A tale of two kings: OKRs vs. 4DX
OKRs vs. other goal-setting methodologies
How do you know if your company is successful?
Are you familiar with your organization’s strategy? Do you remember what your CEO’s #1 priority is for the incoming year? Was it raising the next VC round or was it hiring key senior talent for the engineering team?
Why do you go to work? What do you want to achieve?
How do you know if you, your team, and your entire organization are moving in the right direction?
Although these are some very basic questions considered trivial by many, answering them is not as easy as it seems. Many senior-level executives struggle to set a clear vision and easily trackable metrics that are practically feasible to every individual contributor in the organization. Besides, it’s difficult to effectively handle the unexpected – the constantly changing business environment may cause turmoil that requires higher levels of functioning adaptability and flexibility.
To address these challenges, a goal-setting methodology that supports the company’s business strategy planning and execution is much needed.
In the “A tale of two kings” series, we aim to provide thought-provoking insights into goal setting and compare OKRs to alternative methods.
In the first part, we’re going to explore what OKRs and 4DX are and how are they different from each other.
Objectives & Key Results (OKRs)
Objectives and Key Results (OKRs) is a goal-setting methodology that helps companies execute their priorities by increasing transparency, narrowing down focus, and allocating resources in a meaningful way.
By its very definition and practical implication, OKRs are – as described in the notable research by Donald and Charles Sull – F.A.S.T. or Frequently-discussed, Ambitious, Specific, and Transparent.
Here’s how we identify the 3 main components of OKRs in Gtmhub:
1) The Objective is an ambitious statement of what you want to achieve for a specific period of time.
2) The Key Result is a progress indicator that shows how well you’re moving towards achieving the desired outcome (objective).
3) The Task is an initiative that you execute on a daily or weekly basis that helps you start making progress in the desired direction.
Here’s an example of an OKRs:
O: Skyrocket our revenue growth
KR #1: Increase MoM Revenue growth from 1% to 10%
KR #2: Logo churn to be kept under 5 per month
Task 1: Create a revenue growth plan
Task 2: Edit the churn prevention document
4 Disciplines of Execution (4DX)
The 4 Disciplines of Execution is a proven set of practices for executing the most important strategic priorities. By following the 4 disciplines of execution, leaders can produce breakthrough results even when the execution of the strategy requires a significant change in team behavior.
4DXconsists of the following 4 disciplines:
#1 Discipline: Focus on the wildly important = focus on less to achieve more by selecting 1 Wildly Important Goal (WIG). When setting WIGs, follow this format: “From X to Y by when”.
#2 Discipline: Act on the lead measure (the discipline of leverage) = base your progress and your success on 2 kinds of measures – lag (the measure of the activities most connected to achieving the goal) and lead (predictive and influenceable activities that drive the lag) measures.
#3 Discipline: Keep a compelling scoreboard (the discipline of engagement) = have a simple dashboard with current information to let people know whether they’re winning or losing.
#4 Discipline: Create a cadence of accountability = establish a rhythm of regular and frequent meetings for any team that owns a WIG to consistently hold everybody accountable.
Here’s a 4DX example:
Increase revenue from $1,574,016 to $2,109,328 by December 31st 2020 >> WIG
From $1,574,016 to $2,109,328 >> Lag measure
- Increase the number of satisfied customers >> Lead measure
- Introduce 2 new product lines to enable cross- and up-selling plans >> Lead measure
OKRs vs. 4DX
Checkmating the King: OKRs vs 4DX: 1-0
By their very nature, both OKRs and 4DX require a fundamental shift in moving the organizational culture towards a more collaborative, transparent, and data-driven one. While 4DX helps organizations adopt a specific set of goal-setting practices, OKRs not only embed these but also unite all business units around a common process for prioritization, execution, and success.
As a goal-setting system, OKRs preach for organizational alignment. The practice of setting long-term (strategic) goals and breaking them down into tactical ones (executive) is not only fundamental for the OKRs methodology but also increases the chances for organizations to achieve their top priorities. Moreover, it makes team and individual contributions more visible to key stakeholders. This, on its end, allows for better decision-making and filling in the strategy-execution gap in your organization.
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