Hi! I’m Sergey Kozhemyakin, COO of IMAGA. For the last couple of years, the company has been growing, and our team is expanding. One day we realized that we need to involve more people in strategy development. And that's when the idea to implement a new motivation system came in. Instead of a well known KPI we chose OKR (Objectives and Key Results). In this article I'll explain what OKR is and how it works.
I would like to thank our New Business Director, Vitaly Doshchenko, for his assistance with this article. By the way, we implemented OKR in the company together.
Intro. Why we needed the change
Since 2021, IMAGA has almost doubled in size in terms of employees. That was a huge leap forward that occurred almost imperceptibly. Our team was growing, but we just continued working as we used to. By the end of last year, we finally decided that it was time to change our management approach.
That made sense. In 2022, the number of managers in our company reached 30. However, the number of processes and projects was so vast that the head of one department did not know what was happening in another. And most importantly, strategic tasks were handled by only four individuals.
At the same time, we needed to grow our business, carry out reforms and move forward. But it’s hard to propose something new when everyone is drowning in day-to-day operational hassles. When changes were initiated by us, they were not popular. When people came to us with initiatives, there was no one to implement them.
At the same time, we needed to grow our business, carry out reforms and move forward. But it’s hard to propose something new when everyone is drowning in day-to-day operational hassles. When changes were initiated by us, they were not popular. When people came to us with initiatives, there was no one to implement them.
We needed a tool that would allow us to involve as many people as possible in strategic tasks. Why?
- The more people understand the importance of innovations, the easier to implement them, and the team becomes more conscious;
- When people come up with their ideas, they take some responsibility for the company’s growth.
At the same time, we did not want to lose control over the operational tasks.
How we came to OKR
Up until that moment, we had been working on goal setting like many other companies — through KPIs. KPIs for employees and for the entire departments were quantitative and qualitative. Such metrics influenced bonus motivation and allowed us to maintain stable performance. However, setting strategic goals and, moreover, achieving them through KPIs was challenging for us.
First, because such system was not flexible. Second, it did not fit our horizontal structure. And third, it took a lot of time to maintain it. One day on a regular quarterly retrospective, we noticed that we were far from implementing a big part of our strategic plans. That was the same day when we decided to implement OKR.
OKR is an abbreviation for Objectives and Key Results. It's a very popular goal-setting technique used by giants like Google and Uber. The system helps synchronize team goals through transparency and bottom-up goal setting. OKR differs from KPI in 3 points:
- it’s more difficult to be achieved;
- it does not influence financial motivation;
- it’s about collective responsibility.
The idea was risky. None of us has worked with OKR before. Maybe that's why there were some hiccups along the way. We had to adapt and adjust the process as we were moving forward. But anyway in the end we got a new goal-setting system for our company.
How to understand what goals should be set
Together with my colleague we started to set a list of goals. But then we realized that the essence of OKR is that the goals should be chosen by the team. Plus, the goals should go in one direction with the company's needs. So, there were many criteria.
Fail #1. We selected tasks based on the overall development strategy. And to make it more convenient to work on them, we wrote a list of steps for each task. This didn't work out — the closer was the end of the quarter, the more far-fetched the results became. The goal was formally achieved but did not bring any benefit. For example, you had to make a sales presentation, but no one ended up using the presentation.
We decided that it's worth shifting the focus to revenue and here we needed a metrics pyramid. Only those goals that can be measured by these metrics were taken into work. Our North Star Metric became a turnover since our profitability was already good. We divided the turnover into two separate metrics:
We decided that it's worth shifting the focus to revenue and here we needed a metrics pyramid. Only those goals that can be measured by these metrics were taken into work. Our North Star Metric became a turnover since our profitability was already good. We divided the turnover into two separate metrics:
- number of clients;
- average revenue per client.
As we moved toward the base of the pyramid, we detailed the metrics.
As a result, we ended up with a set of low-level metrics at the base. Among them were the average position in rankings, Churn rate (attrition rate), recognition level among applicants, and others.
The important part was to support the selected goals at all levels in the company so the initiatives would not fade away. After all, it was now clear to everyone why we were striving for this or that goal.
Idea generation and goal selection
Once we had defined the metrics, it was clear how to set goals. In order to make them specific, we conducted a strategic session, which consisted of the following stages:
1. We analyzed the results of the previous period, recalling all the barriers and successes that affected the company's revenue. We used the Miro board for this. The session participants were divided into groups, and each group could put a sticker indicating win or loss. The higher the sticker in the green field, the greater its value for the company, and vice versa — the lower, the worse.
That’s how it looks like
2. Next, we communicated key insights from the retrospective.
3. We looked at the metrics pyramid to see what components make up revenue.
4. We broke into teams and generated project ideas that would help grow revenue in the next period.
5. Ranked the ideas by voting.
3. We looked at the metrics pyramid to see what components make up revenue.
4. We broke into teams and generated project ideas that would help grow revenue in the next period.
5. Ranked the ideas by voting.
After this strategic session, the most popular ideas turned into OKRs. Each OKR had to reflect one of the sections of the metrics pyramid, i.e. be measurable and impact turnover. OKRs could also have several Key Results that were important for transparent progress tracking, but not necessarily influenced the pyramid.
All OKRs, totaling around 20, were recorded in a shared document. Here are a few examples of the OKRs we got:
All OKRs, totaling around 20, were recorded in a shared document. Here are a few examples of the OKRs we got:
Here, the key metric is the 15 cold leads we want to make to new customers, and the supporting metrics are the steps to build an Outreach department and test selling hypotheses.
Here's another example:
The key metric is 3 million rubles of additional PWA turnover on Flutter. And auxiliary metrics are various marketing activities, demo development and launching a wave of cold sales.
The following roles were assigned for each OKR:
- owner — responsible for the OKR;
- helpers — team members involved in the implementation of the OKR;
- Mentors — task supervisor, more about them below.
Owners had to provide forecasts on how they would approach the goal on a weekly basis:
How to make sure that goals are met
Fail #2. Although we set the goals together and then associated them with the metrics pyramid, the test quarter showed that the OKR performance was far from perfect (~50%). At first, the teams enthusiastically started working with OKRs, but then they cooled down. There were several reasons why: sometimes the goal lost its relevance, sometimes there was not enough time for its implementation, and sometimes the difficult stages of implementation were procrastinated.
We have taken the following steps to cope with this:
- Introduced regular cadences. Weekly team meetings where mini-reports (check-ins) are made. These meetings are mandatory and ensure a continuous focus on the goal.
- Check-ins. Each of these mini-reports is available via our corporate messenger, everyone can see it and comment on. It’s also a great motivation to start writing about OKR in a more human way.
- Mentors. After some time, it turned out that reports and meetings don’t guarantee everything would go smoothly. In some cases, work was done for formality sake, just to fill in the progress bar. Mentors are given the authority to cancel outdated OKRs, monitor the progress, and weekly check-ins.
Fail #3. Initially, we assigned 10 tasks to each mentor. However, this turned out to be too much. A lot of time was spent on OKRs, and there was almost no time left for operational tasks. Therefore, we had to bring more mentors for them to spend no more than 2–3 hours per week. The number of goals per mentor was halved and reduced to 5.
Democracy
We have made all artifacts — the metrics pyramid, check-ins, and a document with all strategic goals — public and available to all employees. In addition, during the company's weekly meeting sometimes we share progress with the colleagues and invite them to come up with their initiatives.
Such transparency should increase employees' awareness so that more people in the company understand the strategic goals and can align their daily work with them. Furthermore, we promote the opportunity to voluntarily participate in OKR working groups to influence the company's strategy.
Failure #4. We start to receive many initiatives concerning new products. We were eager to take them on, but there were situations when initiators lost their enthusiasm because of the increased workload. Therefore, we realized that it was necessary to limit the number of goals and prioritize resources.
Nevertheless, the OKR approach itself made the company’s processes even more transparent. Everyone can monitor metrics and goals. This was not our initial goal, but it became a nice side effect — our company became more teal.
Failure #4. We start to receive many initiatives concerning new products. We were eager to take them on, but there were situations when initiators lost their enthusiasm because of the increased workload. Therefore, we realized that it was necessary to limit the number of goals and prioritize resources.
Nevertheless, the OKR approach itself made the company’s processes even more transparent. Everyone can monitor metrics and goals. This was not our initial goal, but it became a nice side effect — our company became more teal.
5 lessons we learned from OKR implementation
The main achievement is that we managed to involve all the company's managers in working on strategic goals. Of course, we face challenges, the transition to OKR is not going smoothly. But we can already see that OKR achievability has risen to 62%. The metrics are smooth but growing. We even made an OKR on OKR implementation to measure the progress of implementing the new model.
Now we plan to raise the fulfillment rate to 80%, conduct a retrospective at the end of the year, take another look at the problem areas, and then extend the OKR system to product and project teams. But even at this stage, we've learned a few lessons. You can use them as a checklist:
- ✔ Start with a metrics pyramid to ensure that OKR goals are not random and are in line with the company's strategy.
- ✔ The process of OKR implementation and realization should be made as transparent as possible and involve as many people as possible — this will share responsibility for everyone.
- ✔ It is better to implement regular cadences — OKR goals should not hang in the air, but should be revisited and brought back to everyone else. For example, through regular meetings or reports.
- ✔ OKRs work better if a specific person — a mentor — is responsible for each goal. Without a mentor, there is a greater temptation to approach OKR goals formally.
- ✔ Not every initiative should become an OKR goal — it is worth considering the company's resources: time and manpower.
We will tell you more about how our experiment is progressing in the next articles. In the meantime, let us know in the comments how your companies work on strategic goals and what percentage of employees are involved in this process. We will be glad to discuss this topic.
