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OKRs vs. KPIs: understanding measurements for your SaaS business
- falafelite 5y agoSolid read! An additional resource for OKRs is a book called “Radical Focus” by Christina Wodtke. Here is a link to it on goodreads: https://www.goodreads.com/book/show/28951428-radical-focus https://www.goodreads.com/book/show/28951428-radical-focus
- vageli 5y agoEh, that book was riddled with spelling errors and could have been a blog post, in my opinion.
- lowkey_ 5y agoTo agree with the sibling comment, another better alternative may be "Measure What Matters" by John Doerr: https://www.goodreads.com/book/show/39286958-measure-what-matters https://www.goodreads.com/book/show/39286958-measure-what-ma... He has a lot of respect in the tech world, being a leader at Kleiner Perkins who invested early in Google, Amazon, and many others. He's the person who really popularized OKRs, so the book has some great examples.
- jph 5y agoI teach teams how to implement OKRs and KPIs. AMA. OKRs = objectives and key results: https://github.com/joelparkerhenderson/objectives-and-key-results https://github.com/joelparkerhenderson/objectives-and-key-re... KPIs = key performance indicators: https://github.com/joelparkerhenderson/key-performance-indicator https://github.com/joelparkerhenderson/key-performance-indic... It turns out three templates can help greatly: OKR for growth = Improve {topic} by {percent} during {timeframe}. Measure by {metric}. OKR for capability = Launch {feature} for {benefit} on {date}. Track progress by {metric}. OKR for process = Accelerate {queue} from {x} to {y} before {deadline}. Time by {metric}.
- skeeter2020 5y agoI like the concise aspects of your OKRs but maybe they're too specific? It's hard to tell without seeing the motivating problem statements in context though.
- jph 5y agoYes you're right about concise and specific. These aspects help teams who are new to OKRs and who want to write good ones. The motivating problem is how to get teams to try: "I don't want to waste time with project management overhead buzzwords" or "I don't understand why we need this because we already have task cards". It turns out when teams see the concise specific templates, and write using that format, then the mental model clicks into place.
- meekaaku 5y agoI have read the John Doerr's Measure What Matters, and trying to implement some. Do you keep all OKR's visible to everyone in the organisation?
- jph 5y agoYes all OKRs are visible to everyone in the organization. Visibility builds mutual understanding, and also can be a great help for inter-team goals, team-of-teams projects, cross-functional areas, and roll-ups.
- jms703 5y agoLove this. Thank you for posting!
- DougBTX 5y agoWhat’s the thinking behind this? > Keeping something static (like keeping a metric at a particular number) is not a key result. I could easily imagine a support team having an objective to keep the backlog of queries low. And to be pedantic, any metric can be expressed as “keep difference between metric x and expected/desired value y close to zero”, so there must be something deeper here.
- k__ 5y agoSo OKRs define goals and KPIs measure the progress towards these goals? Seems like the PM equivalent to Op's SLAs, SLOs, and SLIs.
- skeeter2020 5y agoOKRs are essentially 2 parts. The "O" is an aspirational goal; The "KR"s are the measureable components. * Start with the problem statement and then make the objective to address it. * If you're always 100% on your OKRs they are not amibtious enough. The value is in the progress not "completion". * Don't make your Key Results a giant checklist of TODOs. It's OK to have figuring out the "how are we going to do this?" as part of the result to be measured, you just need to predefine how it will be measured.
- k__ 5y agoSo it's O -> SLA KR -> SLO KPI -> SLI
- chiefalchemist 5y agoWhat do both have in common? K. That is, Key. It's easy to compile and track minutia. To get sucked into "isn't this data and analysis interesting? And fun?" We've all done it. But time and resources are finite. So it's better to focus, and not not try to eat the whole elephant all the time. The key is Key. Or maybe it's, The Key is key.
- yawz 5y agoThe unfortunate aspect of most (if not all) OKR articles is their use of very simple examples. There are a thousand reasons why real world is messier. In a changing environment goals give people the false sense of comfort to stick with a plan rather than review and adapt, not to mention the danger of optimizing things for the wrong KPIs. So surprise surprise! It’s not as easy as it sounds.
- pm90 5y agoApologies in advance for the rant. As an engineer, I’m really tired of these processes and metrics that are supposed to increase focus and enable delivering value but in practice often don’t. A lot of organizational time is spent coming up with OKRs only for them to be either overridden due to the reality of running a business (gotta do what clients need, gotta do what you can to compete with competitors) or just by VPs/Directors deciding that something else requires the teams focus. Ultimately it seems like a whole bunch of busy work for PMs and TPMs, to justify their existence and hiring more of them. “But you’re not doing OKRs correctly!” Sure, I agree to that. But what use is a system or process that’s so difficult to get right that most organizations fail? I would argue that it is useless. I’ve seen this happen with another process: the church of agile. The way I’ve seen agile being used effectively is for orgs to agree to use the parts of it that make sense for them, not worry about what’s “right”, and constantly try out new ways of improving in response to feedback. That gives the team a sense that it’s a process that is evolving to meet their specific needs, rather than evolving to meet a dogma.
- helge9210 5y ago"Plans are useless but planning is indispensable" (c)
- shane_b 5y agoI’m not really a fan of agile but I like the simplicity of OKRs if done well. It’s not easy and time consuming like you mention. My guess is it rarely gets done correctly. One of the main benefits of OKRs imo is helping each person understand where they fit into the big objective. I don’t see the value in management using them to set lofty goals or push their team. In threads that complain about work, I see a lot of comments about a desire for ownership of their work. OKRs can play a role in describing a persons ownership.
- andrewflnr 5y ago> But what use is a system or process that’s so difficult to get right that most organizations fail? I would argue that it is useless. This is also what extremely difficult but fundamentally important problems look like. Getting clarity about goals across a big organization where every single person has a different conception of the problems it faces is Very Hard. I don't know if OKRs are the right answer, but the right answer will definitely reflect the Very Hard nature of the problem it's trying to solve. Probably the most any methodology can do here is trick you into asking the right questions. (I think Agile is an entirely different story. But remember that agility is only easy if you have solid developers, and hiring is in general Very Hard, especially for the kind of people who muck up Agile.)
- theptip 5y agoOKRs are hard. A common error is to couple the O too tightly to the KR. Case in point: > Objective: Reduce body fat % Key result: Reduce body fat by 5% by the end of the year I really don’t like this form of OKR pair. The O is arbitrary here. Ideally leadership should convey the O, and the team can meaningfully exercise their experience to come up with KRs. In this case you are just specifying the KR. For example the O might really be “Get in shape for the calendar photo shoot”, and another meaningful KR would be to increase your lean body mass a bit. But not if you are training for an ultramarathon! Anyway, that’s perhaps a nit that is orthogonal to the point of the article. As to the article itself - I’m not sure I’m convinced by using both KPI and OKR. As I learned it, there is no reason not to set up KRs that are maintaining instead of improving; for example the SRE team might have the O: “keep the site up”, with one of many KRs: “99.99% API uptime”. I’m a fan of conceptual simplicity and I just don’t see a win for a third category above “plain metrics” that the team tracks and “KR” that the company tracks. The main strength I can see to the OKR&KPI approach is it lets you hide your KPIs in some contexts and really drill down on the few true KRs you have left. But whatever works for your team, go for it.
- sroussey 5y agoThe objective should allude to a why. So why do you want to reduce body fat percent? Let’s say you want to fit in your clothes again. Make that the objective. The KR is a how for the O why.
- civilized 5y agoI liked the distinction made here between objectives and key results. Objectives are the general direction you want to go, key results are how much progress you want to make in how much time. In other words, key results set the planned pace in the direction of the objectives. If the business is a vehicle, the business plan is the intended velocity vector. The objective is the direction of the vector and the key results are the magnitude (speed). And the KPIs measure the actual realized progress in the planned direction.
- napoleond 5y agoIn terms of actually tracking and charting this data, it’s pretty useful to have it all in one place and queryable by SQL—this is not usually the case by default! I built https://www.tabbydata.com https://www.tabbydata.com for SaaS founders who have this problem.
- le205 5y agoI have found that KPIs are a useful addition to an OKR framework. Objectives are usually big and ambitious, but need to be pinned down using Key Results. Key Results are the definition of success for an Objective. However, it’s often the case that there are many ‘numbers’ that affect the Key Results. In advance it is very difficult to know which combination of such metrics is the right one to target. For example, if a KR is to increase sales from £70k to £100k of product X, you can break this down into various other KPIs - traffic, inquiries, conversion rate, AOV etc In many cases these metrics can’t be hard coded into a KR, as the sweet spot for the business is unknown - and ultimately we don’t care which combination brings us to hit our KR. So KPIs allow us to play with the next layer down from KRs, setting and revising targets for the constituent numbers that ultimately drive a KR. Note: KRs should not change frequently, but KPIs can - with testing, iteration, and new information.
- karaterobot 5y agoAll I know about OKRs comes from when the last company I worked for (a YC saas company) got all excited to implement them. They said teams would be empowered to meet the objectives they were given by leadership. The goals were audacious, but we were supposed to get excited by the challenge and freedom of working toward them as a team, doing whatever we felt was right to get the job done. Each team then got together and figured out a plan to do that: what to build, how to build it. Then leadership decided they didn’t like our plans, so they just told us what we were going to build instead. In the end, it ended up being completely top down and, ultimately, ineffective. I don’t believe that’s how you’re supposed to run OKRs: My point is that these tools are as easy to mess up as any others, and will fail if there are deeper, unaddressed problems in the org that aren’t solved first.
- hizxy 5y agoMore I read about these measurements, the more I fail to understand.
- simonswords82 5y agoOKRs transformed how our I run my business - I cannot recommend them highly enough. Read The Great CEO Within for a practical guide on how to implement them, including how to manage meetings that manage and monitor OKRs.