Episode 102: Zooming in On OKRs with Christina Wodtke
In this week’s episode, Melissa Perri and Christina Wodtke, author of Radical Focus, get into all things OKRs. Christina shares how she discovered the power of OKRs, why she sees OKRs as a “vitamin, not a medicine,” why OKRs aren’t synonymous with product strategy, what it looks like to apply key results in the wrong way, how to use OKRs to create “super employees,” and so much more.
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Here are some key points Christina and Melissa talk about:
Christina talks about her professional background and what led her to write the first and second editions of her book, Radical Focus: Achieving Your Most Important Goals with Objectives and Key Results.
Christina believes that OKRs are ideally set and implemented at a team level, but they not a safety net that provides your team with product strategy.
Christina highlights the differences between an OKR, product strategy, and business strategy and how they work together in the business ecosystem.
An excellent product strategy and good annual OKRs can help execute an ambitious five-year plan.
Christina and Melissa explore the really difficult question, “When do we stop?” and talk about how checking back in with your OKRs quarter after quarter can help answer it.
Resources:
Christina Wodtke on LinkedIn | Twitter
Transcript:
Melissa:
Hello and welcome to another episode of the Product Thinking Podcast. Today we are talking all about OKRs, radical focus and strategy with Christina Wodtke. Welcome, Christina
Christina:
<laugh>. Hi, Melissa, thank you so much for having me here.
Melissa:
I'm excited to have you. Um, so this is definitely a hot topic and I can't wait to dive into it. So Christina, you are an instructor at Stanford University. You wrote this book called Radical Focus on OKRs, which is one of the gold standards out there for people to use. How did you get into this?
Christina:
Well, um, I first ran into OKRs in that particular format at Zynga. Um, Zynga was a John Door company, and as you know, he told everybody he invested in, including Google to check it out. And Zynga just took to it amazingly well, uh, very metrics driven company, very focused company, a lot of high performers. When I was there, I was there right before the ipo so we had some truly stunning game designers and amazing product managers. So anything that happened with the game, we knew and we were able to tune it against our OKRs and we would set the OKRs across the entire company and then each studio would figure out, okay, this is our theme. What are we gonna do towards it? And then the sub-teams would start working towards it as well. So it was just such a, a simple clean cascade probably because of the studio model, right? I know that, uh, um, larger companies really struggle with it, but Zynga was just, we lived it, we breathed it. And then when I quit Zynga, I started working with small, uh, startups advising them, and I found that they could not get out of their own damn way. So I started teaching 'em about OKRs to create focus, and it worked so well. I decided to write a book about it.
Melissa:
That's amazing. So what, when you're saying too that it worked really well in the studio model, but larger companies struggled with it. Um, what's the difference? Why did you see it working better in a studio model rather than the large company?
Christina:
Well, after the first edition came out of my book, a lot of bigger companies tried to adopt it. And then there was a, a superpower push with measure what matters. And the problem with bigger companies is often that they have so many levels and so many hierarchies and all these matrixes inside of matrixes that it took me a long time to adapt OKRs to larger companies. It wasn't as simple as the company's doing this and each studio is gonna do something towards that, right? That's very simple. That's an easy cascade. But when you talk about this super highly matrixed, hierarchal company, well, honestly, it just, it either doesn't work at all because there's too much command and control. And then the companies who were able to make it work only apply it to, uh, empowered teams. So often they'll have product teams that have some control over their own destiny.
They belong within a business unit. The business unit can set an O K R and then the product team can figure out what are we gonna do towards that considering our, our charter or our mission within the company. And that does work. However, I've seen over and over again trying to apply it to support teams like finance or legal. And that almost never works, um, unless they're in a period of high change or chaos, at which point having an O K R can be like a light through the storm. Service design groups like engineering or, um, user experience design, they can't do it cuz they don't own their time. However, in a big company, they get to a certain point where they get, um, DevOps or design ops, at which point they do control some of their resources and then they can start using OKRs if it seems appropriate. So I think one of the biggest struggles with the bigger companies is they've been told this is like this magic stuff that will fix everything, but it really doesn't work very well everywhere. And until you really understand what OKRs are good for, you end up adding it like salt to everything, including your ice cream sundae, you know? And so a little salt is good, but a lot of salt. Yeah. There's things that shouldn't have salt. Um, so
Melissa:
Yeah, it reminds me a little bit too of how everybody was trying to put agile sprints all over the company and I was getting calls like, can you teach our HR team how to do sprints, but legitimately everywhere. They're like, teach my HR team to be agile. Teach my HR team Scrum. I'm like, and they'll be like, oh, you know, our support team over there does like stand up every morning. So they're doing scrum too. And it is interesting because it's like, that's not the context for, you know, scrum, but it sounds like, you know, these large companies are doing the same thing with OKRs and that isn't the context for OKRs either. So when you're saying too, like OKRs are good for certain things, what are they good for? And in which context do they work really well?
Christina:
I'd say the ideal situation for an O K R is at the team level. Like that's always the easiest way to start implementing it. And the O K R is just a way of making sure you remember the single most important thing that your team is doing and keeps you pointed in that direction despite all of life's shiny objects. Right? So if you don't know the single most important thing that your team should be doing, well OKRs, nott gonna fix that <laugh>.
Melissa:
Yeah. It's not gonna be able to, to, to tell you exactly what to do. You gotta put the OKR in there.
Christina:
Yeah. It's not magically gonna give you a product strategy, right. It's not magically gonna give you a business strategy, that's for sure. So unless the company sort of, you know, I've started telling people, you know, it's, it's a vitamin, it's not a medicine. It doesn't fix things. It just takes healthy things and make them much more powerful and much more effective.
Melissa:
Okay. So that, that's a really good point too. You said it's not a product strategy and I've seen a lot of companies confuse OKRs for a product strategy or for strategy in general. Um, what, what do you need besides OKRs? Like what's the difference, let's say for the people who don't know this be between an o KR and a product strategy or a business strategy?
Christina:
Well, I've started thinking of it, um, as an O K R ecosystem or really it's a business ecosystem in which O K R belongs. And it really starts with a mission. And I think most companies do missions extremely poorly when they're new or even when they're older. So when they're new, they treat it sort of like, uh, a checklist, you know, check, got a mission. They're not really asking themselves, how would a mission help our company? How does it direct us? Um, how will it make employees be excited to work here? How will it direct employees activities? So if you have a really good, simple mission that says, you know, we provide this value to these people by doing this thing, that's really good. And it doesn't have to be perfect because as you grow and you learn, you can change it. You know, missions should be updated, they don't last for a hundred years.
You know, we're, we're a fast moving world, but I think it should last at least five years. So you don't get, you know, whip goal whiplash. Then out of that you want your business strategy. What people do we actually serve, right? Um, what do they need? Uh, how do we make money? You know, is it a subscription? Is it advertising? What's the business model? All those good questions. And then within that, when we get to how do we provide value, that's when we get the product strategy, what are we actually going to build, uh, how do our people think? How do they behave? What role does our product have in their everyday life? Um, all those really critical things that help you understand what are we actually doing? You know, we've got this fancy mission up in the air, what does it actually mean? It means we are going to build, uh, these kinds of services.
It's gonna be software as a service. We're going to do a subscription model. We're going to, uh, serve salespeople in companies less than 500 people. You know, just, it has to be specific enough that's really guiding people. And then when you have that clear, then you can use your OKRs. You can say, well, our objective is to, you know, reach product people who are working in the entertainment industry. Uh, and the numbers tend to be things like, you know, what does reach actually mean? Does it mean they're aware of us? Does it mean that they've signed up to use us? Does it mean there's a certain D a U? And once you've got that clear, what is this quarter's big push gonna be? Then you can start doing things like talking about a outcome-based roadmap, right? I'm sure you've had Bruce or C Todd over, uh, here, you know, and then it becomes a release strategy. And when you think of it as OKRs are this focus and communication tool to make sure people really know what they're working for, then you stop stretching it to try to do everything.
Melissa:
Yeah. I like, I like the way that you're phrasing that when you're thinking about product strategies too, and business strategies. We mentioned the mission as well. Um, what's the difference between like those things and a vision and a mission? Like, I feel like everybody gets hung up on these little terminologies and think like, you know, strategy is the O K R part, but the vision is, you know, this, this part of your, like how do you think about your stack of all these different things?
Christina:
I feel like people often get sucked into those ideas that if there are two different words, they have to be completely different, but often they're very close to the same thing. I mean, what's the difference between sad and melancholy? Well, they're very slightly different, but they're not completely different. So when we talk about a mission or a vision, maybe you have both and they overlap or maybe you're just using different words. I believe Salesforce has V2MOM, which is vision and value and mission and metrics. I can't remember the acronym exactly cause I don't work there, but it kind of doesn't matter, right? Why does this company even exist? That's a mission. You know, maybe it's a vision because this company exists to make this amazing thing happen, or maybe it's a mission because we exist to fulfill this. I don't, there there's subtle differences and they're probably only held by the company itself, right?
Like the word vision is gonna be used differently in multiple companies. The word mission, it's a little more standardized, but some will have more stuff in it, some will have less. When I was studying missions, uh, fairly recently, I saw everything from Phil's Better People's Day, which is a really wide mission, right? For a coffee company. And then, um, I saw Amazon's, which is, you know, a couple paragraphs long and is not memorable at all. But, uh, people understand it. So you have to think, what do I want my employees to actually know so they know why they're here and why is it worth working here and what should we be paying attention to? It's really that simple.
Melissa:
Yeah, I I think that's a really good point. I have worked with a lot of executives recently, or last couple years, um, who don't have a strong vision for their companies, right? It's more like, be the best. Like, cool, what does that mean <laugh>, right? Or, or like, uh, you know, we're gonna be, uh, a great crm. Like, all right. Um, so when you're thinking of what's required in there, you know, you mentioned a few things, uh, about we need to be able to point people in the right direction, but if you were an executive and you're sitting down and trying to do this exercise for the first time, you're like, I want to build a strategy. I wanna build OKRs for my company, I need a vision. Like, what would you advise them to do first? Like what should they wrap their heads around first? What should they be researching? What should they be pulling together?
Christina:
I find it wonderful that you're asking me this right now because I've been working with this exact struggle with, um, a couple of execs that I occasionally coach. And it is really hard because they'll say, I wanna be a, a top 10 entertainment company. And I'm like, but you guys make toys. Like, can we get a little more specific? You know, you're not gonna make a movie tomorrow, right? That's just out of your control. So, um, if you don't have a company, it's a different situation. But if you already have a company, you should just step back, put aside some reflection, period. Which by the way, this is about to be the new year. This is such the perfect time to stop and reflect. So what does your company do? Which of these things do not belong as Sesame used to say, Sesame Street used to say like, the first time I heard, um, Google saying we're doing self-driving cars, I was like, you must know something.
I don't know. Right? So you have to ask yourself, does this fit? And it's possible Google knows things that only Google knows that from the outside it looks weird, but from the inside it might be fine. But if you're making a lot of toys, then the question is, if you make that first video game, is it a stretch or is it growth? And, uh, you as a company should know that, but if you're starting to make TikTok videos, you could say, are we just doing it to be fun and hip? Or are we actually promoting our toys? So these are all the kinds of questions you have to get right with yourself, you have to get right with your company. And from there you can ask your start asking yourself, okay, we make these amazing toys for grownups that like puzzles and like to do something with their hands.
Okay, now we have a sense of that. So we can say our mission is, you know, and I, I hate making up examples, but I'm gonna see if I can pull it off. You know, our mission is to give smart, playful people something to do with their hands that brings them joy in life's cracks. I don't know, that was very long, but you could, you could know wordsmith it, right? And then there's gonna be a point maybe five years later where you say, okay, things to do with our hands, that's kind of limiting us. We wanna start moving into other spaces and you can tweak it, you know? Um, but you want it to be big enough. You can grow for five years and small enough that, and specific enough that people can use it as a guide. And that's a sweet spot. And that just means, you have to know your own company's culture and you have to talk it through, but half-assing it if you excuse the expression, is what I see too many people do.
And weirdly enough, the Phil's example I gave you earlier, it works like you walk into a Phil's coffee and you ask them what's their mission? And they have a big smile and say to better people's day. Actually that was true until the pandemic. At which point I've seen a couple of them crack because customers have turned into wolves. But <laugh>, I'm sorry to say, but mostly they get it. They're like excited. They're happy to make the coffee because if you're not happy with that coffee, they're not happy, they're not fulfilling their mission and it gives 'em a lot of room. They can add pastries, they can add anything.
Melissa:
Do you think some of the companies, this was just starting to occur to me when you mentioned the entertainment company, like, we wanna be an entertainment company, but we do toys. Do you think people are confusing, like what they're selling to VCs and how they're trying to position their tam and where their growth opportunities are with like, what they actually are or what they're gonna be for the next five years?
Christina:
Yeah, I think so. Actually, let me ask you, what would be example of it if you can?
Melissa:
Yeah, I feel like, um, well, you know, that one, the toy one kind of stood out to me. And I I, I run into this a lot with executives too, and especially CEO founders, right? Where they explain their company and the vision for it is huge and lofty, and you're like, great. But that's the vision that they try to, and you know, when you piece it all together, you could see how they can get there one day, but it's a 10 to 15 year journey. It's not like where we are right now. I guess you could think of that even like at, you know, Netflix would've been a great example if you looked at Netflix from day one and thought about what they are now. Um, you told somebody that vision when they were shipping DVDs, people would've been like, what? But as a, as a founder, you could see the potential in it, right?
Mm-hmm. <affirmative>. But I feel like it confuses maybe the people who are working for you about like, what do we need to do right now? And it distracts them from, you know, what's gonna be the next year to two years worth of work versus like, where are we gonna be in the next 10 years? Um, but there's, I, I see this kind of conflict like that when uh, executives have to go explain this stuff to their teams, right? And I think they're saying a weird balance between how do we talk about things that everybody's gonna be able to see from their point of view today and versus like what we're actually selling the market and selling the VCs with in our potential. Have you seen that before too?
Christina:
Um, I have seen that. I think that a good product strategy and good annual OKRs, if it's appropriate, if you're big enough, could help reign that in a lot. Because you want the mission to have enough space so you can grow. And I love that you brought up Netflix, because I love Gibb Biddles product strategy series on mediums just so good. And his description of like the five years of Netflix, which starts with DVDs and ends with games. And you know, I'm sure you many people are looking at it and saying, Netflix and games, I don't know if I see that happening, but look for Netflix in your app store or your play store, they are back in games. They tried the, uh, I think it was Bandersnatch um, and it didn't really fly, but they are looking to go there because somewhere along the line and the product sa said, games will be a place where we can grow interactivity.
Actually, they didn't say games, they said interactivity originally. And I think that's really fascinating cuz they're also now doing some watch parties and other things so they know where they're going, they just don't know how to get there. And what they were doing last year is not always what they're doing next year. So you can have a big ass mission and a, a wide product strategy, but then when you get down with the product, or sorry, wide business strategy, but when you get down to the product strategy, you're really asking yourself how, how, how is it gonna be games? Is it gonna be personalization? You know? So for the toy company, like, just cuz they're a toy company now doesn't mean they won't become an entertainment company. One word, Legos. I mean, Lego Batman might be the best Batman movie ever made. <laugh>, you know, um, they, they're having kits, they're having video games.
The Lego Harry Potter season one was one of the best games I've seen out there for iOS. The second one, less so, but Lego realized that they needed to do something beyond the basic, you know, here's a bunch of things, put 'em together and rather than say making dolls like another, you know, company might do, they said no, let's take this module approach these fun characters that have come out of our, our kits and let's take them further. Let's see what other ways. So Lego was al I don't know if they were always an entertainment company, but they're definitely an entertainment company, which is, you know, it it, that comes down to strategy. A hundred percent.
Melissa:
Yeah, that's a fantastic example. And that's true. And I, I think when, when I'm talking about this too with like the CEOs, um, I'm not saying it's bad that they can see that. Like it's great that Netflix can see they're going into games. It's great that a CEO or somebody can see that part of the view, like that part of the future and know where it's going. When you've got all these tools at your disposal as an executive, you've got your product strategy, you've got your, um, your mission, mission, your vision, your OKRs, like all these things that you, your values, right? Like there's so much of this, right? Like, and you talked a lot about the product strategy being the how, how do you reign in people to provide focus to their teams? Like how can they use OKRs to make sure people are working on the most important things right now so that somebody's not off building, you know, the thing that you need for games, but like, you don't need that now. You need that in 10 years. Cuz we don't have the capabilities to even use that, which, which is something I've run into before, right? Where, um, tech sometimes gets ahead of product or something like that, right? Where it's like, oh wow, we just built this like amazing algorithm that's going to be so great and you're like, cool, we have none of the data that it needs to process mm-hmm <affirmative> any of this because we didn't do parts one, two, and three first in order to get what we need in order to then move into this beautiful vision and this great stuff. So we need to do that first and we just kind of went out of order. So how do you keep people from doing that? Or what's your advice for executives to make sure that we're focusing on what needs to get done now and growing into these things?
Christina:
Well, honestly, if you're using OKRs correctly, that's exactly their job, right? You may have this big vision and you may have this big business, uh, strategy, business model, everything but the OKRs say this quarter, this is the single most important thing to be working on. And we want you to be sure not to forget about it. You know, and everybody's always doing lots of things, right? If you're a manager, you've gotta stay on top of your people and you need to hire well, and then you're of course doing a lot of maintenance and support, blah, blah, blah. And it's just, if you take that strategy and say, this quarter, this team, don't forget this thing and let's go ahead and measure it every single week, you know, and say, are we getting closer or farther? Is it working? Is it not working? That's what the o OKR should be doing for you, um, is just giving you that, that focus. And if you may be excited about this fabulous, uh, algorithm later, but right now we really wanna say, is the data even there? What's it doing? How are we gonna collect it? What makes sense? I mean, a lot of times, yeah, people get excited by the fun part and you have to remind them there's like another part that you have to be paying attention to now.
Melissa:
Yeah, that's a, that's a really good point. Everybody wants to do the shiny fun thing right now. Um, and you can't always do that immediately. So you mentioned OKRs too are great for the team level. Um, I've seen a lot of companies ladder them up. Uh, one company told me the way that their OKRs worked, and I'm not saying any of this is good, I wanna get your reactions to this because I can see your face right now. You're like, oh boy, what's coming? Um, but I had one company say, oh, all of our like, key results become the next team's objectives.
Christina:
Ah, I hate that one. I hate that one.
Melissa:
That was my, that was my reaction too. I was like, what <laugh>, okay.
Christina:
I mean if an objective is setting you a vision for the quarter and the key results are saying how do we know we made it, then how would moving a key result into objective even work? Like you're losing all the value. Ah, my gosh.
Melissa:
Okay. So not that. So if you're, your key results are another team's objectives, you're doing this wrong.
Christina:
Yep. Okay. And this is what happens when people are sloppy with their examples. It's really John do's fault and slightly Rick Clouds who use that same damn deck.
Melissa:
<laugh>. Okay, this is good to know. And then, um, another one that I've heard is how objectives and key results, uh, ladder up. Um, if you're a ceo, do you have OKRs? Does the VP of product have an okr? Is it like a per person thing? Is it a per team thing? I've got my friend in the other room who works at Google right now trying to write her OKRs out for her performance review. So like, I know these are all, you know, these are things I've seen. They tie it to the person, what, what do you think about that?
Christina:
It's bad and I can explain why, but I'll start with a simple no, please don't do this. So what's funny about Google is I have so many friends at Google and I swear every department does it slightly differently. So we often talk about Google is like this huge entity, but just like any big companies, it's a collection of city states. And, um, I wouldn't take, I'd be careful about what examples you take and in fact I'm seeing more and more articles saying even Google doesn't do OKRs the way rework their official blog says you're supposed to do it. So we'll take a moment and go, ugh. So what I've seen over and over again to the point I go, just don't do individual OKRs, just don't just, if someday you go, oh, I still get OKRs and it makes sense for blah blah reason, but like wait five years, maybe 10, maybe never. Um, because it's just, it's so complicated. Like first of all, you're getting way too many things.
So with human memory, we've heard the seven plus or minus one, but it turns out that as we've been studying working memory, it holds about four things maybe on a good day. And so when you get a new idea introduced like this is this quarter's OKRs, you'll be able to hold it in your working memory only bits and pieces of it, right? The four things, uh, the objective and the three key results. And what happens by continually reminding people about them is it starts to reinforce the links between the neurons and you start moving it into long-term memory. And once it's long-term memory, then it's much easier to access. So when you have a high level OKR and a second OKR and a third okr, now we're not talking four things, right? We're talking 12 things and now we added a team's okr. Okay, now we've got what, 16 things trying to hold in your memory.
Oh wait, and there's another level, another level. And at which point we've destroyed a lot of the value of the OKRs because people are like holding so much stuff in their head, they're confused and of course everybody's like, oh, let's put it on a poster. But the problem is people start ignoring the poster because it's ver we, our eyes are designed and our brains are designed and notice new things. So if it's just hanging out there, we're not gonna look at it anymore. So what is much better is to pick a single OKR or maybe two, um, the one above you and the one you're living in. And I think that anytime people are doing layers of OKRs after two don't, maybe three, but just don't, and work on helping people remember what the team's OKR is. Um, a good team leader will repeat it over and over again.
And a good business leader, business unit leader, what have you, company, they'll repeat the companies. And so hopefully that repetition will start creating those, the the long-term memory. And what's really wonderful about this is as you start running experiments to move those numbers, you start learning and it gets tied to those OKRs. And so when you move to the next quarter, right this quarter, pretend you're really working hard on retention. Well, when you move next quarter to conversion, you haven't forgotten that like it's still in your head. And so you're actually building super employees because you're reducing the amount of information they're getting, you are increasing their retention of this information and the entire organization is hopefully learning. So if you are in a company that has multiple, multiple layers, I recognize, I recommend this more complex system, which is the company sets zero OKRs and then everybody says, what can I do towards it? And you have it reviewed by two peers who understand what you actually do and that's it. None of this check, check, check, check, check up and down the ladder, right? Um, none of this I have to keep track of everybody's stuff. No. It's like I know what the company's doing and I know what I'm doing and I'm good. And that will, uh, maximize the learning and focus that you're looking for.
Melissa:
Okay. So when you're talking about like three max levels of OKRs, as you mentioned, like we have a business level, O K R, those you were thinking that size. Okay.
Christina:
Business unit if you're bigger company, if you're smaller.
Melissa:
Okay, that makes sense. And then, um, we've got middle one. What would the middle one be?
Christina:
Oh no, middle ones. Just middle
Melissa:
Ones. Okay.
Christina:
Company team. Done.
Melissa:
Done. Okay, cool. Um, so and
Christina:
Services can opt out.
Melissa:
Okay. And all of these are focused do you think, um, per quarter, is that like the time horizon that we're looking at to achieve? Or is the business one like longer
Christina:
Over and over and over again? Quarter seems to be the right amount to set a rhythm of setting goals, reviewing goals and learning. Now something I see people get confused about is next quarter you could have the same OKRs, mind blown, right? There's no reason to change them or you could tweak them, maybe you change one key result or maybe you keep the same objective and you put three new key results or maybe you have something completely different because you are wrong. Like you have a lot of options to repeat things until you feel like you understand the nature of your goal. Because you know, Melissa, you and I come from a lean background, it's all about the iteration and the learning, right? So the same thing should be applied to the OKRs. They're not a mission that you don't wanna change too quickly cuz that's ADHD as business strategy, that's no good.
But with the OKRs, we wanna be able to change them as new information comes in. So three months is short enough that you can change them, but long enough you can learn every week. I've had start go, but we're really fast moving, let's have new OKRs every two weeks. And I'm like, no, no, just slow down. Really think about what you're trying to do this quarter and commit to it. And if you're actually completely off your rocker, you can change it within the first two weeks. But if you're not, then suck it up and figure out how to make it work.
Melissa:
When you're looking at, if your OKRs are the same quarter to quarter, let's say you have the same one, you know, this quarter, you get seen one next quarter, how do you start to tell like whatever we're doing is not working right? What, what are the, what are the signals you're looking for to to make sure that you're still on the right track?
Christina:
Well if I could ask you that question, I mean that's like when do we stop? It's gotta be the hardest question in the world. Yeah. Um, I run this run into this with startups. In fact, I think that startups are particularly, um, it's particularly useful for startups because they will go ahead and say we have a formal stopping point to see if this is working or not. Otherwise, uh, startups can become like long in the tooth as we say here in the valley, you know, they're working, working, working and barely getting any traction and there's a point where you're like, it's never gonna be the unicorn you hoped it was gonna be. You've taken a lot of vc, you're never gonna really pay it back. It's time to walk away. So OKRs are there, let's stop every quarter and really look at what we're doing and ask ourselves is this a direction we wanna keep going?
And maybe you pivot, maybe you throw it out, it's fine. Um, with bigger companies I think that that is also useful. Like you have this new initiative I keep, I, sorry, I keep thinking about Google, like how many times are they gonna build chat and throw it out and then have a new chat. But it's actually the same chat, which you're kind of moving from one chat to I'm, I'm like, why? Why? You know, like why don't you just build your chat, know exactly what you're hoping for from your chat, your key results and then just keep tweaking it until the results are making sense. Um, so there's gotta be a sweet spot between pick and stick and do overs and pivots are usually the right ones. But companies really struggle with this. I think it's one of the hardest questions that a company's gonna ask itself. Our team's gonna ask itself, do we keep going? Do we make a small change or do we throw it out?
Melissa:
Yeah, it's a hard question and I see for startups like do you usually end up answering that question because you just don't have unlimited amounts of money <laugh> to go after. But for, you know, bigger companies, they could spin their wheels forever, um, with how much money it would take for them to go broke. Uh, not that any of the investors would be happy, but you know, they got a while to ride out their stock prices to zero or before somebody comes and buys it all up. So those are the ones I see struggle the most with like actually calling it. Whereas startups and growth stage companies are no, you know, if we don't start changing something within a year, we're gonna have to lay people off or make a drastic change cuz we just don't have unlimited amounts of capital.
Christina:
Yeah, the VC will eventually go really And with big companies, as you say, actually they can never get shut down. Like there can be a strange little group that's working on something that isn't providing real value and going forever. And I think that's on the company. The company should be able to create some sort of review system as many companies I know do, uh, product councils. I don't know if if you've seen that as often and that's really useful.
Melissa:
Yeah, I think too, like using Google as an example and no, I don't work for Google. I've got no skin in this game. I have never worked with Google as a client or anything, so I don't know. But I think a lot of these large companies get so big, um, and they've got so many different departments and the departments are all working autonomously that they actually lose a very cohesive product strategy across the whole company. And you know, when we get to be 50,000 people, a hundred thousand people, it's like, I don't know what that team's working on or that team is working on. Even when I was at Athena Health, we were like 5,000 people and up until, you know, a certain point before we started getting everybody together, making a defined strategy and doing all that stuff while I was there, um, they would talk about how people would come present, what they were building for the quarter and like everybody was building a calendar and was like, that's nobody talked to each other. Nobody like put a cohesive product strategy across the whole thing. Um, but then when you start doing that, that's where you start to focus. That's where you start to divvy up the teams. But I see bigger and bigger companies like leave that out. I don't know what you've seen with those two.
Christina:
Well I had the same thought with things like Google where like how many people were trying to build a social network or how many people were building whatever. And then I talked to um, Ken Norton back when he, you know, he worked there, sorry, I talked to Ken Norton, who's, who's now coaching and he said when I was at Google, Google would always allow multiple initiatives that were working on the same problem to go forward. Because innovation isn't about efficiency, it's about effectiveness. So what you really wanna do is see who gets there firsts and then after somebody's arrived, then you can kill the other ones and put attention and focus on the one that's succeeding. And then it's about efficiency and over and over again. I keep seeing companies mix up those two ideas. Is it gonna be effective or efficient? You can't always have both. Sometimes you can, but mostly not. And so what kind of problem is it? Are we trying to solve a big mystery or are we trying to scale? And you have to know the difference. So I have the same feeling like why would you do that? That seems so wasteful. And then I thought, if you don't know what the hell you're doing because it's a new space, not in a bad way, then you want a bunch of people working on this problem.
Melissa:
That's a really good point. So there there is a difference between like exploring a problem space that is unknown and how do we throw quite a few people at that problem space looking get in there and just, you know, even if they all come to the same conclusion, great. That means we probably should go that way. <laugh>. Yeah, <laugh>. It's like we are all, we know this is like a known known thing. We know what the solution is and we're just executing on it. If you throw like 18,000 people that aren't talking to each other around the execution and let them all build the same thing, then it becomes worthless then it's not efficient like you're saying.
Christina:
Yes, exactly. And knowing which are which is often the hard part because of course many startup folks and uh, entrepreneurs think they know everything. But I think Google just letting them pop up wherever they show up and letting them do stuff, I think that's not a terrible solution.
Melissa:
That's a good perspective. That's a good perspective that I didn't think of with some of it. Um, when you are letting, so here's, here's a question about OKRs when it comes to this, right? How do your OKRs or the process of OKRs differ? Do you even use them? You're in that exploration phase of figure out what problem we're solving versus like execution phase. How do you, how do you go about thinking OKRs in those two phases?
Christina:
Um, I actually wrote a, uh, I essay about it, it's on my blog Elegant hack, which is the goal meets the team. So some teams are working on innovation projects and some of them are trying to double down on the learnings and do rapid, uh, blitzscaling as Reid Hoffman calls it. And it's very different. So for somebody who's trying to figure it out, then their objective is understand how China could be a place where we can expand our mission. And you could have numbers that show this is what we think is a strong signal, right? And it's a lot goes back again to, um, lean and David Bland's wonderful testing, uh, business ideas. You know, you wanna go ahead and say, okay, we don't know exactly what we're gonna do here, but these are the things we think would happen if we were onto something.
And then you get to the next level, I call them exploratory OKRs, but maybe we shouldn't have different types. I don't know. It's just, it is really about how you um, how you form the question, right? And then, um, hypothesis is when you're like, okay, uh, we think this is the answer. So when I was talking about the fiction and radical focus, it was a small company that did tea delivery and they sold B2B to restaurant suppliers. But let's say they're struggling with the question of how do we have a direct relationship with the customer? Because if you have somebody between you and the customer, that's always a little bit, uh, risky. So they don't know how to have a direct relationship, but they come up with some good key results. You know, um, how many emails do they have? How many, you know, subscribers, what have you.
And so they say, okay, how are we gonna get those folks? And that's when you could try a popup tea shop or direct mail subscriptions or whatnot. And then if ones looks like it's taking off, then you move into the hypothesis, which is we think popup are gonna work, right? Popup tea shops, that's, that's looking good. Um, and at which point you say, uh, pop-up tea shops will convert 20% of our current volume into, uh, direct relationships, something like that. And so then you can spend a quarter seeing if that's true. Cuz sometimes things look good at the beginning and then they kind of fall apart. And so you spend that time, but then you realize these pop-up shops are not necessarily sustainable, however they are good at making direct relationships. So then maybe you move to let's have stores, you know, let's start being uh, more like Starbucks or more like David's.
And that's an interesting question. So we have this hypothesis that these stores, all they need to do is sell tea cuz David's has a better revenue per square foot, right? And so we're gonna have these tea shops where we sell our fabulous teas, people walk in, they get the tea, they get a sample, they leave, um, and so on. So you're constantly like trying to tighten in on what is working and how does it move forward. And so the OKRs become steadily more specific and then when you nail something, then you can start looking at OKRs that are about scale. Does that make sense?
Melissa:
Yeah, completely. And I think that clears it up nicely. So it's like we've got some objectives and key results that are just very much about exploratory results. Like, let's see if this is gonna work and that's totally fine. And then when we get into yes, we've proved it and now we need some outcomes associated with it, they get a little more concrete, they get a little more, um, you know, metric focused where we can actually go back and measure the results of all of these things.
Christina:
Absolutely. And the funny thing is, there's another one that people struggle with a lot, which is, what if we can't do it in a quarter? And I say, well, you know, you have milestones of things you wanna do, why not have milestone outcomes, right? So let's say you're building something that takes six months, you're moving into another country. Well the first step might be we wanna make sure there's demand before we just jump into this under your country. So maybe your OKR is about determining demand and then maybe the next O K R is about, uh, determining optimal location, whatnot. You know, so when you're talking about demand, you'd say, uh, people in Belize? Uh, well, I, I don't know. I don't, I I, I'm having, I'm running outta examples, but I feel like that's the kind of examples that, you know, you see all the time in the lean startup books.
Like how, how do we measure demand? Well, we measure demand by putting ourselves out there with landing pages or, uh, pop-up stores or surveys, which suck. But for really lightweight can help, you know, we're, we're gonna determine what demand is and then we keep moving. So each quarter is a go, no go. And eventually it becomes later go no go. And how, what is it gonna take to make this happen? And what I love about this is it lets us de-risk on a regular basis continually as opposed to just going, we're gonna build this thing, let's go. And then it, it's out in the world and fails. So the milestone OKRs, the outcome based milestones, they just work beautifully.
Melissa:
Yeah, I really like that. That's a good, that's a good tip for looking at that too. And I do hear, what if you can't do it in a quarter? What if it's gonna take like, um, longer? You're like, oh, I guess it'll take longer <laugh>. Like let's just try to break it down.
Christina:
No, like even a usability test, like you know, you're building something, uh, maybe your OKR is people love it and can use it and check out within two minutes or whatnot.
Melissa:
Mm-hmm. <affirmative>, that's a good one. Um, I also find it really hard to come up with all of these, uh, these suggestions or examples on the fly. So I'm glad I'm not the only one. And people are always like, can you gimme an example of this crazy thing? And <laugh> I like can't, can't come up with it. So I appreciate you trying to though for a lot of this stuff and you've done a really good job at it too.
Christina:
Well the tricky part is you want the examples to not mislead people. And the easy thing sometimes can be misleading as we learn from John dor. I mean I get that coming up with examples is hella hard, right? And so, um, when I do the second edition, the number one thing is I put in so many more examples because things aren't quite real until you can see an example.
Melissa:
Yeah. Okay. So what I'm taking away about OKRs from you, which I think are really great, is one, it's not a per person thing. No. For the team maximum two levels, right? Like we've got business OKRs and we've got Team OKRs,
Christina:
One OKR per quarter. Even if you settle and get two <laugh>, then at least you don't have five or 12. But just remember each one you add is destroying people's ability to focus on strategic matters.
Melissa:
That's a good one. And then also OKRs are not strategy. So you can't just think implementing OKRs is the end game.
Christina:
Nope. You got it. Get your kids off to your magical resort place and spend some time with your leadership team and say, what the f what are we actually doing <laugh>, how are we gonna get there? And then when you have an answer, you can make your OKRs.
Melissa:
Okay. I think that's really good advice for people. So thank you so much Christina for being with us on the podcast today. If people wanna go learn more about um, OKRs and about your work, where can they find you?
Christina:
You know, my forever blog will always be elegant hack.com. Um, so I'd say that's always your best bet.
Melissa:
Okay. And then make sure that you buy Christina's book too. If you wanna explore OKRs more. It's called Radical Focus. Um, and I believe you, is there anywhere specific with you'd like him to buy it from?
Christina:
No, just make sure you're getting the second edition. Cause there's so much I learned in the five years between the first and second edition and it'll probably be much more helpful. I mean, Amazon is where most people go. I'm sure that's fine, but it's everywhere. It's in Barnes and Noble. In fact, this is the, I just gotta report and this is the first quarter I think that Cobo built, uh, oh, outsold apple. So go buy it for your Cobo since everyone else is <laugh>.
Melissa:
Love it. Okay, well thank you so much again for being on. Um, and if you enjoyed this, uh, episode of the Product Thinking podcast, please subscribe so that you never miss another episode. We are here every Wednesday next week we'll be back with another Dear Melissa answering your questions about product management. So make sure that you get those in@dearmelissa.com and we'll see you next time.