Transitioning from operational metrics to innovation accounting is challenging. Working with OKR's when building ExO's (Exponential Organizations) makes a lot of sense but can be challenging. Here are some experiences shared in the OpenExO community
4. Objectives & Key Results
For Exponenti al Organizations
This Shared Goals framework from Andy Grove at Intel is now practiced at Google, LinkedIn, Dropbox and others.
Essentially, the company sets annual and quarterly goals.
Teams and individuals then create their own OKRs, aligning with the company’s objective,
-but they do so all at once, in negotiation with each other.
5. How is your organization dealing with
metrics for innovation?
EXECUTION INNOVATION
Objective Measure financial results Measure the reduction of risk & uncertainty
Internal and external organizational knowledge around each initiative
researched
Metrics Key Performance Indicators
(KPI)
Test Assumptions/Hypothesis (true/false)
Number of hypothesis validated for each initiative proposed by teams
Amazon: No of Weblabs run per year (500-200) such as customers sharing
opinions, online customer reviews etc
Risk Being disrupted by
competitors
Implementing an idea that won’t work
Financials Real return of a business
Earnings per share, earnings
growth rate etc.
Expected return of a business (to be tested)
Free Cash Flow over earnings per share (drives longer term thinking. eg.
Amazon: “Free Cash Flow is defined as net cash provided by operating activities
less purchases of fixed assets, incl. capitalized internal-use sw and web dev.,
both of which are presented on our statement of cash flows” -Bezos 2004 Letter
Predictability High Low
Failure Not an option Part of the iterative learning process: -> Failure, Failure and then Success
Cost of failure Negative outcome “to be Investment to learn what works and what doesn’t
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7. Organize your goals and improve team coordination with OKR
The following content and the Objectives & Key Results (OKR)
framework is strongly inspired by and building on the book
Measure What Matters -by John Doerr.
OKRs are a simple process that helps drive varied organizations
forward. The process is usually adapted over time by the
adopting organization, in particular in the early phases of
implementation. Actually the implementation process is best seen
as an experimental initiative to learn how OKR’a can best be
defined, implemented and evaluated in the adopting organization.
Objectives are often quarterly where the Key Results typically
are monthly. If you have weekly Objectives or Key Results, they
often prove to be tasks -and you will quickly find yourself doing
common task management
How a team communicates, reviews and improves OKR’s
CFR:
Support and guide your team with personalized discussions
Quarterly Objectives
Organize your goals and improve team coordination with OKR
Feedback & Recognition
Weekly Planning
Praise progress towards goals and boost morale with peer recognition
Track weekly activities to create more visible and interconnected teams
1:1’s
Support and guide your team with personalized discussions
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Quarterly Objectives
Organize your goals and
improve team coordination
with OKR
Weekly Planning
Track weekly activities to
create more visible and
interconnected teams
1:1’s
Support and guide your team
with personalized discussions
Feedback & Recognition
Praise progress towards goals
and boost morale with peer
recognition
The OKR Cycle
Getting Started
CFR: Conversations
Feedback & Recognition
9. “Critical to a sense of autonomy is that more than half of company
objectives originate from individual OKRs, bringing wisdom from the edges
of the organization, inward. For example, what started as an Individual OKR
from an engineer frustrated with the state of mail clients became Gmail,
now one of Google’s core strategic products.”
10. Where to Begin:
❏ Start by creating and socializing your Massive Transformative Purpose
(MTP). Your company’s North Star, it guides you to your future, and
helps your people align outcomes.
❏ Use your company’s Core Values as the guardrails for behavior and
decisions. We recommend Jim Collins’ articles, exercises and book,
Built to Last, Chapter 3 - Core Values.
❏ Hire to match your structure and culture. Self-directed self- starters
and entrepreneurs aligned with your values will thrive.
❏ Create and empower small, independent, multidisciplinary teams
(Zappos and ING both started with a pilot project). When they are
oriented, push decision-making to the edges, closest to the customer.
❏ Create Dashboards to provide open, transparent access to needed
metrics
❏ Well-executed autonomy will require additional ExO attributes:
Engagement, Social, Dashboards, Experimentation.
11. Metrics for Marketplace Initiatives
How to measure success
Business
Metrics
Usage Metrics Transaction Metrics User Satisfaction Metrics
Gross
Merchandise
Volume (total
sales value of
products
through your
marketplace
during a
specific time
period)
Monthly Active Users (MAU) Liquidity (provider and customer
liquidity) measured as %. The % of
listings that lead to transactions
within a certain time period
Net Promoter Score (NPS)
(How likely are you to recommend our
service to a friend or colleague?)
UserReports or SurveyMonkey
Customer
Acquisition
Cost (CAC)
Bounce Rate Provider-to-Customer Ratio Product/Market Fit Survey
(How would you feel if you could no longer
use (product) ?)
survey.io
Customer
Lifetime Value
(CLV)
Time Spent on site Repeat Purchase Ratio
12. Learning Metrics
T he H uman Ski l ls
New Capabilities/Skills New Ways of Working
Experimentation, Time Management, Rapid Learning,
Coaching, Mediation, Stress Management, Work
Ethics, Tenacity, Resilience, Community Building,
Hunger & Drive
Create, document and share best practices for ongoing
innovation mindset in the organisation
Change the World Mindset, Crafting Product
Identity/Brand, Validating Problem-Solution Fit, Identify
Customer Segments, Pitching, Creating Team Identity,
Culture & MTP, Domain Expertise
Social technologies adopted and customised
UX design, Storytelling, Market research, rapid
prototyping, business model discovery, customer
discovery (lean startup), Technical project
management, financial modelling, conceptualisation,
legal & compliance, sales
Involve senior leadership, board & other key stakeholders from
beginning to end in transformation projects
ExO methodologies (take ExO Foundation Course) ExO Sprint, localized processes based on ExO to run
experiments, validated business hypothesis and allow
innovation to get implemented
13. ❏Most case studies show us it can take approx 6 months to achieve functional routines of working with OKR
and have a balance between number of OKR’s and a manageable workload. It is NOT an easy transition to
adopt the OKR framework and implement it.
❏It takes time to get used to keep OKR status updated and monitor OKR’s of other teams
❏OKR’s for innovation work will frequently not be understood by the part of the organization that focus only on
execution metrics. -So there is an educational task that can involve creating internal content to share to
others what you work on and how you measure success
❏Teams appreciate the traction they see when focusing on specific outcome, that is well defined
❏Define LEARNING metrics as well, can be an objective to acquire inhouse knowledge on blockchain (as
example) with Key Results being run an experiment on Initiative X before December 1 that builds a
prototype on blockchain technology -with the objective to LEARN
❏OKR’s shared in a transparent way (The DASHBOARD) does help on enabling collaborationa across
organizational silo’s. To build an ecosystem that is mutually supportive for everyone, you MUST have
transparent objectives
❏Consultants tell us they typically have to explain OKR’s every time they meet their clients -and why OKRs
are used. This is only overcome when the organization sees the value of OKR and takes ownership of the
OKR and related processes
❏Many feel afraid of the transparency: what happens if I do not achieve my objectives? will that impact my
career, my salary, my bonuses etc? Communicate clearly how you want to work with OKR and what the
measurements are used for (and not used for). Keep OKR separated from performance reviews (actually
they become obsolete and less than 6% think PR’s are worth the time), salary negotiations etc. They are
very different conversations and should not be mixed
Implement ati on Advice Shared
By other OpenExO Community Members…
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Leadership
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