{"id":39505,"date":"2021-10-04T07:00:00","date_gmt":"2021-10-04T05:00:00","guid":{"rendered":"https:\/\/strtgy.design\/articles\/how-to-make-sales-objectives-and-okrs-coexist\/"},"modified":"2021-10-04T07:00:00","modified_gmt":"2021-10-04T05:00:00","slug":"how-to-make-sales-objectives-and-okrs-coexist","status":"publish","type":"post","link":"https:\/\/strtgy.design\/en\/strtgy-notes-en\/how-to-make-sales-objectives-and-okrs-coexist\/","title":{"rendered":"How to make Sales Objectives and OKRs coexist?"},"content":{"rendered":"

Hey, happy Monday!<\/p>\n

Every first Monday of the month I answer the questions that are coming in numerous from those who have decided to subscribe to the launch list of the OKRs Implementation Guide at STRTGY<\/strong>. You can do so too by visiting this link<\/a>. <\/p>\n

This is the most frequently asked question of the period just past:<\/p>\n

How can I synchronize Sales Goals and OKRs?<\/h2>\n

On the topic of “goals,” the Sales Team is the toughest one to deal with. You know. <\/span><\/p>\n

The literature on the subject recommends separating economic rewards from the structure of OKRs. True, in part. This topic would require a note of its own, or perhaps a whole chapter, <\/span>In the meantime, if you’d like, you can reply to this email telling me your opinion, I’m curious to know what you think!<\/span><\/p>\n

When we talk about Sales Goals in the context of OKRs one important thing has probably already happened in the company, and that is that the budget estimate or business plan for the year has already been approved and bonuses have already been agreed upon with each team member.<\/span><\/p>\n

In practice, someone has already calculated how much revenue they should need to bring on board for the current period in order to support growth expectations, costs, investments, and bonuses, which, by Sales (or ownership), are often considered part of their compensation.<\/span><\/p>\n

In this scenario you will be very familiar with, a phenomenon called “sandbagging” can happen. What does it mean? <\/span><\/p>\n

“Sandbagging” means that you are inclined to negotiate the lowest possible number to make sure you reach it.<\/span><\/p>\n

Many strategy terms come from military jargon. In fact, to fool the enemy about their capabilities, troops can fight with minimal firepower by defending behind sandbags and hold out with as little damage as possible before launching a final attack that will catch everyone by surprise! <\/span><\/p>\n

What happens, however, is that the leaders thus decide to give themselves a ceiling by setting growth at the lower limit of potential growth, and at the end of the year–even if everything goes well, no surprise!<\/span><\/p>\n

How do we get out of this bind?<\/span><\/p>\n

One of three possible approaches to writing KRs<\/h2>\n

The OKRs’ narrative also tells us the story that we need to shoot high, make a so-called moonshot! A number so big that even if we missed it, we would surely land farther than we had hoped. <\/p><\/blockquote>\n


\nHowever, let us see how it works in reality.<\/span><\/p>\n

When writing OKRs, it is necessary to introduce another parameter: confidence.<\/span><\/p>\n

Confidence of achieving an outcome is not rocket-science. There is no algorithm to calculate it. It is as imperfect as we humans are imperfect, but it is useful for understanding many things. <\/span><\/p>\n

Based on this parameter, we can take three different approaches to writing KRs: <\/span>Committed First<\/b>, Target First and Stretched.<\/span><\/p>\n

To make the story more vivid let me introduce Mario, he is our Head of Sales. His contract goal is to reach \u20ac100k in sales, and because we decided to launch OKRs someone tells him that his new number now is \u20ac300k… <\/span><\/p>\n

Mario is bewildered. He has two numbers. One that he has agreed with his manager and the other that came out of nowhere like this-what will be his real goal? What number will he really be evaluated on? Why this new pressure on his work? <\/span><\/p>\n

This is a perfect case for using the first approach.<\/span><\/p>\n

Committed First<\/h2>\n

In Mario’s case, if it is true what we said a moment ago and that is that the Sales Goals to which his bonuses were linked is a goal that, if missed, would put the organization in trouble, then we might think that it was calculated on the real capabilities of his team to be able to achieve that result. <\/span><\/p>\n

So we can say that the confidence level is very high, say 90%, otherwise he would not have accepted it. Mario has everything he needs to be able to work well, we can consider your number as a minimal commitment, “committed” indeed. <\/span><\/p>\n

If at the end of the period Mario has hit \u20ac100K in sales, what will it mean for him and the company?<\/p>\n

Certainly that Mario lived up to expectations…but he would have still lived up to them even without the OKRs. <\/span><\/p>\n

However, it would have been far more satisfying for the organization if Mario had accomplished much more, wouldn’t it?<\/span><\/p>\n

In the Committed First approach, the critical target is set at 30 percent. <\/b><\/p>\n

If \u20ac100K is the minimum we expect, confidence of achieving the goal is very high, and the organization does not need to work differently, then \u20ac100k will be 30% of its KR.<\/span><\/p>\n

In Mario’s example we need to state his KR with target at \u20ac300K (100 is 30% of 300, to keep the numbers round)<\/span><\/p>\n

This approach (if well communicated) will save Mario from a nervous breakdown because with that result his bonuses will be safe even if the KR is only 30% achieved.<\/span><\/p>\n

It is important to remember that OKRs are not an assessment tool of the person but of how the strategy is executed!<\/p><\/blockquote>\n

Imagine instead the case where Mario and his team have developed a winning strategy whereby they manage to close \u20ac230k worth of contracts. At the end of the period his KR will have achieved a progress of 76% and this value will contribute to the measurement of progress on the final goal considerably! <\/span><\/p>\n

In this scenario, not only will Mario have met and exceeded his quota by securing and increasing his bonus but, by cooperating with colleagues, he will have developed the skills to enable the organization to replicate success.<\/span><\/p>\n

To conclude<\/h2>\n

The Commited First approach to KR writing secures the organization’s minimum outcomes while maintaining the tension given by stretching on the goals that the methodology enables.<\/b><\/p>\n

In the book I am writing you will find that there are many other nuances, but for simplicity’s sake we will stop here now. <\/span><\/p>\n

Let me know if this note was helpful to you and feel free to share it with your team or those who are facing OKRs right now.<\/span><\/p>\n

Good work!<\/span>
\n<\/span>ALWAYS MAKE PROGRESS! \ud83c\udfc2<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

4:30 of reading – Discover one of three possible approaches to KR writing<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","footnotes":""},"categories":[97],"tags":[],"class_list":["post-39505","post","type-post","status-publish","format-standard","hentry","category-strtgy-notes-en"],"acf":[],"yoast_head":"\nHow to make Sales Objectives and OKRs coexist? - STRTGY<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/strtgy.design\/en\/strtgy-notes-en\/how-to-make-sales-objectives-and-okrs-coexist\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to make Sales Objectives and OKRs coexist? 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