OKRs bring your long-term ambition closer to your everyday tasks by connecting aspirational Objectives with specific, time-bound and measurable Key Results.
Check out: Tip for writing better OKRs.
Measuring performance starts with choosing the right metrics.
Right metrics will be informative and direct you towards you goal while wrong metrics deliver trivial information and don’t seem to lead you anywhere.
If you don’t know where you’re going, any road will take you there.Lewis Carroll – Alice in Wonderland
I’ve seen even the most well intentioned and well executed plans go to waste because of poor metrics.
Stop chasing poor metrics
A few years ago I met a Managing Director from a global software company. They were in the middle of figuring out whether to continue investing in their blog or not.
A year ago their marketing team had created a new blog with an aim to generate new leads for their sales team. The content they published was great. Both their customer service and software experts regularly contributed to the blog and their agency invested in boosting it using paid media.
Everything was looking swell until they reviewed their performance halfway through the year. The blog drove great social engagement and traffic to the site and no conversions.
So, where did they go wrong?
The blog was created for generating new leads but no metrics were set to measure that. Instead managing an ambitious content calendar and multiple social media channels simultaneously lead marketing to rely a lot more on metrics related to articles published per month and social engagement per post.
It’s only natural that without a metric for keeping up with their long-term and ambitious goal, they fell back on measuring what seemed both urgent and easier to measure. In the end, the blog was built, content was created, media budget was spent and to sales teams frustration no leads were delivered.
Lag & Lead Metrics
The first rule of performance measurement is to chose only those metrics that can be influenceable. The second rule is to remember that your objective and the activities leading up to it have different timeframes.
To properly measure an Objective you need to use a Lag Metric and for measuring Key Results you need Lead Metrics.
Lag metrics measure output or results. For example, revenue is a lag metrics that shows you the output of your sales activity.
Other examples of Lag metrics include:
- Customer Satisfaction etc.
Lag metrics show the impact of your work after it’s been completed.
Lead metrics measure input or activities. For example, how many demos you schedule each week can have a direct impact on your monthly revenue, A lead metric such as Demos / Week shows you the immediate impact of this activity on your objective.
Lead metrics come in all shapes and sizes:
- Sessions per week.
- Downloads per page.
- Sign-ups per month etc.
Lag and Lead metrics can also help you avoid common challenges that derail most strategy executions.
Using Lag & Lead metrics with OKRs
Using the same story from above, let’s see if using Lag and Lead metrics would’ve made a difference.
- Objective: Generate 100 new leads through the blog by the end of December 2016.
- Lag metric: Total number of leads generated over 12 months.
- Key Result 1: Publish 2 new articles each week.
- Lead metric: Number of article published per week.
- Key Result 2: Generate 5000 sessions per month.
- Lead metric: Sessions per month.
- Key Result 3: Gather 50 new e-mail subscribers each month through the blog.
- Lead metric: Number of new subscribers / month.
- Key Result 4: Deliver 10 new marketing qualified leads to sales each month.
- Lead metric: Number of MQLs per month
Using OKRs together with Lag and Lead metrics paints a different story. To start with the objective is unambiguous i.e. the blog is successful when it’s generated 100 leads over the year. Often reaching 70% of the target is considered successful. Anything less than that is a flop.
At the same time the Key Results also make it clear how to reach that goal.
- Reach quantitative goals with publishing and traffic acquisition.
- Generate 50 new subscribers each month.
- Deliver 10 MQLs each month.
Using Lead metrics make it easy to evaluate, optimise and improve OKR performance.
Using lag and lead metrics together can help you eliminate ambiguity and save you from ending up falling back on vanity metrics just to show any results at all.
- Measurability is key to getting your most important work done while managing your most urgent work.
- Metrics used to measure objectives only show the impact of your activities after the fact. These metrics are called Lag Metrics.
- Metrics used to measure your daily activities inform you of your progress immediately. These metrics are called Lead Metrics.
- Successful OKR implementation requires using Lag metrics for measuring Objectives and Lead metrics for measuring Key Results.