You can’t improve what you can’t measure, as the saying goes. However, one of the main challenges of using metrics is deciding what to measure, and ensuring they align with and reflect the right organizational goals and expected results. To this end, OKRs and KPIs are effective tools for news product teams to work together effectively and in the right direction.
INTRODUCTION
As the use of data accelerates, we are increasingly able to understand consumer behavior in order to create products that meet their needs. In this Blueprint, I will explain how two of the most famous methodologies to monitor whether our products are doing well or not — KPIs and OKRs — can be implemented.
The exact date when KPI, or key performance indicator, was invented is unknown, but some people believe that evidence of the use of performance management can be found in the 3rd century A.D, when an emperor of the Chinese Wei dynasty rated the performance of family members using KPIs. That could be the first time that someone systematically used indicators to evaluate something. Many people attribute the way that we use metrics today to the early 1990s, when the famed management scholar Peter Drucker came up with the concept of performance indicators. He created it in order to give organizations a better way to understand the progress teams make on key business goals on a regular basis.
OKR, an acronym for Objectives and Key Results, was created in 1970 by Andrew Grove, the president of Intel. It emerged as Intel's response to rapid technological advances and market transformations. Then, as now, it was necessary to have a management model that allowed companies to adapt quickly to all these changes. The OKR presented itself as a fitting answer.
However, it was only in the 2000s that the methodology became popular. Since Google's adoption, OKR has started to become widespread among companies that were born with a totally different DNA than companies from Silicon Valley. For decades, OKRs have proven to be powerful, reliable tools that aid companies in attaining their long-term goals.
Some companies like to limit their objectives to five, like Google. Others set as many as 10 objectives. Regardless of the number, they have to be written in concise and understandable statements. Key results, by their turn, must be measurable and time-bound. Some companies have key results for each month, others per quarter, while the rest would set annual ones. In the media industry, OKRs are still a relatively new concept. Some companies already started to apply the methodology, but others are figuring out how to do it.
In the following sections, I will summarize the key concepts behind KPIs and OKRs, as well as how to implement them for the first time.
IN PRACTICE
KPIs and OKRs
First, let's explore the difference between OKRs and KPIs.
- KPI is the key performance indicator and is a simple data point to track and monitor performance of a particular area.
- OKR is a goal-setting framework that describes what you want to achieve and how to do so. O is for Objective, what you want to do, and KR is for Key Result. It basically helps you answer how you know if you have achieved the objective.
Check their main aspects in the table below.
Some companies start setting KPIs and later look at how to change to OKRs. OKRs are a little bit more complex than KPIs, since, in order to use them, you should not only have key indicators, but clear objectives as well.
Using and applying KPIs
KPIs are used to track the most impactful metrics for your company's strategy. They help focus on what is important. They are also important to show the entire company what key things that need to be taken care of, whether they are good or bad, and what actions you should do to achieve better results.
But always keep in mind that KPIs tell only a part of the story. In most cases, they are isolated numbers that are not explaining the strategy for the entire company. That's why OKRs became so popular. In the OKRs methodology, the company should start by looking at the objectives.
Characteristics and best practices of KPIs
KPIs are more easily found within companies than OKRs. But even so, its use should follow some recommendations. KPIs need to be directly linked to business objectives so that they bring important results to the company. It is worth mentioning that KPIs can be defined either from the top down or from the bottom up, as they must consider the different visions of the company.
There is no exact number of KPIs one should select, but usually, teams start with a few — the ones that are really key to the business and critical to success. The fewer KPIs you have to focus on, the more you will be focused on them. Also, the more KPIs you have, the more time and money it will cost you to monitor and optimize them.
Another very important point is in relation to transparency, as KPIs need to be defined and communicated to everyone involved on a daily basis. And in doing so, keep in mind that the numbers need to be ambitious but achievable.
Tracking and evaluating KPIs
KPIs should keep everyone within the company aligned on how the business is progressing. Therefore, it is necessary to create some kind of follow-up of the results. Online dashboards, weekly emails, or even meetings can be created to visualize data and discuss achievement plans.
It is important to define the monitoring frequency and also set aside a moment each quarter to assess whether the selected KPIs still make sense for the business.
Here you can find the necessary steps for the implementation of KPIs within a company.
Using and applying OKRs
First, we should have a clear picture of why we are considering adopting OKRs. If the answer is to have better control of employees' activities, this is not the right framework, since OKRs are based on giving freedom to the team to decide how to get to the outcomes.
OKRs are most likely to work when a company has a strong mission, hires great people, and then trusts them to do great things.
Some steps that could help you do this for the first time:
1. Check your mission
Your missions should be clear and inspirational. Everyone in the organization should understand what the mission is and work toward it. In case you are not sure about your existing mission and want to revise it, this guide can help.
2. Build a safe place for learning
To have an effective team, you must have psychological safety. You should create expectations of how the team will work together. People only feel safe if they feel connected with each other. You should set formal expectations of how to work together — rules of engagement — answering questions like: How do we want to work as a team? Are we going to talk at stand-up meetings? What happens when someone makes a mistake?
We build an opportunity to do right together and to create a safe place when something is wrong.
Some characteristics of a good vision statement, from our Product Kit guide, which also differentiates the mission and vision of a company.
Example: Give people the power to make good decisions based on accurate information and data from the business market.
The vision above is aligning and inspires the team at the same time. Notice how it is simple and aspirational. When the team has clarity on the vision, objective creation is easier.
3. Start with one Objective (for one quarter)
My advice is to start with just one objective — because you will have this objective in mind all the time, and it is easy to see if this is evolving or not. This helps to keep it simple and comfortable for anyone that is doing this for the first time.
But at the same time, the objective should be ambitious, clearly defined, qualitative, and set within a specific time frame. It needs to be communicated and understood by all employees and stakeholders. The objective also needs to be actionable by the team independently.
Example: Be perceived by users as the best business-related media brand in our country.
Remember that Objectives are inspirational, while Key Results take that inspiration and make that quantifiable, as we will see later on.
4. Practice metrics thinking when establishing the desired key results
You need to choose a metric that is comparative, understandable, and changes the way you behave. You need to ask: What does this number actually tell me?
A comparative metric allows you to compare a number to other time periods, groups of users, or competitors, which, in turn, helps you to understand which way things are moving. For instance, an increased conversion from last week is more meaningful than a 5% conversion.
A metric should be understandable, in the sense that people need to remember it and be able to discuss it. It should also be a ratio or a rate, not an absolute number. Finally, the metric should change the way you behave. When you read the metric, you need to think about what needs to be done differently to change that result.
5. Cadence
The OKRs cadence is what makes OKRs work. Not just for assessing or evaluating the status of an initiative, but for celebration as well. Cadence means having a clear rhythm on how we check the evolution of our work. These should be clear for the team and followed diligently. You can create a systematic process to do that. For instance, each Monday you send an email checking the progress against OKRs, showing the team what is going well and what is not. You should provide clarity on last week’s tasks, next week’s priorities, and potential risks or blockers.
Characteristics and best practices of OKRs
Remember, the objectives should be ambitious, clearly defined, qualitative, and set within a specific time frame. They need to be communicated and understood by all employees and stakeholders. The objectives also need to be actionable by the team independently.
The key results take all that inspirational language and quantify it. They can be based on anything you can measure properly, such as growth, engagement, revenue, performance, loyalty, and so on. Keep in mind that key results are not things you do, like completed projects or launched products, but rather the results that follow from those actions.
At the same time, key results should be difficult, but not impossible. They need to be aspirational, but not overcomplicate your goals. Remember that everyone on your team should remember the OKRs at all times.
In order to help you do it for the first time, see the examples below.
Good example
Objective: Launch an awesome MVP
KR1: 40% of users come back twice in one week
KR2: recommendation score of 8
KR3: 15% email newsletter open rate
Bad example
Objective: Customers love us so much, they are our sales team
KR1: New self-service help area
KR2: Love-driven marketing with TV commercials
KR3: Customer service completes sales training
Notice how, in the bad example, KRs are focusing on deliverables and projects, not on outcomes. They are also not quantifiable and clear to communicate.
Tracking and evaluating OKRs
As mentioned before, OKRs need to be constantly monitored. Two weeks before the end of the quarter, grade your OKRs based on the data collected. A 0.0 grade means the result was a failure, while 1.0 means the result was a complete success. Most results should land between 0.6 and 0.7, since you had set an ambitious goal. After that, you should plan for the next cycle.
But only checking is not enough. To learn from experience, you need to reflect on what has happened and what it means. This is not about passing or failing, but about the entire process.
Remember this is a cycle. You start with an OKR definition, align it, do regular check-ins along the execution, and reflect on the OKR results at the end of the cycle.
Always keep in mind the following questions:
- Why did we not make this?
- Why did we make it?
- What did we learn?
- Where are we growing?
Why can't we get things done?
KPIs and OKRs are great for setting goals, but, without a system to achieve those goals, they are as likely to fail as any other process. You need to communicate the goal obsessively and comprehensively. The continuous weekly check-in process allows team members to engage and think about better solutions to drive the outcomes. Having KPIs or OKRs without focus and cadence of learning becomes just an exercise of setting numbers.
To summarize, in order to be successful, you have to focus on what matters. There isn't much complexity, but they take discipline to do well. So you will have to experiment, come up with new ways to do the rituals, learning what you are good at, and what you are bad at.
TERMS
Definitions for product terms referenced in this guide are sourced from NPA’s crowdsourced product glossary
Blocker: An event that stops or slows product development.
RELATED READINGS / RESOURCES
Radical Focus: Achieving your most important goals with Objectives and Key Results
https://www.amazon.com.br/Radical-Focus-Achieving-Important-Objectives/dp/0996006028
How to run an OKR setting meeting
http://eleganthack.com/wp-content/uploads/2022/03/OKR_Worksheet.pdf
OKR examples
https://okrinstitute.org/okr-resources/okr-examples/
About the author
Luciana Cardoso started her career at IBM, working with Project Management for Latin America. After 10 years, she joined the Estadão Newspaper in Brazil as a Product Manager. She led the company's digital transformation, creating the Product area and being responsible for the Digital Strategies team, an area responsible for understanding readers' needs, developing products, and following market trends. In the last year, she became Senior Product Manager at Quartz, responsible for product innovation and user experience. Working with remote teams, she brought results such as increasing the readership of the daily newsletter and creating the first Quartz podcast. Today, she is part of the Executive Board of News Product Alliance, acting as Vice President.
