One of the things that I see routinely in early stage startup companies is a lack of accountability around execution. Sometimes this is because there are unclear objectives. Or sometimes there’s a process around objectives which has become dysfunctional or fallen by the wayside.
When I joined Duo Security, the founders Dug and Jon were proud of having an OKR (Objectives / Key-Results) system in place. But as I went around the company to speak to various managers, it became evident there were problems. People wrote down all kinds of ambitious objectives at the beginning of the quarter, but then no one looked at them again until the quarter was over. There was a perfunctory assessment of the results, they were shared in an all-hands meeting and life went on, un-impeded by the objectives.
Unfortunately, this is a primary source of OKR dysfunctionality. Because it can lead to an almost random de-prioritization or dropping of 30% of the objectives. What happens if the Engineering team commits to an ambitious set of features to be delivered in the quarter and then mid-way through the quarter drops 30% of them? What if Marketing spent the first month of the quarter working on launching those capabilities and instead dropped some other features from their list? And what if Sales has been training people on new features that no longer exist?
It becomes quite clear that by being overly ambitious, we have created a lot of thrashing across departments. The intersection of what needs to be done is hampered by sub-optimal decisions made at a departmental level.
The solution at Duo was to create a less ambiguous process and brings a higher-level of clarity and coordination across departments. It begins by having a small but clear set of objectives at the corporate level. In an early stage company this likely includes things like:
Launch new Enterprise edition by July 15
Expand into EMEA with translated product in German, French
Improve reliability by having no unplanned downtime
Raise Net Promoter Score (NPS) to 30 or higher
Generate 1,000 MQLs and sales pipeline of $2m
Generate $1m in new bookings
Each department that worked for me (which was initially sales, marketing, product, customer service) would create their departmental objectives, taking into account the overall company objectives. However, we were not obsessed about forcing departmental objectives to line up with specific corporate objectives. Sometimes a departmental objective is just its own thing. Worrying too much about which initiative departmental goals align to can obscure the more fundamental decision: is it worth doing or not?
Although there are lots of different tools that you can use for writing and managing goals, in my experience the tools don’t matter. (And in fact, fancy tools with too many capabilities can add more confusion, for example surfacing debate about how to weight various objectives.)
I like to keep things simple. Write out the top 8 or 10 or 12 objectives in a text document in an enumerated list. I weight them all equally. So if one goal is substantially bigger or harder than others, consider breaking it into two. The objectives should be SMART, e.g. Specific, Measurable, Attainable, Realistic, Time-based. Most fundamentally, at the end of the quarter, we should be able to determine whether the goal was completed or not. I like to make sure that executives have skin in the game so we tied half of executives bonus to be paid based on company objectives (usually oriented around the Annual Recurring Revenue, or Sales bookings) and half based on attainment of their departmental objectives.
I also make it clear that the executives must coordinate with their colleagues across departments. So, for example, the head of sales and the head of marketing must be in agreement about what are the appropriate objectives around lead generation, sales tools, training and so on. It helps to reinforce the “client” relationship that exists between departments. That is, I want the head of marketing and the head of sales to recognize that a big part of the marketing department’s role is to help sales close more, bigger deals faster. I want them to work out these things together rather than throwing it over the wall, or worse, sending it up the organization to the c-level executives to determine the appropriate trade-offs. If the heads of two departments can’t work together on the same side of the table to prioritize goals, then its unlikely that people in their departments will work together either. The executives must set the standard for collaboration. (If they can’t, they probably shouldn’t be in the company.)
My direct reports are usually fairly senior, so I tell them if they get 80% or higher of their objectives, life is good and their bonus will reflect their accomplishment. At 70% it means we did not set the right objectives or I did not manage them well enough, so I will manage them more closely. At 60% or below, they can’t work for me. Since I also say this in the interview process, it helps candidates who are not goal-oriented or do not want to be held accountable to opt out of the process.
However, I try to be flexible in one respect. I tell people that they can come to me any time during the quarter and if there’s something they set as a goal that they view as no longer useful to the company, we can strike it from the list. However, we don’t drop something because it is hard, only because it’s no longer the right priority. In my experience, it’s fairly rare for people to take me up on this, but it prevents people from working on something they realize is no longer important. I also remind them that they cannot come to me at the end of the quarter and say the accomplished a whole bunch of other work instead of what we agreed to.
It’s good to follow up with people mid-quarter or in some cases, monthly, to review their progress on the goals. This is an important reminder process sometimes things have either not started or we’re not yet seeing good results. It also helps frame a conversation around the objectives, what is blocking them, and how we can increase the likelihood of success.
Setting objectives at the company level and even the departmental level is not easy. It requires focus and discipline. Often high-growth companies are filled with people who are ambitious and want to do lots of initiatives. Most organizations in a growth phase benefit from doing fewer things better rather than being spread too thin on too many things. You have to say no to some things.
Of course, there are many more things that get done in a department than the eight or ten top objectives. But it helps to identify what are the most important items that will move the company forward.
I have found that if you roll this kind of framework for setting, measuring and rewarding objectives at the top level after one or two quarters, it can be rolled out more broadly, to the next level of management. I would not suggest rolling it out out across the entire company all at once. When rolled out too quickly, it can easily lead to chaos at the end of the quarter with employees chasing down their colleagues in other departments to do work in pursuit of “their” objectives. It is better to take a measured approach. Get good at setting objectives at the departmental level before you expand broadly.
How does your company set goals? Does everyone know the overall company goals for the next quarter? How often do you follow up on the goals?