Revenue OKRs: Do's and Don'ts

Revenue OKRs: Do’s and Don’ts

John believes that “truly transformational teams combine their ambitions with their passion and their purpose.”

When OKRs are used well, they will connect your purpose to your Objectives and Key Results in a clear and straight line.

OKR example: Superhuman

Let’s look at our friends at Superhuman, a software company on a mission to create the fastest and most efficient email experience - built for people like myself who get way too many emails. Superhuman cuts the time that people spend in their inbox, preserving more of their day and enabling them to get more done.

One of the company’s Objectives is to “Refine the entire Superhuman experience to remarkable quality.” “Refine the experience” – that’s action-oriented. It’s the “what” they’re trying to accomplish. It’s an Objective that sets the bar at “remarkable quality.” The OKR’s Key Results will define that level of quality and how it will be achieved.

It’s easy to draw a line from this Objective to the company’s mission of creating the best email experience possible. The better the product is, the more people will accomplish in their day. The what supports the why.

In day-to-day work, it’s common for people to feel disconnected from why they’re doing what they’re doing. OKRs can help.

Note how Superhuman’s Objective isn’t a project milestone, such as “Launch new product by next quarter,” or “Sign up 10,000 new subscribers next month.” OKRs serve a different, broader, and more inspirational purpose.

Where a project milestone emphasizes the activity that needs to get done, OKRs emphasize the impact of that work. Both are important, but they are two very different tools.

OKR example: Google Chrome

Let’s use the development of Google Chrome as an example. When Google determined to win the web browser market, their Objective was far more ambitious than “Launch a new browser”. Their OKRs reflected a strategic choice about how they would win. They decided to “Build the world’s fastest browser.”

Google might have said they wanted to “Build the world’s most secure browser” or “Build the most customizable browser.” But no – they believed they would win on speed.

Once that strategy was established, their OKRs oriented all of their efforts toward speed. Everyone on the team knew why they were doing what they were doing: to increase speed. They also knew why they chose not to do other things.

So if you find yourself starting with something like “Launch project by next quarter,” try going a level deeper. If your team were to meet the project deadline, ask yourself the following questions:

• What will that change?
• Why is this our priority?
• To achieve this Objective, what is the first thing we need to do? Why is that the most important thing to do first?

You’ll find that one of those answers usually contains the seed of a strong Objective.

The best OKRs reflect both purpose and profit

What about revenue goals? Often we’re asked whether “making more money” is a good enough “why.” Here’s our response:

While increasing revenue is an important goal, it’s not very inspiring. We’re not saying you should never talk about money. Every organization has some means to sustain their activities and help them grow.

Let’s say you work in a nonprofit. Most of your money probably comes from donations. For companies, it’s revenue or profit. And in a government agency, it’s your budget.

Every organization must sustain itself. If it falls short, it will have to cut back or shut down. In short, money is vital for an organization to survive, to thrive, and to grow. But the best Objectives reflect both purpose and profit.

For example, the Sand Hill Unicorns’ goal to “Win the Super Bowl” is a better Objective than to “Make money for the owner.”

The goal of winning the Super Bowl will inspire everyone in the organization. And if the team achieves this Objective, guess what? It will also make the owner a lot of money.

If your team’s Objectives have been framed along the lines of “Increase revenue,” you might think about how you can better incorporate your “why”.

If you get stuck, consider these questions:

• What actions sustain and grow our revenue?
• What does that revenue enable us to accomplish?

Let’s say we’re running a large nonprofit performing arts venue – an opera house, for example. We sustain and grow the organization by attracting a dedicated audience of season ticket holders. By doing that, it allows us to continue to produce more operas and be an important cultural force in our community.

An Objective for the coming year might be: ”Attract a younger, more diverse group of season ticket-holders.” The Objective supports both our survival and growth because if we achieve it, we’ll expand the base of our main source of revenue for years to come.

Numbers alone don’t inspire people. So challenge yourselves to reach beyond revenue targets. Combine growth-oriented goals with a sense of purpose. Aligning purpose with profit is one of the best ways to mobilize the people in your organization.