Doreen Baseler is a Product Expert at SAP SE with more than 20 years of experience in product and project management in Supply Chain and Manufacturing as well as SAP Solution Manager and SAP Customizing methodology and tools. She currently focuses on portfolio management of customer influence channels for SAP S/4HANA Cloud and works as a coach in different company domains. This includes working as a Design Thinking Coach as well as OKR coach. On top of that she manages an OKR program dedicated to implementing OKRs within the SAP S/4HANA product management unit.For day-to-day work, there are many good templates for OKRs that serve as fill-in-forms for your team’s final OKRs. But how do you as an OKR coach actually get there with your team? How can you support your participants in the best possible manner to arrive at well-formulated OKRs? Let me introduce you to the „OKRs according to the LEGO principle“ as a simple and effective strategy.
The evolution of the LEGO principle
Does the following scene with OKR “newcomers” sound familiar to you? When participants are asked to define objectives and Key Results, some of them start to vividly and passionately discuss the topic. They even seem to burn for it, they raise one aspect after the next and - worst case! - tend to eventually lose focus. The OKR workshop is about to end in 30 minutes - and not one single letter has been written on the board.Perhaps you have also experienced quite the opposite: Your workshop participants are overwhelmed. When defining OKRs, they are requested to consider many aspects: higher level organizational or team goals, unfinished Objectives from the last quarter or new team themes. To get to its essence and reflect it in highly motivational OKRs indeed is a masterpiece of work. So eventually, the discussion progresses slowly - at the end of the workshop the physical or digital piece ofl paper does not show anything that looks close to an OKR.Reflecting on my first OKR workshop as an OKR coach, I knew I would have to change something. I realized that not every participant is a born author or writer - and that’s totally OK(R). What the participants were missing: A clear guidance on HOW they could arrive at good Objectives and Key Results. So I decided to develop two easy-to-explain templates for my next workshop. This would help the teams to arrive at Objectives and Key Results more effectively and efficiently.The LEGO principle that I am going to introduce to you is a method you can use in your OKR goal or review workshop after the team has brainstormed on the focus themes for the upcoming quarter. The principle builds on the fundamentals of good OKRs:
- Objective: What is the value we create for our customers?
- Key Result: How do we measure if we create the aspired outcome?
Designing good “O”s for your OKRs
Let’s start with the Objectives. I will now share with you how I walk my participants through the process when the discussion tends to run out of focus or proceeds too slow:
- First, ask your participants to break down the Objective in its individual components.
- Now have the participants focus on selected aspects, for example “Who is the customer?” Provide alternatives to the word “customer”. If it is a people-centric Objective, the “customer” can be an “employee”. Participants should evolve their own understanding of the “customer” and - that’s important - write it down. You may find that the participants have a different opinions of which customer to address: All customers of a dedicated product? Or only the ones in the sweet spot? The end user or the business user?
- Then, you motivate the participants to state what they want to achieve with the Objective, such as e.g.: to automate central business processes, to incorporate customer feedback for a focus topic into the product portfolio, launch a new product, enable customer to use the product etc.
- Subsequently, you move on to establish the pictured benefits for the customer and let the participants write them down. These could be aspects like: faster and less error-prone management of business processes, ease of product use, increased customer satisfaction, reduced costs etc. You can also ask the opposite question to generate ideas, such as: “What would customers miss if we did not work on this Objective?” In the next step you can “translate” these ideas into effective customer benefits.At the end of this exercise, the following template should be filled with keywords for sections (1) to (3):
- In the next step you will find out jointly with your participants if they have a common understanding of the aspects they have pointed out. Do they use terms synonymously? Or are they talking about different contents? As a coach you want to help the team to narrow down the options they have brought to paper. Here, you can guide your participants with selected questions like: “Do we really address all customers or only customers of selected industries or from sweet spots respectively?” “What does sweet spot mean for you?” This clarification is of utmost importance to set a clear focus.
- Once the participants have a joint understanding, you move to the core of the LEGO principle: The keywords from (1) + (2) + (3) are assembled to a sentence, which more often than not reads a bit clumsy and overloaded. I suggest you encourage a participant to take a first shot by handing over the pen to him or her in an onsite meeting or provide a similar option in the virtual meeting room.
- Then, you go into another iteration to reduce the sentence to its essential components the participants want to achieve. For example: It is not important to list every single benefit but rather list the primary one. Explain to your participants that the details for achieving the Objective are reflected in Key Results anyways - so their ideas wont be “lost”. This may alleviate the situation and lead to faster decisions in the group.
Good “O”s for your OKRs – An example
Sometimes it is also helpful to provide an example with the LEGO principle. Final Objectives from a product management perspective, for example, can look like this:
- DIMENSION PRODUCT/CUSTOMER: Provide easy-to-use sales order processing app (what?) to our sweet spot customers (who?) to run their daily order processes more efficiently (value?)
- DIMENSION EMPLOYEE: Our Product Managers (who?) are equipped with the right skill set (what?) to successfully drive our Cloud product strategy (value?)
Designing Good “KRs” for your OKRs
With the Objectives the frame for the Key Results has been built. Typically, this seems easier since most participants have already worked with KPIs. Nevertheless, KPIs do not necessarily equal to Key Results, since KPIs as lagging success indicators focus more on the final results whereas OKRs mirror the progress towards these results. Cross-unit KPIs, for example, can be a good starting point to derive your OKRs. However, in practice a strict separation of KPIs and Key Results is not always possible. Personally, I think it is not beneficial to lead academic discussions on topics like KPIs versus OKRs or output versus outcome anyways. Quite often there is no wrong or right, but it is more a question of perspective and context. Ultimately, the definition of OKRs is a constant learning journey for both parties, the coach as well as the entire team. And keep in mind: There is always a chance to uncover improvement potential in a retrospective and implement the lessons learned in the next quarter.It is likewise important to acknowledge that not every business unit can influence the company KPIs to the same extent. A product manager, for instance, has a direct impact on the product portfolio and the coverage of desired functions and features which in turn affects drivers like customer adoption and customer satisfaction. Nevertheless, the direct impact on the product sales may be limited given the fact that a dedicated sales organization is in charge of such activities. This example, however, also shows the potential the OKRs can unfold as a means of coordinating company efforts between unit boundaries towards a joint mission.To design Key Results according to the LEGO principle, you can proceed as follows
- Prepare a matrix or a table. On the left, you ask participants to list the aspired outcome in the upcoming cycle (1). On the right, you request them to define corresponding measures (2).
- Prior to this exercise, explain to the participants why it is important they make their Key Results tangible:
- The first choice is total numbers, percentage, or monetary values. If needed, the participants can describe how the values are to change compared to the last quarter. This option allows a differentiated perspective for evaluating a goal‘s progress later on in the cycle.
- Some Objectives are not yet mature enough or simply cannot be measured properly with actual numbers. Quite often this is the case for tactical Objectives which are derived from the company vision and strategic goals. This is where milestones may be applicable. In the next OKR workshop, however, you as an OKR coach may still challenge such Key Results.
- Binary Key Results are to be avoided at all, if possible. They simply do not allow to track progress of an OKR in a dedicated cycle. If a KR is not achieved, the OKR or KR owner can only set it to “incomplete” or “not achieved”. In many cases, this does not adequately reflect and document partial progress of 30, 50 or 70%.
- You can choose to either do the above named exercise in a group or first opt for a silent brainstorming and then have the participants present their thoughts.
4. Once more the LEGO principle comes into play: Participants are now asked to bring both aspects together in the final version of the Key Result. To ensure quality you should remind the participants to limit themselves on the number of objectives. This is especially true in the beginning of the OKR journey: Many teams tend to be overambitious and opt for defining more than five Objectives with five Key results per Objective. Later on they come to realize that they have attempted to boil the ocean and will not be able to achieve their set goals. Insist on the 5 x 5 rule - this will save them from having to deconstruct their OKRs in later stages.
Checklist for good Key Results
TIP: Visualize the checklist below on your virtual or physical whiteboard so your teams always have some guidance for good Key Results at their fingertips.
Does the Key Result provide details for the Objective with a defined outcome? Or does it rather mirror the result of an activity?
Can you really measure what you have defined?1st choice: numeric / percentil / monetary Key Results2nd choice: Key Results with milestonesTry to avoid: binary Key Results
Can the team members influence the Key Result based on the defined metric?
Can the team members provide continuous feedback based on the chosen metric?
Is the Key Result realistic to achieve and yet ambitious?
Hint: A thought-through measurable Key Result with defined output is still to be preferred over a not tangible binary KR
Good “KRs” for your OKRs – An example
Once more I recommend to bring one or two examples into the workshop. Final Objectives from a product management perspective, for example, can look like this:
Provide easy-to-use sales order processing app (what?) to our sweet spot customers (who?) to run their daily order processes more efficiently (value?)
- KR: Sales order app delivered to 200 customers
- KR: Sales order app actively used by 30 customers
- KR: 5 reference customers identified willing to promote the sales order app
Our Product Managers (who?) are equipped with the right skill set (what?) to successfully drive our Cloud product strategy (value?)
- KR: 50 new hires trained in the area of „PM Fundamentals“
- KR: Product portfolio prioritized to cover 10 – 20% of all requests related to sales order processing app
OKRs according to the LEGO principle - A summary
Well prepared, you will be more relaxed when conducting your next OKR workshop. At the same time you can give your participants the guidance they need: OKRs according to the LEGO principle is a method that works in three simple steps: 1) It decomposes the Objectives and Key Results into its core components, 2) it generates ideas for these components and 3) and assembles these structured ideas to arrive at your final OKR. A further iteration might be required to come to a readable version of your OKR. This method works well for new coaches and teams but also for more experienced teams that do their “homework” of defining OKRs in smaller groups.