From QBR to OKRs
Performance conversations occur across the organization - it's time they looked at the same data.
Organizations have always had the need to monitor and manage performance. Our performance monitoring journey began way back in 1494 by Luca Pacioli, who described the system of double-entry bookkeeping used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et Proportionalita. Ever since then we have been looking for better ways of keeping score.
As we look at a more modern time, between the 1950's - 1980's, performance monitoring saw milestones such as MBOs (Management by Objectives), Standard Accounting, ABC (Activity Based Costing), Balanced Scorecard, The Baldridge Award, etc.
Around the 1980's - Sales leaders realized that in order to monitor and manage their performance, they needed a few key things:
- They needed clear sales targets broken down by region, salesperson, and product.
- They needed to be clear about who is supposed to sell what to whom. Sales activities are typically linked to a specific salesperson (and their support team). Ownership was clear - through defined regions, account ownership, etc
- They needed to use both financial AND non-financial measures. Dollars are a lousy way of keeping score - It could be more important to attract new customers, other times it might be more important to enter new markets, or it could be more important to sell as much product as possible.
- They needed clearly defined outcomes that were easily measurable. What was the objective, and what would we have more of (or less of) as the Salesperson moved towards their objective (the key results).
- They needed timely performance reviews. Waiting for the year-end to do performance reviews is far too late and infrequent. Sales occur daily, weekly, monthly etc. If one had to wait until year-end to see how we were doing (like the Accountant's do with year-end statements), we would be out of business before we know it. Back in the 80's, Sales teams thought a quarterly review of activities would be frequent enough.
These principles became the essence of what we now know of as QBR - Quarterly Business Review. On a quarterly basis, we review:
- The Objectives that the person/team/department had.
- How they performed against their objectives - what were their targets (or Key Results) and how did they perform against those targets?
- As a team, what ideas do we have to help each person perform better?
It turns out that OKRs (Objectives and Key Results) are exactly the same as a QBR - people have their Objectives and their Key Results
An important point to note is that the pace of business is far faster now than it was in the 80's. Back then, we'd create five-year plans, but the uncertainty we used to have out five years, we now have out one year. This means our old five-year plan is our new one-year plan in 2020. That means our old one-year plan is our one-quarter plan in 2020, and of course our old one-quarter plan (QBR) may be our one-month plan or even one-week plan (sort of like a sprint, for the Agile people out there)… Who knows?
So in business today, we need to review Objectives when necessary which turns out to be far more frequently than once a quarter! These meetings are no longer just for sales teams, but rather for all teams. When we have our OKR Performance Meetings we review everyone's Objectives, their Key Results, and we brain-storm on how we can help each other perform better; just like in the old QBRs.
It turns out that OKRs are just the new QBR.
OKRs (and the related performance conversations) are just the modern version of QBRs. To modernize them, we kept the:
- Key Result(s)
- Monetary and non-monetary measures (as well as leading and lagging, etc.)
- Clear ownership and role
but we added*:
- Inclusion of all areas of the organization,
- Provide near-real-time reporting in powerful systems of record such as Hirebook.
- Allowing complete transparency - everyone gets to see how the entire organization is performing, not just their silo or behind closed-door meetings with their boss.
- A unique cadence of accountability - different departments meet about their performance at different tempos - not just quarterly.
*NOTE - when I say "we added..." I lied! There are no "rules" that must be followed for OKRs. Sure a lot of people are trying to make up rules, but there aren't any, nor is there one "thought leader" who could sit as judge and jury over what can and cannot be done. You'll have to use your experience and best judgement.
ESG is becoming a regulated requirement - but it is just a category of OKRs within your OKR structure. This video explains the mechanism behind measuring ESGs through OKRs
In this series of videos I'll walk you through where that misinformation came from, why it is wrong, why you should include OKRs, and how to include OKRs