Where Do The Numbers Come From?

Another book excerpt, answering an OKR question we hear a lot

Here’s another excerpt from our forthcoming book, Who Does What By How Much. If you like it, make sure to sign up to be notified when the book is available.

Setting Your Numbers

One of the hardest parts of writing Key Results is deciding on the specific numerical target. When we start working with numbers, there’s an expectation that we can use math to figure out the right answer. The simple truth is actually a bit unsettling though: there is actually no right answer here. 

Instead, it’s more accurate to say that there are a range of answers, all imperfect, and you want to find an answer within that range. To do this, you’re going to have to have some conversations, use the data that you’ve got available to you–which will probably be imperfect–and make some smart guesses. In the end, you’ll be able to come up with a good answer. 

So, given all that, how can we find that good answer? 

A good numerical target should be based on two factors:

• Factor one: what’s possible?

• Factor two: what’s valuable?

What’s Possible?

When we set OKRs, we want to be clear-sighted about what we can and can’t do. We expect that people will be upset about this advice. After all, there’s a lot of macho talk in the OKR world about setting ambitious goals. That’s great. We’ll just say that ambitious goals might feel impossible, but you do in fact want them to be possible.

The Wright Brothers built a flying machine! NASA sent humans to the moon! These are big audacious goals, and some said they were impossible, but clearly, those folks were wrong. So asking, “what’s possible?” is an important part of goal setting, as long as it’s done in the right frame of mind. 

Now, what is possible, and how can we know in advance? Unfortunately, we can’t. The only reason that we know that flying machines are possible is that the Wright brothers succeeded. Same with the Moon. Will it be possible to send humans to Mars? It seems possible, but only time will tell.

Now look, sometimes, you can predict what’s possible with a high degree of certainty. That’s great. You have data. You have precedent. Let’s say that you want to sell a million pairs of shoes. You know that’s possible, because other companies have done that. What you don’t know is if you can do that. Or if these particular shoes will sell a million pairs. In these cases, the question isn’t exactly about the theoretical possibilities, but still, you’re in the fortune-telling game.

Given that, this part–what’s possible–is often a guess. You have to look across the table at your team and at your stakeholders and have those hard conversations. We think that there’s a lot of value in these conversations, and we encourage you to embrace them.

What’s Valuable?

The value question is a little easier to have, because we can usually quantify the result. If we sell 100 pairs of shoes, is that valuable? 10,000? 1,000,000? These numbers are easy to work with and can quickly tell us if an initiative is worth pursuing.

Still, these numbers can be subtle, especially when we’re not working with sales or financial data. What if we’re trying to make it easier for people to register for our web site? If we increase registration rates by 1% is that valuable? What about 10%? What about 100%? Again, these numbers lend themselves to modeling, but ultimately, you’re going to have to build a model and have conversations with your team and your stakeholders.

Find the Intersection

Setting your numbers then is a question of finding the intersection of what’s valuable and what’s possible. You still won’t know for sure—and that’s a feature, not a bug. What it means is that you and your team are about to set off on a process of discovery—which is the essence of agile. But that’s a topic for another post.

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DEAL ALERT

In advance of the launch of our latest book, Who Does What by How Much? A Practical Guide to Customer-Centric OKRs, my co-author Jeff Gothelf is offering a deal on his online, self-paced OKR course.

From now until Monday, Feb. 19, purchase the self-paced course for  just $24.90  . . . down from $249.

That’s 90% off. Yes, you read that right.

It’s a great course, with short, practical, bite-sized videos to help you and your team get started. Get it before the deal is over.