By Ethan Garr
In the early days at TelTech, when I led our product and marketing team, we were having a problem. Growth was accelerating, but we were struggling to keep up. We couldn’t hire and onboard the right people fast enough, and we were making unforced errors that threatened to derail our progress. We needed to develop better organizational alignment, and the Objectives & Key Results framework (OKRs), the one tool that everyone always raves about, wasn’t working.
If you have struggled to implement OKRs, I get it. We tried twice, and even with the help of high-priced consultants, the efforts fizzled out. In theory, OKRs were exactly what we needed. Hell, John Doerr, famously evangelized them into Google, so why wouldn’t they work for us? I don’t know if it was maturity or commitment, but it would be a few years before we could make them stick. The good news is that we survived. Our app RoboKiller became a breakout success, and TelTech was acquired in 2018 by IAC.
One of the things that helped us get through those early headwinds is some good advice I received from Sean Ellis just before I started at TelTech. He told me that “to be successful in my role I should work to teach everyone their role in growth in the North Star Metric.” It took time to build this into our process, but by connecting the work individuals and teams were doing to a single metric that illustrated how we delivered value to users we made our people and processes more effective and found the alignment we needed.
Are OKRs and a North Star Metric Compatible, Or is it One or the Other?
I am not suggesting that a North Star Metric is a replacement for OKRs or that one is better than the other. What I am saying is that you can kick ass with both. OKRs are a tactical process that helps teams align, while a North Star Metric reflects important principles of growth. A North Star Metric offers direction and focus, and it becomes an actionable tool to guide experiments and connect teams. OKRs systematically align the goals of the individual with the goals of the team and the company, and they provide visibility and accountability for everyone in the organization.
Having a good plan for how and when to use these tools can help accelerate growth. In this article, we will describe mechanisms for integrating the North Star Metric into your growth process, and provide practical advice to help you use both tools for the right reasons and at the right times. Managing accelerating growth is a common struggle for fast-growing companies, but if you can get them right OKRs and a North Star Metric can help you sustain your growth curve through these challenges.
Is This the Right Time for Your Team to Implement OKRs?
If your company is ready to scale you should start working on implementing OKRs now, and you should focus on launching them slowly, methodically, and with realistic expectations.
Even if an organization does want to adopt it, I strongly recommend they not go overnight to get 50,000 people to do it. Most companies start with a pilot. And if the leader’s not committed, don’t bother. Don’t even try. Stay with whatever you have. — John Doerr (How VC John Doerr Sets (and Achieves) Goals, by Daniel McGinn)
There is a dramatic shift that takes place when a company moves from the early stages of finding product/market fit into growth mode. A host of new operational challenges emerge as more people with specialized skills must be hired and onboarded and sustainable growth becomes more dependent on experimentation across the entire organization. The business is no longer just a function of a small entrepreneurial group iterating to find the right value hypothesis, and the growing pains usually expand to include more competition for limited resources, the emergence of functional silos, and a lack of clarity about priorities.
Often, a specific problem emerges that shines a light on an area of misalignment, and that is when leaders turn to OKRs to bring order to the chaos, but I think OKRs are most likely to work when they are a framework for success, not a solution to a problem. I spoke to a woman leading growth at a 250 person logistics company. She discovered that clients consistently complained about account communications. Realizing the problem stemmed from alignment issues between customer success and the sales team she decided to turn to OKRs to “fix” the problem.
My question to her was whether she could afford to wait 6 to 9 months to resolve the issue? Most companies could not. OKRs may have prevented this problem from developing in the first place, especially if customer delight was baked into a clear company objective, but they certainly are not a quick fix for the problem today.
When [John Doerr] discussed the idea of OKRs with Larry and Sergey, they immediately realized the value of having a quarterly set of priorities for their organization. It took them around two quarters to figure out how they can write their own personal OKRs and Google corporate OKRs each quarter. — Week Plan, How John Doerr setup OKRs at Google
You should start working on implementing OKRs now because if you can make them work, eventually they will align teams, create visibility, and encourage engagement. To give yourself the best odds for success you should really take time to study and learn best practices for launching OKRs within your organization and go in with realistic expectations. In her book, Radical Focus, Christina Wodtke explains, “When I work with clients to implement OKRs, I give them a warning: you will fail the first time. They do all fail, but they all fail in their own special way.”
I will provide some resources to get you started, but understand that if you are looking for a band-aid solution to a problem and you force OKRs, you are going to fail and it will be demoralizing and distracting for your team. While you are working towards success with OKRs, there are other things you can do now to help bring order to the chaos. Getting started with a North Star Metric is one of them.
Start With a North Star Metric
Data-driven rapid experimentation is one of the most powerful drivers of sustainable growth. When teams become proficient in generating high impact ideas, and develop the muscles to repeatedly test, learn and iterate at a high velocity, they position themselves for long-term success. Teams that employ a North Star Metric do this best.
The North Star Metric is the single metric that best captures the core value that your product delivers to customers. Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base. — Sean Ellis, What is a North Star Metric?
When growing companies start getting bogged down by the chaos, having a clear North Star Metric to provide focus and clarity can make a significant impact. Sales, marketing, product, customer success, engineering all contribute to how value is delivered to customers, but the more siloed they become the more likely it is to disrupt the customer experience. A shared metric that connects all teams to the mission makes it easier to focus growth efforts towards a common goal.
At the logistics company I mentioned earlier, data suggests that when a sales representative and CSR connect with each other within the four days prior to a shipment customer satisfaction improves significantly. That analysis can inform a series of tests to help drive growth for the company, but if the sales team is holding itself accountable to a revenue metric and customer success is focused on a delivery time metric, neither team may see the value in a test the other team proposes.
But what if both teams looked at the core value the company delivers to customers as “Weekly Loads Delivered?” It does not make their silo metrics any less important, but it provides a common language for them to use for growth experiments. If the sales team is making sales, but the carriers find that their trucks sit for hours waiting for their loads to be ready for pickup, the company is failing to deliver on its core value. That is when churn happens and growth falters. With a North Star Metric, both teams can see the value of the work they are doing in the context of the larger mission.
What Steps Make a Make North Star Metric Actionable?
I like the North Star Metric because I think companies can build it into their processes without a lot of heavy lifting. If done well, it can begin to have an impact quickly while growing into an important component of the company’s culture of growth. Of course, its success hinges on first identifying the right North Star Metric (here is a good article to help you get started). For me, the two key ingredients of a good North Star Metric are first, that it actually captures the core value your product delivers to users, and second, that the metric itself is super simple and straightforward. If the metric you decide on is based on a complex algorithm, just start over. Uber uses “Weekly Rides,” and I suggest you try to make yours that simple too.
From there, find the right people to evangelize the concept. It certainly is worthwhile to introduce the idea in an all-hands meeting, but it will most likely take off if a small group of growth-minded leaders begins “speaking in North Star Metric in their daily interactions.” An article in Fortune Magazine once suggested that Mark Zuckerberg, CEO of Facebook, “is mind-numbingly efficient about slipping the statement into everyday conversation.” The more your North Star Metric becomes part of the lexicon, the more it will work to break down silos and promote cross-functional collaboration.
The next step is critical, but also straightforward. Add the North Star Metric into your existing processes, and develop new ones around it. Tools like Growth Hackers Experiments already have this baked in, but it is easy enough to build into whatever system you are using to manage growth experiments. If you are using Vision Documents (here is why I think you should) add “how does this experiment connect to the North Star Metric?” as a line item. When your North Star Metric is referenced often throughout your growth meetings, you are doing it right!
Finally, continuously work to integrate the North Star Metric into the larger company culture. Connect OKRs to a North Star Metric (more on that next), build it into the onboarding process for new hires, share progress against it in company-wide meetings, and share it publicly. If your North Star Metric is about delivering customer value, your customers will likely be delighted when you share it.
Sustainable Growth: Use a North Star Metric to Make Your OKRs Better
In December of 2017, the cryptocurrency and blockchain craze was in full effect, and a beverage company hungry for growth decided to seize the moment despite having no experience in the sector by changing its name from Long Island Iced Tea Corp. to Long Blockchain Corp. This one clever trick drove “explosive growth”, and the company’s stock price jumped 275% in one day to $5.57. I am guessing you will not be surprised to learn that the success did not last. Delisted from NASDAQ, LBCC was trading over the counter at around $.085 last time I looked.
While the example is extreme, the point is that sustainable growth is not short-sighted and opportunistic, it is mission-driven. The North Star Metric is the best data-driven articulation of a company’s mission, and when it is embraced across the organization it is a powerful force to drive growth. It naturally aligns individuals and teams to make decisions that drive the company towards a meaningful goal. However, the limitation of the North Star Metric is that it offers no accountability or transparency on its own, and this is exacerbated as growth accelerates and teams expand:
In the beginning, you have nothing, just a vision. . . and some people join for the mission . . . then after a while, you have got a product . . . and some people join for the product. Then you have numbers, and some people join for the numbers, and then after a while you have an awesome team, and some people join because they want to help that team . . . – Breakout Growth Podcast conversation with Nilan Peiris, TransferWise, VP of Growth
Essentially, the faster you grow, the easier it is for people to lose sight of the mission. This is where pairing the North Star Metric with OKRs can become increasingly impactful. As I explained earlier, integrating OKRs is a long process, and failing to get them going at first is normal. However, you can greatly improve your chances of making them effective and meaningful if they tightly align with and help shed light on the organization’s mission.
This article by Bruce Gil on the “What Matters” website, explains that “A company-wide OKR pulls everyone in the same direction, serving as your team’s North Star.” I would argue that it is the other way around, your North Star reflects your mission, and your OKRS pull everyone in the right direction, but regardless, the article offers good advice for building mission-driven Company OKRS.
Gil explains that when the What Matters team originally started writing their own company objectives the results were lackluster until one of the co-founders brought the mission into focus: “He pointed out that what we were really trying to accomplish was to create engaging content that helps leaders reach their goals and to operate like a top-tier media company.”
Who Builds OKRs and a North Star Metric Into the Organization?
If your approach to building company-wide OKRs brings value delivery to customers to the forefront, your individuals and teams will be able to create OKRs that are mission-driven as well. Training managers to ask questions like “how will reaching this objective build value for customers, or how will achieving this key result move the North Star Metric?” will ensure that OKRs are best positioned to drive sustainable growth.
From there, it is important that managers build OKRs into the company’s daily processes. In Radical Focus, Christina Wodtke explains that “the most common fail is no follow-through. I’ve seen any number of companies set OKRs, then ignore them the rest of the quarter.” Setting uninspired OKRs that are not mission-driven is antithetical to building sustainable growth, but doing the work and then failing to make the framework matter in your organization is criminal! It should be easier with a combined OKR/North Star Metric focus because employees generally thrive when they feel connected to the mission.
OKR progress should be part of regular one-on-one meetings between individuals and their managers, as well as part of team and company-wide discussions. Wodtke suggests a weekly discussion cadence that includes Friday celebrations, but I think companies have to find their own rhythms with these processes to be successful. Whichever ways you end up structuring this, the point is that OKR conversations should be framed within the North Star Metric so that the “why” behind the work individuals and teams are doing is always set within the context of the mission.
Now Go Make it Happen!
You can win with a North Star Metric and OKRs, but understanding how and when to integrate them into your organization is the key. A North Star Metric can have a fairly immediate impact ensuring that your iterative test/learn process measurably tracks to your mission. While OKRs take time to implement, they can help your organization track to a set of common goals. If you start building clarity with a North Star Metric now and then use it as a guiding principle to inform and strengthen your OKRs as you introduce them into your organization you will build a strong foundation for sustainable growth.
However, neither tool is a magic wand, they depend on strong and intentional leadership to make them part of your organizational culture. So, do not waste your time creating a North Star Metric unless you can commit to each step described earlier. And if you are implementing OKRs to check a box on the “that’s how Google did it” checklist, or as a quick fix to a problem, abort the effort now before you really screw things up!
As companies scale, rapid growth can become its own headwind. More teams can lead to more silos, more people can lead to more misalignment, and more bureaucracy can choke the machinery of growth itself. OKRs and a North Star Metric work to overcome these challenges by helping every individual and team understand their role in growth.
OKRs and North Star Metric Resources
North Star Metric:
Much of my NSM thinking has been informed by Sean Ellis, and I highly recommend his writings on this subject, including this article:
Finding the Right North Star Metric, by Sean Ellis
Collection of Some of the Best SaaS North Star, by Gokul Rangarajan
Objectives & Key Results:
Google Ventures Startup Lab | GV partner Rick Klau covers the value of setting objectives and key results (OKRs)
Christina Wodtke, Principle – “Accomplish Big Goals With Objectives & Key Results”
Harvard Business Review with John Doerr
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