Ally.io CEO Vetri Vellore recently sat down with Leah Bateman, Training and Development Specialist at Gaming Innovation Group, and Rakesh Mahajan, VP of Revenue at Human Interest, to get their take on annual goals and annual planning. Read the condensed version of the conversation, or watch the full talk below.
Vetri: How do you implement annual planning at your company/who is involved and when?
Leah: So we’re currently in the process of annual planning for 2021 and in the current environment it’s all virtual of course. Before, we would have executive management sitting in a room together. Now, it’s all done on Zoom. We start with the executive management team with the top level priorities for the year, and of course they’re coordinating their plans as well with one another.
After that, we go into translating those top priorities into objectives that sit at the top level of the organization for different teams to then define more specifically the key results and how they contribute to make sure those objectives happen.
Rakesh: For context, we’re about a 200-person company now and very much sort of in year five or six in the company’s gestation.
For me, it’s very much a planning exercise that starts now and the way we’re approaching it is we set ourselves one very top-level vision, as opposed to an objective. Like where do we want to be? And it really starts with, like many startups, we all have this aspiration to go public at a certain point in time. We’ve defined a timeframe. And so it’s almost a work back plan from there. The board says okay if we’re going to go public in whatever year, what do we need to achieve this coming year to get to that point? And so then the executive team says okay, that is what we think we need to do at a one line. We need to have an exit-level company, a company that’s ready to exit in three to four year and therefore each of the departments to support that needs to achieve the following outcome by the end of 2021. And then based on that outcome, we’re now all stitching together our individual department-level plans.
I think Leah’s framework is exactly right. Like what are the objectives that each department needs to achieve? And then we start stitching them together by having one-on-one Zoom calls with each relevant department. I work with marketing and product and we start intertwining, you know if I need to achieve this, what do I need from that department? And then we go deeper and deeper…what do they expect me to deliver etc. That’s kind of how we’re building the planning process and the forcing function for us, the beauty is, unlike some of the larger companies I’ve worked at, here there’s this very defined board meeting the first week of December and everything needs to be locked down by then, because otherwise you go back and forth so many times, it takes forever. So there’s a pretty clear starting no earlier than October, and December is a date that we have everything locked down.
For us, there’s the board’s vision of when we need to exit. This is what the shape of the business needs to look like at the time of exit. Whether it’s a revenue number, a margin number, size of customer, the number of customers, it’s sort of a very simple set of metrics — KPIs. If you want that to be successful in an exit, this is what it needs to look like.
Leah: We’re really following our new vision and mission statements that were launched for our organization in mid-2020, they are kind of our North Star that we’re chasing after. And from here, what we’ll be working with each member of the C-level on is translating those top priorities into objectives and key results so that once those priorities are clear from their perspective, how do we simplify it and make it make sense for the rest of the business. Then when you ask anyone what’s your must-do priorities for 2021, they can see how those dots connect up to the vision and mission and what we need to achieve.
Vetri: Some of our customers have tried approaches like asking the team to submit one thing every team member thinks the company should do. They’ve actually had some remarkable success, and again it needs to fit in with the organization’s culture to get that kind of feedback.
I’m just curious what you both think about something like that? Is it practical for your organizations or is it better to start from the top and cascade down?
Leah: That is an interesting idea. I think it definitely depends on the organization. From my perspective, we’ve been working to really hone our focus and refine things to really define. We can do lots of things and we’ve done a lot of different things as a business overtime, and now we’re becoming a bit more focused. So generating ideas might not align to the vision and mission at the end of the day, it’s not where we are currently, but I can certainly see that for a different type of business or a different state of maturity.
Rakesh: Like you said, I think it’s interesting. I think there are good ideas that have no natural place at the top or bottom of the organization, they are just good ideas. I would probably guide it a little. Here’s the outcome that we want in some period of time…three, four, five years from now. Now, how do each of you think we should go after it? So it’s a guided set of input because I think then people can identify areas particularly with their sphere of knowledge that gets us to that point.
Vetri: Once you have these top priorities, do they stay at an annual level or what point do you break those into quarterly goals and milestones?
Rakesh: For me, we’re at the growth stage of our business. It’s hyper growth, so we have to break it down. I don’t even think quarterly is sensible. We focus on small and medium businesses where there’s a different sort of frame, which is just rapid-fire almost consumer-like in terms of velocity. So for us, it’s down to monthly and weekly. Our business has to grow month on month on month. So we just have to move. It’s kind of my philosophy, and I think it’s probably different if you’re in my old world where I was at an enterprise, quarterly makes a lot more sense. But I certainly think SMBs are a monthly business.
Leah: For our highest-level objectives, we think annual goals fuel the constant North Star for people to look at and for it to remain the same. For functions like financing, quarterly works quite well, but I think it depends on the group and we’re open and flexible with teams to not try to force people’s hands on how specific to get at any time throughout the year. Instead, we rather them think critically about the way their work flows and what makes sense for their team.
Vetri: That is a pattern we see very commonly. Particularly the larger organizations, we see a pattern where the enterprise goals tend to be annual and the cadence of each department is left to them to define, some have monthly, some follow a quarterly cadence. They all align to this annual objective of the company so there’s clear alignment. At the same time, each department is empowered to follow the cycle that makes sense to them.
Leah: If it’s possible to define quarterly goals, I think it’s a good idea for people because planning is so important to make sure that we’re successful at the end of the day. But then again, if you’re in a group that’s so fast moving that it can’t work or doesn’t make sense, it doesn’t make sense to plan for things that aren’t able to be planned for.
Rakesh: I think that’s fair. From a sales and marketing perspective, monthly is absolutely how we do it. But to both of your points, product engineering is much more quarterly. When are certain releases going to happen, certain dev work etc. And hopefully then it all ladders up.
Vetri: Once you’ve done this planning, how do you make sure there is clear alignment of work, budget, resource allocation, projects toward these priorities?
Leah: That’s a definite challenge. I do think that’s where OKRs help us because we can see the interdependencies. If this team needs to achieve this, we need to have these resources available and support them too to hit the mark and having those regular check-ins so that it’s revisited and redefined and updated as you go. I think that’s really important.
Rakesh: Yeah, I’d completely agree. For us, the objective for the revenue team would be to deliver X million dollars of revenue, underpinning some key results that we expect. We expect results of whether it’s hiring, whether it’s marketing activity, whether it’s new features and functionality and all of those key results are the only way we’ll go deliver X million of revenue. That’s where the OKR process actually works very, very well.
Vetri: Once you have this plan, how do you roll out goals to the rest of the organization?
Leah: We do a lot to try to communicate. I think clarity of plans is really one of the most important things that once they’re defined and all this thought has been put into them from a few people, we need to make sure that those people go and talk about it again and again and don’t forget to keep referring back to those plans to make sure everyone really understands them and remembers that is what is most important. So we do a lot of internal communication at a company-wide level, and then we’re always tapping on our leaders to refer back to those OKRs, whether they’re annual or quarterly to begin status updates that way. Where are we in terms of our goals? That’s something that we really are trying to do better at and focus more on. I think internal communications at a broad level is important, as well as having leaders who can articulate and engage with smaller teams on understanding the plans, fulfilling the plans continuously is really important.
Rakesh: Yeah I’d agree with that. I think we have a great culture around publishing and just putting it out there. Here are the quarterly OKRs for the company all in a Google Sheet so everybody can see it. And then when you click on the objective, it layers into KRs that are underneath it and how those are tracking. In a COVID world, we’re doing it every two weeks, but I think we’re moving back to monthly in terms of communication to an all hands around here’s what’s happening, here’s how we’re tracking against each of the OKRs and what’s going well and what’s not going well.
And then on my team, I’ll take that specific objective related to my team and go deeper on that. Here’s why we are green or red or yellow, hopefully not red, but you know what we’re doing better to achieve that outcome.
Leah: We had an honest challenge when we first started to roll out OKRs where some of our leaders put their objectives into the tool and there wasn’t a conversation that happened after that. So people could go in and see the objective described but without talking about it, what does this mean, why was this defined and how does each person sit into this? And what’s the expectation about what happens next in terms of setting those next level key results. That’s still something we’re working on is getting better at those conversations, the reasons why and engaging people and setting their objectives and key results that connect to it.
Vetri: What problems have you come across in planning now or in the past?
Leah: One thing that I’ve seen time and time again across different organizations and teams is not involving the right people. I think it’s a major pitfall when you’re talking about planning. If you don’t have the right stakeholders with a seat at the table and a microphone to provide the right input to the plan to make sure it’s really considering all the important factors in that plan, you’ll more than likely not be successful. Being really intentional about who is involved is really important.
Rakesh: I think combined with that for me is iterating. Like get a plan out there, get people to throw darts at it, tear it apart and build it again, but do it quickly. Take onboard the feedback, understand the reasons behind the feedback. And also making sure you build in a “the world is not perfect.” So in a perfect world, every sales person would hit their quota and it would be perfect. In a perfect world, every code that is released would be 100% perfect, but the reality is none of those things are true. So therefore what you need to do is actually say “x percent of it will go wrong” and build that into your planning so that you’re not always missing by 20%. So you understand that the world is not perfect and you build that in either in scenarios or at least at minimum setting objectives. While you want the objectives to be stretching, you want to make sure that you actually hit them or at least have a good shot at hitting them. Because the worst thing you can do is have such a big, hairy, audacious goal and everybody gets so demotivated because it was one of those “if the world was perfect” kind of thing.
Vetri: What is the most important step in planning?
Rakesh: For me, you have to be led by the outcome of the business. In the next five years, where do you want your business to be? If you’re living in a startup world, it’s a lot easier because you know what you’re trying to achieve as an outcome. If you’re led by that as your North Star, then everything just sort of works back from there.
Leah: The most important thing from my perspective is learning through this process of planning and goal setting. So taking the time to reflect and understand what plans didn’t work out that we made last quarter or last year. And if not, why? And what parts of our plans were effective and successful that we need to keep repeating and why. So that process of learning and reflecting continually when making plans is really important.
Rakesh: I think the other thing I’d add is what Leah said earlier about being inclusive. So while we’re led by that North Star of the three, four or five-year vision of where we want to be, getting the input and the iteration is what’s going to make this thing really work.
Vetri: This question is from our audience. How do you balance your three to five objectives with the work that is keeping the lights on? How do they align to make sure there’s deliberate focus on the key priorities and not constantly get pulled into keeping the lights on?
Leah: We hope that we use technology to tackle this. So in addition to OKRs in Ally.io, we also have software like Jira that helps us track other work that’s daily. So using Jira for more tactical work that keeps the lights on and then of course hopefully you can refer back to your objectives that connect to the bigger picture of the organization. Then if something needs to change, we have the data from the tools to have those conversations. So for Jira, we have data to support a change in objectives or change in priorities, whatever needs to happen.
Rakesh: I think there’s a couple of things for me. One is your KRs need to be set appropriately. If your KRs are ignoring keeping the lights on, then there’s a problem with your KRs. At the end of the day, it’s one thing to say like, I’m a sales guy and I want to sell more cool stuff. I want lots of great product features and functionality. But the reality is we need to make sure that the product itself is working as promised and it does what it says before we start adding in new bells and whistles. So for me, one of the KRs has to be keeping the lights on.
Then there’s part two, and I mean this in the nicest possible way, it’s about prioritizing your own work. The KRs are there to guide you, but they’re not going to do the day-to-day prioritization. You’ve got to kind of do that yourself.
Leah: That’s a good point. We’ve had teams also go through that learning process of we have objectives that we know we would like to achieve, but first we need to clean house. So let’s set our objectives focused on those things first, before we can get to the more aspirational things. So it’s also about being practical.
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