Paul Niven Makes You Care about Strategy Again
Today I’m talking with Paul Niven, who is taking a stand against the frustratingly low levels of strategy execution in organizations here in North America and around the world. Paul is the co-author of Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs.
As you might expect, Paul is a leading researcher and authority on OKRs. In this interview we discuss:
- Why strategy execution is a number one concern for executives.
- The factors that contribute to an organizations inability to deliver on strategy.
- Mission and vision, and the difference between them.
- How to prevent tediously bland statements of non-achievable, random aspirations.
- Identifying broad priorities.
- And much, much more . . .
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Michael: I don’t know if you’ve experienced ‘strategic planning.’ I’m making air quotes with my hands. But, you know that feeling where you’re walking your way through strategy and it’s like, “This is two days of my life I’m never going to get back again,” as we have these erudite, high-level, abstract, vague conversations, or conversations that are just about a bazillion tactics that only add to your anxiety because it just gives you even more to do.
Now for years, I’ve used a simple planning model which I can’t even remember where I got it from, but it kind of is a way of trying to connect the outcome you want, the vision, through the objectives, through the projects that you run, to the tactics that you’re doing, and it’s been really successful, but it’s a little bit amateurish, I think. Maybe I’m being harsh on myself.
It turns out that actually a version of this has been used for years called OKRs. You may have come across that language. Really popularized by Google and, of course, if it’s popularized by Google, it’s popular for everybody. And it turns out that this is a really rigorous way of creating alignment and focus from the big outcome you want, that 20-year, 100-year goal for you as an organization, right down to what you—and I mean you listening right now—are spending your time doing on a day-to-day basis.
So, I got sent this book. It’s got the least sexy title in the world. It’s called Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs. But I’ve just got on the line with the author, Paul Niven, and we’ve had a really good conversation about just what this is, and we spend most of our time figuring out what language means and how to build alignment so that you can see that line of sight between how you spend your time towards the bigger outcome you’re doing. And there’s a really nice connection here between are we spending our time doing good work or are we spending our time doing great work?
So, I think you’ll enjoy this, my interview with Paul Niven, author of Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs.
Alright, Paul, I’ve shared your accomplishments with the world, but where I want to start, which is where I love to start with all our guests, is kind of going, alright, Paul, what are you taking a stand against? What are you no longer tolerating? What has irritated you enough that you’ve actually said, “I’m going to write a book about this”? You know, what is it? What’s gotten under your skin?
Paul: First of all, Michael, thanks very much for having me on your podcast. And there is something that has really gotten under my skin and a lot of executives’ skin for a long time, and that’s our frustratingly low levels of strategy execution in organizations here in North America and around the world. And this is a problem that’s been around for quite a while, and it’s only getting worse. I read a study in Harvard Business Review last year. They asked 400 executives, “What is the number one challenge you face?” Strategy execution was number one, topping growth, innovation, even geopolitical instability. The statistics here, Michael, are really sobering. They vary, but at the high end they suggest about 25% of organizations effectively execute their strategy, and this despite that the fact, as you know, that virtually all organizations develop a strategy.
Paul: And at the low end, it’s about 10%, which is remarkable.
Paul: So, I just want to unpack that for a second, because strategy execution is such a big term. Some of your listeners might be thinking, “Well, what does it actually mean and why is it so low?” And I think there are several reasons that go into that statistic. So it’s not one thing, it’s really a syndrome, if you will.
The first problem is that organizations, or most organizations, don’t effectively communicate their strategy to employees. And there are a lot of statistics on this. Some suggest only about 5% of the typical workforce understands the strategy, and when asked most employees can’t even name one of their company’s top three priorities. They can’t even name one.
Michael: Okay, so communication is one of the things that gets in the way. What else?
Paul: Right. Measurement, right? When you think of businesses, what do you think they measure primarily?
Paul: Money, exactly! Absolutely. About 65% of all measures used for decision-making, resource allocation, and performance measurement in business today is financial. But what’s interesting is that value is actually created by intangible assets. You know, relationships with customers, the knowledge our employees all bring to their work every day. Cultures capable of growth and change. That’s what we need to be measuring, so that’s the second big problem.
Michael: Okay, so we’re not measuring the right things and we’re measuring too much of the less consequential things?
Paul: Exactly. Financial measures will always have a place, of course, but we need to really be measuring, you know, what are the drivers of future financial success? We need a balance in our measurement.
Third problem that I would cite is that more organizations don’t create alignment. And having listened to your podcast, I hear this come up again and again with talking about silos in organizations.
Paul: And I think, you know, one of the reasons we do that is that most, whether you have squads or tribes or business units or departments, depending upon your organization’s structure, they’re typically not—they typically don’t use goals that are aligned with strategy and they don’t align with other units. So, that is really difficult, a real big problem, when we all know that collaboration now is so important for organizational success.
Michael: Okay, now I got those three things that get in the way of people implementing strategy and I’m guessing strategy is figuring out what we should do, and then execution is actually doing it once you figure that out.
Michael: But part of what you talk about in the book is this need for alignment, and you actually have, I think it’s like five different levels. And I want you, I guess, to give us a definition of each one so at least we all know what we’re talking about because, you know, strategy is one of those words that gets bandied about a lot, but often people are not quite sure what we’re even talking about.
Michael: So, from the top, let’s talk about mission. What is mission?
Paul: Sure, good. And at the risk of sounding like a Dilbert cartoon here to some of your listeners unpacking these terms, I’ll do my best and I’ll share with you the definitions that I’ve used and my clients have used over the last 20 years or so.
Paul: Mission really describes the core purpose of the organization, why you exist. So, if you’re a for-profit company, like yours or like mine, beyond making money, why do we exist? You know, and for me, it’s helping people think differently about how they measure and manage performance. That’s my mission. And my strategies may change over time, the way I do business will change, but that’s my North Star. That’s what guides me and that’s what causes me to change. So, that’s how I would describe mission.
Michael: Okay, so why we exist. Can you give me an example of some brands that people know, and if you know them or take a good guess at what their mission might be, just to bring that to life?
Paul: Sure, absolutely. Well, I think Google is digitizing the world’s information. I’m probably not getting it absolutely correct, but it’s as simple as that. I know for a long time Walmart’s mission, whether you like Walmart, or depending on who you are, regardless of your opinion of them, they had a terrific mission, which was to help, you know, ordinary people buy the same things as rich folk, because they were just keeping prices down so everybody had the chance to buy quality goods.
Michael: Got it, okay.
Paul: So, those are two examples of really quality missions, yeah.
Michael: Nice. So, as we go through these different levels, maybe we can try and keep linking them back to Google and Walmart.
Michael: The next level down is vision. And I know mission and vision get kind of mucked together a lot. So, how is vision different from mission?
Paul: Yeah, they do. I see this so often with clients when they’ll send me their mission and vision statements and they’re really virtually identical. But my definition of vision, and if you look at some other pundits, I think they would agree, a vision is a word picture of what the company ultimately intends to become, and it’s longer-term, maybe five, ten, fifteen years in the future. So, whereas your mission again is that North Star, is why we exist—I want to help, you know, companies think different about performance measurement—your vision is more concrete. You know, what are you going to do in the next five years to make that happen? So you might actually be talking about the number of customers served or the number of markets you’re going to be entering. So, it’s more concrete, less abstract. That’s the big difference between mission and vision, core purpose versus specificity.
Michael: Got it.
Paul: So, I think it was Starbucks, way back when, was 2,000 stores by 2000. That’s a vision, right?
Michael: Right, got it.
Paul: Because it’s very concrete. It’s very specific. It’s something you can act upon and you can measure. Yeah.
Michael: Got it. Okay. So, any guesses what, for instance, Walmart’s vision is or could be?
Paul: I don’t know what it would be, but I would imagine it would be something in their heyday about store openings, that sort of thing, or maybe a big revenue objective. Yeah.
Michael: A big revenue number? Got it. So, and when I think about Box of Crayons, this is all just trying to make it real for me.
Michael: So, I’ve got two phrases that I bandy about a lot. Maybe you can help me figure out whether they live in the same box or different boxes.
Michael: One is ‘we help people and organizations do less good work and more great work.’ That feels like a mission statement to me.
Paul: Absolutely. It does, right.
Michael: Yeah, perfect. Okay. So, the second one that’s become more real to us, and I’m wondering if it’s a vision statement or whether it’s just a competing mission statement, is ‘helping all managers, giving all managers the tools so they can coach in ten minutes or less.’
Paul: Okay, so your first, ‘less good work, more great work,’ is definitely a mission because they way you do that may change over the years but that will always be, again, your guiding principle, what you want to do. Helping managers with tools they can apply in under ten minutes, with the ten minutes part you’re getting closer to a vision there because you can measure your ability to actually do that. How many managers have you helped? How many have been able to implement that tool? That sort of thing. So, that is closer to a vision.
Now, my advice to you would be to hone that even more. You know, do you have a goal in the next five years of how many managers you’d like to help, how many tools and templates you’d like to have in the market?
Michael: Got it.
Paul: You know, again, that helps you. You’re moving closer to your mission because you’re helping more managers in a more concrete fashion.
Michael: Okay, I like that. Now, how do you stop visions being just tediously bland statements of non-achievable, random aspirations?
Michael: You know, “We will be the number one company in X sector by name a year.”
Paul: Yeah. Right, and that is such a problem. I had a client once that called that ‘Buzzword Bingo.’ You know, we’ll invest in synergies across markets to—you know, Bingo!
Michael: Yeah! Right.
Paul: And, yeah, that’s the last thing we want to do. Well, you just have to be pragmatic in your approach, and first of all is to make it quantitative. That will help immediately. So, you know, synergy is not a number, right? So, you want to start thinking about numbers. Again, for Box of Crayons, is it the markets you serve? Is it the managers you serve, number of templates you offer, tools you offer?
Paul: Just starting with a number will really help you to get over that hurdle.
Michael: Okay. I like that. That’s really helpful already, just quantifying that. And the mission kind of stays the same, but vision may change every five, ten, twenty years as things evolve or you achieve the bold target you set yourself.
Paul: That’s right. Exactly. Yeah, again, your mission, what I’ve read from some people, should be written to last 100 years or more. The most famous example of a mission I think, and I don’t even know if they would have called it a mission, is the ‘HP Way’ that Hewlett and Packard developed way back in 1960 when they talked to a group of employees about a company being more than a collection of people, but in doing something to serve the greater good. And you know, that’s what we’re talking about when we devise our mission.
Michael: Nice. Perfect. Okay, so the layer down from that, because obviously you want the vision to serve the mission. Below that is the strategy, which you ideally want to serve the vision, which then serves the mission. So, I mean, “strategy,” just one of those massively abused, almost meaningless words.
Paul: It is.
Michael: How do you talk about strategy? What is it for you?
Paul: Right. Well, I wrote a book. I’ve written six books and one of them is a management fable called Road Maps and Revelations, which is all about strategic planning. And so, when I was researching that book, because you’re 100% right: it’s one of those extremely mushy terms. So, I’ve been a student of this for the last 20 years, but I did extensive research. I read all the books, I talked to people, and I tried to boil it down to its DNA, Michael, and I ended up with this definition. Strategy is or are the broad priorities adopted by an organization in recognition of its operating environment and in pursuit of its vision and mission. So, I’m linking to vision and mission, but I’m saying strategy are the broad priorities that reflect your operating environment. So, you know, that means you have to look at where you are right now, but also you have to look at the longer-term of where you want to go.
And by broad priorities, I mean the most important things to a business. Who are your customers? It sounds very simple, but I’ll tell you, a lot of my clients have difficulty answering that question. Who are your target customers? Where; what markets do you want to serve? Geographically, that sort of thing. The biggest question, the core of strategy, the biggest priority that you have to come up with, that I have to come up with, everyone listening has to come up with, is what is our value proposition as an organization? Why would people buy from you or from me?
So, that is the core of strategy, and I’d be happy to unpack that if you’d like.
Michael: So, first of all, let me check this. I mean, “priorities” is another one of those massively misguided terms in organizational life.
Michael: Which is like, “I’ve got my 19 key priorities or my 97 key priorities.” Do you have a sense just around when you look at strategies and you talk about their broad priorities, do you have, like, a range of numbers? Like, is it five plus or minus two? Is it no more than three? Is it up to twelve? I mean, I’m just randomly throwing numbers at you, but …
Paul: Yeah. Very good question, and I guess it will depend upon the organization, but the fewer, the better, obviously. If you’ve got ten priorities, you’re obviously not going to be able to concentrate on anything. I would say the bulk of my clients over the last 20 years or so would have in the range of one to five, with three probably being the average number of priorities.
Michael: Got it.
Paul: And it’s typically something around there’s a customer priority. Again, who are the customers? What’s our value proposition in serving them? There’s usually a priority around innovation or growing that core somehow, and there’s often a theme or a priority around operational excellence or being as good as we can at what we’re currently doing. But definitely, a small number of priorities is all that you can manage.
Michael: And you’ve talked about the importance of the vision starting to be quantified. When you say, like, an operational excellence priority, does that have numbers in it or is that still more kind of qualitative? You know, kind of aspirational in language rather than pinned down in terms of numbers?
Paul: No, numbers are at the centre of everything I do, Michael. I believe that anything can be measured, and in order to execute strategy, to learn more about your business, to be more effective as an organization, you have to translate everything into numbers. And I’m not trying to be cold about that, but it’s just a fact that regardless of whether your strategy’s about operational excellence or pursing customer intimacy, you have to translate that into numbers.
Michael: Alright, as usual we’re breaking up the regular interview to ask these three questions that I think are intriguing. And the first one, Paul, is this: what’s the crossroads you came to; what’s the decision you made that, when you made it, has made all the difference for you in the life that you live?
Paul: Well, apropos to the kind of work I do, Michael, it’s a decision that I made about 25 years ago, and I don’t know if it’s a decision or a situation, but my wife and I were living in Canada at that point, in Nova Scotia, and we went for a walk or a hike in a local park, but—and we’d often done that. We’d had some of our best conversations in the park. But that day, it was different. We decided to speak about our goals, you know, for ourselves, our relationship, our careers. For example, for me, I wanted to work at a large consulting firm with the goal of acquiring some experience that I could have my own firm one day, and I also wanted to write a book.
So, here’s the big difference, and I think a lot of people do that. They go out and they think about what they want to do. When we got home, we actually wrote everything down. We got a lot more specific and we did some of the things that you and I have already talked about here in the podcast. And that was the first time I think I recognized the power of public commitments. You know, Robert Cialdini, who I’m sure you’re familiar with, talks about that.
Paul: And so, I had something to measure and monitor over time and it made an enormous difference to me. I saw the power of goal-setting, and 25 years later I’m pleased to say that virtually everything we talked about that day has come true for us with a good combination of luck and hard work.
Michael: Oh, that’s great.
Michael: Brilliant. Congratulations. Question number two. Whose work has influenced your work? Now, that could be a thought leader, of course, but it could be a mentor or somebody in your close network of friends, whoever. But whose work has influenced your work?
Paul: Well, I guess one of the benefits of my occupation is that I have—obviously, I work a lot with my clients, but I have some flexibility in my time, so I have the chance to read a lot, which I do and I love to, so there’s so many people. From the business side, I think specifically as a consultant, the work of Edgar Schein has had a big influence on me. His book, Process Consultation, which as you know came out decades ago.
Paul: My book is so marked up you can’t tell if it’s yellow or white, and I still refer to it consistently.
And I guess other than Edgar Schein, it’s the usual suspects that you would expect for someone in my position: Connoman(?), Tversky, Pink, Richard Thaler, (inaudible), David Rock. They’ve all been huge influences on my work.
And personally, I read a biography of Martin Luther King when I was very young and that never left me. Just the power of narrative and being a strong leader.
Michael: Yeah, brilliant. I love that you mentioned Ed Schein. He’s one of my key influences as well. I trained with him 20 years ago and that was a great couple of three or four days working with him directly like that.
Paul: I’ll bet.
Michael: Yeah. Third and final question is this. Now, we talk about Box of Crayons, doing less good work, doing more great work. Great work, the work that has more impact, the work that has more meaning. So, how do you think about great work for you at the moment?
Paul: Well, it links with your very first question, and that is what am I taking a stand against? And it focuses on my work helping organizations execute strategy while simultaneously improving alignment and increasing engagement. And what I’m doing right now is I’m working on a model that effectively balances long-term strategic priorities with day-to-day action at the front-lines of a business. So, how do we create performance systems that balance that inherit tension? And I think in the past, a lot of systems have focused on either one or the other, but not both. And I’m really excited about the work we’re doing now, where we can balance that tension, and I’m already seeing some results so it’s very exciting.
Michael: Fantastic. Alright, cool. That was great, Paul.
Michael: Let’s get back to the main interview now.
Michael: So, we’re talking about numbers, and one of the things that I would say that shows up regularly when I see people put numbers to strategy is these numbers feel more a work of fiction than nonfiction. You know, they’re kind of like, “I’m randomly selecting some numbers. They feel like a BHAG, you know, audacious or whatever it might be.
Michael: But you know, I’m curious to know if—and this is an impossible question to answer but I’m going to ask it anyway, which is how do you help people identify numbers that have a sense of grounded reality to them, that find that sweet spot between both possible and provocative? Rather than just, you know, somebody sticking a finger up in the wind and making up a number.
Paul: Right. And you’re right, BHAGs, the Big Hairy Audacious Goals that were put forth by Jim Collins and I believe Jerry Porras, have become very popular, but they’re pretty much worse than useless if they’re not grounded in reality. And you know, studies have shown actually that when managers are faced with goals that they think are insurmountable or impossible, they have a greater tendency to abuse their employees. It’s the corporate equivalent of kicking the dog syndrome, so this is a very serious issue.
So, what I do to help overcome that is first recognize that that’s a problem, and I help people overcome their unconscious biases when it comes to measurement. And we have a lot of them: you’d be surprised. We have an overconfidence bias. We have—sometimes we fall prey to a recency [sic] bias. So, I just really—there is a lot of science developing on this, and David Rock, who I know you’re familiar with.
Paul: And some of the things that we’re hearing from the NeuroLeadership Institute is telling us how we can more effectively develop these measures. But the key, I guess, is to look at your business. Nobody knows your business better than you. Look at baselines for what you’ve done in the past. Try to project that in the future, but balance that pragmatism with your dreams for the future.
Michael: Love it. So now, we’re getting from strategy, with maybe three to five broad priorities, into objectives and key results, the OKRs.
Michael: And I’ve got to tell you, when you sent me the book, I said to myself, “You know what? Nobody’s going to accuse Paul of clickbait in terms of the title of this book,” because, I mean, the title is, you know, it’s Wiley Corporate F&A, and that’s the sub-publishing piece.
Michael: Now, Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs. So, alright. It sat on my shelf for a while because I wasn’t immediately drawn to the sexy title or cover.
Michael: But actually, when you get into it, it’s all about trying to make people doing their job see a line of sight from what they do and whether they’re succeeding or not, all the way through objective, strategy, vision, to going, “I know how I serve the mission by the thing that I do here.” So, I love that line of sight.
Paul: Exactly. Right.
Michael: But once you get strategy, your broad priorities, you then move down to objectives. So, first of all, what does that even mean?
Paul: So, an objective is a qualitative statement of what you must do well to execute your strategy. More colloquially, it’s what do we want to do? I want to improve the customer experience. I want to increase my revenue per email sent this quarter. It’s what do we want to do? That’s the objective. Simple as that.
Michael: And I’m guessing there are numbers attached?
Paul: No, there are not. The objective is purely qualitative, but the key results, the key results is where you get the quantitative, so that’s where we go from what do we want to do to how will we know if we’ve achieved it? That’s the key results.
Michael: Okay, got it. So, let’s go back to objectives.
Michael: Against a broad priority, typically how many objectives do people have? I mean, is it, again, the fewer the better?
Paul: Yeah, absolutely, and if you look at data across a broad range of industries, and this OKR model is very popular with Google and a number of Silicon Valley firms, and so we’re starting to see more research and more literature emerge from their practices. And the rule of thumb, Michael, seems to be three to five objectives.
Michael: Got it.
Paul: But to me, that’s even a high number. You know, again, the fewer the better because it’s very difficult to manage multiple priorities simultaneously.
Michael: So, again, how do you give people the discipline to find the right objectives? Because it’s relatively easy to come up with objectives. It’s much harder to go, you know, the Pareto Principle, “These are the three that, if we hit them, will make the most difference to us being able to achieve our strategy.”
Paul: Right, yeah. That’s a very good point, about finding the right objectives. Because, you know, it’s always easier to come up with a greater number than a smaller number. When I was doing the research for the book, one just funny anecdote that I came across is that the average American devotes more time to picking out a TV set than they do setting up their retirement account, because it’s fun and easy to go and pick out a new TV but it’s really difficult to set up that retirement account.
So, it is challenging, but I have a number of criteria that I walk my clients through. Just we start off with that inspirational, so we want it to be inspirational but we ground it in reality, so that’s the first test. We make sure it’s doable in a quarter. That is very, very helpful. Probably the biggest difference between OKRs and other performance systems is their cadence. You change your OKRs every quarter because your business is probably changing very rapidly, so doable in a quarter is very important.
Michael: Right, so I’m really interested in this idea of the quarterly piece. 90 days. Now, is that something that’s recently emerged, that 90 days is a period of time that’s both short enough to get something done but long enough to get something done? Or is that about the pace of work picking up? I mean, I’m curious to know where that 90-day piece comes from.
Paul: Yeah, great question. Sort of all of the above. You can trace a line from OKRs way back to the work of Peter Drucker, who I know a lot of us are familiar with as the father of management thinker, who developed management by objectives.
Michael: Yes, we worship Peter Drucker.
Paul: We do, yes. Absolutely. He developed MBOs, management by objectives, back in the 1950s. The problem was a lot of our organizations set goals annually and that was it. And even in the 1950s, that cadence obviously wasn’t appropriate. Interestingly enough, Andy Grove from Intel, he sort of resurrected the idea of MBOs, but he realized, because things were changing quickly at Intel in the 1980s, that yeah, a year was too long. He chose 90 days, and in some cases 30 days, so for some of his teams it was 30 days, and that’s what sort of stuck.
And here’s what’s interesting, Michael. It fits. If you look at the current research, I mentioned David Rock earlier; I’m sure you’re familiar with Teresa Amabile and her work on the Progress Principle out of Harvard.
Michael: Of course, yes.
Paul: Well, she says the greatest way to boost motivation and emotions at work is to show progress on meaningful work. And we find we can do that with these 90 days, but of course we don’t look to the metric just at the end of 90 days. We encourage weekly meetings and mid-quarter reviews, but the 90 days seems to work beautifully because you can tackle a large enough project in 90 days where you can make progress, but it’s small enough that you can break it down into increments and look at it every day, so there does seem to be some magic in this 90 days.
Michael: Yeah, I love that. So, we’ve got objectives. We’ve got three to five objectives that are inspirational but also ground in reality. They’re quarterly, so you’ve got a 90-day thing you’re trying to achieve.
Michael: What are some of the other characteristics of a strong objective?
Paul: Well, as I mentioned, they’re qualitative first. We don’t have numbers there. That will come up in our key result. Probably most important is that they provide business value. You know, I wrote a—and we’ve been talking about this throughout the conversation—I wrote a blog recently called the Soar Like an Eagle Syndrome because so many of my clients want their objectives to be, you know, “We will soar like an eagle and, you know, fly over all of our competitors!” And you know, that’s not the point here. The point is that it’s something that provides real business value. That gets lost a lot in these exercises because it’s unusual for people to step out of their roles and talk about these things. And it’s kind of fun, but sometimes, as you know, we can get carried away. So, my role as a coach is to really help people make sure that the objective they’re developing is creating business value and, most importantly, links back to those strategic priorities, the big chunks that we talked about earlier.
Michael: So, one final question before we push on to key results, which is this. I know there are—I’m thinking of people on my team, and whereas my work can feel like I can projectize it, so I can kind of come up with these objectives that have 90-day sprints(?). But I look at somebody else on my team and I go, “Okay, what her job is is to make the trains run on time. You know, it’s about managing the logistics, making sure that our projects get delivered, that our program leaders are set up for success, that our clients love us,” and it doesn’t feel that there’s a shift over 90 days. You know, what she did last quarter is not dissimilar from what she’s doing this quarter. How do you help people whose job is more on the kind of ongoing maintenance to think about objectives, or does this stuff not work for them?
Paul: Sure, that’s a great question, and a real challenge that I see a lot with so-called, quote unquote, “support functions.” HR, legal, finance, risk, that sort of thing. And often, sometimes they’ll choose not to opt in just because their functions are more routine, if you will. But I would challenge that. I would say that there’s always a way. If you’re doing logistical work, for example, is there a way to do it better? Well, try one 90-day cycle where you try to improve something about what you’re doing. Pick one thing that you think can be improved and try to improve it. Finance. You know, the month end close process. I’ll bet it hasn’t changed in your company, if you’re a large company, for decades. Well, tackle that. You know, maybe you don’t use OKRs every cycle, but there’s got to be something in your organization that can be improved. And believe me, improving something makes you feel better, and the very act of quantifying itself leads to improved results, so I would challenge anybody to try this.
Michael: Love it. Alright, so then we go from objectives into the key results, and that’s when we start trying to figure out what we measure so that we know we’re achieving our objective or not. So, again, I’m going to guess that there’s going to be a select few rather than more number of key results that you try and figure out to articulate success or not success with your objective.
Paul: Absolutely. Again, the smaller, the fewer the better here, and it’s typically the literature would say two to five key results per objective. But again, I think that’s even too many. I think we want to really focus on what is the most important key result that you’re aiming for with that objective?
Michael: Got it. And what does a key result sound like? I mean, for instance, if my objective—so, let’s say I’ve got a strategy and my strategy is—well, you can tell me whether this is actually a strategic priority or not.
Michael: Which is growing Box of Crayons’ business in the tech industry. Is that a strategic priority?
Paul: That could be, yes, because it connotes growth, and we often see priorities around growth so, yes, we’ll say that is a priority. Growth is a priority and it’s specifically in the tech industry, so you’ve identified a potential market to you, so very good.
Michael: Perfect. So, my objective would be to—so, I don’t have numbers attached to this, so my objective would be, what, to become a player in the tech industry? That’s pretty vague.
Paul: No, I would challenge you—absolutely.
Paul: No, but that’s okay. It’s a good start, though. We could say, well, becoming a player in the tech industry could take years, so let’s back up from that. What can you do, you know, in the next six months and we come back here to the next quarter? Maybe your objective will be to make, in the next 90 days, make five very good contacts. And we’d have to obviously define “very good,” but five contacts in the tech industry that you think would be influential to your growth.
Michael: But that’s a number, right?
Michael: So, isn’t that pushing it down to a key result?
Paul: I was doing both there.
Paul: So, we could identify five influencers. Identify influencers in the tech industry, could be our objective, and then making five could be our key result, making five contacts.
Michael: Got it. Okay, love it. So, I see how you—so, I can see that as soon as you get into this, you start running into, “Is that a strategic priority? Is that an objective? Should it be in our key result?”
Paul: That’s right.
Michael: And I think probably part of the art of this is knowing what fits where in the hierarchy.
Paul: Well, absolutely. And you saw, I did it myself. I’ve been doing this work for 25 years and I just conflated the two worked into your example. So, obviously if we had more time, we would break this down and we would chart it correctly. But that’s fine. When you’re brainstorming with your team, you’re going to be going back and forth between objectives and key results constantly. That’s raw material that you can then develop into more specific objectives and key results, but you certainly don’t want to limit yourself during those sessions.
Michael: So, I know our time is all but done, and we’ve been going at a rapid fire and we still just only touched on the framework that builds out mission through vision through strategy through objectives through key results so there’s that line of sight. If there were one or two places that people get trapped up when they’re trying to think through this structure, this system, what are the two places you’d say kind of, you know, “Beware, there are dragons here”?
Paul: Well, I think I guess the first is vision and mission and the difference between the two. So, I would encourage people to make sure that there is a differentiation there, that typically the mission again is more about the core purpose and the vision has numbers attached to it and is longer term.
And I would—probably my strongest piece of advice to people is have a consistent definition of the terms. If you don’t use the definitions I just mentioned, that’s fine, but you have to use consistent definitions in your organization. I see this all the time with my larger clients. What one person calls an objective, someone else calls a tactic or an initiative, and it’s a huge, huge inhibitor to strategy execution. So, please be consistent with your terms, is my strongest piece of advice.
Michael: I love that. So, I’m glad that we actually spent time trying to nail those definitions down because it speaks to that.
Michael: Paul, your book, which is a really practical guide to trying to develop this alignment and rigor in terms of how you think about having the impact you want, and my guess is that it can work at an organizational level but also even at a team level or an individual level. The book is called Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs, Paul R. Niven and Ben Lamorte, but if they want to find out more about the work that you do, where can we find you on the world of the Web?
Paul: Yes. Well, appropriately enough, there is a website called OKRsTraining.com, O-K-R-s-Training dotcom, and you can learn more about the book and my work at that website.
Michael: Paul, it’s been a pleasure. Thanks for you time today.
Paul: Thank you, Michael.