Activity Trap

Peter Drucker termed the “activity trap”: stressing output is the key to increasing productivity while looking to increase activity can result in just the opposite. On an assembly line, it’s easy enough to distinguish the output from activity. It gets trickier when employees are paid to think. Grove wrestled with two riddles: How can we define and measure output by knowledge workers? And what can be done to increase it?

💡 MBO(management by objectives) Ancestors:

• Frederick Winslow Taylor and Henry Ford were the first to measure output systematically and analyze how to get more of it. Taylor wrote that in his view, scientific management consists of “knowing exactly what you want men to do and then see that they do it in the best and cheapest way”.
• Peter Drucker took a wrecking ball to the Taylor-Ford model, when he wrote that a corporation should be a community “built on trust and respect for the workers – not just a profit machine.”
• Andy Grove “management by objectives and self-control” became the foundation and genesis of what we now call the OKR.

Examples of OKRs from Intel:

OKR = Objectives and Key Results

• Intel Corporate Objective:
  • Establish the 8086 as the highest performance 16-bit microprocessor family, as measured by:
    • Key Results (Q2 1980)
      • Develop and publish 5 benchmarks showing superior 8086 family performance (Applications)
      • Repackage the entire 8086 family of products (Marketing)
      • Get the 8MHz part into production (Engineering, Manufacturing)
      • Sample the arithmetic coprocessor no later than June 15 (Engineering)
• Engineering Department Objective (Q2 1980)
  • Deliver 500 8MHz 8086 parts to CGW by May 30
    • Key Results
      • Develop final art to photo plot by April 5
      • Deliver Rev 2.3 masks to fab on April 9
      • Test tapes completed by May 15
      • Fab red tag start no later than May 1

💡 Basic OKR Hygiene

When you’re little, with fewer resources, it’s even more vital to be clear on where you’re going. It’s like raising kids. If you bring them up with no structure, and then you tell them as teenagers “Okay, now here are the rules” – well, that’s going to be hard. If possible, it’s better to have rules from the start.

• Less is more
  • A few extremely well-chosen objectives impart a clear message about what we say “yes” to and what we say “no” to. A limit of 3-5 OKRs per cycle leads companies, teams and individuals to choose what matters most. In general, each objective should be tied to five or fewer key results.
• Set goals from the bottom up
  • To promote engagement to create roughly half of their own OKRs, in consultation with managers. When all goals are set top down, motivation is corroded.
• No dictating
  • OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Even after company objectives are closed to debate, their key results continue to be negotiated. Collective agreement is essential to maximum goal achievement.
• Stay flexible
  • If the climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle.
• Dare to fail
  • Output will tend to be greater when everybody strives for a level of achievement beyond their immediate grasp. While certain operational objectives must be met in full, aspirational OKRs should be uncomfortable and possibly unattainable.
• A tool, not a weapon
  • The OKR system is meant to pace a person – to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review. To encourage risk taking and sandbagging, OKRs and bonuses are best kept separate.
• Be patient; be resolute
  • Every process requires trial and error. An organization may need up to 4-5 quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.

💡The 4 OKR “superpowers”

1. Focus – and commit to priorities
   • High-performance organizations home in on work that’s important, and are equally clear on what doesn’t matter. OKRs impel leaders to make hard choices. They’re a precision communication tool for departments, teams, and individual contributors. By dispelling confusion, OKRs give us the focus needed to win.
   • LinkedIn CEO Jeff Weiner “When you are tired of saying it, people are starting to hear it.”
2. Align – and connect for teamwork
   • With OKR transparency, everyone’s goals – from CEO down – are openly shared. Individuals link their objectives to the company’s game plan, identify cross-dependencies, and coordinate with other teams. By connecting each contributor to the organization’s success, top-down alignment brings meaning to work. By deepening people’s sense of ownership, bottom-up OKRs foster engagement and innovation.
   • Box CEO Aaron Levie ” At any given time some significant percentage of people are working on the wrong things. The challenge is knowing which ones.” Research shows that public goals are more likely to be attained than goals held in private.
3. Track – for accountability
   • OKRs are driven by data. They are animated by periodic check-ins, objective grading, and continuous reassessment – all in a spirit of no-judgment accountability. An endangered key result triggers action to get it back on track, or to revise or replace it if warranted.
4. Stretch – for amazing
   • OKRs motivate us to excel by doing more than we’d thought possible. By testing our limits and affording the freedom to fail, they release our most creative, ambitious selves.

CFRs (Conversations, Feedback, Recognition)
The failings of annual performance reviews have sparked a robust alternative – continuous performance management.

💡 About Cascading Goals

In moderation, cascading makes an operation more coherent. But when all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with 4 adverse effects:

1. A loss of agility
   • even medium-size companies can have six or seven reporting levels. Tightly cascading organizations increase the length of the goal setting cycle and tend to resist fast and frequent goal setting.
2. A lack of flexibility
   • Over time, the system grows onerous to maintain
3. Marginalized contributors
   • Rigidly cascaded systems tend to shut out input from frontline employees. In a top-down ecosystem, contributors will hesitate to share goal-related concerns or promising ideas.
4. One-dimensional linkages
   • While cascading locks in vertical alignment, it’s less effective in connecting peers horizontally, across departmental lines.

To avoid compulsive, soul-killing over alignment, healthy organizations encourage some goals to emerge from the bottom up.
An optimal OKR system frees contributors to set at least some of their own objectives and most of all of their key results. People who choose their destination will own a deeper awareness of what it takes to get there. When our how is defined by others, the goal won’t engage us to the same degree.

💡 OKR Life Cycle

• The setup
  • Make everyone’s goals more visible so that contributors can actually see how their work contributes to the company’s success.
• Midlife tracking
  • Continue – if a green zone(“on track”) goal isn’t broken, don’t fix it
  • Update – modify a yellow zone(“needs attention”) key result or objective to respond to changes in the workflow or external environment.
    What could be done differently to get the goal on track?
  • Start – launch a new OKR mid-cycle, whenever the need arises
  • Stop – when a red zone(“at risk”) goal has outlived its usefulness, the best solution may be to drop it
• Wrap-up: rinse and repeat
  • OKRs do not expire with the completion of the work. As in any data-driven system, tremendous value can be gained from post hoc evaluation and analysis. In both one-on-ones and team meetings, these wrap-ups consist of three parts:
    • scoring
      • 0.7 to 1.0 = green (we delivered)
      • 0.4 to 0.6 = yellow (we made progress, but fell short of completion)
      • 0.0 to 0.3 = red (we failed to make real progress)
    • subjective self-assessment
      • Inevitably, some people will grade themselves too harshly; others may need to be challenged. In either case, an alert facilitator or team leader will jump in and help recalibrate. In the end, the numbers are probably less important than contextual feedback and a broader discussion within the team.
    • reflection
      • Did I accomplish all of my objectives? If so, what contributed to my success?
      • If not, what obstacles did I encounter?
      • If I were to rewrite a goal achieved in full, what would I change?
      • What have I learned that might alter my approach to the next cycle’s OKRs?

Two OKR Baskets

The relative weighting of these two baskets is a cultural question. It will vary from one organization to the next, and from quarter to quarter. Leaders must ask themselves: what type of company do we need in the coming year? Agile and daring, to crack a new market – or more conservative and operational, to firm up our existing position? Are we in survival mode, or is there cash on hand to bet big for a big reward? What does our business require right now?

• Committed objectives
  • Tied to company metrics: product releases, bookings, hiring, customers.
    Management sets them at the company level, employees at the department level. In general, these committed objectives – such as sales and revenue goals – are to be achieved in full(100%) within a set time frame.
• Aspirational objectives
  • Reflect bigger-picture, higher-risk, more future tilting ideas. They originate from any tier and aim to mobilize the entire organization. By definition, they are challenging to achieve.
  • Can prompt a reset for the entire organization.
    People can start saying: “If we’re going to be that big, maybe we need to redesign our architecture. Maybe we need to redesign our storage.”

💡Continuous Performance Management: OKRs and CFRs

“Talking can transform minds, which can transform behaviors, which can transform institutions.” Sheryl Sandberg

Annual performance reviews are costly, exhausting, and mostly futile. On average, they swallow 7.5 hours of manager time for each direct report.

CFR:

• Conversations: an authentic, richly textured exchange between manager and contributor, aimed at driving performance.
  Five critical areas have emerged of conversation between manager and contributor:
  • Goal setting and reflection, where the employee’s OKR plan is set for the coming cycle. The discussion focuses on how best to align individual objectives and key results with organizational priorities.
  • Ongoing progress updates, the brief and data-driven check-ins on the employee’s real-time progress, with problem solving as needed.
  • Two-way coaching, to help contributors reach their potential and managers do a better job.
  • Career growth, to develop skills, identify growth opportunities and expand employees’ vision of their future at the company
  • Lightweight performance reviews, a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting, in the context of the organization’s needs.
• Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvement
  • Feedback is an opinion, grounded in observations and experiences, which allows us to know what impression we make on others.
• Recognition: expressions of appreciation to deserving individuals for contributions of all sizes.
  Here are some ways to implement it:
  • Institute peer-to-peer recognition
  • Establish clear criteria: recognize people for actions and results
  • Share recognition stories
  • Make recognition frequent and attainable
  • Tie recognition to company goals and strategies

Continuous performance management

1. Set of monthly one-on-one conversations between employees and their managers about how things are going
2. Quarterly review of progress against our OKRs. We sit down and say “What did you set out to accomplish this quarter? What were you able to do – and what weren’t you able to do? Why or why not? What can we change?”
3. Semiannual professional development conversation. Employees talk about their career trajectory – where they’ve been, where they want to go. And how their managers and the organization can support their new direction.
4. Ongoing, self-driven insight. The idea here is to capture more specific feedback in real time.

Better Discipline

Early in your career, when you’re an individual contributor, you’re graded on the volume and quality of your work. Then one day, all of a sudden, you’re a manager. Let’s assume you do well and move up to manage more and more people.
Now you’re no longer paid for the amount of work you do; you’re paid for the quality of decisions you make. But no one tells you the rules have changed. When you hit a wall, you think, I’ll just work harder – that’s what got me here.
What you should do is more counterintuitive. Stop for a moment and shut out the noise. Close your eyes to really see what’s in front of you, and then pick the best way forward for you and your team, relative to the organization’s needs.

💡Writing Effective OKRs

• Objectives are the “whats”
  • express goals and intents
  • are aggressive yet realistic
  • must be tangible, objective, and unambiguous; should be obvious to a rational observer whether an objective has been achieved
  • the successful achievement of an objective must provide clear value for the company
• Key Results are the “hows”
  • express measurable milestones which, if achieved, will advance objective(s) in a useful manner to their constituents;
  • must describe outcomes, not activities; IF your KRs include words like “consult”, “help”, “analyze”, or “participate” they describe activities. Instead, describe the end-user impact of these activities.
  • must include evidence of completion.