Insights from how a 200-Year-Old Bank is running an OKR-Based Digital Transformation
I recently appeared on the “Dreams with Deadlines” podcast and enjoyed a wide-ranging conversation with host Jenny Herald.
Jenny had this incredible knack, across the depth and breadth of her experience with industry OKR leaders, to draw out key insights that have made a difference in my coaching practice, and can be helpful for your OKR implementation, as well.
Here are seven highlights from our conversation:
- The Importance of Outcomes for Quality OKRs
- How OKRs Increase Cross-Functional Value Delivery
- The Importance of Funding and Underlying Systems in Supporting OKRs
- One Way to Stay Out of Planning with OKRs
- Setting Committed vs. Stretch OKR Goals
- Addressing Resistance to OKR Adoption
- My One Key Piece of Advice for Starting with OKRs
1. The Importance of Outcomes for Quality OKRs
Let’s talk about this outcomes-versus-outputs thing because I think a lot of people hear that. What’s the difference, firstly, and is one more important than the other?
Outcomes involve a creativity and strategy focus, where you’re able to visualize a future different from what currently exists and what your current capabilities are leading you in the direction of.
So that’s a fundamentally different approach from Outputs, which are more analytical, planning and project-based.
Again, one is not better than the other. I think the goal is to start by setting goals that are Outcome-focused and then delay that analysis and planning just a little bit longer so you can create that appropriate signpost for both the teams and the organization aligning on what larger strategic direction you’re looking to go in.
2. How OKRs Increase Cross-Functional Value Delivery
How have OKRs helped the cross-functional nature that we’re seeing more pervasive with teams that are developing products and experiences for customers at KeyBank?
Objectives and Key Results were introduced about 16 months ago.
Before, we had a much more functionally-structured organization, with a number of silos — Engineering, Quality Assurance, Design.
If we were going to achieve meaningful client outcomes, we recognized we would have to restructure cross-functionally, we would have to be more data-informed on how we do things, and we were going to have to think about our customers and what value we were delivering to them.
And that’s really forced this notion of reaching across silos and collaborating in these ways so that we can deliver these streams of value to customers in ways that provide business value at the end of the day.
3. The Importance of Funding and Underlying Systems in Supporting OKRs
One of the things I think a lot of organizations that are taking the OKR methodology and have a hard time with was how to weave this in with how they’ve run their business before, like, namely, how to fund when it sounds like what you’re trying to get them to do is to fund to value.
Can you help demystify how that looks at KeyBank?
This is definitely one of those initiatives that addresses an underlying system.
If project funding is in place, and I know Ford Motors has gone through the same thing, if you’re funding a project episodically, at the end of that project, the team is broken up, and you have to make a business case and go in front of a group and make a pitch for why your team should be funded all over again.
But a lot of the work is really maintaining, iterating, supporting existing systems, and you shouldn’t have to find team members and reassemble the band every year. There are pieces that have to continue to provide value.
And these streams of value are essential in providing that continuity.
The funding piece will lay the foundation for long-lived, stable teams that are cross-functionally organized around value and be able to deliver that value over time.
And that really is a prerequisite for good OKRs — being able to set these Outcomes, and then allowing the teams over time to figure out how to deliver on them.
4. One Way to Stay Out of Planning with OKRs
So you have mentioned that OKRs are something that you do ahead of planning because everybody wants to get to the task list.
How do you help coach teams as well as leaders to allow that breathing room to think more long term? What has worked for you as a coach to slow things down so that you can speed them up later?
I think Christina Wodtke speaks effectively about the importance of starting with a Mission for OKRs.
So staying grounded in and aligned to that Mission is a really key way to do that and figure out how the mini-Mission for the quarter, which is your Objective, how is that going to align to the longer-term Mission? And then how do the Key Results, in a quantifiable way, how are they helping create this signpost, this measure that we are actually delivering towards the Objective?
I think staying aligned to that Mission is extremely important and helps people visualize that North Star, that longer-term goal, and to really stay out of that Analysis and Planning tendency that comes up.
I wrote an article about this insight, and it’s really something I’m excited about bringing forward with the teams in this coming OKR planning cycle.
5. Setting Committed vs. Stretch OKR Goals
What is your take on aggressive stretch goals versus goals that seem difficult but more achievable?
This is definitely another area of growth. I think there is in more traditional enterprises that notion of, we set goals and create expectations that we can meet.
There is a reluctance in a public forum where you would set a goal that you might not hit. So it’s very liberating to understand that baked into the OKRs framework is that notion of we do want to set goals that may seem daunting at the beginning of a period and that we might not hit because in our effort to stretch, we will learn new things, we will be forced to innovate and collaborate.
This is definitely a new area and moving from that focus of being very safe, very conservative in goal setting to let’s be more aspirational.
So I think it’s something that organizations, early on, it’s comfortable to set goals that are more achievable but to gradually over cycles to develop that capability to set more moonshot-focused goals. And not every area of the organization is going to be appropriate to do that.
When you’re trying to break into creating new innovation and new experiences for clients and do things that haven’t been done before, that’s obviously where that kind of thinking can provide the most benefit.
6. Addressing Resistance to OKR Adoption
What do you have to say about how to apply this from your experience at KeyBank so that it is not burdensome, it doesn’t end up evolving into a reporting exercise but actually is a value-add for teams as they’re pursuing what their quarterly mission might be and the Outcomes they’ve set for themselves?
How do you weave it in existing processes so there’s no perception additional work is involved?
It’s not that hard, Jenny, to look on product Twitter and engineering Twitter and see how much OKR hate is out there.
I believe it comes back to the fundamentals of probably working against task lists that are sort of this planning-based, compliance-focused approach.
The OKR Mindset Shift
If you can have a combination of a bottoms-up and tops-down, collaborative, Outcome-focused goal setting approach, and the teams can then dig in and figure out the best way to deliver on them, we’re talking about a very fundamental seismic shift in the way people approach work.
For most people, they just get a ticket and say, do this thing, and they do this other thing. And then they hand back the ticket. And they ask, what’s the next thing for me to do?
Now we’re asking teams to really dig deep and think what they have to do to deliver on work in a meaningful way, and how can they be more effective in the process? It just involves a lot of pieces that are very new.
From structure, comes freedom.
I would liken that sense of when you first learn to ski, the ski instructor will tell you to sit into this crouch and tuck your poles and do all these extremely uncomfortable things in the beginning.
I think insofar as you put in the work to learn and eventually get comfortable learning the mindsets and techniques that underlie good skiing, that allows you to eventually fly down the mountain.
And I think people tend to resist that initial set of however many lessons it takes to get to that level of comfort. So it’s getting good coaching, having leadership that is focused on doing this for the right reasons, and then it’s using the framework in a lightweight way that allows teams to innovate and deliver against these goals that have meaning.
7. My One Key Piece of Advice for Starting with OKRs
What’s one piece of advice that you give to those folks who might be starting out with OKRs or let’s say they tried them before and they’re like, didn’t work, but maybe we’d give it another go because maybe we did it wrong?
What’s like the one nugget that you would share with them?
Probably, for me, the biggest thing would be Client-centricity and Strategy.
Those two pieces I think are two sides of the same coin. And then just getting good people and putting in place a program that’s effective in setting goals and effectively delivering against them.
How are Client-Centricity and Strategy related?
I know it feels like I’m stating the obvious or asking the obvious, can you delve deeper into what do you mean by Strategy and Customer-Centricity being two sides of the same coin?
I’ll invoke again the recent piece I wrote referring to Roger Martin.
He talks about that big gulf between Strategy and Planning. And strategy is really that creative- and client-focused sense of, we are creating a different outcome for them, we are creating a different future reality, and an understanding that you can never control your clients.
I think in the planning and analytical sense, you always see yourself as the customer and you focus inward and you can always control costs and you believe that people will do things as you expect them to. While there’s a place for that, I think you just need to apply the right thinking in the right context.
So it’s Creativity and Strategy versus Analysis and Planning.
Understanding those are two very different things.
And the Creativity and Strategy piece really relies on understanding that you can’t force your clients to do things, you can just be a great business, and they will reward you with advocacy and loyalty.