Systematize company objectives(OKRs, EOS, et al)

Systematize company objectives (OKRs, EOS, et al)

If you want individuals and teams to row with strength and coordination, ensure they know their boat’s next destination. This next destination is not the fuzzy promised land over the horizon, it’s the port directly within sight. The point of company-wide objectives is to provide context for how everyone fits and contributes, and to drive greater cross-functional communication and support.

There are several effective methods for setting and driving accountability around company objectives. We are fans of both the Entrepreneurial Operating System (EOS) and the Objectives and Key Results (OKR) methodology. In each case you can start with your senior team, but eventually the process should cascade down the organization at all levels (company, departments, teams and individuals).

The OKR Methodology

Best practices for setting objectives:

  • Make it measurable (you either hit key results or you don’t)
  • Make it time bound (typically by quarter or year)
  • Limit the number (3 to 5 is a good rule of thumb, otherwise you risk dilution)
  • Address the most important things, not everything
  • Define upfront, update and reinforce throughout
  • For company-wide objectives, solicit input and complete buy-in from leadership team

A couple good examples of company-wide OKRs:

  • Zume, an automated delivery food truck startup
  • Intel in the 80s during “Operation Crush”, designed to address rising competition

For more on OKRs, we suggest the original text: Measure What Matters.

The EOS Model

In a nutshell, EOS is a management system that helps align and synchronize all the pieces of your business to produce the concrete results you want. The system is designed around 6 key components (Vision, People, Data, Issues, Process and Traction) to unite leadership around where the company is going and specifically how it will get there, including who plays what role, repeatable processes and data backed accountability.

If implemented effectively, EOS will produce a healthier and more productive leadership team, surface and crush issues quicker and ultimately, accelerate results for the business.

EOS Implementers follow a Proven Process to guide a leadership team along the journey, strengthening the 6 Key Components. Along the journey, the leadership team learns to master simple tools designed to help build trust and clarify the issues blocking their Vision (including issues within the leadership team) and then knock those issues down one quarter at time.

For more resources on EOS, start by visiting eosworldwide.com and/or reading Traction.

DIY vs. using a coach:

The most reliable approach to implementing EOS or the OKR system is to hire an outside coach. But for those tight on cash (e.g. seed stage companies), there is the DIY alternative which is still worthwhile.

  • With a coach:
    • Pros: more likely to stay on track and succeed, benefit of impartial third party
    • Cons: more expensive
    • Tips: be rigorous in evaluating coaches, ask your investors and advisors for recs
  • DIY:
    • Pros: cheaper, can still get 60-80% of the value if disciplined
    • Cons: significantly more effort, requires CEO to spearhead, deteriorates without strong self-discipline
    • Tips: whether you can afford it or not, interview a couple coaches and be upfront about the cost barrier. You’ll learn more about the process and they might even get you started pro bono. Execute and iterate at the leadership level first. Ask individuals to connect their job responsibilities to their core rocks. Be self-aware and clear about your role as visionary or integrator. Never miss an L10 meeting.

Rockefeller Habits:

While not as well known as OKRs and EOS, especially among technology startups, Rockefeller Habits is another fairly established system. Kickstarted by Verne Harnish’s 1999 book, Mastering the Rockefeller Habits and since codified into a planning and implementation methodology called Scaling Up, Rockefeller Habits outlines three fundamental habits key to successful business management: priorities, data and rhythm. Since the publication of Harnish’s book, many leadership teams have adopted the One Page Strategic Plan (OPSP) and corresponding planning frameworks as their foundation for generating accretive growth.

A note on BHAGs:

Though terminology differs, most systems involve visualizing a future state and working backward from there. Instituting a “big hairy audacious goal” (BHAG) is maybe the simplest distillation of this concept. We at Vocap are fans of using BHAGs. When used effectively, a BHAG will cut through the clutter, rally the team and keep everyone’s eyes on the prize. A good BHAG should be simple and easy to understand, such as “the march toward X” with X being some ambitious, measurable achievement. YouTube’s “billion-hour mission” is a great example:

BHAG in Action: Shishir Mehrotra on YouTube’s Billion Hour Mission
Transcript from Masters of Scale
  • MEHROTRA: At the time we were doing a hundred millions hours a day or so in watch time, and I rattled off a few other properties, Google.com was about the same, but it made no sense for Google.com because the goal was get on and off the property. Facebook was roughly double that at the time. But the big stat was television was watched about five and a half billion hours a day. So that was kind of the percentage of the stomach. What is the bigger picture that we’re going after? And so we said, “Okay, that’s our goal. We’re going to get to a billion hours a day of watch time.”
  • HOFFMAN: Now the overall goal was set. But Shishir knew that wasn’t enough. He had to make sure the new ritual of checking success against this unfamiliar metric mattered to everyone across the YouTube team.
  • MEHROTRA: We had a bunch of other goals we could have set and so there’s a bunch of teams there whose first question would be, “Why does that matter to me? Billion hours a day of watch time. Does that mean just the search and discovery team is all that matters?” And I said, no, this goal actually reshapes how we think about the property more broadly.
  • HOFFMAN: But simply saying a goal is important isn’t enough. You need to paint a picture of why the goal is important. And how your new strange rituals will get you there. So Shishir tried to project what it would mean to get to that goal of a billion hours a day.
  • MEHROTRA: It would mean that when YouTube got to that point, we would have about double the traffic of the entire size of the internet at the time. So I looked at my networking team and said, “Hey, this goal is not just for those discovery guys. You got to go rethink everything and rethink how we stream video and so on.”

OKRs, EOS and Rockefeller Habits are just a few of the more proven methodologies. Regardless of the specific system you choose, you will do well to incorporate the basic principles outlined above.

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