Hey Elon: Do you have an OKR for “Efficiency?”
Elon Musk and his team are acting quickly. But what are they doing? Do they have a strategy? Have they taken the time to define key results to focus on achieving in the near term? I bet Musk has OKRs for Tesla as it is a growing company, but I doubt Musk has OKRs for government work and believe we’d all benefit from a set of OKRs to make America more efficient. A participant in last week’s @ProdPad webinar sent me the following email:
“Ben, you mentioned OKRs work best when your clients are in growth mode, but would OKRs work for my organization given we want to scale back and get more efficient in the face of unfavorable market conditions?”
The moment I saw this question, I knew it was time for me to get back into writing mode. While “OKRs tend to work best for my clients who are in growth mode,” growth is not a necessary condition for OKRs success.
One of my earliest OKRs engagements was with Sears in 2014. At the time, Sears was selling off assets as they sought to end their business as efficiently as possible. While my editor advised me to exclude Sears as a case study in the 2016 OKRs book I co-authored with @PaulNiven, I was compelled to include it simply because organizations don’t simply grow because they adopt OKRs. In fact, Sears was successful with OKRs as it helped them shut down efficiently.* Sears was able to leverage OKRs to effectively “scale back and get more efficient in the face of unfavorable market conditions,” as online sales and e-commerce stole market share from mail-order catalogs and retail stores.
So, the answer is yes! OKRs can be great for scaling back and getting efficient. I wonder if Elon is setting OKRs for his work leading DOGE and not just for Tesla.
To make this a bit more concrete, here is an example of two identical functions that leveraged OKRs for strategic execution: one for growth, the other for efficiency. Let’s compare the Accounts Payable teams at Oracle in the 1980s with Sears in the 2010s:
Oracle Accounts Payable team
(courtesy of Jeff Walker 2011, Ex-Oracle CFO)
Sears Accounts Payable Team (based on my experience working with them at the time)
Accounts Payable mission Make it clear that vendors may not be getting paid…ever. Objective: Implement creative solutions to optimize our cash flow- KR: Increase average days to pay vendors from 60 to 120.
- KR: Increase total payments to vendors who get paid through a 3rd party billing. program that charges vendors a 10% processing fee and sends a rebate back to us from X% to Y%.
While many companies are like Oracle, seeking to “grow-grow-grow” or “drill-drill-drill”, I am starting to receive more and more emails like the one from my last webinar. Many organizations are looking to scale back and “shink-shink-shrink” or “survive-survive-survive.” OKRs are not just for growth; OKRs can also be an effective approach for scaling down or getting lean. As for Elon, I think it might be good to align on why: “Why do we need to dramatically reduce and shrink the government with such urgency?” The answer to this question seems to be obfuscated – at least from my reading of the news these days. I’m not trying to express political views here, though it is fun to call out Elon Musk. I’m trying to be part of saving your organization or helping your team get more efficient in the face of “unfavorable market conditions” by offering two complementary OKRs coaching sessions. In our sessions, we can explore how I can help you get more efficient by developing OKRs to make your strategy concrete and actionable, leveraging the cadence and accountability that are the hallmarks of OKRs.
*As well, their OKRs program led to possibly the only quantitative analysis of the Value of OKRs.
The first three people to send a note to me at the link below, with the subject: “OKRs Coaching for Efficiency” will get those two coaching sessions.
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Ben, your post gives me more clarity on different uses of OKRs. Thanks.
(I already am in your coaches network)