflect the same old business KPIs. I stopped counting how many times I’ve seen revenues, profit, market share and similar KPIs in the OKR sets. On the other hand, I also see metrics that measure the productivity, as if the teams had the urge to show how busy they are. “Deliver XX story points”, “Provide 3 concepts”, “Interview 100 people” are only a few of these types of Key Results I’ve seen in the field.
But what is the difference between KPIs (Key Performance Indicators) and Key Results? Is a metric all what’s needed in a Key Result? In this article I’ll share some of my insights the bring light into different types of metrics and when and how to use them in OKR context.
Not long ago I decided to quit my job and go on an adventure as self-employed Business Coach. It was one of the scariest things I’ve ever done, and I say this as a person who had many new starts in life – I mean I moved 15 times, lived in 4 different countries and 8 cities. So, change is kind of part of my DNA.
But, because of some past experiences the thought of not being self-sufficient financially was just a no go for me.To get over this fear I started organising my work with OKR. I’m an OKR coach after all, so, eat your own dog food, right? Well, after 12 years of employment and steady income my biggest fear was that I won’t have enough income and even worse, it won’t be predictable. First, I calculated my expenses and what I would need per month & year accordingly. I noted it down as my financial metric. Of course in order to reach my financial goal I would need clients who buy my services. So another metric I need to work on is obviously the number of clients, which is my business metric. These two metrics would show me how successful (or not) I am. These metrics measure the business results, in other words the IMPACT of my business.
In their book 4 Disciplines of Execution the authors Chris McChesney, Sean Covey, Jim Huling explain the crucial difference between lag and lead measures. While lag measures show the success of a past performance, lead measures influence and increase the likelihood of reaching the wildly important goal.
Why is this information relevant for my my business? This piece of advise helps me to focus on leading measures on my day-to-day work. While the income or number of clients move slowly, I have the feeling of creating an impact already by focusing on outcomes to generate Business Impact.
What is an outcome? Joshua Seiden explains it very well in his book “Outcomes over Output”:
Outcome is a measurable change in human behaviour that drive business results.
In order to generate the business results I want, I asked myself, “What would make the people come to me and ask for my services?” “How would they find me?” “Why would they trust me?”
Considering that I had no money for marketing, and no pleasure in doing cold sales calls, I had to think of a STRATEGY that fits me and type of clients I want to reach. It became obvious to me that it would be smart to leverage my visibility in business networks, be part of communities, and to collaborate with fellow experts.
In mid-term, I would measure the success of my activities in becoming visible when I see more and more potential clients contacting me. So the number of leads is now my LAGGING OUTCOME (North Star). For now! I’m aware that this metric may not represent the value I deliver right away, however, at the current stage of my new business, it helps me to find the right market for me. The more visible and acknowledged I’m the more qualified leads I would have, which again means people find the insights I share in different channels valuable. So, it sort of measures the value I provide. In the future it might be a different one, but again, I focus on a mid-term future, that is more tangible for me.
If the number of leads is my lagging outcome, what can I do to influence it? Since I had no previous experience, I talk to people, I observe what others do, and do my research. After all, I bet on couple of tactical strategies. One of my bets is creating engagement in social business networks, by sharing interesting topics. Another bet is becoming a community leader for OKR practitioners. Last but not least, I want to be seen and heard as an expert in my field.
After all, my hypothesis is that increased engagement and visibility will lead me to increase the number of leads, my lagging outcome. Therefore I noted these down as my OKR for the first 3-4 months, in other words my LEADING OUTCOMES, .
After the OKRs are defined, the real work actually start. This the 3rd layer of OKR, that is not included in the abbreviation: Initiatives. The things we do and ideas and experiments we work on, because we believe these are needed or would help to achieve the OKRs. That what comes out of it is the OUTPUT.
To achieve my OKRs I have to learn and do a lot of things that are new to me. For example, publishing social media posts, or publishing blog posts, or organising community events. But I don’t do these things blindly. I experiment and try different things to find out what work better. I measure the outcome of every initiative and check if it helps me to make progress towards my OKRs. If not I try different approaches. So what counts is not how often I share in social media, but what kind of engagement I create. This way I learn to do the right things right.
While being all so busy with all the new topics I learn and experiment with, I also have to make sure that people contacting me are not waiting too long for an answer, right? Long waiting times could cause me to miss an opportunity and/or displeased clients. After all this kind of work is Business as Usual and I need to take care of it too, just like I have to do my accounting stuff. So, I have make sure the response time to leads and of course to clients is in an acceptable range. Therefore response time to leads and clients is part of my Health Metrics. If this number is too high I should be alarmed and do everything to bring it back to acceptable range again!
There are many different metrics, that are important when used in right context.