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Mind the Product

Product Management

Sunday Rewind: Whose job is it anyway? The rise of Product Ops and why it deserves to be an independent function

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Creating metrics that matter

B2B product management

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Minimum Viable Product

OKRs

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Eira is an editor for Mind the Product. She's been a business journalist, editor, and copywriter for longer than she cares to think about.

Eira Hayward

<p><em>We talk to <a href="https://www.linkedin.com/in/%F0%9F%91%A9%F0%9F%8F%BB%E2%80%8D%F0%9F%92%BB-jenny-herald-23b4656/?originalSubdomain=de" target="_blank" rel="noopener">Jenny Herald</a>, VP of Product Evangelism at <a href="https://quantive.com/" target="_blank" rel="noopener">Quantive</a>, about why OKRs are a powerful way to align on company goals, why they&#8217;re hard to implement and how to make their implementation easier.</em></p>
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<p>In 2002 Jenny Herald was a young lieutenant and finance officer in the US Air Force when she first became interested in OKRs (objectives and key results) as a way to set company goals and measure outcomes.</p>
<p>She was working on the way that expenses were reimbursed at the Edwards air force base. On her father’s advice, Jenny spoke to the most senior enlisted person she could find, Senior Master Sergeant Morris. He told her to “take care of the people, and they will take care of the mission”, a statement that is never more true than when you’re with dealing with people’s money. The reimbursement system was a mess, she says, people were sometimes reimbursed late and incorrectly. When she’d finished her work, expenses reimbursement had improved from seven to 10 days with 80% accuracy, to under three days with 99% accuracy.</p>
<p>A couple of decades later and Jenny is an OKR champion. As the VP of Product Evangelism at OKR software supplier Quantive, she hosts the <a href="https://community.quantive.com/podcasts" target="_blank" rel="noopener">Dreams with Deadlines </a>podcast where she interviews business leaders on aligning teams and organisations. She also writes and gives talks about the methodology, and more besides.</p>
<h3>Businesses using OKRs perform better</h3>
<p>She’s busy. Quantive is growing &#8211; the company had about 20 employees when she joined four years ago: now it has over 300. It’s testament to the uptake and impact that OKRs are having for businesses trying to track and align on company goals. This impact is confirmed in a soon-to-be published report from Quantive on the state of OKRs. It shows that businesses that engage with OKRs perform better than businesses that don’t. Says Jenny: “It’s really exciting to see. We all believed it, we just never had the empirical evidence to support it. Now we do.”</p>
<p>Despite their adoption and impact, people find OKRs hard &#8211; because they are hard to get right. Jenny has lots of insights and advice for anyone struggling with their implementation. She says: “People look at these frameworks online, and they think they can just copy them and bring them into their organisation. They don&#8217;t realise that it&#8217;s a way to think about something, not the prescription for how to do it.”</p>
<h3>Why do OKR programmes fail?</h3>
<p>There are many reasons why OKRs fail, Jenny says. It may be that not everyone has bought into the framework. Perhaps senior leadership has bought into the idea but the team itself might feel “it’s another mandate for additional reporting on top of an already-heavy workload”. Maybe mid-level managers are keen to implement OKRs, she says, but they&#8217;re not getting sponsorship from the top. Jenny has collaborated with her Dreams with Deadlines community to produce an <a href="https://community.quantive.com/blog/okr-program-failure-prevention-guide" target="_blank" rel="noopener">OKR Program Failure Prevention Guide. </a> It&#8217;s useful for any business looking to implement OKRs and save itself from making the mistakes that others have made.</p>
<p>How does a business also set itself up to successfully implement OKRs? Education, training and data literacy are prerequisites, Jenny says. And it can be helpful to enlist outside help. An experienced, unbiased and independent consultant can advise on ways to implement an OKR plan and resolve any issues you find difficult.</p>
<p>“With anything in Product you can buy or you can build,” says Jenny. “Your core competency is not to get good at OKR programmes, your core competency is to deliver value, to change and transform your business for future customers and to attract net new business opportunities. So why not find somebody who has seen umpteen OKR deployments, who&#8217;s seen what went sideways, what didn&#8217;t, and have them talk with you for a small period of time to get you going?” It was with this in mind that Quantive has recently bought UK consulting firm <a href="https://www.auxinokr.com/" target="_blank" rel="noopener">AuxinOKR</a> and launched a consulting services division.</p>
<h3>Data literacy is a prerequisite</h3>
<p>“Data literacy continues to be a challenge, especially among product and engineering,” Jenny says. There needs to be a baseline understanding of the data, she adds and “you need to be able to access it, interpret it and know that it’s clean”. And you must ensure that your key results indicate value delivery.</p>
<p>A shift in thinking from outputs to outcomes and business impact is also required. “We&#8217;re very accustomed to thinking about doing stuff, rather than what the benefit and value would be,” Jenny says. “People like to talk about shipping a product, the roadmap, what features they’re going to deliver.” Our thinking needs to shift, she says, so that we instead ask “if we did this stuff, what would happen? What is the value of building it?”.  She adds: “When you&#8217;re tactical it&#8217;s difficult to think up a level, and it’s  difficult for senior leadership to articulate the impact they need to see.” They feel like they can control impact through the roadmap, she adds, which leads to a focus on features and outputs.</p>
<h3>OKRs for navigating change</h3>
<p>Changing the business is uncharted territory for many teams. They have to embrace the change and understand what is meant by a meaningful set of OKRs, Jenny says. Then they must know how to craft them. “<a href="https://www.linkedin.com/in/johnpcutler/" target="_blank" rel="noopener">John Cutler</a> talks about the <a href="https://cutlefish.substack.com/p/tbm-2553-persistent-models-vs-point" target="_blank" rel="noopener">persistent business model</a>,” she explains. “People measure it with KPIs and then question why OKRs are needed. But you have to be able to run the business and change it at the same time.”</p>
<p>As Jenny says, “it’s stinking hard”. And it’s why people create OKRs that look like product roadmaps rather than using them to effect growth and change. She adds: “If you&#8217;re not growing or transforming the business, then you&#8217;re stagnating and on your way to dying.”</p>
<h3>A framework for learning</h3>
<p>The pace of business change is now so fast that organisations need frameworks that help them to increase their learning and agility, says Jenny. They also need a way to show the value of someone’s work quickly and consistently. OKRs, she believes, are the best framework for aligning an organisation around the work that enables it to thrive. She says: “The organisations that do this well are categorical leaders, because they&#8217;re learning and providing value.” She gives the example of SaaS billing and revenue management supplier <a href="https://www.auxinokr.com/overcoming-the-challenges-of-hypergrowth/" target="_blank" rel="noopener">ChargeBee</a>, which adopted OKRs a few years ago. It has grown rapidly and was last year<a href="https://www.reuters.com/markets/funds/software-startup-chargebee-valued-35-bln-latest-funding-round-2022-02-01/" target="_blank" rel="noopener"> valued at $3.5 billion</a>.</p>
<p>And if you think that OKRs only suit larger, structured businesses, then think again. Maybe the OKR framework feels quite “heavy” for your business? This is because, as Jenny says, “businesses create programmes that crumble under their own weight” with too much governance. But OKRs are fundamentally a unified definition of success.</p>
<p>“It&#8217;s not about the size of the organisation, but what’s happening that warrants this sort of framework,” she says. “At ChargeBee, for example, they found it was getting difficult to have teams work with each other, so OKRs gave them a framework for cross-functional work.”</p>
<p>Jenny says that large businesses have taken enthusiastically to OKRs because they’re looking for ways to stay agile. But they also have a role in scaling businesses: “You get to a point where you don&#8217;t know names and you what everyone does. But could it be that you could work with one of them to produce some better outcome for the business?”</p>
<p>Jenny has even used OKRs to work on some of her personal goals. She went on a fitness regime &#8211;  that she jokingly called Jenny Bring Sexy Back &#8211; to work on her mental, emotional and physical fitness. She says: “I had my own definition of success. I was able to focus on it and achieve great results. Now, was this magic? No, it was me thinking through what outcomes I wanted, leading indicators to help me achieve the outcome and the impact I wanted. And by the end of the period, I felt much fitter.”</p>

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