CHAPTER 11

How to Move the Needle?

Chapter Highlights

Defining good OKRs and following the OKR cycle is challenging for most organizations. It’s a big leap and it requires a big cultural change, too. However, as with any other skill that is learnt, practice makes better, and the more you and your teams cycle through OKRs, the better you will all become. Your teams will be increasingly focused and aligned with your overall company strategy. The OKR Cycle makes sure that your goals are not set and forgotten, rather that they are kept alive throughout the quarter.

After the executive team has defined the single quarterly OKRs for the company, the operational teams connect and align their OKRs to the company KRs. Your teams are ready to start the first week of OKR check-ins. Immediately the following question arises: How do we move the needle?

The Cynefin Framework

Every organization and situation is unique, there isn’t a cookie-cutter approach to achieving OKRs and therefore the honest answer is “it depends.” Sometimes a team knows exactly how it can move the needle. For example, to increase product quality of a software product, software engineers could apply best practice code design techniques and consistently show this behavior throughout the day or week. There can also be moments where teams have no idea on how to move the needle. What is the best way to approach this?

Luckily, Dave Snowden has created the Cynefin framework to help us make decisions on how to best make sense of your own and other people’s behavior (Snowden 2007). It’s a sense-making framework (not to be confused with a categorization model) to help leaders and teams make sense of a certain situation, in our case to decide how to move the needle. For many years I’ve successfully applied the Cynefin model to OKRs to help teams make decisions about which approach is best to get that needle moving for them.

The Cynefin Framework (see Figure 11.1), when uniquely applied to OKRs, is a way for you and your teams to understand and respond to your current state, which is especially relevant when you make progress attempts.

Figure 11.1 The Cynefin framework

In the previous figure, you can see two larger domains (ordered and unordered), which are both divided into two subdomains. The four domains describe a particular state and its associated with steps toward a response. Becoming aware of the status quo and then using the framework as a tool to make sense of appropriate responses that will move their needle, a team can arm itself with the most effective means of problem solving to fit their situation. Let’s take a look at the domains that make up the Cynefin framework:

Clear Domain

Where the problem lies and how to act to solve it is clear. This is likely because this isn’t the first time your team or company has been in this position. So, while it may not be easy, there are still well-understood best practice guidelines to follow. In Chapter 4, you’ve learnt about leverage behavior measures. For example, if your Objective is to “fit into your wedding outfit,” the lag measure is body weight and the lead measure might be your caloric intake per day. Cause and effect are well known here. If you consume less calories, you lose weight. If you then consume less calories over the course of 90 days, you just might achieve your Objective.

In the clear domain, you will find key results that focus on consistent human behavior or weekly outcomes the team needs to achieve. You can check daily or weekly if team members actually showed the desired behavior the day or week before. If not, teams respond by creating a list of possible actions to counter for the undesired effect, behavior and prioritize them and then make commitments to each other to follow up on those actions in the day or week ahead. These actions are different from the horrible action list we discussed in Chapter 2, because they will only focus on small actions or commitments for this week. This puts teams in direct control of adjusting their own behaviors, giving them autonomy (and therefore is a display of trust), rather than having them follow orders and fostering resentment.

Complicated Domain

The heart of the matter is relatively clear to your team or company and there is a mutually agreed upon outcome. However, the method for getting from point A to point B is not obvious. In this domain, there are many possible paths to take, and you, as a leader, can expect that there will be a lot of (technical) learning going on as team members evolve and adjust to get closer to a workable solution. They will need a lot of feedback in order to adjust swiftly.

Teams first need to understand the current performance of the “system” (more on measuring performance in Chapter 12) before they can respond. Then teams can use root cause analysis tools, for example by using the “five whys” technique we discussed in Chapter 3 or the fishbone diagram from Chapter 4, to determine their next course of action. For example, when customers don’t come back to your website because your site was lagging, a software team could then define an Objective to boost the website performance, with a KR that would measure website response times. The solution wouldn’t be as obvious, so they first need to measure the current website performance and do a root cause analysis before they can proceed. The team could then build prototypes and iteratively find a solution that will move the needle of their KRs.

In the beginning of the OKR cycle, the weekly check-ins will be about learning more about the problem. External help from outside the team is often required. In case of the website performance example, the team could consult a website performance specialist. Based on these lessons, good practices and prototype iterations can be applied and monitored throughout the rest of the quarter.

Complex Domain

This is the domain of competing hypotheses. In the complex domain, you cannot plan activities in order to move the needle. You can only plan for experimentation. The relationship between the problem and the solution is foggy at best and your team or company will need to test different environments in order to crack the code and uncover the actual underlying problem. First, the team needs to make the challenge less hard by envisioning a future state only two to four weeks in the future. Then, on a weekly basis, the team should list obstacles, and hypotheses and run “safe to fail” experiments to remove these obstacles. Sometimes there aren’t any obstacles to identify and the only thing you can do is to experiment.

Safe to fail experiments are meant to approach the issue from several angles in a small and safe way, in order to allow possibilities for solutions to emerge. They should occur swiftly and at as low a cost as possible. Prepare your team to run experiments and deal with the results, according to the framework outlined in Chapter 12. In this process, teams discover new ways of working, new practices of how to deal with emerging problems, or how existing technologies can be combined smartly to solve problems.

Chaotic Domain

You can accidently enter this domain because of crisis. Both you and your team or company have no clear vision about what can be done to address the problem and any solutions will not be apparent until they eventually emerge. Think of this domain like firefighting: Doing nothing isn’t an option; you know you have to do something, but what will stop the fire from burning the whole building down might not be evident until much later in the investigation. You try to firefight to stabilize the system and move the problem back to one of the other domains. As you have no idea how to put out the fire, any crazy idea that you or your teams have is a good one. It is in this domain where true innovation happens.

When companies and teams start with OKRs, their goals aren’t that much of a stretch yet, because their first priority is to make OKRs work in their organization. Therefore, the solution to move the needle can often be found in the more ordered, safe, and predictable domains (clear or complicated).

If companies run OKRs for a few cycles, the OKRs can really become stretched. If you have defined real stretch goals, all of your work fall into one of the unordered domains (complex or chaotic).

Solutions in the clear domain are relatively straightforward. To dive deeper in the chaotic domain would deserve a whole new book, so I suggest you study chaos theory and complexity theory if you would like to know more about this domain. In the remainder of this chapter, I will describe in detail how to achieve results in the complicated and complex domains. We encounter these domains most often, and they produce increasingly difficult problems the more we stretch our goals, because uncertainty is high, solutions aren’t obvious and some degree of failure is inevitable.

Our Complex World

The problem with achieving ambitious results is that we live in a complex, unpredictable world. Perhaps you can recall the Cone of Uncertainty in Chapter 5. To be more specific, we are part of a complex adaptive system (CAS). This is a system that is made up of multiple interacting parts within a closed system, with the capacity to change and learn from experiences. Within this dynamic network of interactions, we can never predict the results of our actions. So what can we do then?

Let’s start with what prevents us from achieving our results: obstacles. In the book Lean Enterprise it says “The purpose of setting aggressive target conditions is to reveal obstacles so we can overcome them through further improvement work” (Humble et al. 2015, 124). Thus, stretched goals, which are a signature of the Lean OKR approach, will also help you to reveal constraints in your organization.

Whether you are trying to climb K2, win the World Cup, go to Mars, make strides in decreasing our carbon footprint or become the market leader in your space, eventually, you will face obstacles, big and small. The problem is that you don’t know which obstacles you will encounter. Going for stretch goals—moonshot goals in particular—means you enter into unknown territory. That is a scary thought for most people. As mentioned before, people hate uncertainty. Not knowing how to achieve a goal is a good recipe for demotivation and anxiety.

Thus it may happen that, after the first week of your first OKR cycle, you check in on your OKRs for the first time and find that there is a problem with the team’s confidence levels. Pursuing OKRs is hard because you venture out into unknown territory, you experiment, and you take risks. Navigating this unknown territory requires a different way of thinking.

Scientific Thinking at Toyota

The solution is called scientific thinking. There are two kinds of thinking we call “scientific.” If you engage and reason about scientific content, such as force, mass, gravity or quantum physics, then you are thinking about science, which is rather obvious. The second kind of scientific thinking includes “the set of reasoning processes that permeate the field of science” (Dunbar and Klahr 2013, 701). These processes include, but are not limited to, induction, deduction, experimental design, causal reasoning, concept formation and hypothesis testing. In this and the following chapters, we will look into this second kind of scientific thinking that is required to achieve your OKRs.

Scientific thinking is the skill you need to adapt to an ever changing world. Researcher and author Mike Rother writes the following about scientific thinking: “[S]cientific thinking may be the best way we have of navigating through unpredictable territory to achieve challenging goals” (Rother 2018, 1). For many years, Rother and his colleagues researched the underlying managerial routines and thinking processes that resulted in Toyota’s success with continuous improvement. During their research, they identified patterns, behaviors and practices that showed a strong relation with scientific thinking. Rother created a four-step behavioral model that he called the “improvement kata” which helps people to get closer to accomplishing a challenging goal. He also defined a routine that managers can use to help teach their employees how to use scientific thinking. He calls this the “coaching kata” (Rother 2009). Finally, he identified a third practice to help people get started with scientific thinking and named this the “starter kata” (Rother 2018).

Kata is a Japanese word that means “form” and is a pattern of martial arts movements that one should deliberately practice on a daily basis. With regular practice, you may improve until you master a new task. Deliberate practice focuses on tasks beyond your current level of competence and comfort (Ericsson 2007). Similar to deliberately practicing martial arts movements, people need to deliberately practice scientific thinking, preferably daily. This happens in the Toyota car factory, where everybody is practicing this way of thinking. Imagine what this could do to your company.

Although these routines and behaviors have been proven many times in an industrial context, applying these behavior and thinking patterns in the context of achieving OKRs is not only new, but can be groundbreaking for many organizations. Let’s look how the improvement kata and the coaching kata can be applied to OKRs.

The Improvement Kata

The improvement kata can be used by teams on a daily basis to get closer to their OKRs. An improvement kata is a daily deliberate practicing routine that people at Toyota use to continuously improve processes and create innovations by learning how to apply principles from scientific thinking into their habits and routines. The improvement kata is especially suitable for, but not limited to, changing processes, and I am sure you have found that most of your OKRs are related to changing processes, as well. Think about it for a moment. You want to increase your sales? You need to look at your sales process (sometimes called a funnel). Marketing? The same thing: You need to look at your marketing process. Customer on-boarding and customer journey? They are both processes.

There are four steps in the improvement kata that help you move the needle. You always start with (1) understanding the direction you want to go. Then you need to (2) understand your current condition and (3) understand your target condition. Subsequently you (4) observe the problems and any obstacles you are facing, and conduct a series of experiments that will remove the obstacles (Figure 11.2). Following the steps of Plan, Do, Check, Act (PDCA) will guide you through a rapid loop of discovery that gets you to your target.

Figure 11.2 The four elements to reaching an OKR

So, how can we apply these steps to achieving your OKRs? Let’s look at each step:

The Coaching Kata

The coaching kata is the routine used by Toyota’s managers to teach their teams how to use the scientific thinking to reach their goals. When using OKRs, your leaders and managers also need to teach their teams how to get better at achieving results. Without a learning practice in place, it will become very hard to scale this systematic and scientific way of thinking. This includes not only teaching people how to apply scientific thinking, but also teaching them techniques to deliberately practice new skills. If you want to win Olympic gold on the 200m butterfly or if you want to become the best piano player in the world, you need to use deliberate practice a lot. For some reason, in the business world this isn’t very usual.

By default, teams are not familiar with working with OKR inspired challenges and behavior changes. They tend to gravitate toward the stuff they are familiar with (e.g. building features, and using Scrum or Kanban). There is a tendency then to see each OKR as a project, leading them back to the whirlwind, or the BAU. It’s a leader’s or manager’s job to teach and coach teams on how to get a step closer to KRs: to help them wire their brain differently. As the authors of Lean Enterprise put it: You need “to design, evolve, and operate a system in which the people doing the work have the necessary skills and resources to run their own experiments, thus learning individually and collectively, developing and growing their knowledge” (Humble et al. 2015, 59).

Teaching scientific thinking is thus spurring employee empowerment. If you teach people this way of thinking, they will be able to handle more difficult challenges. At Toyota, they are able to generate and utilise an entrepreneurial mindset and accompanying behavior in their people (Rother 2019). Teaching and practicing scientific thinking is critical to embed into your organizational culture in order to beat your competition and innovate at scale.

Case Study: Making Customer On-Boarding a Seamless Experience

You should check in on your OKRs on a regular basis to see if they are going in the right direction, but how do you get closer to your OKRs? Let’s use an example to show how the improvement kata can work in practice.

Let’s say you are working in a product development team. Recently, your company has announced a very ambitious company OKR for the quarter. Now it is up to your team to see how they can impact the company’s KRs. During the OKR setting workshop, your team decides to set the following OKR (step 1. Direction): “Customer on-boarding is a seamless experience” to contribute to the company’s ambition for this quarter. By using the measure guidelines from Chapter 4, the team defined measures for their success. “Average drop-off rate during on-boarding” could be a good indicator to put into one of the KRs, for example.

The team already tracked the customer drop-off performance for some time and noticed that the average drop-off rate is currently 12 percent per week (step 2. Current condition). Now your team is about to set a target for this quarter. Eleven percent is easy, while 0 percent is impossible. As you learnt in Chapter 3 on how to write good OKRs, you should start with a 50 percent chance of achieving the target. The team decides to set the target at 5 percent. By using the formula FROM X to Y, they define the following OKR:

Objective: Customer on-boarding is a seamless experience

KR 1: Decrease the customer on-boarding drop-off rate from 12 to 5 percent per week

Great. Now What?

So your product development team has a clear baseline and a target for the next 90 days. It’s a very big challenge for the team. They have never tried to reduce the drop-off rate of customers so dramatically, so they should try to respond to this situation according to the complex domain. But where do they begin? Where do they start with achieving their ambitious goals? What should the team do in the first week they are going to work on their OKR? They should develop a target condition.

Target Condition

A target condition (step 3) is a state one to four weeks into the future. Using an American football analogy, you can think of the OKR as “scoring a touchdown.” A target condition can be similarly thought of as “getting a first down.” With a target condition, your team is clear on the direction in which they must move the ball and even more clear on the positioning needed in order to land that touchdown. What’s not clear are the steps that your team needs to take to get there, as the required steps are largely dependent on external factors your team can’t control, such as the other team’s offensive and defensive plays. For that, your team needs to figure it out as they go. The same is true for moving their needle.

A target condition can answer questions like:

After the team develops a target condition, they use confidence scores to rate their confidence in achieving their KRs. In case of a low confidence, the team can identify obstacles that prevent them to get closer to the target condition. Subsequently, they select one obstacle, for example, “why do our customers drop off early?” When the team has identified their obstacle, they can design safe to fail experiments to learn more about their obstacle and eventually use that knowledge to remove it.

You will learn how to define and select obstacles later in this chapter, and in the next chapter we will look at how to use and create experiments. Here, we first continue to look at how to define target conditions by exploring a technique I developed, based on the OKR rationale.

Micro OKRs as the Next Target Condition

Traditionally, target conditions are described by process steps, process characteristics, process metrics and outcome metrics. To simplify this, you can also use the OKR format to describe the next target condition. This results in what I refer to as “micro OKRs,” which help you to get a small step closer to your regular OKR.

Just like target conditions, micro OKRs are small challenges to get you closer to your longer-term challenge step by step (your summit, see Figure 11.3). What is important is that you only define one set of micro OKRs at a time (similar to the annual and quarterly technique discussed in Chapter 5, with one Objective and the accompanying key results). By using a series of these micro OKRs, teams can focus on small wins and learnings, which also helps to have more celebrations, progress and improve motivation. Some companies that have more experience with OKRs, only use team-level micro OKRs, instead of running the default quarterly OKR cycle s. This comes with an important note: Your teams should never lose sight of their larger challenge.

Figure 11.3 Micro OKRs as the steps toward the regular 90-day OKRs

Ideally, the lifespan of micro OKRs sits between one and four weeks. In practice, this might vary, so use common sense here and try out what works best for you. As a leader or coach, you need to ask the team working on the micro OKR which variable needs to change in order to get closer to the target condition. Working with micro OKRs ensures the team has only one subfocus for the coming period, and forces people to think only about a limited future state.

Like regular OKRs, micro OKRs also use an OKR cycle. Because the cycle is short, following all of the workshops would be too taxing and confusing. Instead, try to be pragmatic. Give your micro OKRs a good amount of thought (a maximum of four hours) and give them a go. You can skip the alignment workshop and the kick-off can be done during the regular weekly OKR check-in. The reflection at the end of the short micro OKR Cycle gives you a nice learning moment. The opportunity to experiment and quickly receive feedback makes micro OKRs a great way to practice OKRs within the larger 90-day cycle. I will explain in Chapter 13 how you can include micro OKRs in the updates of your OKR dashboard.

Methods Toward Developing Micro OKRs

Micro OKRs are the next target condition a team needs to focus on. You can develop micro OKRs at the start of the OKR cycle, but you will also need to develop new ones throughout the main OKR cycle. There are two approaches to develop the next target condition with micro OKRs:

Which approach you should take depends on the stability of the measures you use inside your KRs. If the measures do highly fluctuate, you need to stabilize them first. Otherwise use the baseline of your measures and set a target one to four weeks from now.

Micro OKRs With Lead Measures

Do you recall the wedding example from Chapter 4? The larger Objective was to reduce body mass and waist size to get us in our wedding outfit in six months’ time. The KRs were thus focused on a slightly abstract, long-term goal. After looking at your current condition, you noticed that both body mass and waist size are stable measures, so you can break these main OKRs into smaller ones. One set of micro OKRs could be to cut the number of calories in the next four weeks, which can be done by a KR that decreases consumption and a KR that increases what we burn. These micro OKRs are less abstract, and can be measured daily. Moreover, it’s efficiency lies in the predictive lead measures toward change in our body mass and waist size.

Removing Obstacles to Achieve Extraordinary Results

Whether you decide to work with micro OKRs or only with regular OKRs, identifying and dealing with obstacles (step 4) is a major activity when moving ahead in the complicated and complex domains. In 2017, I was part of an OKR workforce team for a medium size software company located on the coast of the Netherlands. The executive team had a very ambitious goal to reduce its software product defects while increasing the speed of innovation in order to build a superior product than it’s competitors. The company started its quarter with the following product department OKR:

Objective: Boost product quality

KR: Diminish our weekly product defect rate from 20 to 0

KR: Decrease customer complaints on feature XYZ by 70 percent

KR: Increase mean time between failure from 2 days to 10 minutes

To start working on these OKRs, we needed to find out what the number one bottleneck was to product quality.

I joined their product department to help them find the constraint that prevented them from achieving higher product quality and speed of deployment. Instead of focusing on solutions, I helped the product teams brainstorm their obstacles. In this process, we selected the number one obstacle for them: knowledge on building quality software.

When we identified their main obstacle, we could define several experiments to begin addressing it. By thinking in obstacles first, we avoided jumping to a conclusion too soon, and we took the first steps in boosting their product quality. Do you know the obstacles that prevent you from achieving your OKRs?

How to Approach Obstacles

What are the main obstacles to problem solving? Firstly, we tend to drastically overestimate the number of problems that stand in the way of our goals (Kahneman 2013). A good way of dealing with this is to ask: Do you need to resolve all of them? Often, if you overcome one obstacle, other obstacles seem to melt away. By focusing on obstacles one at the time, the team has a directive to break them down. In the next chapter, you will learn how exactly to overcome obstacles, but first you need to be able to identify what “real obstacles” are, which we will look into in the next section.

Secondly, when problem solving, we too often frame obstacles in a negative way, as complaints, instead of formulating them observantly (Boeg 2019). “Customers don’t like our user interface” is not a valid obstacle. The real obstacle might be “We don’t know if customers can navigate easily through our on-boarding process.” This is both more specific in terms of what the problem might be, as well as more realistic in terms of information that is actually available, being careful not to make unfounded assumptions. The bottom line is to pay attention to your assumptions and observations when distinguishing symptoms from the real problems. The fact that customers are dropping off during on-boarding is not the real problem. It’s a symptom of something else. Of course, the final outcome is that you want your customers to not drop off. Similarly, “the sales team is always too late calling back hot leads” is not a valid obstacle. The real obstacle in this case could be “we don’t know how call back time influences new sales.”

Identifying Your OKR Obstacles

After you have set and aligned your (micro) OKRs, teams go into the weekly rhythm of OKR check-ins. During the first OKR check-in, the whole team provides confidence scores in relation to the KRs. In case there is a low confidence score, the team members look at one or more of your KRs and list all of the obstacles they can think of in a sort of brainstorming session. Most people are good at listing problem areas. Framing your obstacles as questions can help. For example:

Be careful with obstacles such as time and resources. “How can we get more time or budget to improve our customer on-boarding process?” is not a good question to ask, because time, budget and the number of people on the team can never be a valid obstacle. You will always have to deal with the constraints of the system.

Using the concept of free listing, affinity mapping and dot-voting from Chapter 7 let each team member write down their obstacle on a (digital) sticky note. Next, group all related obstacles together. Use dot voting to select the most important one. This winning obstacle will now become the focus point for the team in the coming weeks (Figure 11.4).

Figure 11.4 The obstacle selection process

An example: With the aforementioned technique, a product development team identified three obstacles to achieving their “5 percent customer on-boarding drop-off rate per week”:

They have selected 3 as the most important obstacle. This became their number one focus point.

In case the team uses micro OKRs, note that some people might want to write down an obstacle that relates to the main OKR. Design a separate space on your dashboard (see Chapter 13) for this. It’s good to have these obstacles listed.

Brainstorm Obstacles

When you want to move your KRs in a positive direction, you should try to focus on one obstacle at the time. A good technique to isolate obstacles is to use the following template. Try to come up with at least three or four obstacles and fill in the following template:

Pick the #1 Obstacle

The next step is to pick one obstacle that has the most impact on getting closer to your KRs. Pick only one! The 20/80 rule applies here, which obstacle (20 percent), when removed, will most likely move the needle of your KR substantially (80 percent). If you have trouble selecting one, pick the easiest one, especially if a team is new to this way of working.

Chapter Recap

In this chapter, we’ve explored the Cynefin sense-making framework as a tool to determine how to respond to OKRs. We’ve explored scientific thinking and Toyota’s Katas as a way to instill a change of approach that will encourage genuine shifts in behavior and habits at team level, and we’ve looked at how this can work in practice.

We’ve learnt about target conditions as a key part of this change to establish a new, ideal view of how processes should look in the future, and we’ve seen how micro OKRs can link to target conditions as measurable steps toward that future.

We’ve established the importance of identifying obstacles as part of achieving OKRs and explored strategies for doing so. We’ve identified ways of ranking obstacles to identify the number one obstacle that needs to be overcome.

At this point, you should have a much clearer vision of the future you want to realize and a stronger understanding of the small, measurable steps you can take toward achieving genuine, tangible change in your organization. You should have a stronger awareness of how to identify, manage and overcome the most unpredictable and extensive obstacles that accompany the most ambitious OKRs.

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