Module Description:
Curated CEO Peter Ombres explains how OKRs accelerate alignment of goals from the overall company level down to each individual on the team. He then lays out how early-stage startups can get started.
Full Transcript:
- Welcome everyone to our Ubiquity University session on when should I start using OKRs? Ubiquity Ventures is a seed stage venture capital firm, investing in software beyond the screen. That means we back early stage entrepreneurs who are using software to solve real world, physical problems, often through smart hardware and machine learning. Today, we're lucky to have Peter Ombres, COO and co-founder of Curated, to talk with us about OKRs, what they are, how to implement them, where he's seen them be successful in his own company and in his past. So Peter, thank you for being here. Let's dive right in and just start with the obvious question in my mind, why is there so much hype about OKRs? Like, when did they get into the zeitgeist and is it actually as big of a deal as it seems to be on the social media?
Yeah, yeah, yeah. Happy to be here again and happy to help. Yeah, so OKRs are really just a tool. So think about it as a tool you're going to use to manage the company, to create alignments, to define goals, and to really agree and align on what success looks like. And so I think the origin of OKRs goes back to Intel. Andy Grove at Intel started using them years and years and years ago, and Google was, I think probably the most recent and most prominent company that's used them, all the way from the very top as company level objectives and key results, all the way down to individuals. And they have an internal system, where anyone can see anyone's OKRs, any functions, OKRs, et cetera. So there's a lot of transparency, but I think it has created a, there's a lot of hype around OKRs because it's a tool that allows you to take your mission and what it is that you wanna accomplish and actually distill it down into a set of key results, objectives and key results, that drives the business forward and allows you to actually clearly define what success looks like. And so think of it as really just a tool to do that, to accomplish the goals that you want to accomplish.
So you're running a later stage, helping to run a later stage company, Ubiquity, back pre-seed, one person, five person startups. Talk to us for a second about where this would be applicable. You mentioned Google, large public company, but is it applicable all the way down to the earliest stages of companies?
Yeah, so at Curity we didn't roll it out until about our series C. And so it took us a while. We tried a number of different systems, a number of different goal setting approaches, but you know, when you really dig in and you ask anyone that's used OKRs, I think there's this a-ha moment that they have. And typically it's, I wish I had started using this sooner. And so I would highly encourage your companies to use this at the very beginning. As I said, there's no, you know, it allows alignment, it forces alignment, and it clearly defines exactly what it is that you want to accomplish. To be totally honest, two people need to do that because there's differing opinions at that stage and 10,000 people need to do that because, you know, obviously there's even more ambiguity that can be created in those situations. So I would say the earlier the better and at the founding stage, when there's just a few of you, is a great place to start.
So let's dive in with an example. You and I talked about a few and maybe we could use that to illustrate, so take it away.
Yeah, so I think most of your audience are seed stage companies, so maybe the example we can use is what's the next creation point for the business? So the discussion that would happen amongst the founders is, you know, we've raised our seed, we need to get to a series A, what is the objective that we need to accomplish in order to get to the point where we can raise our series A? So in this, let's assume it's a software company. Our objective is to launch into market and prove product market fit. So that's our objective. It's big, it's bold, it's what we need to accomplish. So then what you do with that objective is you then have to figure out what are the milestones or key results that you need to accomplish in order to achieve that objective? So one of them is probably around finishing the product. So, you know, finish all product developments, QA it, and make sure it's it's live and ready to go. Another one is probably around sales and getting to a certain number of customers. So maybe it's 10 paying customers by a specific date. What that does is it clearly defines, you know, how many customers do we need? And the paying is important because you're getting someone to pay for it. Another one could be around marketing, you know, come up with the right marketing messaging and brand story. And so what's the key result around marketing that you want to accomplish in order to achieve that objective? And so there's typically, the approach is one objective and three key results, three to five key results. But what we don't wanna do here is create a laundry list of all the things that need to be accomplished at the company. A lot of times the first time you do this, it ends up being initiative. Initiatives are key results instead of, a milestone is the key result, under which there are a set of initiatives that you need to develop and work on in order to hit that key result.
Okay, so this company-wide annual goal, you're saying breaks out, it's almost like a hypothesis tree, but it breaks out into a few components. And earlier, we were talking about how those components very often align to the functional areas of a business. So the one about finish the product would go down to engineering, and then the one about 10 paying customers would go down to sales. So it helps to divvy up the work with really clear demarcation lines between who's responsible for what.
Yeah, and there there can be overlap. It doesn't have to be functionally aligned, but that is an easy way to think about it at the beginning, which is, you know, you're a small seed stage company. You probably don't have that many teams, but you do, the few teams that you do have, you wanna make sure that they're working on the specific key result that you need them to work on in order to hit that objective. And so what it really does is it creates a lot of transparency across the organization and you're telling that functional area, as a leadership team, this is what we need you to do. So to your point, yes, in the sales example, it would be, I need 10 paying customers by, you know, June of 2024. And so they then can take that as a key result that they, as an organization or they as a functional area, have to accomplish. And then they can take that away and say, all right, what is the plan? They can develop their own OKRs. What is the plan in order to hit that goal? How many prospects do we need to be reaching out to? How many sales, you know, how many meetings do we have to have? How many of those meetings have to convert into a contract negotiation? And then of those, how many do we have to close? And so what they would do is they would add up that math, the sausage making of that functional area doesn't need to be transparent to the whole organization, but that math has to add up to that 10 customer goal that we were just talking about.
Yeah, I like this. Can you say a little more about the transparency? We were talking earlier about how many companies publish these on an internal site?
Yeah, so at Google, anyone at Google can see obviously the company level objectives. They're talked about on a quarterly basis, but then down to each functional area or individual. And so this is a extremely large company that's been doing OKRs for a very long time. And so I would caution companies to go to too many levels too quickly 'cause it's a tool that you need to learn to use. But in all people, you know, in all instances of using OKRs, transparency is absolutely key. And that's important because anyone should know what it is that we are trying to accomplish as an organization, that a functional area is trying to accomplish as a function and that you, as an individual, are also trying to accomplish.
Yeah, I like that, the part that resonates with me, I'm thinking if I were meeting with somebody in my own company, before the meeting, I could go look up their LinkedIn, get to know what they're into, soccer, or where they worked at before, but it would be even more valuable before that meeting to go study their key result. Like, 'cause then in that meeting, I could literally speak in their language, you know, "Hey, I saw your key result for this quarter. Is this, these two things. I can help you with this and this, I need this." I wrote this blog post a few weeks ago about, you know, help me help you how to sort of get what you want by thinking about others. But I like this idea of, it's almost like a name badge you wear, you know, my goal in life this quarter is this, are these two or three things and everybody knows it.
Oh yeah, and that's one of the big, that's one of the very powerful things about OKR is, you're publishing to the company what we, as an organization, need to do. You're publishing as a functional area, what does the we as a function need to do? And to your point around the individual, what that allows those people to do that have that transparency and can see that is instead of you having to go to each individual and have a conversation about what it is that you expect of them and what you want them to do, they already know what the company needs to do and they can go away and do the thinking on their own to try to figure out, okay, within my functional area, within my job definition, whatever it is, how can I contribute to the success of those key results? And ultimately, that objective. And so really what it's doing is it's pushing a lot of the work down into the organization, cascading it down, and then allowing the organization more organically to come up with the set of initiatives that they wanna work on
Yeah.
In order to actually achieve those key results.
Hmm, I'm thinking about the brilliant movie, "Office Space," from many years ago. And Lumbergh has this poster, you know, what can I do for the company in the software development cubicles. I'm making fun of that because what you're talking about is very different. This is not what can I do for the company or do whatever's a vague statement. It's here are the three things we're trying to do. And then underneath that is the function, underneath that is you. And, and I think that clear mapping would make it a dramatically different exercise.
And cross-functionally as well. So in the example of I need to, I need 10 paying customers by June 24, the marketing team could look at the sales team's OKRs and try to figure out how could I, as a marketing team, help the sales team accomplish that goal? And so they could be more proactive. They don't have to go to the sales team and ask permission to do anything. They could say, "Hey, a better sales deck or a better marketing deck, or a better articulation of the value proposition that we're trying to sell into the market would help that sales team." So I'm gonna proactively, as a marketing team, go out and try to develop better messaging, better targeting, better whatever it is that'll help the sales team accomplish that ultimate goal. And if the sales team hits that goal, we as a company, achieve the objective.
Yeah, I have this tiny voice in the back of my mind, like, what you're saying is so obvious, shouldn't everybody already know without having to go through this process? Shouldn't everybody already know what we're trying to achieve? And I think the answer is no. Like, unless you do it, it never gets said out loud and repeated and published and it becomes a mantra.
You can always redo a lot of things, but I think rolling out OKRs earlier is one of the things I wish we had done, and it's, again, it's a tool, you know? Saying, defining your objectives and key results is 10%, the 90% is the work that goes in to actually coming up with the language for the objective itself and getting alignment across the leadership team. And then another alignment on what are the set of key results, articulated with something that is measurable that we need to achieve in order to hit that objective. And yes, it seems very straightforward, very easy. We should be able to sit in a room, get on a whiteboard and do this in a couple hours. You'd be surprised at the misalignment that comes up and is teased out through the process. And so this is where you need to create the space and the time. Typically this is done, not in a two hour session, but over weeks, large companies do it over months. And it's because you just need to create the space, first you brainstorm, then you argue, then you discuss, then you come back and brainstorm more. And finally, what you end up with is extreme alignment at the leadership team that you can then cascade down and then teams can just run.
I see.
Which is really the execution that we're all looking forward to accomplish whatever it is that we need to get done.
Yeah, it sounds therapeutic. Everyone has a different opinion and gets a chance to be heard and then democratic and then at some point, you know, solidifying and locking that in for the year feels like a nice heartbeat, you know, a cadence to the company that you sort of could then go heads down and you don't reevaluate that until the next quarter or whatever the right time is.
Yeah, and one thing that you might run into is, is this worth the investment? Is it worth the time upfront to spend doing this? And what we found is the distraction of misalignment throughout the quarter was way, way, way more costly to the organization than the upfront time and costs to actually clearly define what it is that we wanted to accomplish.
Mm hmm, yeah, that makes perfect sense. It's not obvious 'cause as an engineer I'd be like, let me, why am I in a meeting, right? That's a very common retrain. I don't wanna do any meeting, why am I in a meeting? Let just build. But my version of that is, you know, building the right thing is 10 times more important than just sort of getting to work, writing code. And this is sort of at the organizational level. Okay, this makes sense. I think it's something that we're gonna push all the Ubiquity portfolio companies to embody across all stages here. And I know there's a lot that's been written on the web about OKRs, but it sounds like, you know, we were talking earlier about if we should have a visual or a template, but it is a relatively simple output. It's more about the process and having the organization go through that on a regular cadence and the transparency, so.
The result of this should be, should be bullet points, which sounds crazy. But that's all you need is bullet points of objective and key results. But yes, the process and the work to get there is the value.
Perfect, to tie things off, what do you recommend as the best way to roll out OKRs?
Yeah, so first, you have to decide and commit. So I think the whole leadership team needs to make sure that they're committed. And I think again, in the spirit of transparency, make sure the whole organization knows that you're doing this. There's a great book called, "Measure What Matters," by John Doerr. And there's a website, I think the address is whatmatters.com. And both of those are extremely useful and powerful resources. So what I did is I asked the whole organization to buy the book, expense it, get the audio book, expense it, and spend the time actually digging into to the book and the materials, just to educate everyone at the organization as to what it is this tool is, how is it rolled out, how is it used at organizations? And the other thing is just examples. You know, practice, practice, practice, trying to go through the process. It's one of those things that you just have to do a few times. But the first step is commit to it. And then I would absolutely, 100%, push people to buy this book or listen to the audio book 'cause it's incredibly valuable.
Peter, thank you again for doing this. This has been our session. When should I start using OKRs on Ubiquity University. At Ubiquity, we'd love to hear from you, especially if you have an idea that sounds like software beyond the screen. You can set up a meeting at pitch.ubiquity.VC and I'd love to hear what you thought about this session or ideas for other sessions. I'm at Sunil at ubiquity.vc and we'll have Peter's info below to contact him if you have any follow up questions. So thanks again Peter, appreciate it.
Thanks Sunil.