 Good afternoon. My name is Ray Tsuchiyama. I am your host for another great episode of Business in Hawaii. On a very beautiful, sun-drenched afternoon in the capital city of Honolulu, in the state of Hawaii, and we are going to be focusing on a tool to be used by CEOs and, of course, leaders in many, many organizations. How to achieve success and have a bridge between strategic planning, a long-term, and a day-to-day execution? How can you really get your staff, employees, people, colleagues to complete projects, fulfill goals, and create success in many companies throughout Hawaii, the US, and the world? I have, as our guest today, Big Ball Ashraf, to my left, from Guild Consulting, a partner there, and welcome to the show. Thank you. Happy to be here. Well, today we're going to put up the first slide if we can. And it's called Objectives and Key Results, OKRs. But before that, I see the logo of Guild Consulting. Can you tell me a little bit about what Guild Consulting does and your role and background? Guild Consulting is a local consulting firm. We have six partners and our office is at Manoa Innovation Center. And we do basically three things. One is we do strategic planning for for-profit, non-profit, even for government. Second thing we do is a very unique service called Growth Partner Service. This is meant for companies between $5 million to $50 million, which the CEO or the founder wants to grow really fast. And like I was saying, a very unique service that we provide. And the third thing we do are consulting projects, like any other consulting company. Our difference is that we have access to a whole bunch of very specialized expertise from all over U.S. and we bring those to bear for companies in Hawaii. And today we're talking about OKRs. And can you define that for the audience? Because I think a lot of CEOs have heard of that term and have really tried to do this sometimes on their own. And what is that exactly? Where did it come from? Sure. So Peter Drucker, who's widely recognized as the father of management, he introduced a concept called management by objectives. And OKR is an offshoot of that. MBO, I've heard of that. You're right. OKRs were first practiced by Andy Grove at Intel and it was very successful. And then John Doar, who was at Intel and later became a venture capitalist, brought it to many of his portfolio companies and then later just became like an evangelist for this method of achieving really ambitious goals. And it's been used by Google and many high-tech companies. That's right. That's one of the most popular companies and Google acknowledges that OKRs are the reason for their success. And so why don't we put up the second slide and see that. OK, so I see a lot of acronyms up there and they seem to be all about goals setting. Could you go over, they're like the grandfather or the father of OKRs in a way? Well, you know, I would say that these are different. So let me set some context here. Well, when we talk about Hawaii, you know, I would say, I mean, not I don't have, you know, empirical data for this, but it's a 50% of companies don't even do strategic planning on an even annual basis. Let's take them out. And then there's a whole set of companies who do strategic plans. And these are documents which are very intellectual and which are never implemented in the companies. Let's take them out as well. So what we are left with are companies who have strategic plans and who have day-to-day execution and they are looking for an effective bridge between these two. All these methods that we saw on the slide relate to that. So OGSM, for instance, is objectives, goals, strategies and measures came from the reconstruction of Japan after World War II. There is, you know, some other 4DX, four disciplines of execution, a different method, balanced core cards. There's one called... There's BHAG, the Big Bury Audacious Goals, which is very, very visionary in a way and hard to achieve, but they put it out there by the CEO. Comes from a philosophy called Rockefeller Habits and you have BHAG and then ROX and then these are all bridges between strategy and execution and companies, especially companies that are growth-focused, kind of use these as tools. So yeah, so they're tools, not philosophies, but they're tools based on a certain philosophy about how to do business or how to grow your business and achieve results. That's right. Okay, the third slide please. Okay, this is a formula. And I will objective as measured by these key results and the how, the what and the how. And this is, I guess, the model, the key focus of OKRs. Yeah, so John Doar, who has been promoting OKRs, you know, this is kind of his formula. The objective is like, what are we going to do to further, you know, our company's interest? And then key results are like, how are we going to achieve those objectives? So one of the, it must test for key results would be, they are the battles, you know, and the objective is the war that you have to win. Right, right. You know, like they say, choose your battles which will help you win the war. Right, right. So it kind of focuses you on doing the right things basically. And we're looking at an audience of CEOs out there that you said you extrapolated people who, the CEO is a leadership who have strategic plans and want to execute. And this is a way of bridging that they have a goal and how to do that day to day that they end up where their goal is. That is correct. One of the key advantages OKR method have over and we have, you know, as a consulting company, we have worked with, you know, the framework that our clients use. But from our perspective, one of the key advantages in OKR method is, you know, especially the local context where we operate is we see in most of the time when say people set smart goals, it assumes that you already know to a very great specificity what you want to do and how you will do it and all that. And sometimes it's not that clear. So that's where the smart breaks down. Also in terms of aligning the entire organization behind one, you know, direction, it's difficult because smart is mostly about individual goals. What ends up happening is the managers end up doing most of the heavy lifting while OKRs allow them to align the entire organization so that direct reports and frontline staff support their overall goals. That's kind of, I guess, focusing on the entire organization. That is correct. But you do break it down into groups who are held accountable to execute and to, you know, fulfill those goals. That is correct. All right. Why don't we turn to the next one, a time scale. This is interesting because a lot of times when you have strategic plans, at the end of the year it says, when did the year go? And there's no results or you haven't grown or you haven't done things that you set out to do. That's right. Again, that goes back to what you said earlier. Many companies either don't do strategy plans or they have one that they don't really execute. That's correct. And so that one is basically focused on a time frame to achieve or to execute your, I guess, to get to the key results. That's right. So OKR framework allows for nesting of your goals. And the nesting is of two types. One is you can have a five-year OKR and then one level below that you have one-year OKR. Oh, that's a long one. You can roll up under the five-year OKR. The other way of nesting is you can have the overall company goal and the department goals are under that and the OKRs are kind of serving to achieve the company goals. And then you can have individual goals serving to achieve the departmental goals. So in those two ways, they can be nested. Now, this is a very simple question, but how are OKRs developed with an organization? Because they must be based on a strategic plan. So there must be a strategic plan first before OKRs. Am I correct? That's correct. So the way we have implemented OKRs in our companies, both for-profit and non-profit, and we will do it for a government department as well, is first you do the strategy and then it can be a quarterly or annual strategy. And then at the end of the strategy, you develop the overall organizational OKRs. And once that is there, then you try to roll it down to departments and individuals, but there instead of just being top-down, it's more like a discussion of what can further the overall company objectives. And that's the best way to implement it. Having said that, I will also say that it is more effective that the organization in year one of implementing just do the company OKRs. And once the top managers get in the habit of achieving access in this format, they roll it down and bring other people in. So it's something that can be learned very quickly. I mean, you have to get that learning in the organization over time about what is strategic planning and then getting OKRs. It's not something that you can train people in a month. Well, I think learning is of two types. Understanding OKRs is very simple. And that's one of the reasons it is so attractive to companies, all kinds of companies. But the discipline of executing against OKRs, that takes time to build. It's like a muscle that you have to just develop. Right. And when you say this muscle, is it that people have an OKR or they have a key result, but they just don't execute daily on it and they forget about it or people are not held accountable to achieve those OKRs within a group or organization? Well, we are mostly in a knowledge economy now. So the way to measure success is no longer how many phone calls are we making or how many emails are we sending. It's what results we are delivering. But it is difficult sometimes for people to distinguish between busy work and what is really driving the objectives forward. And that change of habit, I think, takes time. Well, we're going to go to the next slide and see what that's all about. Oh, there are rules on this and why don't you go through them? Yeah, so the first rule is set annually, both annually as well as quarterly. I am a firm believer that the speed in which the market changes now anything which we just have annually is no longer relevant. Right. So hyper speed as you know. That is correct. When we implement OKRs, we do it quarterly and then we break the quarter into 13 weeks and we show progress on each result on a weekly basis. That's the effective bridge between strategy and execution. Don't have too many. Sometimes people get too ambitious and they get too detailed, especially in the beginning. So you kind of stick to just having the overall two or three objectives and then maximum four or five results underneath that. Yes, OK. Make them challenging. So this is important. The teams achieve more if the overall objective is more visionary and more challenging. Do the teams think more or do more? Because it's like an effort to get people together because sometimes people give up because the goal is too ambitious. Yeah, so that is another advantage of an OKR. In the sense that you can have an ambitious objective and then you can have key results where you can make them more realistic. So for instance, it is more motivating if you tell me that our team is going to work on building the tallest building in Hawaii versus building the 17th tallest building in Hawaii. It's just like... Yes, of course. It's a good comparison. Go back to the slide again, the last one. And then the last one, and this is promoted especially by the version that Google has implemented. The KR needs to be really quantitative. Objectives can be more qualitative and they need to have a number. And what it allows us to do is to say, are we 70% there or on a week by week basis? So you can see progress. You can match what you're doing as a quantitative measure. That's a great metric. I think a lot of companies think that they're progressing. If they don't have a metric, then they may be falling behind vis-à-vis a competition or even within their own organization. So going even further, I think for the leadership, what drives the OKR process? Is it the top person, the CEO says, this is very important for an organization, let's all go for it. And he gets people together in a process. How does it all begin? So like I was telling you, if we exclude all the companies which don't do any strategic thinking, which are just living day-to-day, and then we exclude companies which are only interested in a planned document, companies which really want to bridge strategy and day-to-day execution, they're actually hungry for such frameworks. And we'll hold it right there after this important break. Hi, I'm Rusty Komori, host of Beyond the Lines on Think Tech, Hawaii. My show is based on my book, also titled Beyond the Lines, and it's about creating a superior culture of excellence, leadership, and finding greatness. I interview guests who are successful in business, sports, and life, which is sure to inspire you in finding your greatness. Join me every Monday as we go Beyond the Lines at 11 a.m. Aloha. Hey, Aloha. My name is Andrew Lanning. I'm the host of Security Matters Hawaii, airing every Wednesday here on Think Tech, Hawaii, live from the studios. I'll bring you guests. I'll bring you information about the things in security that matter to keeping you safe, your co-workers safe, your family safe, to keep our community safe. We want to teach you about those things in our industry that may be a little outside of your experience. So please join me because security matters. Aloha. This is Ray Tujima. We're back in this exciting dialogue with our guest, Iqbal Ashraf of Guild Consulting. And we had a question just before our break on how can OKRs be best cascaded down into the organization? How can they present an example of executing OKRs to other staff members throughout the organization? That's where we left it. And why don't you continue in your response? Yeah, so like I was saying, Ray, the only companies which are interested in OKRs and they see the need for this are companies which are already doing strategic planning, number one. And number two, they are using that not just as an intellectual exercise but trying to implement in their organization. They see this value of OKRs immediately. We have just implemented OKRs in a large nonprofit in here in Hawaii, in North Shore, where when we asked them for their previous strategic plan, they couldn't even find it because it was done and put in a shelf collecting dust. It wasn't a living document. It was a fossil. So for OKR, I think the CEO buy-in or the managing directors buy-in, without that you go nowhere. But then beyond that, the top management has to buy-in and that's all we need for the first year. Once they start seeing the value of that, of how far ahead they are versus their peers after one quarter, then it is an easier sell to the rest of the organization. So far ahead, what you're saying in the operations meetings or when they go over the OKRs, they must be using what's called benchmarks. They must be looking at themselves vis-a-vis their competitors in that same space. Yeah, like if you are a company which does not do strategy planning and all that, then basically you're trying to grow your organization by sales and then you're trying to hire the people. That's the common thing that you are involved in. But when you are doing OKRs or other methods like this, then at the end of the quarter, you not only do those things, but you achieve those big capability increases or make these leapfrog kind of things which your peers have not done because they have not been thinking about those things. They have been just living day to day. That's what I mean versus their peers. Okay, next slide, please. This is regarding performance management and you have like an example of that. Am I correct? And this is, I think, many companies that are growing quickly have the same, I guess, issue or problem. How do you hire good people and join in a timely manner or very quickly and grow the company? That's right. This deals more not with just the hiring, but how do you create that ramp up so that they are in production much faster? So in this case, for instance, the objective, if you can go back to the slide, kind of tolerate some weakness because improved performance of new recruits can mean different things. So there is a little bit of weakness in that and that's perfectly fine in the OKR method. But then we go to key resolves and they are really, really specific. So they are saying basically we have to reduce the onboarding process by one week. And there's a time thing, one week, seven days. Reduce new high performance review cycle time and I'm not really happy about that here because it needs to have a quantitative measure to that as well. And then this company, this client, had a mentoring process internally and then they wanted to improve the mentor to new recruits ratio by one to four. Basically, it was much wider span before that. It was not very effective. So that is how they are trying to improve the ramp up period of new recruits. And again, that is a way to do it in an area we would call HR, right? That's correct. And it's not just for HR related objectives. It could be in finance. It could be in IT. It could be in sales. It could be in marketing. Many, many areas of a contemporary firm. In fact, this kind of bridged HR and operations because the overall objective was the company level objective. Two of those key results were owned by HR and one, the mentoring was an operational person because they are the ones mentoring the new recruits, not the HR. You're correct because just because you hire people quickly doesn't mean that they're mentored or trained and getting into, you know, delivering results in production or operations. That's correct. And so it's kind of bridging to groups that usually are siloed. That's right. And that's unfortunate in most firms. Here you have OKR that kind of melds two groups and makes both of them exponentially more efficient. You actually touch upon a really important point. OKRs break down silos in organizations. And we see that in organizations. I have seen that up close in the nonprofit where they just did their own thing. And OKRs basically, you know, you can have an objective which is company level, but then each key result might go into a different department or different individual and they have to all work together to make the overall objective come to life. Well, you have a very good point. I don't want to go into the state government. There are many areas that they could function, collaborate and go for the similar results. That would be for larger objectives throughout efficiency or throughout the state government. Next slide, please. And we have another one that's coming out of the sales. We had one of two areas, HR and operations. And what is this about? This is about a referral program. The objective is kind of inspiring that the entire company can rally around. Basically, they want customers that advocate of their service. And then they have a whole bunch of key cells underneath that. Some of them are owned by individuals outside sales or account management. The first one is owned by the chief operating officer. And his job is to reduce the processing errors. In this case, her job, reduce the processing error rate that the clients, current clients, feel happier. So they are more conducive to giving referrals to this company. And then there's a training component to that. There's a hiring component to that. And then those are all owned by different individuals from different departments. And then when you say sales, it's not just the sales department. There are other groups involved in this OKR. That's correct. Next slide, please. And this is, I guess, trying to metric or trying to get people to review and update each other what's happening in their area where they own or accountability. This is how we tangibly show how do we bring strategy to life on a week by week basis. So in this case, as you see, the objective is on top. It's the same example. And it's owned by Matt, who is in account management. And then Cindy, who is the chief operating officer, owns the processing error rate reduction. And then we review this every week with this client. And basically you say, are you red, green, or yellow? Red meaning you are stuck. You may not be able to achieve this. Yellow means there's some issues going on. Yellow means you are on track about achieving this. And most of it is green. That's good. And so this is a report card that you see weekly. It's not placing blame. It's just that you need help. You need focus. You need all kinds of ways to get ahead. This is shutting light on how to achieve that OKR. That's correct. Next slide, please. This kind of talks about how do you align the entire organization. I recommend going to the whole pyramid the first year of implementation. But see that on the top is your vision and purpose for the organization. And then we have OKRs at the company level. Sometimes people have five-year OKRs and then one-year OKRs below that. But then you go down to department level OKRs and then to individual level OKRs. And the example I will take here is I used to paddle. So when you are canoeing, everybody needs to row at the same rhythm and the same direction and all that. To the same drumbeat. Otherwise, if you are misaligned, the effect is much less focused and the impact is so much lesser. So this is how you align the entire organization between the overall vision and purpose of the company. But going back finally to where we started in our conversation is about strategic planning. And if people don't plan, people don't grow their organizations or even individuals as staff people cannot grow and add new abilities or new skills and so forth. And of course, everybody has to contribute to the growth of an organization and it may be a lot to do with breaking down silos. And so what you bring with OKRs is that it's of course trying to execute on a strategic plan but also making an organization really work better. Is that one of the kind of side results of all this? That is correct. So how do you achieve your strategic plan on a day-to-day basis? How do you ensure that things get done not just in the busy work but what you set out to do? And is it that people here in Hawaii, as you mentioned, a lot of them don't do strategic plans or put them away and don't execute? Is it because they don't have a tool like OKR that they can achieve those strategic plans or is it a mindset that anything they do is just focused on growing and by adding people or sales and not doing things strategically to really be a destructive force in the business landscape? You know, I did not really think about that but there's a very interesting question Ray. My personal hypothesis is with time a lot of business owners, entrepreneurs get farther away from why they started on that journey in the first place. They get farther away from their customers and they get more preoccupied by their competitors or just doing what they are doing every day. But that's a question beyond OKR so why they are not doing strategic planning in the first place? Well, we're coming to the end and I think though for the audience of CEOs or leaders of not only companies but nonprofits and maybe directors of state agencies they should look at this and look at it as a context of planning plus execution and how to make it more efficient organization. And we come to the close, I want to thank you for this discussion and on behalf of Think Tech Hawaii and Business in Hawaii, my name is Ray Tsuchiyama. Thank you very much. Thank you.