OKR FAQ: What are some common OKR mistakes organizations make?
Hi all!
I love doing Live Q&As — after I get through the tech jitters, I get to help people by answering their real-world questions, and very few things in my work are more fun than that. In a recent multi-channel AMA-style live, I missed a great question:
"In your experience working with corporations, what are a few things organizations get wrong when setting goals, and how have OKRs helped?”
I recorded a follow-up answer, so you can watch the video above, and I’m including the transcript below if you’re a reader, not a video person!
Hello and welcome. I'm Sara Lobkovich, Strategy Coach and Objectives and Key Results Activist. Today, I'm answering a question from my recent livestream that I wasn't able to answer live:
"In your experience working with corporations, what are a few things organizations get wrong when setting goals, and how have OKRs helped?”
There are a couple of big things that came to mind right away, so I'll work through these in chunks. I hope to make it manageable.
Not distinguishing between stretch and mandatory goals
One is not recognizing the importance of distinguishing coherently between stretch and mandatory goals. The stretch goals are the ones where we're setting big, bold, aspirational goals in uncertain territory. They push us, they challenge us, they maximize the time we spend in flow state, and they extend the time that people spend in goal pursuit, according to motivation science research.
This is wonky, but it's one of the biggest contributors I see that holds organizations back from peak performance. It really hurts employee engagement. There are a few different angles to this as a challenge. For one, it's just a basic trust issue. I've seen people penalized for not achieving stretch goals by enough. When a minimum threshold wasn't communicated, so basically, you're telling someone they have a stretch goal and then treating it as a mandatory goal.
Personally, I reserve mandatory goals for the areas of financials, milestones for major delivery moments and big dependencies. But almost everywhere else, if you're in a growth-focused culture, you're likely to gain more from stretch goal-setting than from setting conservative mandatory goals. You're likely to gain more from stretch goal-setting when implemented well than by focusing only on mandatory goals or must-hit goals.
It’s high potential, high performers who often suffer
Another facet that's connected to that issue is when we don't distinguish between mandatory and stretch goals, or when we muddle the two. A lot of times, it's ambitious, engaged, high performers or high potentials who are wired for stretch goal-setting. And if you're not careful with your ops around stretch and mandatory goal-setting, you might find your high performers experiencing negative consequences of not fully achieving their ambitious stretch goals even if they overperformed what might have been a mandatory target, while mediocre performers who achieve 100% of their safely set goals might be maximizing their reward. It leaves performance on the table and incentivizes behavior that doesn't help high performance.
The relationship between goal setting and recognition and rewards merits more care
Goal setting and its relationship with recognition and rewards, both collectively and individually deserve more care and attention than it gets in most organizations. Implementing Objectives and Key Results, especially the model I work with, No-BS OKRs, solves for those gaps really elegantly.
Organizational goals tend to focus on financials and activities, not always important progress or outcome measures
Another pitfall I see often: organizations tend to focus their goal-setting in three categories.
The first is their major financial metrics.
The second is what needs to get done, their activities.
And then the third, sometimes on their most important remote major outcomes.
Very few organizations are skilled at identifying progress or process goals or leading indicator goals so that they know whether they're on or off track with data with certainty that's greater than just a subjective opinion-based estimate.
When the only numerical goals a business communicates are financial, which happens a remarkable amount of the time, that gives sales and the executive team and maybe marketing some clarity about what's expected, but few line staff can look at financial goals and glean any information about why and how their work matters or to inform their work or how their work connects to those financial goals.
Objectively quantifiable, metric-based goals should be created all over the organization-- its themes, its projects-- not only for financial measures.
Objectively measurable goals are important for high performance, even if they’re scary for some people to create
People can be really resistant to creating Objectively measurable goals for a long list of reasons, and too many organizations adopt a goal model—they sometimes even call it “OKR"s”—and then let folks just write goals that are all based on activity, because that's what people tend to be more comfortable setting goals around. We feel like we control our activity. We don't feel like we control our outcomes because we don't. We influence them.
We have to make that leap in order to shift to the outcome mindset — that it’s more important sometimes to sign up for goals we may influence (even if we don’t control them) because that’s how we really achieve change, and high-performance in uncertain territory.
It’s important to give specific meaning to the words “Objective” and “Key Result”
Not using and applying those words and meanings consistently — “Objective” and “Key Result” — and getting really disciplined about what an Objective and what a Key Result is, how they're created, how they're used, is another big pitfall.
Focusing goals only on Key Performance Indicators (KPIs), and not building new measurability where needed
The last one I'll talk about today: when organizations do reach beyond their financial metrics and set metric-based goals, they tend to over-focus on traditional business metrics and known Key Performance Indicators or KPIs. Think customer satisfaction, customer retention, margin, and all the other numbers that are in your existing dashboards-- or in the dashboard you wish you had.
Too many organizations look at those existing metrics, and start and finish their goal-setting there.
Doing that reflects creating goals about what already exists.
If you're in a high-change, high-innovation, transformational space, you've got to create goals about a world that doesn't yet exist.
That means getting creative about how to objectively quantify progress and impact without established business metrics.
I teach practices for this, including how to create index measures with available data, how to create Key Results based on desired or undesired observable behavior. And then there's always build and instrument a model to measure or baselining Key Results to help fill in your data gaps and allow you to set goals around what's most important, not just what you can measure.
Existing Key Performance Indicators and business metrics are important, but it's crucial to also consider what you're not yet measuring. Ask yourselves:
What data are we overlooking, and how can we improve our measurability for the future?
What metric, the absence of which, is hurting our ability to improve?
Those are the key questions. And then you can run some experiments around the answer.
Objectives and Key Results done well, especially the No-BS OKRs that I work with, provide a framework that addresses each of the pitfalls I mentioned above. When done well, OKRs are a series of quick, efficient, simple questions and answers that serve as a shared language to increase focus, clarity, and alignment, and ultimately your performance impact.
Hi, I’m Sara Lobkovich!
I help change makers and status quo challengers set clear goals, stay focused, and build cultures of growth and high performance.
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