How not to draft your first OKRs

city continent country destination

(Each week, I write a post about OKRs. You can see the series of posts here; if you have a question about OKRs you’d like to see me cover down the road, drop me a line.)

After my OKR video started to take off, founders at a number of GV portfolio companies reached out asking if I’d help them implement OKRs. In the years that followed, it was some of the work at GV I enjoyed most – it became a way of looking at the companies through their teams’ eyes, seeing how they thought about their challenges and opportunities, and trying to think intentionally about executing on their big idea(s). Except this one time, which turned out to be a textbook case of What Not To Do.

The company was roughly 150 employees when the CEO decided to implement OKRs; to kick things off, the CEO invited me to attend their weekly leadership team meeting. All of their direct reports were in the room, and they started the meeting off by explaining that at the conclusion of this discussion, they wanted to have a rough draft of the upcoming quarter’s OKRs. So far, so good.

I stood at the whiteboard, and asked the CEO’s reports what they thought the CEO’s top priorities were. Fifteen minutes later, we had a list of a dozen or more priorities. Not surprisingly, this was more a list of what each of the leaders in the room felt was important to them – not really a prioritized list of what was most important to the company. I handed everyone but the CEO three post-its, and asked them to walk up to the whiteboard and put a post-it next to whichever goal they felt was truly most important.

Looking at the whiteboard, it was immediately apparent that there were ~5 priorities that the group mostly coalesced around, another five that had a handful of votes each, and the remainder had just one vote a piece. (In the years since, I’ve seen this pattern repeated again and again. Instead of identifying the most important, they had a general sense of what’s more important. Then there’s the less important, followed by the unimportant. The goal is to get the team from more to most.)

Even before we narrowed the top five to just three, the team started to get a sense of the value in explicitly saying what was a priority, and accepting what clearly was not a priority. I asked the CFO: “I’m not asking you to like that noone else in the room cares about improving margins. But I’m guessing that single vote for ‘improve margin by x%’ was yours. Would you rather know at the beginning of the quarter that nothing is going to get better with margins? Or be surprised at the end of the quarter when nothing is better? What could you do with you and your team’s bandwidth if it was focused elsewhere – on one of the goals that is a top priority for the company?” Grudgingly, the CFO agreed: she’d rather focus her energy on something else, and set expectations with her CEO and Board accordingly. They were starting to come together.

We spent the next half hour discussing which of the five we’d de-prioritize, and eventually got the list narrowed down to three. I asked the VP/Engineering to take the marker. It was time to repeat the exercise, but this time looking at the eng team’s OKRs in light of what we now understood were the company’s priorities for the quarter. He listed out each of the priorities his team was focused – there were eight. I challenged him: now that you know what matters most to the company, which of those eight priorities were less important? What are your top three? After a vigorous discussion with his peers, he got down to three. The CEO actually said it was the most clarity they’d ever seen in a leadership team discussion. It felt great.

Remember how I said this was a textbook case of What Not to Do? This was when the wheels came off.

The VP/Engineering was wrapping up, clearly feeling pretty good about the progress made, when he paused. “Oh, I forgot one thing: Europe.” He wrote it down on the whiteboard. Heads nodded around the table, as all agreed that yes, Europe was indeed important.

I was confused. “Europe? What the hell does ‘Europe’ mean, exactly?” The CEO explained: “We’re launching in four countries in Europe next quarter; it’s critical the eng team finishes building out the country-specific support in the product before we launch.” More heads nodded.

We were two hours into a discussion about what was most important to the company for the next 90 days, and this was the first time anyone thought to mention launching in Europe? I asked the group: “Isn’t that, like, a company-level priority? And won’t other groups be involved? Sales? Ops? Finance? Marketing? The CEO?!” (Prior to those four countries, the company’s product was available in just the U.S.) They paused, then generally agreed: yes, it sure was!

We went back to the company’s top three: given their belated recollection of their goal of launching in Europe next quarter, did they still feel confident that those three were really their top three? (No, it turns out: launching in Europe really was one of their top objectives.) Back to the whiteboard they went, they demoted one of their original top three, and with the renewed focus, the VP/Engineering resumed his calibration of his team’s goals to ensure they were aligned with the company’s “direction”.

That meeting was nearly a decade ago, but I remember it like it was yesterday. The company did not do well – it turns out that forgetting Europe in a discussion about their top priorities was a sign of a fundamental lack of coordination across the leaders in the company. I had a debrief with the investor who was on the company’s board – they were sadly not surprised. That one attempt at drafting OKRs was followed by a series of quarters of “we just need to focus” – which included little actual focus, and lots of distraction. The company shut down less than two years later. (No, the launch in Europe did not go well.)

The approach to drafting your first OKRs can feel a bit chaotic at first. I’ve repeated the approach described in this post countless times, generally with good results. (The example above notwithstanding.) In many cases, it’s the first time that the leadership team is engaged in a conversation about the work they’re collectively doing, as opposed to a series of updates from each team. Decisions get made (what happens if we deprioritize this? could we help you accelerate that?); actual prioritization happens. Over time, teams start to align with each other.

Approaching it this way accomplishes a few important things:

  • leaders within the org feel engaged in the process, instead of having their priorities dictated to them by the CEO. They’re active participants in the goal setting process, and each leader sees how their peers are choosing what to focus on (and what not to focus on).
  • alignment across teams emerges organically, as they go through the process of not only declaring what each group’s priorities are, but if there are dependencies across groups, they get identified (and accepted, or declined – leading to better calibration in the process)
  • explicitly moving items below the ‘top three’ line helps impose focus. Teams start to see that good ideas don’t need to be acted on as soon as they occur to someone: good ideas become great products when they enjoy the benefit of everyone’s attention, not just a handful of people who are trying to juggle all the other balls in the air. Being diligent about only focusing on three goals gives the team permission to avoid distractions (anything that’s not in the top three), and gets the team conditioned to keeping a backlog of “not now” ideas that they can revisit in future quarters.

Would love to know if there are good facilitation guides to implementing OKRs for the first time – throw links in the comments if you have one you like.

2 responses to “How not to draft your first OKRs”

  1. I started to implement Okrs in my business, I’m still small 14 people.
    Would you help me?
    I was in doubt, if I move to the entire company or start to wander?
    Example: today only marketing is starting to use okrs.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.