About the Speaker

Paul Niven is an author, OKR coach, management consultant, and noted speaker on the subjects of strategy, OKRs, Balanced Scorecard, and strategy execution. As both a practitioner and consultant, Paul Niven has developed successful Performance Management systems for clients large and small in a wide variety of organizations, including Fortune 500 companies, public sector, and nonprofit agencies.

His most recent book is Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs. His previous books include, Balanced Scorecard Evolution (2014), Roadmaps and Revelations, a business fable designed to help organizations develop simple yet powerful strategic plans, and Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results (2nd edition). The first edition of this text has been translated in over fifteen languages around the globe.

His other books include Balanced Scorecard Step by Step for Governments and Nonprofits second edition released by John Wiley & Sons in April 2008, and Balanced Scorecard Diagnostics, which was released in April, 2005.

A Peek into the Podcast

01:04 – 02:23 – Is there more demand for OKR in this Pandemic?

02:24 – 04:04 – Do companies realize that OKR are going to be even more important in this remote working scenario?

04:05 – 06:08 – How OKRs are going to enable teams and individual employees?

06:36 – 08:43 – Can employee of all levels be involved in the OKR process?

08:45 – 10:13 – Is there any size limit for companies in order to adopt OKR? 

Transcription 

10:14 – 15:27 – Do you see any change in the future OKR trends?

In the current landscape, the pandemic, do you think there is a change creating more need for OKR?

It is interesting right now as you can see, I’m at a room in my house here. So, there is so many things changing since the pandemic. One of the big challenges with what all we have to grapple with is what does the future of work look like, is it going to be all remote? I doubt that. Is it going to be all back at the office? I doubt that. It is probably going to be some form of hybrid work.

From the research that I have read and from speaking to all the clients around the globe, what they are most concerned about is how do you unite people around a common purpose if they’re in disparate locations. So, we’re not all in the office having those spontaneous conversations. How do you make sure we’re aligned?

OKRs, when done well, actually that’s a terrific aspect of the model that it really does unite people around a common per because you’ve got to develop OKRs that signal your contribution to strategy. So, it’s a great way for teams to come together.

I think, regardless of what direction future work goes to, we are going to see more and more organizations adopting OKRs because again it helps to unite employees and teams around a common purpose.

Do you think there is realization in companies that OKR is going to be even more important now with the distributed workforce, virtual onboarding happening everywhere, efforts to make remote employees buy the company culture?

We spoke about the future of work but there are big challenges that organizations have to face. On the positive side, I split my time between the United States and Canada. So, I know a lot about those two countries, not the other countries in the world.

There’s been so much pent-up demand here after the pandemic and vaccination rates are very high. The US economy is very strong and so organizations want to take advantage of that which means growing.

In my research, I have discovered that 90% of all strategic plans have some reference to growth. Everyone wants to grow and now especially is a tremendous time for growth but what tends to impede growth in most companies is a lack of focus. This is another reason, post-pandemic, we’re going to see even more interest in OKRs because again, when done well, OKRs can really ensure that you focus on what matters most to executing your strategy right now.

Therefore, when you look at the factors in the world right now, the future of work whether it is hybrid model we talked about, you look at companies that are seeing all this demand now, as economies around the world are reviving back up to pre-pandemic levels, they need to focus. OKRs can help with that. The future is bright for the world of OKRs.

We usually talk about OKRs from company goals. Now, from the teams and individual employee’s perspective, how is that going to enable them and make them be more productive? Is there any data to support the statement?

I will back up a little bit on that question and go a very meta level on ‘Why do people work?’ Of course, everybody wants a paycheck, and fair compensation is crucial. I charge my clients for our services but all of the data that goes back decades suggests that people want meaning and purpose in their work. That’s really important.

What’s interesting is that there’s a professor in Harvard University named Teresa Amabile, whose work I follow. She wrote a terrific book few years ago called The Progress Principle, and in that book, she talks about what does it take to improve employees’ motivation and engagement during the work day.

Teresa has done decades of study on this and what she is determined is that the single biggest thing you can do to improve employees’ motivation and engagement during the work day is give people the chance to show progress and meaningful work.

Just think about that for a second.

Progress and meaningful work.

That makes sense when we move forward on a meaningful project. Everything just feels good about the day, doesn’t it?

We could sit here and churn through 100 emails but you don’t feel good at the end of the day.

That’s what OKRs can do for you.

When you write good and effective OKRs that signal your contribution to the company, you know that your OKR with a key result that you are going to work on for a year from now on, it’s hopeful that you are making progress throughout that quarter or whatever the cadence is. So, you have the chance to show progress on meaningful work, and that’s not a highly touted benefit of OKRs but John Doerr talks about OKR superpowers, and I think that’s a hidden superpower, critical progress and meaningful work.

Is there a way where all the employee levels, the low level or mid-level, be fully involved in OKRs? Will they understand how OKR works and the visibility of what are the company objectives flows through the organization?

For OKRs to work well and if you want to connect from top to bottom, it really starts with the executive leadership of the company really starts with the executive team, the leadership of the company.

This is the most distressing statistics that I have come along. In my research, only about 10% organizations effectively execute their strategies. So, why is that? If you dig a little deeper, you find that there’s a lot of research that backs up what I am about to say. Only about 5% of the typical workforce understands the strategy, and we see this with our clients all the time. They share statistics like this with us.

So, we have to start right there. To succeed with OKRs, you have to go way back and say, “What is our company strategy?” and then you have to communicate that so everybody understands it. Just getting across that hurdle is enormous and then once you do that, of course, everybody can have OKRs but it’s not a matter and this is a fact that OKR is simple methodology and is a kind of double-edged sword. They are easy to implement but that does not mean it should be done simplistically.

You need to have conversations throughout the organization, so if I report to you, I need to share my OKRs in the context of the company strategy. I would see how I fit in. So, OKRs can be tremendously effective for teams and individuals as long as the company has done the work of developing a strategy, communicating it, and ensuring that these conversations are taking place throughout the organization.

You read a lot about OKRs really fostering strategic conversations but again we see a lot of organizations falling short of that, and that’s where OKRs can really break down when they have people create OKRs in a vacuum without that strategic context. OKRs can be extremely effective for teams and individuals even at the tactical level but you have to have those prerequisites in place that I talked about.

When you are looking at a company size, large, small, is there anything like OKRs should be done only for companies of certain size or can it be used by anyone who runs a business?

We just talked about the importance of strategy, and every company in the world whether you’re a small startup of five people or you are Google, you need some form of strategy like what is our plan for overcoming our competition and winning in our markets. By that yardstick, every organization in the world could have OKRs because you need a means to execute it.

We’ve got so clients in startups, Fortune 50 companies, Government agencies, non-profit; hence, OKRs are really not industry-specific.

When we see organizations succeeding or having challenges with OKRs, it always comes down to what I call the ‘soft things.’ What I mean be ‘soft things’ is executive support. Do executives understand? Do they have a guiding rationale for OKRs? Has the company provided training on OKRs so that everybody understands how the model works? Is there a champion in place and a group of ambassadors?

It’s always the change management aspect that tends to trip it up but to answer your question, we don’t see any industry specific barriers, all organizations, all sizes can benefit from OKRs, when done well.

Have you seen any changes or it just remains the same in terms of what’s there for OKRs in the future? How has it morphed into something different?

That’s one of the fun things about my job. My job is that this is not a static model and that’s why I love working in this arena. We’re learning more about the organizations that have been around for 100 years and we are learning how to manage better all the time and this is changing as well.

A couple of big trends I’ve seen with OKRs, number one is its cadence. So, when OKRs really hit the vanguard and became very popular, it was just assumed that you but we would operate on a 90 day i.e., a quarterly cadence but we have clients challenging them. It doesn’t work for every client because maybe they have a seasonal or cyclical business or maybe it’s a school district that operates on a school year, it could be anything.

Right now, we have clients who are using four-month periods. They call trimesters. We’ve got clients in six-month periods. Anything beyond is probably a little bit too much but I really like that the people are challenged in that assumption saying ‘what is the right cadence for us?’ And if you are in a business or an industry that is moving very quickly, maybe even monthly, it’s possible. So, you have to match the cadence of your OKRs to the industry you’re in, and the culture you have and all sorts of factors.

The second trend is that if you look at the literature around OKR, it is very clear that you would never link it to incentive compensation. The idea is that the employees or teams might sandbag, setting artificially load targets to achieve their bonus.

What’s fascinating to me is, you mentioned in your introduction, I have a background as well a balanced scorecard. OKRs and balanced scorecards share a lot of the same traits. They’re fairly similar frameworks but there are some differences.

In the balanced scorecard world, it is not even a question if you would link to incentive compensation, it’s when it was all assumed, which is very interesting. With OKRs, it is the opposite. And, I’m seeing organizations now question that, maybe there could be a link.

My personal opinion here is that sandbagging argument is not really warranted because here’s why. When you create OKRs, let’s say I report to you, I’m not going to submit my OKRs to you and you would just rubber stamp and say, “These are good.” We should be having a conversation, which is a key part of the OKR process.

If we are having a conversation, you should be able to, as my manager or as the person I report to, say, “Hey Paul, I don’t think you’re stretching yourself here” or “What is your rationale for your target?” or “Why did you choose it?” The idea is if we’re having realistic conversations about this, then I think you can overcome that challenge of sandbagging.

When you think about it, what we are doing with OKRs is asking people for exceptional performance. OKR is not about business-as-usual tasks, it is about 10x improvements. So, if we’re putting this expectation on people, shouldn’t they be rewarded? So, this is a very interesting and evolving field.

Stay tuned in until the next Talent Cast episode.