How To Set Simple Goals Without Drowning in Process
(And Why I Stopped Using The Term OKRs)
Photo by Ronnie Overgoor
"The key to strategy is omission. — Peter Drucker"
OKRs has become an all-or-nothing cult. Most teams and their leaders are confused, others claim they understood and religiously preach a specific version of OKRs that they have seen work in a (read: one) company they used to work at. Goal-setting systems, like any system, need to be tuned to the organization they serve. The organization should not be serving the tool. And so, I simply refer to “goal-setting” and then try to understand what companies actually need.
Over the last years, I had this “How to…OKRs” cheat sheet on my shared drive. Everytime someone asked about goalsetting, I would share my cheat sheet and forget about it. Until I realized: this might probably be the most requested resource in my library. It took me a couple of weeks to distill it to its essence but - without further ado - here are my key learnings.
Generate Your Goals By Building A Driver Tree
Aligning teams around shared objectives is crucial. Instead of traditionally followed OKRs, I've found it more fun and effective in deploying the “driver tree” approach, especially when facilitating goal-setting sessions with executive teams for upcoming quarters. The magic of the driver tree lies in its ability to foster collective discussions, ensuring that goal-setting becomes a collaborative endeavour rather than an isolated exercise. Having a real-time conversation around a flipchart creates collective understanding of all the necessary parts that make the business succeed and inspires more entrepreneurial thinking. Ultimately, I am a visual thinker who thrives in motion, so the driver tree exercise is just a lot more fun for me.
Step 1: Identify the Top-Tier Goal
Start by pinpointing the long-term goal. This will sit atop of your tree diagram as the overarching objective your organization is aiming to achieve. This could be a business goal, such as boosting annual revenue by a certain percentage or achieving a particular level of market penetration.
Step 2: Determine the Key Drivers
Once your primary goal is established, identify the most critical drivers that will lead your organization to this target. These drivers are the primary factors or conditions necessary for achieving your top-tier goal. They form the first branches of your tree. For example, if your long-term goal is to boost annual revenue, key drivers might include increasing product sales, reducing operating expenses, or expanding into new markets.
Outcomes refer to the specific results or end states you desire to achieve. Think of them as future projections framed in the future perfect tense—like "I will have expanded to three new markets" or "We will have reduced operating expenses by 15%". These outcomes depict clear, tangible accomplishments that signify progress toward the top-tier goal.
For any of these drivers, write down the outcomes you need to achieve your top-tier goal. How you get to these outcomes needs to be in the responsibility of the owner of this goal.
Step 3: Break Down Each Driver into Components
Next, dissect each of these key drivers into their individual components, forming the lower branches and leaves of your tree. As you delve deeper into this analysis, the components will become more specific and focused. For instance, if one of your drivers is to increase product sales, its components might include marketing strategies, sales team performance, or customer satisfaction levels.
Again, outcomes only!
Step 4: Assign Metrics and Targets
Now that you have a detailed diagram of goals, drivers, and their components, it's time to quantify your plan. Attach a relevant, measurable metric to each driver, giving your team a concrete way to track progress. Furthermore, set a specific target outcome for each driver for the designated timeframe. These targets should be realistic and achievable, yet ambitious enough to push your team toward growth.
Step 5: Collaboration and Refinement
Performing this exercise should involve a small, dedicated group comprising team leaders or members from different departments. A collaborative approach ensures diverse perspectives and a holistic view of the organization's objectives. Once the tree diagram is completed, share it with the larger team, gather feedback, and make any necessary refinements. It is important to open up the conversation and include all team members. When your colleagues get the opportunity to contribute, it will (1) make the goals more resilient by adding many more perspectives and (2) increase the sense of agency in your team because they know their contribution is valued. How can you do that?
The process I use has three phases:
Management thinks through the long-term (seven years, 12-14 months) perspective, then derives the first set of goals for the quarter. Communicates that to team leads or full company.
Teams then come up with suggestions of how they think the goals should be formulated and measured. They also come up with outcomes they can contribute to these goals.
Management collects all inputs and produces a final set of goals. Every goal has an owner and a project team that is put together from different departments. Team size is 4-5 people.
A drawing from an early speech I delivered on goal-setting.
Remember, the tree diagram isn't set in stone; it's a living document. Revisit and adjust it periodically to ensure it aligns with evolving business realities and continues to guide your team effectively towards your long-term goal.
Assorted Goal-Setting Principles (Or: How To Not Lose Your Mind)
OKRs are great for consultants. They promise clarity and focus for the organisation, which CEOs love, and they’re just complicated and confusing enough to compel organisations to seek outside help. I have learned myself: OKR advisory is a wonderful door opener for business development. Ben Bear really hit the nail on the head:
The driver tree works because it's simple, long-term-first, and clearly communicates to and with the entire team. If you follow a few principles to keep the process of goal-setting simple, you will not need to hire a consultant anymore. So here are my principles, time-tested in the last ten years of my investing, advising and coaching work.
Practice “Backcasting”: Plan long-term first
Imagine where you want your company to stand in seven years. Why seven years, you ask? It's a sweet spot between being too short to evoke genuine transformation and too long that it feels like mere wishful thinking. Now, visualize that grand picture: Is it global expansion? Is it innovating an entirely new product line? Or perhaps it's achieving industry leadership in sustainability?
Once that picture is painted, reverse engineer from there. Ask yourself: To reach that seven-year pinnacle, where should we aim to be in the next 12-18 months? This method, fondly known as “backcasting”, ensures you’re focusing on pivotal, culture-defining moves rather than just tackling what's urgently knocking at your door today. The risk without this approach? You may end up chasing fleeting opportunities, neglecting the foundational and strategic changes crucial for long-term success.
The driver tree approach begins with this long-term vision, allowing you to break down these overarching objectives into manageable, actionable drivers.
The goal-setting process requires a single owner
The goal-setting process requires an owner. This owner needs to be a full-time member of your team with 20-30% available bandwidth. Often, this responsibility falls to the chief of staff, chief operating officer or chief technology officer (in tech-heavy companies). You cannot outsource responsibility, even if you hire a coach or consultant.
The responsibility of “owning” means not only being in charge of goal-setting across the entire organization but also goal tracking and helping facilitate resource conflicts as they arise.
Keep Things Simple
Goal-setting is about directing the attention and energy of the entire team. It helps every individual team member to ask, “What is the best use of my attention and energy right now?” Communicating a complicated web of interlocking priorities with varying timelines will confuse everyone on your team. The answer to this question must be crystal clear and concise - to every single member on your team.
Startup enthusiasts frequently grapple with differentiating objectives, key results, and initiatives. Just as the driver tree advocates for a streamlined structure, starting from the primary goal and trickling down to the key drivers, your entire goal-setting approach should echo this simplicity.
Here's a simple mantra: if it doesn’t rank high enough to be a goal, discard it. Prioritizing a long-term perspective ensures this clarity. Think of your goals as a straight line, not a web. They should stand clear and independent, without being tangled or dependent on each other.
Maintaining the simplicity of the "one layer" approach, ensure all goals share the same finish line. If you decide on a three-month period for your goals, stick to it for all. This eliminates unnecessary complications. When goals have varied timelines, you'll find yourself constantly adjusting and replanning. The aim is for the goal-setting to work for you, not the other way around.
Think minimum viable product: the simplest goal system—one that just barely does the job—is the right one.
Communication: Simple messages, repeated often
Even if you are a great communicator and your second-level managers are very capable to translate the company priorities to their teams, assume that only a fraction of your intended message is being received by the entirety of the company.
Goals need to be central to your communication as a leader. In the same way, as the driver tree visually communicates the hierarchy and interrelation of goals, your verbal or written communication should be clear and straightforward. Revisiting and discussing the driver tree with your team can serve as a consistent and understandable touchpoint.
I mentioned already that you need to keep your goals as simple as possible so everyone understands. You will also have to repeat yourself over and over again, and on different channels so you can be sure to reach everyone in your organization.
Successful communication relies on simple messages, repeated often, regardless of the medium. So your goals not only need to be simplicity, but you need to repeat
Balance Goals Between Day-to-Day and Project Roles
As companies expand, roles often divide into two distinct categories: “day-to-day” operations and “project” work.
The "day-to-day" roles, like accounting and people operations, are the backbone of an organization. They ensure smooth daily functioning through continuous, repetitive tasks, which rarely have a concluding point. Think of these roles as the heartbeats of your company, maintaining the regular rhythms.
On the other hand, "project" roles focus on specific tasks with clear endpoints, like launching a new product or implementing a new software system. These roles drive change and propel the company's mission forward.
Here’s the catch: While goals can be transformative for project-based teams, urging them towards innovation and completion, they can muddle the clarity for day-to-day teams. For instance, asking an accounting team to constantly innovate might disrupt their primary responsibility of ensuring consistent financial operations.
Founders often wonder: Can my day-to-day teams also have goals? Absolutely, but with a caveat. Having led finance and admin teams in startups, I can vouch for the importance of aligning their goals with realistic project tasks they can take on, without compromising their routine responsibilities.
In essence, while setting goals, recognize the distinct nature of these roles. The beauty of the driver tree is its adaptability. It can capture both the day-to-day operations and project-oriented objectives, helping leaders visualize where each team fits into the broader mission.
Day-to-day responsibilities should be guided by clear role descriptions and metrics. As a leader, it’s crucial to gauge how much of each team's time is committed to routine tasks, adjusting their project goals accordingly. This ensures clarity, prevents overburdening, and sets every team up for success.
Why I Stopped Using The Term OKRs
It's easy to get ensnared in the intricacies of various methodologies, acronyms, and tools. But at the end of the day, our ultimate pursuit remains unchanged: Let's focus on clarity, simplicity, and real progress. Because clear goals, not confusing jargon, drive success.
Ditching "OKRs" for "goals" cuts through the noise. It's not about buzzwords, but clear direction everyone can rally behind.
The driver tree, with its roots firmly grounded in collaboration and clarity, presents a refreshing perspective in this realm. It strips away the noise, the clutter, and the unnecessary complications, paving a straightforward path from a dream to its realization.
Give it a try, and watch as your team comes alive, buzzing with purpose and passion. After all, isn't that the very essence of entrepreneurship?