The healthiest culture is a culture built on accountability and operational excellence, not on fancy values. One way to build accountability and performance from the start, and define the right culture, is to use Objectives and Key Results (OKRs).
Everything is about Phase Two!
Building a startup is much more difficult than building a traditional business. Any tech founder knows it. The tough part is that, in most cases, the startup not only faces uncertainty, but insufficient resources, entrenched competition, lack of experience, and many other challenges. Still, there is hope! Uncertainty can be fought through experimentation, resources obtained, go to market strategies devised, more experienced people hired. But, without operational excellence, the opportunity will be wasted.
I’m going to stop here, to share with you one of the best business lessons I have learned in the past ten years. It does not come from a serial entrepreneur who raised billions and billions of dollars, nor from a thought leader, or a known VC. It comes from a bunch of third-graders in the popular South Park TV series. Before you watch this short excerpt, let me give you a bit of context. The kids have to write an essay about business, so they gather at one of their homes, drink coffee, then end up staying late thinking about what they could write. While debating how they should approach the topic, a few gnomes come in the room. the gnomes open drawers and steal the kid’s underpants. Watch this for the rest of the story:
So what’s the lesson here?
Objectives and Key Results (OKRs)
What is your phase 2? How do you get from an idea to a successful, profitable business? Despite all the learnings, entrepreneurship and management are still more art than science, and subject to different mental models, cognitive and personal biases.
There are problems with all traditional management models-waterfall, agile, management by objectives, six sigma, lean startup-heck, you could even consider micromanagement an approach. Especially if it can help you break through the early stages. The downside is that the waterfall model can’t plan for uncertainty. Agile management is too short-sighted. Six-sigma will help you improve your startup process, but what if it’s the wrong process? Lean Startup is an excellent philosophy, but it encourages cognitive biases and a lack of accountability as a methodology.
All the traditional models have shortcomings when applied to a small startup organization, that’s why Objectives and Key Results could be a better fit for startups. Based on the management by objectives methodology, OKRs were first adapted by Andy Grove at Intel, then brought by John Doerr at Google, from where they spread throughout the startup world. Christina Wodtke, a former product manager and GM at LinkedIn, MySpace, and Zynga, further evangelized the methodology through her articles and books. (I recommend both Radical Focus and The Team that Managed Itself).
While there are as many detractors as there are supporters, I won’t get into that argument. I have implemented this and adjusted it over the past seven years in all my companies (Grapefruit, Eternime, Exploratorium), and with tens of startups at MIT, Singularity University, Techstars, and other accelerator programs. It just works. Here’s how.
An OKRs implementation guide
Now it’s time to get your hands dirty. This is exactly how we do it at Exploratorium (the startup organization that builds DE Toolbox and Metabeta). It is one of our essential processes as it helps us move together as a team from the vision to why it finally works. It helps us move from a long-term vision beyond ten years to the hard question of what we should do today, then it allows us to be accountable.
Our process has two essential parts:
The model we use to zoom in from a 10-year visionary horizon → to a medium-term (3-year) horizon → to yearly goals → to quarterly OKRs → to weekly priorities and, finally, → to daily tasks.
The routines that keep this process on track.
From vision to yearly goals
Our long term vision is simple and expressed on one page:
We help investors to find and grow the best startups. We do this by focusing on data-driven decisions, not only on gut feeling.