OKRs Explained 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.
Show Notes
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 Radical Focus
Episode 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: I think that's a really bad idea. And I think that's one of the things that John Door got wrong in his book, which is that he showed a picture of the CEO of Google's OKRs. And I think that's a terrible example because it makes people think that OKRs are for the CEO. And they're not. They're for the teams.
They're for the people who are actually doing the work. And if you're a CEO, you should be doing your job, which is to set the mission and the vision and the strategy and the business model and all those things. And then you should be checking in with your teams to make sure that they're doing their job.
And if you're a VP of product, you should be doing your job, which is to set the product strategy and the product vision and the product roadmap and all those things. And then you should be checking in with your teams to make sure that they're doing their job. And if you're a team, you should be doing your job, which is to set your OKRs and then execute on them.
And if you're a person, you should be doing your job, which is to do your work and then get a good performance review. And I think that's where the confusion comes in. People confuse OKRs with performance reviews. And they're not the same thing. They're related, but they're not the same thing. And I think that's a really important distinction to make.
Melissa: Yeah, I think that's a really good point. I think that's where a lot of the confusion comes in. And I think that's where a lot of the problems come in too, because if you're tying it to a performance review, then people are gonna sandbag their OKRs. They're gonna make them easy to achieve so they can get a good performance review. And that defeats the whole purpose of OKRs, which is to stretch yourself and to aim high.
Christina: Exactly. And I think that's why I like to say that OKRs are a vitamin, not a medicine. They're not gonna fix your company's problems. They're just gonna make your healthy company even healthier. And if you're already a healthy company, you don't need to fix anything. You just need to make sure you're doing the right things. And I think that's where OKRs come in. They help you focus on the right things.
Melissa: Yeah, I think that's a great way to put it. Christina, thank you so much for joining me today. This was a great conversation.
Christina: Thank you so much for having me, Melissa. It was a pleasure.
