GOALS, OKRs AND KPIs

GOALS, OKRs AND KPIs. Building a Data and Perforance -driven Organization EKELEME JUDITH OLUCHI.

OBJECTIVES AND KEY RESULTS (OKR). Objectives and key results ( OKR , alternatively OKRs ) is a goal-setting framework used by individuals, teams, and organizations to define measurable goals and track their outcomes. They can also be referred to as Goal setting strategies used to build businesses Objectives (What): Goals that inspire and set direction. Where do I need to go? Specific, measurable, actions each team or employee must take to achieve the overall goal Key Results (How): Metrics with targets that help you measure how well you’re getting close to your objective Steps that measure progress : .How do I know that I’m getting there? What will I do to get there?.

OKRs split your goals into two parts: Objectives and Key results GOAL : To grow revenue by 5 million usd . Objective here: To grow revenue Key result : 5 million usd.

Objectives should Create organizational discipline and alignment Prioritize Key Results should be Measurable and quantifiable Make the objectives achievable Lead to objective assessing Actionable 1-5 K ey results, when completed, should make the objectives complete..

PRINCIPLES OF OKR. Focus and commit to priorities Align and connect teamwork Track for accountability Stretch Goals: helps you rethink what’s possible.

STEPS TO SET UP OKR. Review previous quarter or year Identify one to five objectives Identify 1 to 5 key results that cause each objective to be completed Track progress..

GOAL: To grow revenue to $5 million this year Objective : Grow revenue Key Result 1 : $5 million revenue this year KR2 : 1,000,000 monthly users..

Example 2 GOAL: Become Africa’s biggest FashTech Brand by 2023 Objective: Become Africa’s biggest FashTech Brand by 2023 Key Result: X5 the average annual revenue of the biggest Brand KR2: X10 their users/visitors/ month To track:.

TYPES OF PERFORMANCE INDICATORS. LAGGING INDICATORS LEADING INDICATORS.

LAGGING INDICATORS :. show result over a period of time, e.g , Total sales of the last quarter, total users onboarded in the last year. They are easy to measure and provide quick answers about whether or not you’ve met your goals. It is often used as a baseline for setting ambitious goals. For instance, one may look at the sales or revenue of the last quarter and set ambitious goals for the new year or quarter: Annual revenue or profit Show how you did. They don’t tell you what you should do to make better changes or what you should change to do better..

LEADING INDICATORS. Capture data that have an effect on the outcome. This makes them important in predict or anticipate an outcome. *** Used to predict an outcome For instance, if a Saas company sees a sharp decline in the number of app download( a leading indicator), they might predict a drop in quarterly sales or profit( a lagging indicator) Leading Indicators are more operational in nature, which makes them harder to measure but easier to influence. E.g ; A spike in website traffic A Change in app download An increase in helpdesk request(Can tell two things) Leading Indicators show how you’re doing. Measure the things that affect your outcomes; when you track and monitor them, you can take actions to make improvements..

KEY PERFORMANCE INDICATORS(KPIs). Quantifiable metrics to evaluate the success of your business: They are used to m easure how well your business is performing, thereby indicating the health of your business KPIs help you catch issues in your business early before they become a big problem Provide clarity on what aspects of your business should receive the most focus. We can decide to apply the 80/20 Principle here. Identify the 20% of the your activities that drive 80% of your growth, revenue or profit. Then, optimize. They align your business goals with your current reality and help you make better decisions Track the effectiveness, efficiency of your work force, timeliness of your business actions, economics and resources utilization (burn rate for instance).

CHARACTERISTICS OF A GOOD KPI. A measurable value that demonstrates how an organization is achieving key business objectives Must agree with what you are to trying to accomplish Must be easily tracked and measured Must be crystal clear A KPI must have context to which they are compared to in order to be meaningful: Can be compared against target, past achievement, other companies, etc..

KPI CATEGORIES. Customer Acquisition Liquidity Profitability.

CUSTOMER ACQUISITION METRICS. Retention rate Churn rate LTV Return on Advertising spend Conversion rate on website visits % tage of traffic that make purchases How much and how frequently: Numbers don’t lie What channels bring in the most customers?.

LIQUIDITY METRICS. Working capital Burn rate Account receivable.

PROFITABILITY METRICS. Conversion rate on website visits: Number of visitors who make purchase Percentage of traffic that make purchases How much and how frequently: Numbers don’t lie % ROI on ad spend Year to date PnL.

This training can also be a KPI. Here, for instance, we can compare attendance to performance How the n umber of days attended translates to performance Number of days translates to product knowledge, understanding of the business, sales , and annual revenue/profit Ratio of the product knowledge score to performance T he time or money spent training vs ROI Training feedback: if there could be a better way to train..

SIMPLE STEPS TO CREATE KPIs. Select time frame (weekly, monthly, quarterly, yearly) Select KPIs (6 -12, at most) Identify your star KPIs Measure and monitor according to timeframe Teams (appropriately selected to suit the KPIs).

BEST PRACTICES. Keep bookkeeping up to date: Track your business revenue and expenses monthly. Account receivable turnover(subscription) Return on adspend metrics You can’t optimize every KPI at the same time: it is difficult to because it is isn’t easy to improve very are of your business at the same time. You’ll be dissipating energy in all directions. Lowering CAC and onboarding more customers might not work together at one point in your business Select your Star KPI based on your current objectives or situation in the business.

Asking the Right Questions is crucial to KPI creation/ formulation When questions are asked not to proffer a solution; they are directed towards finding remedies to symptoms E.g suppose chronic overtime work in a company is dragging down profitability. If the question is framed as: What should be done to reduce overtime? Framing the question in a more solution-oriented way: Is the company’s workforce large enough to do all the work required? Do the capabilities of the employees match the nature of the work? Do you see any trends or significant changes from the last quarter? Are any of your KPIs underperforming? Are your leading KPIS appropriately informing your lagging indicators Are the right people working on the right KPIs?.

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