Three Ways to Improve Your Key Results

Three Ways to Improve Your Key Results

How do you know if you’ve written the right Key Results?

If you ask yourself these three questions, your answers will strengthen your KRs:

1 - Do you want an early signal that tells you when you’re off track?
2 - How should you balance quantity with quality?
3 - How do you want your team to stretch?

Now let’s break each of these questions down.

Leading vs lagging indicators

Some metrics are strong predictors of success. If you want to predict how many chickens will hatch, it makes sense to count the eggs. That’s called a leading indicator.

Or you might wait to count your chickens until the eggs actually hatch. That’s called a lagging indicator.

In the real world, that old saying, “Don’t count your chickens before they’re hatched,” isn’t always the best way to go. Sometimes it really is better to count hatched chickens (lagging). And sometimes it’s better to count your eggs (leading).

Many teams are used to using lagging indicators for their Key Results. A common one is sales revenue.

Yes, the amount of money coming in is an important number to track. But revenue, like counting hatched chickens, is a lagging indicator. You won’t be able to tell if you’re on track until the end of the cycle – when it’s often too late to shift your tactics.

Key Results that use leading indicators can be really insightful.

Let’s go back to our sales revenue example. Closing a sale is usually an end result – you know you’ve succeeded once the sale is made. But there are a lot of leading indicators that can indicate if a sale is going to happen. For example, if we sell our products on a website and a customer adds one to their cart – that’s a leading indicator of interest.

Here’s the good news: Most teams intuitively track leading indicators. We’re just encouraging you to make them official and use them as Key Results from time to time.

In our sales revenue example, in addition to our website we have a team that goes directly to their customers. Let’s say the team is tracking meetings with heads of procurement, and they realize they’re not having as many meetings as they usually do by this time of year. The team has an important decision to make: Should they double down on their current prospects and reach out with a special offer? Or should they try something new and go after new prospects? Leading indicators can inspire teams to devise new ways to succeed earlier in the game.

So as you’re writing a set Key Results, do a quick check to see if they’re leading or lagging indicators. The most effective way to go is often a mix.

Doing more vs. doing better

When we’re talking about measurements, we can look at them as quantitative or qualitative measurements. Even if you’ve never used these terms, you probably know what I’m talking about.

Imagine you’re at the candy store. You can choose a small sampler of artisanal chocolates of the highest quality. Or you can grab a big five-pound bag of mass-produced chocolate: quantity. Do you buy the big bag or the small bag? It depends on what you want.

Most Key Results focus on one or the other: either quality or quantity. So when you’re creating an OKR, we advise you to balance quantity goals with at least one benchmark for quality.

Let’s say you have a Key Result to produce a new product with 30 percent fewer parts: a quantity Key Result. But at the same time, you don’t want more defects. So include a quality Key Result to keep the defect rate under one percent. Now you’ve paired quantity with quality.

When leaders fail to balance these two types of KRs, we see a lot of avoidable mistakes. Focusing on quantity without quality can even encourage people to game the system. In one cautionary tale, a bank’s sales team met their aggressive targets by creating fraudulent mortgage accounts.

Balancing quality and quantity is one big difference between OKR methodology and other goal-setting systems.

High-performing teams set clear targets

Think of Key Results as targets. If you want to set aggressive but realistic goals, how far should those targets be? The distance you set will determine your tactics.

Let’s imagine that we’re responsible for designing a new car engine. The current model gets 35 miles per gallon. The target for the new one could be 40, 60, even 150 miles per gallon.

Each of these targets will inspire the team to take a different approach.

If the new engine design changes are radically different, just holding fuel efficiency at 35 miles per gallon might be a big challenge.

Perhaps the new design will increase mileage from 35 to 45 miles per gallon – an incremental stretch. That might require an evolution of the existing design, but it’s not a completely new kind of engine.

But if we set a target of 150 miles per gallon, that’s a leap. It would compel the team to discover entirely new capabilities, such as engineering an electric engine or a hydrogen one.

Hold. Increment. Leap.

These are the three degrees of stretch. In general, nearer targets are safer – but not as ambitious. A distant target is more ambitious – but harder to reach.

Now, how much stretch should you set? You’re the best judge of what’s realistically aggressive – as well as what the moment demands. It’s important for everyone on your team to know how far away that finish line is. Then they can approach it with the same degree of intensity.

Our three tools to improve your Key Results:

• Decide when to use leading or lagging indicators. Or both.
• Balance quantity with quality.
• Be clear on how far to stretch.

It takes time to make Key Results the best they can be. But as they help to clarify your direction and speed… it pays off!