Radical Focus

We once talked about a book called “The Most Popular Leadership Course at Harvard Business School.” The most significant and impressive aspect for me in that book is that a manager in the work process must pay attention to critical tasks. Critical tasks are the most important indicators of the progress of work at each stage of a company.

But why do many companies continue to stagnate or spin their wheels despite working for a long time? It’s because there is no effective method for advancing critical tasks. So today, we want to introduce you to a book called “OKR Methodology.”

Another aspect of this book that attracted me is its challenge to, or rather, its disruption of the commonly used Key Performance Indicator (KPI) method. 

I believe that when everyone in the workplace hears the three letters “KPI,” they shudder. People have a love-hate relationship with KPIs. KPIs are top-down, and every year, when each company is pushing its KPIs for the year, there is a constant negotiation with subordinates, bargaining back and forth. The downside of subordinates receiving KPIs is that they will calculate and say, “How can I precisely achieve the KPI without releasing more potential for next year?”

As a result, every company can achieve its KPIs at most, but it cannot create more surprises. Moreover, everyone is oppressed by KPIs and is exhausted.

So, what does OKR mean? The three letters O stand for Objectives, Key Results. Objectives and Key Results constitute OKR, which stands for Objectives and Key Results.

The OKR methodology was first invented by Intel and is now widely used by many Silicon Valley companies, including Google and LinkedIn.

After reading this book, I couldn’t wait to recommend it to all the entrepreneurs and CEOs I know. I believe this book will revolutionize the management approach of many companies. Its characteristic is the combination of top-down and bottom-up approaches to enhance the overall team’s productivity. The entire team is constantly working towards OKRs.

Here is a particularly good metaphor: why do many companies always stagnate or spin their wheels in the development process?

There is a Greek story called Atalanta. Atalanta was a beautiful girl who ran very fast and loved running. Her father wanted to marry her off and said, “You should get married.” Atalanta said, “I cannot marry someone who runs slower than me.” So her father said, “Okay, let’s organize a national running competition and let everyone come to run. You will marry the man who comes first.”

Atalanta said, “I will participate,” and they ran together. She ran very fast, leaving all the other boys behind. Only one boy, named Hippomenes, kept pace with her. As they ran, Hippomenes threw golden apples on the ground. He had a few small golden apples and dropped them on the ground. Atalanta saw the golden apples and bent down to pick them up, then ran again. Hippomenes threw another golden apple, and she bent down to pick it up. This happened three times, and Atalanta kept picking up the golden apples. In the end, Hippomenes won the race and married Atalanta.

What does this story tell us? It’s about not chasing after small things when you are constantly advancing your company’s goals. Don’t be tempted by a small golden apple on the ground; otherwise, your speed will slow down, just like Atalanta’s.

The best thing about this book is that it starts by telling us a startup story, immersing us in the scenario of a new startup company.

There’s a girl named Hannah and her partner Jack who co-founded a company called TeaBee. What does TeaBee do? Both of them love tea, and they think there’s a pain point in the world: many restaurants provide very poor-quality tea. Later, Hannah and Jack realized that good tea doesn’t have to be expensive. They could buy tea directly from tea farmers, ensuring that the tea is organic and of high quality. Because they were tea enthusiasts and reduced many channels, they could also ensure that the price of tea leaves was very low. So they decided to establish a company that could help tea farmers make money. They sourced tea leaves from farmers and supplied them directly to restaurants. The ideal was good.

We say that entrepreneurship must start from a great dream. Their dream was excellent: to help all restaurants provide better tea to customers and help all tea farmers sell tea at a good price.

So TeaBee was established, but after opening, they found that things were far from simple. Because many restaurants said, “We need stable supply. Can you provide stable supply?” If you are a small company and cannot provide a stable supply, we would prefer to cooperate with intermediaries. Hannah believed that the company could be flexible, and they could cooperate with some intermediaries to sell their better tea through them. Jack said, “No, this contradicts our goal because our goal is to replace these intermediaries and sell tea directly from tea farmers to restaurants.” But Hannah said selling directly to restaurants won’t work.

So they had a lot of strategic conflicts, often arguing. This was the first conflict. Then they found that there were a lot of things to do in the company. Even simple tasks like daily sales registration were very troublesome because they hadn’t established a perfect system. All the details, such as sales, warehousing, and outbound, had to be manually recorded. So Hannah said to Jack, “As a tech-savvy person, you should create a system for us.” Jack agreed, “Okay, I’ll create a system for you.”

While Jack was working on the system, there were suddenly various tea leaf exhibitions. These were like roadshows for sugar and alcohol. Jack loved participating in roadshows. He believed that each roadshow could bring many small customers and help express his views better, so he spent more time on roadshows. Hannah noticed that Jack was doing roadshows, but the system wasn’t progressing. She became increasingly frustrated, and there were constant quarrels. The whole team was on the verge of splitting because some supported Hannah, and some supported Jack. The business of the company did not make significant progress, and one or two effective sales came from intermediaries. So they faced a problem: should they continue to run the company?

In the early stages, a company will encounter various troubles. Many people are just spinning in place because there are many different ideas and contradictions. Many ideas seem to be opportunities. If you don’t seize them, it’s a pity, but if you grab them, you may forget what you wanted to do before.

Fortunately, they had a startup mentor named Jim, their angel investor who provided the first money. So, Jim arranged to meet them in a coffee shop in Silicon Valley, where he coached various investment projects. After they poured out their grievances, Jim said, “Pay attention, I am your investor, not your mother, so you need to solve all these things yourselves.”

In the coffee shop, Jim introduced them to a new working method called OKR. You need to use the Objectives and Key Results method to manage your team. He briefly introduced the OKR method, which means you need to set an OKR. The most important goal we want to achieve this quarter, the entire team focuses on this goal, and we review it. 

When we openly discuss the team’s atmosphere, you’ll find that the atmosphere suddenly improves. In the past, there was a feeling that no one would discuss the elephant in the room, even though everyone knew that working here was unpleasant, with many problems. However, when we started quantifying the assessment of our team’s atmosphere, everyone could easily face it. It became a topic for discussion, and then we could smoothly plan the week’s work and the follow-up plans for the month.

At the end of this week, during the beer party, everyone found that this day was really important. Why? Because in our previous weekly meetings, when reviewing goals, it was mostly the managers talking. Hannah would talk and express her concerns, hinting or reminding others that the team atmosphere was very bad. Then, at the beer party, when it was time to discuss goals, the customer service department would talk. People from customer service who had never spoken loudly in front of everyone before would now talk about what we’ve done recently related to OKRs, where we are making progress, and the challenges we’re facing.

Most importantly, even the tech guys who usually don’t talk to others, staying isolated in a small room coding, started communicating with everyone about recent advancements in programming. You know, people in tech departments in various companies are considered mysterious, with a language others don’t understand, and it’s unclear what they are doing. So there is suspicion that they might be playing games behind those computer screens. Then they talk about the improvements, when the program will be launched, the effects after launch, and what feedback they need from everyone.

Through such discussions, everyone feels the contributions of others in the team and the sense that everyone is progressing towards the goals of OKRs. At this point, the manager makes a final summary, marking a crucial turning point in improving the team atmosphere. So, Friday beer parties are indispensable even for the poorest companies; everyone must participate.

If the company is very large, like Intel or Google, this meeting can be held by department, with the management holding their meeting, and then the heads of each department going back to their departments to discuss and set their OKRs. Eventually, OKRs can be detailed down to each individual. The basic logic of its formulation is that company management sets OKR indicators, then it is broken down from management to departments, and from departments to each individual. Of course, it’s not necessary for every individual to have one, but at least you should know what your department’s OKR is.

Through Hannah and Jack’s story, we roughly understand how OKRs work. Next, let’s look at the process of setting an OKR. First, what makes a good OKR indicator? I summarize it simply into two points: it should bring passion and some concern. If the OKR indicator is too low, you will feel neither passion nor concern. But if it’s too high, you will feel only concern without passion.

Next step, setting OKRs must start with the company’s mission. Just like Jack and Hannah, their goal is to bring better tea to more restaurants, enabling more tea farmers to gain greater profits. With this mission, a group of people can discuss OKR indicators. Next is the rhythm from company to department to individual.

The third point is that the goal must be focused. This book suggests that many companies like to set three to five goals, which is unrealistic. The most effective is to have only one goal per quarter, and it’s good enough to push one thing forward in a quarter.

The fourth point is the combination of bottom-up and top-down, meaning the goal is not set by the boss alone and sent as a document. It requires everyone to participate in the discussion. Later, we will discuss how the OKR generation meeting should be held.

Here are a few principles: The first principle is that the goal must be inspiring. For example, there is a very important tip here about what is a good goal and what is a bad one. For example, increasing sales by 30%, doubling the number of users, or increasing revenue for a certain product line to $5 million. Is this a good goal or a bad one? The answer is a bad goal.

It looks very clear with numbers, very commercial, but the problem is that no one is excited about numbers. No one dedicates themselves or strives for numbers because it doesn’t inspire. The goal must be able to inspire, so what kind of goal inspires? It could be a sentence, like capturing the coffee direct sales retail market in the South Bay area, launching a great minimal viable product (MVP), changing the coupon usage habits in Palo Alto, or completing a successful Series A financing round. These goals may seem lacking in numbers and time, not conforming to the smart principles we discussed earlier.

But you will find that when we describe the goal with a system of time and numbers following the smart principles, it gradually loses the inspiring feeling. Therefore, in OKRs, the objectives are our goals, and they must be inspiring to the team and something the team can identify with.

The second is to have a time frame, which is reflected in the plans for this week, the follow-up plans for this month, and our overall key indicators.

The third is crucial: each task is independently responsible for a specific team. We are most afraid of setting a key indicator and finding out that everyone is responsible for it, but it seems that only the boss is responsible. Each key task should be broken down into small team OKRs, and let each small team be responsible for that OKR.

So every OKR has a dedicated team responsible for it, which is the most inspiring thing. Because whether it’s the tech department, customer service, or recruitment in the human resources department, they can feel that they are part of the OKR, and they are constantly making efforts.

It’s like playing a game. Why do different guilds unite to fight a boss together, even though they don’t know each other and are far apart? Because each person takes on a very important part of the task, creating a sense of wholeness. The feeling of happiness for an individual comes from the connection with a great unknown whole. When you feel that there is a great whole behind you, you feel like you are playing a big game in your heart. This feeling is completely different from being just a chess piece for others. So these three principles we talked about, inspiring people, time limits, and independent teams, and everyone should know that including Google and LinkedIn, such companies, when they first started using OKRs, faced setbacks. For example, the measurement indicator for the initial key result was 5%, and after doing it, it became 3% or even 2% after the next meeting. So everyone should not be discouraged. When people are not used to this thing at the beginning, you should encourage them slowly.

The most important method is to strengthen communication. In the OKR task planning meeting on Monday and the beer party review on Friday, communication is the most important thing. It must be ensured that everyone in the team can speak, and each person can talk about their understanding of the OKR and their current progress, which will improve the team’s efficiency by speaking out.

Next, we talk about why OKRs work.

First, we say OKRs combine top-down and bottom-up, and they are behaviors that are connected. For example, as someone who doesn’t understand technology at all The next step is to mobilize all participating executives to freely list all the metrics they can think of to measure the objectives. Through voting, we aim to identify the most critical matter to advance in this quarter, aligning it with the objective in our OKRs. Subsequently, we encourage everyone to speak about the key measurable outcomes crucial to achieving this objective. This process is essentially what we refer to as free listing and brainstorming.

Drawing inspiration from the book “Designing Your Life” and Stanford University’s popular creativity course, we aim to stimulate a plethora of ideas from everyone. Each person should express their viewpoints and ideas without excessive criticism or judgment. The focus should be on consolidation and elimination of similar ideas, leading the team to converge on common goals.

Following this, we use voting to determine the most important OKR for the quarter. In this process, the CEO plays a significant role as the leader of the meeting and the person with the deepest understanding of the company. It would be challenging if the team’s votes differ significantly from the CEO’s perspective, indicating a need for reflection on potential issues.

Transparent and open communication within the company is crucial. Understanding what the most critical focus for the company is at any given time is achievable through effective communication. It is essential not to be overly ambitious; selecting an OKR that can bring about a qualitative change for the company is crucial. For example, TeaBee’s OKR focuses on proving the value of the provided high-quality tea to restaurant suppliers, which sounds like a single goal but requires a multifaceted approach over a quarter.

In conclusion, to facilitate a clearer understanding and application of OKR, we summarize a few key points:

Set only one company-level OKR unless your company has multiple business lines, in which case, design OKRs for each business line. Challenge yourself with a three-month timeframe for OKRs. Goals that can be achieved within a week lack the necessary challenge. Avoid setting short-sighted OKRs. Exclude traditional performance indicators from OKR objectives. Goals should be inspiring rather than based on conventional performance metrics.

During weekly progress check-ins, start with OKRs. Department-level meetings do not need to discuss individual OKRs; one-on-one communication suffices. Confirm OKR progress every week, as they are top-down related – starting with company-level, then departmental, and finally individual OKRs.

Understand that OKRs are not the only things to do but are crucial things to do. Trust that the team can handle other tasks efficiently. OKRs ensure the team achieves a specific goal within three months, representing the essence of OKR.

OKRs differ from Key Performance Indicators (KPIs). While KPIs often involve detailed and passive top-down management, OKRs are about inspiring individuals to achieve their goals, allowing room for personal initiative beyond the specified objectives.

Monday’s OKR progress confirmation is a conversation, not a report or briefing. The emphasis should be on communication and dialogue, addressing challenges, seeking mutual support, and recognizing progress. Encourage employees to provide input and suggestions on company OKRs. OKRs should have both top-down and bottom-up elements, allowing everyone to participate. Publicize OKRs internally, making them visible on walls, websites, and work systems, ensuring everyone is aware of the current focus.Friday celebrations are essential for balancing the rigorous business environment of Mondays. They provide a platform for the team to maintain an optimistic and positive attitude. Creating a “victory” atmosphere is crucial.

In summary, this book, starting with the small entrepreneurial team of Hannah and Jack, may give the impression that OKRs are only suitable for startups. However, giants like Google and Intel continue to utilize OKRs, proving their applicability in both small and large companies.

This book is revolutionary, presenting a simple tool that, when applied, can bring about significant change. The richness and complexity lie in its application. If every company starts implementing OKRs, it will lead to various transformative changes. This book could potentially be a storm-triggering publication, improving work atmospheres in teams of all sizes.

I hope everyone benefits from this book. Thank you.