Paul R. Niven

Paul R. Niven is an author, management consultant, and noted speaker on the subjects of Strategy, OKRs, and the Balanced Scorecard. Clients include: Anheuser-Busch, T. Rowe Price, Humana, Meta, Adidas, Mercedes-Benz, Dun & Bradstreet, County of San Diego, eBay, Hulu, United States Navy, and more.

Articles From Paul R. Niven

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The Value of Setting Objectives & Key Results (OKRs)

Article / Updated 08-16-2023

Before I get into the value of setting objectives and key results (OKRs), I should probably answer a question many readers might be asking: What are OKRs? Basically, OKRs is a method of setting goals for an organization. Humans are avid goal setters, constantly striving to improve our performance, regardless of the field or endeavor we choose. Perhaps you have experience in setting goals in some of these domains: Family: Partner, children, extended relations Physical: Health, fitness, and wellbeing Work: Career, volunteering Spiritual: Religious or other spiritual affiliations Relationships: With friends or others Hobbies: Interests beyond work Some of my goal-setting memories bring me a few chuckles, such as my goal of winning a “Best Screenplay” Academy Award after taking one screenwriting class. I even pictured Steven Spielberg having the honor of bestowing the Oscar on me. Hey, the more specific a goal the better, right? Your company probably has goals related to sales, customer satisfaction, retaining the best people, and a host of other elements designed to propel you past your competition. Whether people have their companies or themselves in mind, there is little doubt that setting goals is a very healthy and positive activity, one that everyone should pursue with rigor. Goal-setting challenges Problems often occur in how people go about writing and constructing goals. That’s where many people, whether crafting goals for companies or themselves, get stopped in their tracks almost instantly. It’s common, for instance, to write goals that are vague and nebulous: “Get more fit.” “Be the best company in our industry.” They sound good — and few would argue with the merits of either of those examples — but the quality that specifically marks real success is missing from both. A number of other pitfalls loom out there in the goal world as well, such as: Setting unrealistic goals that you have no genuine chance to achieve Having too many goals at one time Failing to account for any assistance you’ll require from others in achieving your goals Despite the potential challenges, goal setting is one of the most powerful things you can do in your organization (and your life). You just need a better, more reliable system, and that’s where OKRs — objectives and key results— come in. Sounds good, huh? Maybe if I’d have known about OKRs back when I was practicing that Oscar speech, I’d actually be clutching a gold statue now. The good news for me and you is that it’s never too late to succeed. Setting goals really works Maybe you’re already convinced and are a believer in the power of setting ambitious goals, with a lifetime of experience to back up that claim. If so, great — we have that in common. On the other hand, perhaps you do need to be convinced of goal setting’s value. Maybe you came up in the school of hard knocks and don’t believe in the woo-woo world of setting goals. Well, I’ve got news for you: Goal setting, especially with the use of OKRs, really works, and I’m going to win you over to this idea, I promise. Back in 1968, when the Beatles song “Hey Jude” was dominating the airwaves, a little-known professor from the University of Maryland named Edwin Locke published a blockbuster article that would revolutionize the field of goal setting. “Toward a Theory of Task Motivation and Incentives,” based on Locke’s pioneering research, showed that setting goals led to higher performance in a wide range of domains. Whether it concerned office workers toiling in smoke-infested offices (it was the 1960s, remember), loggers felling timber in northern British Columbia, or truckers rolling along the blacktop, Locke demonstrated that setting goals improved performance in a statistically significant fashion. It wasn’t uncommon, for example, to see performance gains of more than 200 percent! Forget free love and flower children; the real revolution of the 1960s was goal setting. Locke went on to collaborate with a professor from the University of Toronto named Gary Latham. Together they conducted hundreds of studies on goal setting and reviewed hundreds more, all culminating in their 1990 magnum opus, A Theory of Goal Setting & Task Performance. Although it’s not a page turner a là Dan Brown or Agatha Christie, it’s a revelation. Locke and Latham demonstrated unequivocally that setting goals led to improved results, and as an added bonus, working toward a goal boosted motivation. Locke and Latham made clear that certain types of goals are better than others. Specific and challenging (but not too challenging) goals were critical to improved performance. Both of these characteristics (specificity and challenge) are vital to OKRs. The components of OKRs The heading of this section sounds cold and clinical, but the fact of the matter is that goal setting, especially using OKRs, can be … wait for it … fun. As Locke and Latham (see the previous section) made clear, goal setting improves motivation, and who doesn’t like the feeling of being motivated to pursue something you care about? More good news related to the question "what is an OKR?" is that the framework is light on terminology. It involves just three terms: objectives, key, and results. Actually, it’s three words and a conjunction. Yes, I looked it up; “and” is a conjunction. But really it’s just two terms: objectives and key results, more commonly referred to as OKRs. In the upcoming section, I define these terms and look at an example. Terminology matters in any kind of change initiative, including OKRs. You may find that some people will abbreviate the acronym to OKR, omitting the s. There is no agreed-upon acronym, but in this article, I use the plural OKRs and suggest that you do the same. However, what’s most important is that whatever acronym you choose, you use it consistently throughout your organization. At this point in the article, you might be thinking: OKR vs. KPI? (oh, the wonderful world of business acronyms). KPI stands for key performance indicator and it applies more to specific projects, programs, products, and other initiatives. OKRs are used more to outline organization and team goals. Defining an “objective” An objective is a statement of a broad, qualitative goal designed to propel the organization forward in a desired direction. There are a few things to unpack in that simple definition. The first is the word qualitative. This word points to the fact that objectives are aspirational statements and don’t include numbers. The second word to put under the microscope is organization. You can, and most likely will, create OKRs at multiple levels of your organization: the company-level; business unit; department team; and so on. Thus, the word organization in the definition is meant to be generic. Finally, the last part of the definition notes propelling the organization forward in a desired direction. This is the essence of an objective, which, to keep things nice and simple, asks, “What do we want to do?” Writing a basic objective Now comes one of the hardest tasks I faced in writing a book on OKRs: providing the very first example of an objective. Why was it so difficult? Because no matter what field or industry I draw on, there is a risk that some people will think, “Oh, so OKRs are for only those types of companies.” Or, “Well, that doesn’t apply to me.” Oy! Always remember that you can use OKRs anywhere and everywhere, from writing pop songs to ending malaria. So don’t read too much into the following example. Say that your company has a mobile app that has been crashing lately, much to users’ chagrin. That’s a strategic problem, and OKRs are very well-suited to help you overcome strategic challenges. So here’s a possible objective: Reduce mobile app crashes in order to increase user satisfaction. Ta-da! You’ve just had your first exposure to an actual OKR-style objective. Exciting, isn’t it? (Surely it’s one of those “remember where you were moments” as you soak this in.) This example objective is a relatively simple statement, but it is composed of three parts that all effective objectives have in common: It starts with a verb. By its very nature, an objective is action oriented, so you always want to begin one with a verb. Your verb choice will depend on the objective you’re striving toward, but every word matters in the objective, and the verb you choose sets the stage for the rest of the statement. The verb is followed by a description of what you want to do. In this case, you want to reduce mobile app crashes. Now, a lot of people would stop right there. “Reduce mobile app crashes” sounds like a worthy objective. But, there is a third component to a well-written objective, and that is … The “in order to” or “so that.” This final part captures the business impact of the first two components of the objective. Why is it important to reduce mobile app crashes? Because you believe that it will lead to increased user satisfaction. That final component is the most important, because it makes clear the strategic relevance of the objective: why it matters. I’ll bet you could stop reading right now and quickly brainstorm a dozen things you’d like to get done in the next few months. Doing that is relatively easy, but when you add that third component of why the objective is strategically important now, you quickly recognize what really matters, and which objectives are the critical ones to pursue. Share this formula for writing an objective with your team: Verb + what you want to do + in order to / so that (business impact) Some people bristle at formulas and a paint-by-number approach to objective creation, but goal setting is not a natural muscle for most people. They need all the help they can get in writing effective OKRs, especially in the beginning. Providing a formula or template simply gives people a leg up on the task without inhibiting their creativity in any way. After all, the formula doesn’t dictate what verb to use, or why their objective is important. It simply provides a path for creating objectives that will be technically sound and add value. For much more on setting OKRs and how to make them do wonders for your organization, check out my book OKRs For Dummies. Defining a key result Part of the OKR definition is "key result," and now you can turn your attention to that part. A key result is a quantitative statement that measures the achievement of a given objective. The key results answer the question “How will you know you’ve achieved the objective?” Of course, the most important word in the definition of “key result” is quantitative. A key result should consist of raw numbers, dollar amounts, percentages, or even dates, which you will use in the case of milestone key results. Writing key results In the earlier “Writing a basic objective” section, the example objective was “Reduce mobile app crashes in order to increase user satisfaction.” Now you have to decide what set of key results will demonstrate the achievement of that objective. You may want to try these: Study app crashes and determine the three most common causes by May 15. Develop fixes and update the app by June 1. Decrease the number of mobile app crashes from five to one. Increase app store rating from 4.2 to 4.8. A question I get frequently is, “How many key results should we have for each objective?” Although there is no absolute right or wrong answer to the question, a good rule of thumb (as rules of thumb go) is three to five. But beyond the number, you should think in terms of telling a story with your key results. By that I mean that the key results should work together in a coordinated way to demonstrate the success of the objective. Continuing with the example objective, if you’re going to reduce mobile app crashes, you first need to find out why the app is crashing by determining the common causes. That topic provides a good opening “chapter” in your story of success for this objective. This key result is a milestone, which is binary – either you achieve it or you don’t. Milestones are like hurdles that you need to get over in order to measure the ultimate business impact outlined in the objective. A milestone key result always includes a date — how quickly you believe you can achieve the milestone without sacrificing quality. After studying the reasons for the crashes, your next key result is devoted to developing fixes and updating the app. Think again of your story: First you study the causes, and then you develop fixes. This, too, is a milestone key result. Now things get interesting. Your third key result measures the reduction of mobile app crashes from five to one. This is a metric key result because it has numbers. This key result also slots nicely into your story. You’ve studied the crashes, applied a fix, and your hypothesis is that by doing so, you’ll see a reduction in app crashes. Hypothesis is a critical word in the context of OKRs, and in measurement in general. Whenever you measure anything, you’re making your best guess that it is related to your desired outcome. The final key result, “Increase app store rating from 4.2 to 4.8,” is also a metric, again because it has numbers. It also holds the distinction of being the most important of the example’s key results because it directly measures the business impact of increasing users’ satisfaction that was identified in the objective. Therefore, it’s a great and logical ending to a strategic story. When you're doing your OKR planning, I strongly encourage you to use the story concept as you're constructing your set of key results. Begin with the end in mind by identifying your business impact key result and then work backward, asking what drives, or leads to, that key result. Doing so will help you craft a comprehensive and cohesive set of key results.

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Objectives & Key Results for Different Company Levels

Article / Updated 08-10-2023

In this article, I share the most common choices for where to create objectives and key results (OKRs) within an organization, including at the company level only, or for the company and business unit, or for the entire organization. However, just because these are common choices doesn’t mean they’re right for you. When it comes to deciding where to begin OKRs for your organization, you should give careful consideration to the best group or groups to lead the way on your implementation. That decision will hinge on the following: The amount of sponsorship you have at the top The availability of strategic background materials Your desire to foster collaboration Your philosophy on individual involvement in OKR setting I cover your primary options, those used by most organizations, in the following sections. There are other areas where OKRs are useful, including pilot groups, projects, and support groups, and while this article doesn’t cover those, you can learn about them in my book OKRs For Dummies. Creating OKRs at the company level only First, let me define some terms. When I say “company-level,” I mean OKRs that would exist at the very highest level of the company. So whether you’re General Motors, Netflix, or Uncle Morty’s Wax Emporium, company-level OKRs are those created and used to gauge execution at the very top of the house. Whenever possible (and sometimes it isn’t, as I’ll explain), drafting OKRs at the company level is the preferred way to kick off your efforts. Some benefits to starting at the top level Starting at the top has several benefits. Foremost is the fact that OKRs you create at this level make it crystal clear for your entire employee population what you consider to be the most important items for the organization to focus on in the days ahead. Also, I can’t overstate the communication value provided by these OKRs. Keeping in mind how few people can name their company’s top goals, by creating a small number of OKRs at this level, you send a powerful signal of what employees should pay attention to. You also provide the context that all lower-level teams require to create their own, connected OKRs. I was going to continue on to drift into my next point but I’m not sure you’d be with me. Your eyes may be seeing the words but your brain may be stuck on something I slipped into the last paragraph: “small number of OKRs.” You’re wondering, “What does he mean by ‘small number.'" Allow me to turn the tables on you. What do you think is a small but appropriate number of OKRs at the company-level? If you’re like most of the CEOs I’ve worked with, your estimate of the appropriate number of OKRs at the company will be very low, maybe two or three. If so, it’s likely because you want to instill the discipline of focus in your organization, and you’d be correct in wanting this. However, when it comes to actually drafting the OKRs, if you attempt to tell your story of success with such a succinct number of them, the tendency is to lump concepts together or devise such generic OKRs that they could fit any company in the world, Uncle Morty’s Wax Emporium included. The number is also impacted by your current situation. If you’re in crisis mode and mere survival is your goal, perhaps one or two well-chosen OKRs is exactly what you need. If, however, you’re in steady-state, moderate-growth mode, you may be able to balance four to seven OKRs. The old adage “less is more” applies to company-level OKRs. An abundance of OKRs at this level results in a lack of focus and prioritization, causing confusion and skepticism in your employees as to what truly matters. More benefits of starting at the top Having settled the number of OKRs quandary, you can consider a couple of additional advantages of starting at the top level. An obvious benefit is the accountability that it yokes to your executives. It is their responsibility to see these OKRs through, demonstrating success that lifts the entire company. Also, wins at this level will go a long way in generating enthusiasm for OKRs throughout the company. After people see the impact of OKRs at the very top, they’ll be anxious to create their own OKRs, making it clear for all to see how their unique piece of the puzzle fits into place. Now for the disadvantages of top-level OKRs Although beginning at the top with your OKRs offers some clear benefits, you should also consider some potential disadvantages before automatically making it your default choice: The potential of creating generic OKRs that could apply to any organization: The lack of specificity will greatly reduce the power of those OKRs to inspire lower-level teams, and may in fact signal to everyone that the status quo is just fine and your company’s biggest aspiration is to be like everyone else. The possibility that your OKRs will be irrelevant: This possibility comes into play if yours is a very large organization with dozens (or more) of business units around the world, each the size of significant businesses on their own. Think conglomerates with assets spanning the globe. For these companies, job one of the corporate group is allocating resources effectively, and most if not all of the metrics are financial in nature, providing little in terms of guidance or inspiration for lower-level groups. Prerequisites for company-level OKRs If you determine that company-level OKRs are the way to go for you, be aware of a couple of “must haves” before convening your C-suite colleagues for a drafting session. The first requirement is access to, and the participation of, your CEO. If you can’t rouse the sincere support of your CEO, you should reconsider not only starting at the top, but starting OKRs at all. A second prerequisite for company-level OKRs is the existence of some form of strategic plan for the organization from which you can derive the OKRs. They shouldn’t be created in a vacuum. If you’re sitting around a boardroom table engaging in blue-sky brainstorming and pondering, “Hmmm, what should we do?” you have a problem. OKRs will help answer the question, “To successfully execute our strategy, what has to happen?” but only if you have a strategy in the first place. The word strategy can be tricky, though. You don’t require a 300-page leather bound, gilt-edged report from the head office of a global consulting firm. Some answers to basic questions like, “What do we sell?” will get you on track. OKRs are a strategy-execution system, not a strategy-formation system. If you’re relying on the process to help you create a strategy, you’re putting the cart before the horse. Creating OKRs at both the company and team levels A second option for where to create OKRs is at both the company and business unit or team level, which provides the obvious advantage of involving lower-level groups, thereby upping the odds of execution because more people within the organization are creating aligned OKRs. Although this section’s heading suggests that OKRs would be created simultaneously at both the company and team levels, there should be some lag time between those efforts. Company OKRs are written first, widely communicated to ensure understanding, and only then, after that context has been created, should team-level OKRs be considered. Most of my firm’s clients choose this option (company and team OKRs) when embarking on an OKRs process. Deciding which teams and units to include Should you decide to go the route of OKRs at both the company and team levels, your next order of business will be defining the word team. I’m using that word in a very generic sense because as far as I know, no universal terms exist for creating a company’s organizational chart. For example, engineering and IT may be business units at your company, or they may be called departments, squads, or teams. Rather than focus on the titles appearing on your org chart, a simpler approach is to determine how far down the chart you want to go with your initial foray into OKRs. Maybe it’s the first level, those reporting directly to the CEO; or perhaps you’ll go two levels down on the chart. The obvious caveat is that the deeper you go, the more complex your rollout becomes, and you need to carefully consider how much complexity you can take on as you’re getting your feet wet with OKRs. A phased approach, going one level at a time, is the most conservative and likely the safest route; my experience shows that most organizations are excited to expose as many people as possible to the power of OKRs. Thus, going deeper faster has major appeal. Deciding between following the org chart or linking dependent teams If I had been writing this book back in, say, 2016, this section probably would have ended right here. Pick your teams and swish-boom, move on to the next section. But having worked on hundreds of engagements with organizations all over the world, I know it’s not that easy. You have another fundamental question to answer after you’ve chosen who will create OKRs at the team level: Do you write OKRs based simply on titles in the org chart? For example, Sales would create Sales OKRs, Marketing would create Marketing OKRs, and so on. Given its simplicity, this approach was the default answer for many organizations as OKRs rose to prominence, but a downside quickly emerged: Creating OKRs in this way had a tendency to reinforce silos and discourage cross-functional collaboration, which is anathema to the spirit of OKRs. Simply following the org chart may not be your best alternative for drafting team-based OKRs. Another option is to find teams that are highly dependent on one another and create OKRs for the merged entities. For example, in most organizations, the Sales and Marketing teams must work closely together in order to drive demand and revenue. Marketing finds the leads and supplies media and collateral, which supports Sales’s efforts to convert interested onlookers into paying customers. In this case, it could make sense to create OKRs for Sales and Marketing as one cross-functional unit, which of course enhances collaboration and diminishes the silo mentality. A potential challenge with the dependent-teams approach is the fact that in modern organizations, the pairings aren’t likely to be so clean because of the vast web of interconnectedness among most teams operating today. When I ask teams who they depend on for success, they rarely isolate their response to one other team. There’s often a dominant partner, but other dependencies exist as well. In deciding whether to use the dependent-teams method, determine whether the core relationship or partnership among two teams is strong enough to warrant working together on creating merged OKRs. In other words, if they can’t be successful without one another, there is a legitimate case for merged OKRs. Creating team OKRs for customer segments And now, in the spirit of a 3 a.m. infomercial peddling that hydrospa hand massager you just can’t live without: But wait, there’s more! You may also want to create team-based OKRs in reference to specific customer segments, or points along the way of the customer’s journey with your company. An online retailer, for instance, could create OKRs for teams aligned with the checkout process, or the subscription process, or something else. Doing so has the advantage of driving collaboration among teams devoted to a specific outcome, but on the flip side it’s not immune to the difficulty of ensuring that the relationship between the groups is strong enough to warrant shared OKRs. (In case you’re wondering, I didn’t make up the hydrospa hand massager; QVC really did sell them at $40.) Creating individual OKRs for the entire organization Encouraging OKRs at the organization-wide level includes, of course, the controversial practice of having individual OKRs. You may be thinking, “Google uses individual OKRs, right? So shouldn’t everyone?” And besides, is the question of using individual OKRs even up for debate, and what makes it a “controversial practice”? Yes, Google does it, but you may not want to Google, the poster child for all things OKRs, does have a history of using the framework at the individual employee level, but you have to keep in mind that OKRs were literally baked into the culture of Google practically from day one through John Doerr’s influence with the founders. The system grew along with the company and has become an ingrained part of their culture, which is something most organizations cannot say. But even within the Googleplex, there are whispers of discontent over the practice, and some question its value. Most organizations should consider individual level OKRs optional, if they consider it at all. If you do believe that individual OKRs are right for your company, it’s most likely because you can envision the system driving alignment throughout the entire enterprise. You also likely subscribe to the notion that giving employees the chance to write an OKR will boost their support of the system because they will no longer see OKRs as a “corporate thing” but something that they themselves engage with and can potentially benefit from. Both are valid points, but on the “pro” side of the ledger, that’s all I’ve got. Switching to the “con” side, however, reveals a host of potential problems with individual level OKRs. I’ll use an example of an individual OKR to introduce some challenges with the practice. Following is one from a software engineer — and I’m not picking on engineers; I’ve seen similar (in tone, style, and direction) from finance professionals, marketers, HR staff, you name it: Objective: Improve my programming skills to help the company release products faster. Key results: Read the five most popular books on programming on Take three courses on programming languages. Attain Oracle MySQL certification. When charged with creating OKRs, most individuals will automatically default to personal development goals like those above. Absolutely nothing is wrong with personal development, and of course everyone should be actively encouraged to set goals for improvement. However, if you’re hewing to the true intent of OKRs, your aim is to demonstrate business impact. The key results in the preceding example are binary “outputs” that fail to demonstrate how this programmer is contributing to the company’s goal of releasing products faster in a quantitative fashion. Determining and communicating your OKRs philosophy, whether or not you’ll allow personal development goals as part of OKRs, will help ensure consistency in the OKRs created across the organization.

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OKRs For Dummies Cheat Sheet

Cheat Sheet / Updated 08-01-2023

If you’re looking to transform your aspirations into measurable success, there is no better way than implementing the system of creating objectives and key results (OKRs). Countless organizations have utilized OKRs to create focus, enhance alignment, and achieve remarkable outcomes. Whether you aim to boost productivity, enhance innovation, or align your team's efforts toward a common vision, OKRs provide a framework that can propel you forward. This Cheat Sheet compiles essential tips and tricks to help you unlock the power of OKRs and effectively steer your path to success.

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