Matt Munson is a Startup Coach, Angel Investor, Speaker, and Writer. He previously co-founded Twenty20 and was the CEO from inception through exit. This article was orginially posted on his website, here.
The best thing any employee ever asked for
I was nervous about the conversation. After searching for several months for someone to lead our growing engineering team, we had settled on Michael. Michael, if he agreed to take the job, would be easily the most experienced leader on our team. I was hoping his experience at renowned startups would help with recruiting and fundraising in the years ahead.
I find there is this funny moment in any recruiting process where my mind shifts from hoping I will like the candidate to hoping the candidate will like me.
Preparing for this walk, I found myself deeply hoping that Michael would like me and that he would agree to join our fledgling team.
During the walk, I asked Michael a pretty standard question. While the question was standard, his answer was profound. It has stuck with me ever since:
Me, “If you join us, what do you think I can do to best help you succeed in the role?”
Michael, “Say no.”
Me…confused: “What do you mean?”
Michael: “The biggest weakness I see in early-stage CEOs is an inability to say no. They want to say yes to everything, to do everything. As a result, the team gets overwhelmed and lacks focus. This is particularly catastrophic for engineers. But if you can say no to everything except the few things that matter most, we will do well. So, the best thing you can do is say no.”
Damn, I loved this guy.
Michael would go on to join us and prove himself a priceless ally; this was only one of many lessons he would teach me over our many years of building the company together.
Learning the importance of focus the hard way
Thank god Michael was patient. It would take me years as a CEO to really understand how to run a team with a high degree of focus.
We raised our Series A shortly after that fateful conversation. Then, we promptly proceeded to make many of the most cliche stories any venture-backed startup can make.
One of those mistakes was letting the focus we had applied pre-market fit lessen as we scaled the team and attempted to grow.
As I have written about previously, we went through a couple-year period where that lack of focus cost us millions of dollars and months of work.
With our backs against the wall, a stripped-down team, and a much-reduced bank account balance, we recommitted to practicing what had served us well in the early days. We got serious about focus.
That focus saved our asses.
Before getting focused, we had scaled our team from 10 to 55 and found that the bigger we got the slower we went.
After hitting the wall finically, we stripped our team down from 55 to 12. Because we were venture-backed, we had no choice but to find a way to grow aggressively in spite of our small size.
Over the ensuing 12 months, we would grow our revenue from $1M to $5M without adding a single employee. And we did it while working 40-hour workweeks. Those 12 months were some of the most powerful in the lifespan of our business, and, as I look back, one of the most critical ingredients was focus.
We determined that we would begin to practice maniacally what we had always known to be true intellectually but had never really practiced in the day-to-day: that only a few things mattered at any given time and the rest was just noise.
We decided we needed to finally fully employ Michael’s early advice: to say yes to only 2–3 key projects each quarter and no to everything else.
The learnings we uncovered in those months served us even as we continued to grow.
Focus saved us.
Getting started with goal setting
Years later, as a coach, I see teams of any stage or market benefit from committing to focus.
Whether the company is 5 or 5,000, teams with a clear practice of goal setting tend to thrive. Those who do not flounder.
Plenty has been written about goal setting in business (including OKR’s, Rocks, and the other names people use); yet I still meet CEOs every week who do not feel clear on how to leverage goal setting for their own business.
So, with an aim toward helping more companies take Michael’s profound advice, here are my scrappy, operator’s field-notes on how to relentlessly pursue clarity through a simple practice of goal setting.
If goal setting is simple, why is it so hard?
Before we dig into the how it may be helpful to note what makes goal setting so hard. I believe Michael’s request cuts to the heart of it.
Building startups is stressful. If you have been a founder, CEO, or startup leader, you know precisely what I mean.
There is an unrelenting feeling of existential threat at every moment of every day.
When a company is new, odds are nearly 100% that it will die.
Building a startup is about escaping the state of rest, the state of presumed death.
At some point, every company that succeeds hits a point where the odds are nearly 100% that it will live.
But only a very small percentage of startups ever get to that point. Most die.
The anxiety caused by that state of likely death is hard to quantify if you have not lived it. But it is massive.
The result is we founder types like to do things that relieve the anxiety. Things like:
- Work all the time
- Take out our anxiety out on our co-founders and loved ones
- Drink more than we should
- Engage in life-threatening hobbies
Anything that eases the dread becomes a trusted resource…often without our noticing.
When it comes to focus, there is a dangerous setup here. The setup goes something like this:
- In an effort to manage our anxiety, we do more
- The more we do, the less focused we are on what matters most
- The less focused we are, the more critical things fall through the cracks
- The more that critical things fall through the cracks, the more likely we are to in fact fail
- The more likely failure seems, the more anxious we become
- The more anxious we become, the more we feel pressure to do more
And so the cycle goes.
The reality of doing more, it turns out, is not an increased likelihood of success. The reality of doing more is frequently a sky-rocketing risk of failure (as well as burnout, health problems, broken morale, and more nasty stuff.)
And herein lies the power of goal setting.
Goal setting is the art of doing less; of getting clear on what actually matters most right now, and ensuring that none of the most critical things fall through the cracks.
It is helping our teams to say no.
Let’s dig in.
The power of OKR’s (“Objectives and Key results”)
Aren’t OKR’s a ‘big company’ thing?
For a lot of early-stage founders, goal-setting feels like a thing that big companies do. They wonder whether the practice has any place in an early-stage startup.
Let us zoom out for a moment.
What is the job of a CEO (and by extension of a leadership team)? There are three parts:
- Hold the mission
- Recruit and retain the team needed to execute that vision
- Resource that team with capital, clarity, and care
There are a few key pieces to the clarity portion of (3). In simple terms, they go something like:
- What is the change we are here to make in the world
- Why does that change matter?
- What’s our plan for effecting that change?
- How are we going to work together as a team as we execute that plan?
- Where shall we begin? What do we need to do or learn first?
Now, let’s layer on to that list some labels. These labels are often misused, but if we apply them to this plain language the labels may actually prove helpful:
- Purpose: Why do we exist in the world?
- Mission: What is the change we are here to make in the world?
- Vision: What is our plan for effecting that change?
- Values: How are we going to work together as a team as we execute that plan? What are we committed to?
- OKR’s (aka Rocks): Where shall we begin? What do we need to do or learn first?
Put in their proper place, as a part of bringing clarity to the team so we can really get to work, the need for OKR’s suddenly makes sense.
For our purpose here, I am going to refer to goals as OKR’s. Some organizations call these Rocks and others use a myriad of other names. The label matters less than the practice of agreeing on which key efforts matter (in the case of OKR’s we call these “Objectives”) and how we are going to measure progress as we undertake those efforts (in the case of OKR’s we call these “Key results”).
Let’s zoom in on the pieces that matter. Whatever you call your goals (in our case here OKR’s), you need these individual parts:
What is it we are trying to do? This should be clear and inspiring.
How are we going to measure our success or failure? How can we look back at the end of the time period (ie quarter) and know whether or not we achieved our objective?
The objective should be clear. We want everyone in the company to be able to read it and know what we mean.
The objective should be inspiring. Nobody comes to work for a startup so they can punch a clock and collect a pension. We want to do work that matters. We want to be inspired.
To that end: “Improve customer resurrection to support our effort to get profitable so our company can survive and thrive” is a lot more inspiring than: “Reduce net churn by 20%.”
People crave context. Most of us are happy to do some grunt work if we can see the bigger picture for how it fits into the collective team’s goals.
How to get started
One caveat before we get tactical: nobody gets this right the first time.
I have taken a lot of friends snowboarding for the first time, and I always tell them the same thing: don’t quit after the first day!
Everyone’s first day of snowboarding is misery. You fall A LOT. Your butt feels broken. Nobody makes it off the bunny hill.
If your first day is your only gauge of how fun snowboarding is, of course you quit.
OKR’s are the same way. Every team I have helped implement them has found them at first pass clunky, awkward, and annoying.
Slowing down a fast-paced team of startup folk for a day or two and asking them to collectively explore the 2–3 things that really matter most is very hard work. If we as a team are in the habit of spending our weeks working on whatever feels on fire at the moment, it might feel dull or lame to try and whittle the list to only a few things. It may even feel like wasted time to take time away from ‘the work’ to attempt to set longer-term goals.
But what is the cost of not having clear quarterly goals? Or of not having a clear 1, 5, and 10 year vision?
Running a startup with no clear quarterly goals is like building a house by making sure you pound a lot of nails. You end up using a lot of nails but building a really weird fucking house that nobody wants to live in.
Ok, so how do we actually do this?
Because this post is not a book, and because I am hoping to make this a tactical primer not a comprehensive study of the history and practice of OKR’s, let’s dive in and get prescriptive.
There is no “right” way here. What works for one team may not be the best fit for another. Mileage may vary. But here are some ideas from this operator’s brain to get you started.
- Start quarterly
- Limit yourself to 1–3 objectives
- Start with the 12–18 month vision; ask: what would we be foolish not to make progress on this quarter
- Brainstorm all possible options
- Narrow, narrow, narrow
- Start with team-wide OKR’s (individual can come later)
Here is some of the why on each recommendation:
1. Start quarterly
We are looking for a time period that is long enough to allow the team or teams to plot their plan, organize, allocate resources, and get some solid work done. But we want a time period short enough that we are not running down the wrong road for too long if we invalidate the approach.
A quarter provides 10 weeks of work with a week of planning and organizing on the front end and a week at the end to process learnings, prepare data, and plan the next quarter.
After you have gone through a couple of cycles, you can adjust the timeframe and experiment to find one that best fits your company and stage.
2. Limit yourself to 1–3 objectives
The biggest mistake most teams make as they are getting into goal setting for the first time is to try and take on way too much.
It is hard to say no. It is hard to prioritize. But saying no and prioritizing are probably the most critical work a successful startup does.
Start simple. If your team is smaller than 10, start with 1–2 objectives. If your team is smaller than 20, start with 2–3 objectives.
We want few enough company-wide objectives that we can effectively organize small teams around each one. We also want few enough that we can obsessively focus on them and ensure they get the requisite attention.
If your objectives do not feel big enough to take up the attention of the company for the quarter, you may need to go bigger.
Remember, this is not the only work the team will do for the quarter, there will be other work that must be done to keep the lights on and the business working, but these are the high-priority projects most likely to get the company to the next step in our vision for the coming years.
3. Start with the 12–18 month vision; ask: what would we be foolish not to make progress on this quarter
What we are doing in setting objectives is zooming in on our vision. Thus, to determine what your objectives for the near term should be it may be helpful to zoom out to your vision for the next 12–18 months.
Where do you hope to be in 12–18 months? What do you hope to have learned? What do you hope to have de-risked? How do you want your customers, your employees, and your shareholders to experience the world differently than the way they do now?
Once you have a clear shared vision for where you are going in the medium-term, zoom back in. Knowing where you are hoping to end in 12–18 months, what work and learnings would you be foolish to not make progress on now?
It might also be helpful to look at any dependencies that exist in the unfolding of your 12–18 months vision. What do we need to do our learn now in order to make the vision possible? What’s blocking us?
4. Brainstorm all possible options
Once grounded in the medium-term vision, I like to invite the planning team to brainstorm.
One way to do this is to pass around a stack of sticky notes to everyone in the room, set a timer, and ask everyone to brainstorm every idea they have for the work that most deserves our attention this quarter. Then, one person at a time, place the notes on the wall in related groupings. For example, anything that relates to customer onboarding might be in one column, and anything that relates to technical debt might be in another.
Open-ended brainstorming of this fashion can be helpful in ensuring nothing is missed simply because it was not an obvious suggestion.
5. Narrow, narrow, narrow
Once we have a list of options, it is time to find a way to narrow. We cannot do everything; we must find our way to the few objectives which matter most right now.
At this point, some teams like to take turns pitching ideas to the group and then voting. Other teams I have seen find it more effective to have a subset of the team simply select the objectives from the list of prospective options. Choose your own adventure and proceed as feels best to you and your team.
6. Start with team-wide OKR’s (individual can come later)
As your team grows in your practice of goal setting, you may find it helpful to map objectives from the company to small teams, and then down to the individual level. This is a beautiful aspiration because it helps every individual in the organization to understand how her work maps into what matters for the whole company and how she is helping turn our vision into reality.
However, starting with this level of planning can prove overwhelming when you are just getting started with goal planning.
I would suggest starting with company-wide objectives that are owned by teams within the company. Give yourselves a few times through the full process before adding complexity.
OKR’s in action
Now that we have completed the planning, what do OKR’s look like in action?
Team agreement: this is all we talk about
OKRs are all about bringing focus to our work. If focus is the key advantage of a startup, it is critical we lean into and exploit that advantage. The commitment we must make as a team then is that our objectives are what get our attention and our conversation.
All the projects, features, clean-up, etc. that we might do one day are set to the side. For these 12 weeks, this is what we talk about, what we obsess about, what we provide resources for, and what we make damn sure gets done/shipped/learned about/reported on.
For these weeks, this is our work.
What gets measures gets managed
Communication about the progress against our objectives should become a key part of our cadence as a team.
My personal preference here is for a weekly written update to be shared company-wide on each objective with the following details:
- Are we on track or off track for the quarter?
- What did we accomplish this week?
- What did we learn this week?
- What is the supporting data?
- What questions or curiosities have we uncovered?
- What is the plan for next week’s work?
End of quarter processing
At the end of the quarter, the team owning each objective provides a deep-dive report on the work completed that looks similar to the weekly update above.
The report should provide the narrative, details, and data necessary such that anyone in the company can read through the report and basically get fully up to speed on the work.
I prefer narrative form (not slides with bullets) because it forces the preparer to provide the full detail of her thoughtfulness on the work. We are stepping into her head in a way that is not possible with slides.
Written narratives also saves time because we can print them, pass them out and simply read them. There is no need for someone to stand in front of the team and present.
We read, we ask questions, we move on.
The end of quarter reporting should include but need not be limited to:
- How successful were we against our key results
- What work was accomplished
- What did we learn
- What is the supporting data
- How has our understanding of our vision for our business and our key risks shifted or solidified?
- If we were to continue on these objectives, what work would this team recommend be done next?
After you process the learnings from the previous quarter, the process begins again. Revisit the 12–18 month vision from where you now stand, informed by the learnings of the last 12 weeks.
Common mistakes in goal setting
Here are a few mistakes we made along the way in my last company and which I have seen other companies make as a coach:
1. No inspiration
Again, when setting objectives for the quarter, the objective should be inspiring. Whether you are using OKRs, Rocks, or some other framework, I have found the most effective pairing to be an inspirational statement of work to be done, the ‘objective’, with clear, measurable outcomes, the ‘key results.’
Many teams doing OKRs for the first time will set objectives like: increase our active daily users by 200%. While that outcome may be helpful to the business, it is hardly inspiring to the team. It lacks the why.
Compare that to the following: Objective: Improve the happiness of new customers and their ability to do their job well. Key result 1: Improve new customer activation by 50% Key result 2: Increase daily active users by 200% Note to team: If we can achieve this objective, not only will our new customers be happier and more actively use the product, but it will improve the efficacy of our marketing efforts and put us on a firmer path for profitability in the next 18 months.
2. Not making objectives truly measurable
Another common mistake teams make in their first stab at OKRs is failing to make the objectives measurable. Inspirational objectives are wonderful, but they can be frustrating if we get to the end of the quarter only to find ourselves engaged with one another in a disagreement over whether or not we actually achieved the objective.
As noted above, the easiest way to bring clarity to the objective setting is to pair each objective with 1–3 measurable key results.
The requirements for success should be easily digestible to anyone in the company reviewing the objectives. This clarity is helpful not only at the end of the quarter but also in the early planning stages. It is like knowing how the test will be scored before beginning to study. The clarity focuses the effort at hand.
Because the key results will inform the way the work is done, it is critical you get these right (or as right as you can). This is a good time to consider any misaligned incentives you may be creating. For example, we do not want a marketing team packing our acquisition funnel with a thousand new sales leads if those leads are not for a customer segment we know to be profitable. Weighing the tradeoffs baked into the key results is one of the most critical parts of the work to be done when setting objectives.
Finally, it is helpful to discuss how readily available the data is. If our company analytics don’t allow us to access the required data without weeks more of work, the effort may be failed from the get-go.
3. Trying to do way too much
Perhaps the biggest mistake teams make when first practicing objective setting is to take on way too much.
There is a lot to do in startups; and there is a lot of uncertainty.
Many first-time leaders attempt to combat this uncertainty by doing everything. You may even hear them bragging about it as a badge of honor: “At insert company name, we take on everything at once. There are no shortcuts and no weekends.”
Attempting to do everything in a startup because you are afraid to prioritize is like looking at a messy kitchen after a dinner party and deciding to use a garden hose to take care of the problem. The plan is entirely ineffective and makes matters far worse.
As a rule of thumb, a company should have no more than 2–3 key priorities per quarter. As you progress in your practice of goal-setting, you may work toward teams, and eventually individuals, having their own objectives which map into the company’s objectives. But no need to get too fancy here at the outset. When getting started, especially if our team is smaller than 30 people, begin with 2–3 objectives and organize the company against those objectives.
4. Changing up the focus mid-quarter/month/week
Similar to the mistake of trying to do it all, many leaders fall prey to changing up the objectives mid-effort.
Us CEO-types are especially guilty of this. In startups, we are continuously taking in new data from the market, customers, investors, etc. There is good reason to argue the priorities that felt so critical a week or two ago shouldn’t be at the top of the list today.
If your team is five or fewer, and you are pre-product-market fit, shifting focus daily or weekly may be helpful. (In fact, effectively organizing a small team pre-product-market fit is a topic better suited to a separate post. But if you would like to dig in I would suggest starting with Eric Reis’ The Lean Startup.)
Post product-market fit, your company becomes increasingly like an ocean freighter and less like a small speed boat.
Even at 20–30 people, teams need time to plan, organize, and execute in order to do their best work. If you change the objectives every few weeks, no meaningful work is likely to get done. You will be nursing your own anxiety but driving your team fucking nuts.
You will burn up your fuel before crossing the ocean.
Set objectives on a long enough timeline to allow your leaders and employees to plan against the objectives, do the work, and gather learnings. Then surface and re-evaluate.
For most companies, a quarter tends to be an effective time horizon. If each quarter begins with a planning week, that gives you 11 to 12 weeks of execution, learning, and data gathering. A quarter is long enough to get real work done but short enough to ensure you do not go too far in the wrong direction if the data is coming back in an unexpected fashion.
5. Giving up because the first time was hard
Remember, learning how to goal-set in a startup is like snowboarding. The first day, you spend most of the time on your butt, and you are pretty sore afterward.
So most people give up.
But it doesn’t actually take long to get proficient if you stick with it and take a few lessons.
Expect the first few quarters to be messy. Let the team know to expect some challenges. This is a craft we are learning, and we are new at it.
It will take time to build proficiency for any given team. But the results are pure gold.
Don’t give up. You’ll be flying down black diamonds in no time.
Company building is a craft. It is ok that you are just learning. So is everybody else.
If you would like some partnership on the practice, please reach out at sanitylabs.co.
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