OKR Mistake #9

 A while back I went over 8 mistakes I've seen in organizations using OKRs. I realized I missed one important one so here it is.

Mistake #9 - Don't cover the basics

In the previous article I mentioned that a good process is to have some generic high level goals that remain the same with some adjustments every year. And this is related to this mistake. Consider a situation where you want to increase sales and for the sake of this argument, let us assume you have a single KR; increase number of sold items by 100%. It is plausible that this could be achieved by dumping the price of the product. Maybe we can double the number of items by cutting the prize in half.

The problem here is that if the team have the freedom to make any decisions as long as they meet their KRs, dropping the prize could happen. As a result the actual profit might go down or we could even end up in a situation where every item is sold at a loss. Since this is probably not want we want, we need to fix this.

Naturally this could be fixed with various constraints in the organization, but since we're talking about OKRs the way to fix this is to add another KR to balance the scale and set some rules. We could for example add another KR: average profit per item sold should be at least $10.

I'll admit that in this simple example, putting a constraint on the profit doesn't feel like a KR at first glance, but there are actually two important things this KR allows the team to do: First, this allows the team to have tiered prizing. The more you buy the cheaper each item is. And the team can make these decisions themselves since they know the goal. Second, this allows the team to explore other options. Can they improve production to lower the cost to create the item and hence be able to lower the prize while maintaining the same profit.

In this simple example it might feel like an overkill and you could also argue that the team is not going to be malicious in order to meet the KRs set. While the latter is true, in a less obvious scenario a team might make an optimization for one KR that has an undesired side effect if the basics are not covered. And the team might not do this out of malice, but rather ignorance or just in dedication to succeed with the KRs set.

So in conclusion, since you tend to get what you measure, spend a few minutes thinking about how your KRs could be gamed and add a few more KRs to balance the scale and avoid KR gaming.