This guide contains the complete background, story, and implementation of OKRs within an example retail clothing company: Harnish.
Background
Harnish is a regional children’s clothing retailer with 135 stores and 1,750 employees. Focused on delivering an exceptional shopping experience for parents and children. They have performed exceptionally well in their home market, but new stores in test regions have been underperforming.
The team at Harnish have been using various goal tracking techniques over the years, but recently decided to adopt OKRs. This process was brought on with the acquisition of a new COO: Daisie Rhodes.
Departments
Globex has several departments organized by business unit, rather than by region.
- Human Resources
- Finance
- Merchandise
- Marketing
- Retail Stores
Modules
- OKR Management
Integrations
- Google G Suite – Harnish uses Google G Suite to authenticate all users so they don’t need to remember a new password.
OKR Options
| Option | Choice |
|---|---|
| OKR Level | Department Centric |
| Alignment Methods | Bottom Up |
| Cadence | Annual |
| OKR Grading Strategy | BAU |
OKRs
In this story we will cover the first quarter of OKRs implemented by Harnish. Daisie worked with senior management individually to get buy-in on the general approach for their OKR rollout. They decided that for the initial rollout the OKRs would be limited to corporate departments including the leadership of store management, merchandising, and other back-office roles.
Corporate OKRs
Initial Meetings
Daisie arranged a meeting with all of the included department heads to get things kicked off. In this meeting she identified the importance of the OKR methodology, and which existing goal tracking systems it would replace. Because Harnish was already avid at tracking goals, Daisie did not come to this meeting with much in the line of expected objectives. Instead she focused on coaching the team on what makes a good OKR, and pushed on them to analyze their existing goals and migrate them over to a more OKR-friendly format.
She split her initial planning into two parts. The first meeting got the teams engaged and empowered everyone to reflect on their past goals and systems before coming back together to set plans moving forward. In this second meeting they went around the table and each department head took some time to present their problem statements and goals for the upcoming year. The goal of this session was for each department to focus on two key problems they wanted to solve. Although the team had significant experience tracking goals, Daisie still thought it was valuable to keep their first OKR planning period simplified. Each leader came to this session and identified the two key problems they want to focus on, so other teams could identify any alignments in their planning.
Human Resources
- Turnover
- Employee health & attendance
Finance
- Reversed charges
- Purchase requisition turnaround
Human Resources
- Turnover
- Employee health & attendance
Human Resources
- Turnover
- Employee health & attendance
OKR Formation
At the end of the initial meeting, the team had identified these as their target objectives.
| Objective: | Create a Fiercely Loyal Customer Base |
| Objective: | Increase Profitability |
| Objective: | Fortify Position in Latin American American |
| Objective: | Launch New Virtualization Software Suite |
Completed Corporate OKRs
Continue through the rest of this series to learn more about how each department formed their OKRs. After each department concludes their own processes, the final corporate OKRs look like this:
Objective : Create a Fiercely Loyal Customer Base
Objective
Create a Fiercely Loyal Customer Base
Key Results
Reduce Churn
Increase user review volume and rating
Respond to & resolve tickets at lightning speed
Objective : Increase Profitability
Objective
Increase Profitability
Key Results
Increase sales for higher margin products
Streamline the onboarding process for the analytics platform
Increase analytics platform expansion revenue
Take the lead generation engine to the next level
Improve the quality of inbound leads for the analytics platform
Automate the sales pipeline
Objective : Fortify Position in Latin American Market
Objective
Fortify Position in Latin American Market
Key Results
Launch Lat Am marketing campaigns to drive awareness
Establish Lat Am sales office
Improve connectivity for all Lat Am customers to Globex services
Objective : Launch New Virtualization Software Suite
Objective
Launch New Virtualization Software Suite
Key Results
Create the best-in-class user experience for new virtualization software
Deliver world-class support on day 1 of the virtualization software launch
Set the standard for hypervisor performance
Become the category leader for product quality
Product Management
Ellen Genix leads the product management department and started the OKR conversation for the quarter by meeting with her team once the company objectives were formed.
Initial Meeting
In this initial meeting they identified the company objectives that were best influenced by the product management department, and asked whether they had any additional objectives they should consider this period. This analysis confirmed the department will focus on three company objectives:
- Create a Fiercely Loyal Customer Base
- Increase Profitability
- Launch New Virtualization Software Suite
Once these 3 top level objectives have been identified, it was time to determine how product management could best contribute. The initial conversation produced churn reduction as a top priority, as it’s been a known problem in recent history. Additionally with the new product launch the team defined a best-in-class user experience as their key objective to focus on. While reducing churn aligns with loyalty and profitability, the department still wanted to identify some more granular objectives for the analytics platform. They elected to focus on improving the onboarding process, and generating more revenue from existing customers on the platform.
| Objective: | Reduce Churn |
| Objective: | Create the best-in-class user experience for new virtualization software |
| Objective: | Streamline the onboarding process for the analytics platform |
| Objective: | Increase analytics platform expansion revenue |
OKR Formation
Armed with a set of objectives team leaders broke out to identify key results which will be used to track progress. This started with talking between team members to discuss known issues, then reviewing analytics to identify underperforming metrics that can be targeted. For this example let’s cover the “Reduce Churn” OKR in detail:
- Reviewing their analytics platform identified that one metric had been slowly rising over the past 18 months: # of registrations with a single login. This means users were signing up and not getting the product they expected, running into some problem, or unable to properly get the system set up. Two years ago only 9% of users left after registration, but now it’s 24% who never come back. Focusing on keeping users in the system at the top of the funnel should reduce overall churn so they targeted a reduction down to 18% this quarter.
- The team has been tracking a set of special product features called “sticky features”. It’s been observed that companies using at least 1 sticky feature are 2.5x less likely to churn after 12 months. Because of this the team wants to focus on increasing the number of companies using sticky features.
- While there are other metrics to focus on as well, the core metric of reducing churn was included. Analysis concluded that if a customer does not churn after 1 year, they produce 14x more revenue compared to a company who does. For this reason they elected to focus on this 1 year churn period.
- The final key result chosen was the time spent within the application. Businesses where users spent an average 4 hours a week within the system produced 9x more revenue than others. The current average was only 2 hours, so this was chosen as a far-reaching target.
The result of this analysis was the following completed OKR for reducing churn:
Objective : Reduce Churn
Objective
Reduce Churn
Key Results
Decrease # of registrations with single login from 20% to 15%
Decrease churn of 1 year+ customers from 8% to 6%
Increase weekly time spent in the system from 120 to 150 minutes
A similar process was executed for each of their identified objectives, summarized below.
When tackling how to create a best-in-class user experience, they focused on a key functional element of how long each task takes, and then identified key user feedback metrics which can be used to validate success.
Objective : Create the best-in-class user experience for new virtualization software
Objective
Create the best-in-class user experience for new virtualization software
Key Results
Enable system administrators to perform their 3 most common tasks in <3 clicks each
Consistently rank within the top 3 providers in our category across review sites
Net Promoter Score of at least 35
Average Mobile app rating average of at least 4.25/5
To tackle the challenge of streamlining their onboarding experience they focused the key results that ensure the process is quick to complete, and ensure not only speed by also successful conversions. They had also observed a strong correlation between success of users who had received product demos, so a focus was put on engaging new users as well.
Objective : Streamline the onboarding process for the analytics platform
Objective
Streamline the onboarding process for the analytics platform
Key Results
Reduce drop-off rate to a max of <5% for every step
Reduce user inputs required for registration to less than 10
Increase the weekly number of demo registrations during onboarding
Ensure over 95% of users can select from a pre-built configuration
For the final objective of increasing revenue from the analytics platform an initiative was planned around launching new and improved features, and focused on tracking specific revenue and engagement metrics related to these features.
Objective : Increase analytics platform expansion revenue
Objective
Increase analytics platform expansion revenue
Key Results
Launch 2 new add-on features
Release at least 3 significant enhancements to existing add-on features
Increase add-on MRR from $150k to $170k
Increase weekly 1st time add-on purchases from 10 to 15
Increase weekly clicks to add-on information pages from 1,500 to 1,800
Marketing
Jane Baughman leads the marketing department and started the OKR conversation for the quarter by meeting with her team once the company objectives were formed.
Initial Meeting
In this initial meeting they identified the company objectives that were best influenced by the marketing department, and asked whether they had any additional objectives they should consider this period. This analysis confirmed the department will focus on three company objectives:
- Increase Profitability
- Fortify Position in Latin American Market
- Launch New Virtualization Software Suite
Once these 3 top level objectives have been identified, it was time to determine how marketing could best contribute. With the new expansion into the Lat Am market increasing brand awareness in the region was a top priority. Additionally with the new sales team members coming on board there would be a shortage of leads, so the team needed to take measures to increase the lead volume. The last key objective came from feedback from the sales team. Recently sales had reported unusually low conversion rates for advertising leads on the analytics platform, so the group wants to focus on improving the quality of those leads.
| Objective: | Launch Lat Am marketing campaigns to drive awareness |
| Objective: | Take the lead generation engine to the next level |
| Objective: | Improve the quality of inbound leads for the analytics platform |
OKR Formation
With their objectives in mind the team broke apart to further research analytics and formulate their plans. For this example let’s cover the “Launch Lat Am marketing campaigns to drive awareness” OKR in detail:
- To ensure the marketing efforts are properly targeted for the region the team wants to make sure they understand the current regional clients well. To ensure this they have defined a measurable target based on the number of interviews completed with clients.
- While the primary focus of the campaign is to drive awareness, generating new leads and revenue is still front of mind. A target has been set based on the number of leads coming in. The group decided to produce high volume this period, then focus on fine-tuning the quality next quarter.
- To ensure their budget is being used efficiently they will track the average CPA across all campaigns and keep it under $25.
- Finally a key outcome is to ensure the ads are being viewed by many eyes. Video content is specifically effective at building brand awareness, so they’ve focused on generating a quarter million views this period.
A similar process was executed for each of their identified objectives, resulting in the following OKRs:
Customer Service
Ken Leong leads the customer service department which is known for aggressively monitoring day to day performance. Because of this they have a much clearer picture of where problems exist and where to make improvements during their meeting.
Initial Meeting
In this initial meeting Ken identified the company objectives that were best influenced by the customer service department and presented them to the team.
- Create a Fiercely Loyal Customer Base
- Fortify Position in Latin American Market
- Launch New Virtualization Software Suite
Because Ken tightly monitors his performance metrics every day, he is constantly pushing his team to improve key metrics. While these corporate objectives bring focus on two specific new initiatives, the first objective is perfectly aligned with any general service goals that Ken has been trying to achieve. For this example Ken will take the lead on defining the OKRs for his entire team, then meet again to present the goals to everyone before execution.
| Objective: | Increase user review volume and rating |
| Objective: | Respond to & resolve tickets at lightning speed |
| Objective: | Delight customers in the Latin America region |
| Objective: | Deliver world-class support on day 1 of the virtualization software launch |
OKR Formation
In this example Ken had a clear idea of what he wanted to achieve for overall metrics and performance, but delegated tasks to his team for forging the key results for Latin America and the new virtualization software launch. We will analyze the example of “Respond to & resolve tickets at lightning speed”.
- The first key result is the obvious conclusion: if the customer sends an email, they should get a response as fast as possible. Currently it takes 24 minutes on average to receive a response, but Ken has adjusted staffing schedules to help drive this down to 10 minutes.
- Ken wanted to think beyond a quick response, and focus on empowering his level 1 support resources to resolve more calls. Currently they escalate about 65% of calls, and Ken believes this number can come down to 15% with additional training and more support content.
- Once escalated tickets had a tendency to get stuck in limbo for a bit due to limited senior resources. Ken is planning to hire more resources that can help resolve these quicker, and wants to make sure overall ticket resolution time is brought down.
- To ensure the level 1 support team is able to resolve more tickets on the first call, he wants to increase the volume of new support articles being generated. This should empower his team with more knowledge to answer more questions without escalation.
- As the team has been growing it has been harder to manage each region effectively. Ken is re-organizing his teams to have regional leaders to assist with scheduling and localized issues. He wants to ensure he gets these new members promoted or brought on board to help support the other key results.
After bringing all of the results together these are the OKRs they formed:
Sales
Cindy Bau leads the sales department and like customer service, she has a tight grasp on ongoing sales performance, and it was a relatively flat hierarchy giving her the ability to determine her department’s OKRs on her own.
Initial Meeting
In the initial meeting Cindy identified two company level objectives which the sales team would be focusing on:
- Increase Profitability
- Fortify Position in Latin American Market
For this example Cindy will took the lead on defining the OKRs for her entire team, which resulted in the following sales objectives. While the first two objectives would be easily defined by Cindy, she spent time discussing the CRM technology and sales process to understand the pain points.
| Objective: | Increase sales for higher margin products |
| Objective: | Increase Profitability |
| Objective: | Establish a high-performing Lat Am sales office |
| Objective: | Automate the sales pipeline |
OKR Formation
In this example Cindy had a clear idea of what he wanted to achieve for overall metrics and performance, but she has recently hired a sales support specialist who would take the lead on all technology improvements. Let’s take a look at the formation of their OKR for “Automate the sales pipeline”.
- The existing CRM system had some basic automation, but there were still a large number of deals then would go stale. These deals were generally flagged as lower probability early on, so Cindy did not want to increase the amount of sales rep effort spent on these deals. With this in mind they defined a key result of increasing the number of automated touchpoints to reduce this drop off without impacting resources.
- When discussing automation and technology with the sales team during the initial meeting, multiple complaints were brought up about the amount of time it takes to generate proposals. Cindy and the specialist took time to analyze how long it takes reps to generate proposals on average and it was 35 minutes. They decided to focus on optimizing the quoting process and software to cut this in half.
- Another item that was raised by sales team members was the amount of time it took to respond to client questions and provide technical details on Globex services. Many times the reps would need to visit a website and copy/paste information, or search for product information on their document shares. It was determined that they just needed to populate the CRM system with more email templates to streamline this whole process and increase the number of contacts a sales person could make per day.
- One other complaint that came about was the amount of effort it took to schedule demos. Part of the Globex sales process involved scheduling multiple demos throughout the process. There was new technology readily available to automate the process to booking these demos, so it was decided to implement this system and try drive at least 250 bookings through the new system.
After bringing all of the results together these are the OKRs they formed:
IT
Florence Livermoore leads the IT department and started the OKR conversation for the quarter by meeting with her team once the company objectives were formed.
Initial Meeting
In this initial meeting they identified the company objectives that were best influenced by the marketing department, and asked whether they had any additional objectives they should consider this period. This analysis confirmed the department will focus on three company objectives:
- Create a Fiercely Loyal Customer Base
- Fortify Position in Latin American Market
- Launch New Virtualization Software Suite
Once these 3 top level objectives have been identified, it was time to determine how IT could best contribute. They decided to focus on 1 IT objective to support each of the 3 corporate objectives. When it comes to customer loyalty, the best influence IT can provide is on the quality and stability of the services used by customers. Then to support the new Lat Am expansion it was determined that the service quality would need to be improved to the levels experienced in Globex’s home markets. IT is heavily involved in the new virtualization software, and the specific area of focus for these technical resources will be the performance of the system. At the end of the call Florence identified leaders to dive into the specifics of each objective.
| Objective: | Become the category leader for product quality |
| Objective: | Improve connectivity for all Lat Am customers to Globex services |
| Objective: | Set the standard for hypervisor performance |
OKR Formation
Armed with a set of objectives team leaders broke out to identify key results which will be used to track progress. This started with talking between team members to discuss known issues, then reviewing analytics to identify underperforming metrics that can be targeted. For this example let’s cover the “Become the category leader for product quality” OKR in detail:
- Emergency releases have a large impact on IT resources, but they also only occur when a customer experience is severely impacted. While emergency releases are not common, it’s important for the team to avoid these at all costs. The first key result is ensuring not even one emergency release is required.
- With the same logic as above, the team was seeking to reduce the amount of time customers spent in limbo with high priority issues. A goal was defined to define more internal systems to provide important changes without a deployment. To ensure this system functioned properly, a goal was set to resolve every P1 ticket within 48 hours. The current SLA was 72 hours, delivering in less time than expected should have a positive impact on customer satisfaction.
- Although fixing important issues quickly is a priority, the team wanted to ensure that they focused on avoiding issues in the first place. New practices are planned for the QA and development teams to reduce the number of bugs that make it into customers hands. A target was set to have a maximum of 2 P1 tickets every month.
- Testing was a key focus of the development and QA changes, so the team defined a few key results around specific testing performance metrics. They would expect developers to achieve at least 95% coverage with their unit tests.
- For the QA team, they defined two key results. Their automated testing suite needs to cover at least 60% of their applications, and they must have a combination of manual and automated testing that covers 100% of functionality.
After bringing all of the results together these are the OKRs they formed:
