WEBVTT 00:00.400 --> 00:03.640 What's up everyone? Tim Newbolt here. Today I want to do 00:04.140 --> 00:08.160 a quick video to share with you some insights around the difference between objectives 00:08.660 --> 00:11.920 and key results. KPIs and the balanced scorecard. 00:12.480 --> 00:15.680 Let's get straight into it. A KPI or a 00:16.180 --> 00:20.560 key performance indicator is just around managing the health of the organization. 00:20.960 --> 00:24.400 They can be used to drive change, but they work best when they're about 00:24.560 --> 00:28.270 maintaining a healthy business. So you might be looking at metrics 00:28.770 --> 00:32.590 like cash flow, you might be looking at things like customer satisfaction 00:33.090 --> 00:36.430 scores and first call resolution. If they're calling your call center, making sure you're 00:36.930 --> 00:40.830 servicing them right the first time, they're the metrics 00:41.330 --> 00:42.949 that are going to tell you you're looking good as a business. 00:45.270 --> 00:47.990 OKRs, on the other hand, they're about change. 00:48.710 --> 00:52.470 They're about getting that focus and alignment as an organization and driving 00:52.970 --> 00:56.220 a real outcome. So let's actually look at a couple of examples. 00:57.580 --> 01:01.340 Up here we've got a KPI. The blue line 01:01.500 --> 01:03.820 is the actual, the red is the target. 01:05.180 --> 01:08.380 Now let's say we want to have a first call resolution 01:08.880 --> 01:12.260 that sits within a certain green range. So customers call and we solve their 01:12.760 --> 01:16.300 problem for them the first time they call. As long as 01:16.800 --> 01:20.240 our metrics are heading along in this trajectory and it looks pretty good, we don't 01:20.740 --> 01:23.640 need to change it. As long as we're happy with that, we're going to leave 01:24.140 --> 01:26.120 it and we're going to keep checking in on it. We're going to make sure 01:26.620 --> 01:29.640 that that looks good long term, but we're not going to do too much about 01:30.140 --> 01:33.600 it as long as it stays in a healthy kind of range. OKRs, 01:34.100 --> 01:37.520 on the other hand, they're about achieving something, setting that 01:38.020 --> 01:41.200 target. Now let's say we've launched a new product 01:41.520 --> 01:44.560 and we want to have people coming back and reusing that product. 01:45.410 --> 01:48.130 Well, you know, maybe a few times a week, let's say three times a week, 01:48.850 --> 01:51.770 we don't have a baseline, so we don't know what that looks like from the 01:52.270 --> 01:55.410 past. But we're gonna put that in as part of our product 01:55.910 --> 01:58.850 and see what that metric looks like. So in this example over here, 01:59.410 --> 02:03.130 we actually have a little bit of historical data. Sometimes you might not even have 02:03.630 --> 02:06.450 that, but you just know this is our target, where we wanna get to. 02:07.330 --> 02:11.290 So you drive and rally teams around achieving this objective and key 02:11.790 --> 02:15.780 result. It's very focused. Most organizations 02:16.280 --> 02:19.820 at the top will have one objective and three to four key results. Under that, 02:20.460 --> 02:23.980 bigger organizations like Google and Alphabet, they get a bit more complex 02:24.060 --> 02:27.380 and you know, they tend to have up to five objectives, but that's for 02:27.880 --> 02:31.180 massive businesses versus KPIs. You could have 02:31.420 --> 02:34.540 tens, twenties that the leadership team closely monitor, 02:34.620 --> 02:37.980 maybe even hundreds. So it varies quite a lot. 02:38.620 --> 02:41.260 KPIs are not about focus, OKRs are. 02:42.140 --> 02:45.540 So for our team, we're going to stretch and we're going to try and achieve 02:46.040 --> 02:48.900 that. That's the other part of Objectives and key results is it's all about stretching 02:49.400 --> 02:52.980 and challenging yourself. It's okay to fail for a KPI if 02:53.480 --> 02:55.900 we don't have enough money in the bank and we're not going to make payroll, 02:56.300 --> 02:59.100 that's not a, oh, okay, we failed that one. That's a real problem. 03:00.140 --> 03:03.820 If we strive to get customers coming back and return using our product 03:04.320 --> 03:08.110 on a regular cadence, but we're not quite getting that. It's disappointing, but it's 03:08.610 --> 03:12.030 not the end of the business. This is a very important distinction to understand, 03:12.530 --> 03:16.030 is that OKRs are shifting our mindset to achieving outcomes, but also 03:16.530 --> 03:18.990 challenging ourselves and making it safe to fail. 03:20.670 --> 03:23.830 Every now and again a KPI becomes an objective 03:24.330 --> 03:27.550 and key result and that's usually because we need to drive radical change 03:27.870 --> 03:31.070 to correct it. So let's have a look at an example. 03:32.600 --> 03:35.720 Lets say over here, we've got our first call resolution. 03:36.200 --> 03:39.480 It's sitting up here in the red. It's really not looking good. 03:39.960 --> 03:43.720 So what do we need to do? Well, we can set 03:44.220 --> 03:47.759 an objective and key result for the quarter that's going to focus on driving that 03:48.259 --> 03:52.200 number down. And the objective and key results could vary based 03:52.700 --> 03:56.440 on context, but they're going to be centering around improving that customer experience, 03:56.920 --> 03:59.400 solving their problem the first time that they call us. 04:00.950 --> 04:04.230 Once we've achieved that key result and we've actually had that 04:04.730 --> 04:08.670 customer first, core resolution improve, then you know 04:09.170 --> 04:12.670 what, we can abandon that from an OKR perspective. But it's going to maintain 04:13.170 --> 04:16.590 and be a health metric that we continue to track because if it goes south 04:17.090 --> 04:20.510 again, we want to course correct. So where does this then 04:21.010 --> 04:25.430 come in with balanced scorecards? Well, a balanced scorecard 04:26.000 --> 04:29.920 by its title and in very simple terms is a balanced 04:30.420 --> 04:34.040 view of your organisation. And a scorecard. Are we heading down 04:34.540 --> 04:36.920 the right path? Are we doing the right things? Are we running in a healthy 04:37.420 --> 04:41.639 manner? It tries to capture all different parts of the organization how 04:42.139 --> 04:44.880 healthy it is and looks at financial measures, 04:44.960 --> 04:48.920 customer measures, performance measures and many other areas and can be tailored to your 04:49.420 --> 04:52.540 organization too if you have specific needs. But it 04:53.040 --> 04:57.140 tries to bring in this balanced lens of the organization. I'D caution 04:57.640 --> 05:01.140 you from thinking though that they're in the same camp. They do have two different 05:01.640 --> 05:06.020 mindsets. The balanced scorecard is all about achieving 05:06.520 --> 05:10.180 a long term target and it's also about breadth 05:10.680 --> 05:13.780 across the whole organization. Every part, every function, 05:13.940 --> 05:16.420 objectives and key results have a long term focus. 05:17.630 --> 05:21.030 But they bring your attention to the near term. How do you take one 05:21.530 --> 05:25.270 step towards that long term? They give you alignment 05:25.770 --> 05:29.310 within the business around what is most important right now. And they tell 05:29.810 --> 05:33.150 you that you are making progress or you're not making progress and you therefore need 05:33.650 --> 05:37.710 to course correct. The balanced scorecard 05:37.870 --> 05:41.070 is very clear. It does not include near term 05:41.570 --> 05:44.520 objectives. It is all about the long term. 05:47.160 --> 05:50.560 At the same time. It's about success. You need 05:51.060 --> 05:54.120 to nail your balanced scorecard. Failure is literally failure of the business. 05:54.840 --> 05:58.200 That might be a little bit extreme, but it's not about giving it a 05:58.700 --> 06:01.480 crack and learning from it. You need to achieve those numbers, 06:01.880 --> 06:05.680 objectives and key results. On the other hand, they're all about giving it a 06:06.180 --> 06:09.640 go, trying things out and learning from yourself as you take these steps. 06:11.090 --> 06:15.250 Because they're set generally either within a six week frame or a quarterly 06:15.750 --> 06:19.250 frame, they're allowing you to course correct and improve things as you go. 06:20.690 --> 06:24.170 Now they can work really well together because they both show 06:24.670 --> 06:26.930 and reflect and measure your strategy. 06:28.930 --> 06:32.290 The challenge is how do you make the balanced scorecard 06:32.790 --> 06:36.610 consumable and relevant for people and link it to your okr? 06:37.360 --> 06:41.200 And to be honest, that is a way that you can create a tangible 06:41.440 --> 06:45.000 artifact from your balanced scorecard. Something that teams can understand in 06:45.500 --> 06:48.400 the near term by taking valuable slices out of that. 06:50.560 --> 06:54.640 I'd caution you from thinking that your objectives and key results and your balanced 06:55.140 --> 06:58.560 scorecard sit in the same camp. There's a few key differences. 06:59.520 --> 07:02.930 Your balanced scorecard is very broad versus objectives 07:03.430 --> 07:06.010 and key results are very, very focused. 07:07.130 --> 07:10.570 Your balanced scorecard is about a long term view 07:11.070 --> 07:14.970 and a long term measure that will not be achieved in any short term perspective. 07:16.090 --> 07:18.810 Objectives and key results take a long term view, 07:19.370 --> 07:22.810 but they create focus on the here and now. 07:22.970 --> 07:26.930 What is most important today? Both create a measurable 07:27.430 --> 07:31.400 slice out of your strategy. The scorecard, however, is the entire strategic slice. 07:31.900 --> 07:35.600 You achieve your scorecard when you've actually finished delivering 07:36.100 --> 07:39.640 on your strategy. The OKR is a leading indicator that you're making that progress. 07:39.880 --> 07:43.320 It helps you measure your progress towards achieving that strategy. 07:44.120 --> 07:47.640 The scorecard is all about nailing it. There is no middle ground here. 07:48.140 --> 07:51.600 You have to be successful on those measures versus an OKR is about stretching 07:52.100 --> 07:56.280 and challenging yourself. Generally, if you achieve 70% of your key results, you're considered 07:56.780 --> 08:00.700 successful. Now, through that failure that you might experience by 08:01.200 --> 08:04.340 not quite hitting every single one of your key results, you can pivot and course 08:04.840 --> 08:08.500 correct as you go, ensuring that you're on track to deliver that strategy. 08:08.740 --> 08:11.980 It can be very hard to know that you're making that progress with a balanced 08:12.480 --> 08:16.260 scorecard, so in short, they can be done together, 08:16.340 --> 08:19.300 but you've got to be very careful. So there you have it. 08:20.980 --> 08:23.860 KPIs. They're all about health and run of the business. 08:24.610 --> 08:28.450 Objectives and key results are about focus and alignment on driving 08:28.950 --> 08:32.290 change within the business for either internal functions or for the 08:32.790 --> 08:36.730 customer. And a balanced scorecard is a longer term view that can 08:37.230 --> 08:40.930 work well with OKRs, but is very much about a 08:41.170 --> 08:44.810 set destination and not adapting and changing on 08:45.310 --> 08:45.490 your journey.