Why entrepreneurs love:hate decisions
Entrepreneurs are plagued with business-altering decisions every day, but, after a time the best entrepreneurs can take even the biggest leap of faith and fit it into a measurable, testable framework. Until that day though, it can be a difficult transition for someone coming from an environment where every decision gets handed down from above. When you are just making the jump to starting your own business, these constant forks in the road can seem paralyzing, and in constant need of reversal when they fail to produce desired results.
Where it all began
Decisions take their lineage back to latin roots of decidere, or, “to cut off”. It’s a gruesome but apt history for the word. Every decision means cutting yourself off from ALL the other options…gone. It’s a scary prospect and the fear is compounded by years of cognitive training from standardized tests to find option D) all of the above.
All of the above for an entrepreneur means being everything to everyone, and in a competitive world with resourceful and informed consumers that is a death sentence. So we go down a path, but leave breadcrumbs back to the trail. We let the alternative scenario eat away at us asking “what if”? This takes time and energy away from the path in front of us, for which lingering doubt is only making every step forward harder. We open ourselves to self sabotage and only push forward as far as we can while still keeping a part of our energy, emotion, and time held back. Ultimately the result is months of motion without much progress. We have spent countless hours on a path that feels no more validated then when we started, and we have lingering doubts that prevent any true commitment.
How could a person ever deal with the stress?!
Cutting anything out of your life will always hurt, making the above more of a trick question. Great entrepreneurs can remove themselves for every individual decision by simply adopting a framework for decisions that is objective and measurable in its results…the option D for the real world. In this model, decisions become about setting the right goals and test measurements and remove the burden of ‘what if?’. As you grow as an entrepreneur, objectivity finds its way in, and you see those forks in the road less as decisions and more in the context of objectives and key results or as they are more generally referred to: ‘OKRs’. Any decision reversal typically comes quickly on the back of a failed test vs. after months of death marching down the wrong road with the sunk cost demons whispering in your ear. Adopting an OKR framework is far simpler than you might think and will remove those demons (at least some of them)!
OKRs can be seen in practice all around us
While the term may be foreign, chances are you are already well versed in how to implement an OKR framework but have just not thought about it in that light…
Have you ever eaten with someone that always asks the waiter their favorite dish? Guaranteed that person is someone that struggles with decisions and has found a framework to not just alleviate the stress of a decision, but has crafted a framework (albeit a crude one) to test and validate a path forward. How does this fit into the OKR framework?…
Objective: order a dish I will not regret as soon as I hear the next person order
Key Result: identify a dish that is one of the servers favorite items or a house favorite and is a) filling (because I’m hungry), b) not red meat, c) not redundant with whatever app the table orders
I I know how hungry I am, so I want something more filling, I know I don’t eat red meat so I ignore those alternatives, I may even know the section of the menu I’m listing for, whatever my criteria are I am testing the servers list or personal recommendations against those objectives until I hear the option that best meets my criteria. Maybe my friends took me to a Brazilian steakhouse, or the recommendations are all on the lighter side, or the only thing that sounds good is exactly like the app…there are lots of ways to ‘fail’ and there are gradients of failure. For this reason we like to go beyond a pass fail and give ourselves a % score.
If our Key Result is easily quantified (which is needs to be) and includes more than 1 outcome (which it does not need to be, but where possible we try to do) it should be relatively simple to arrive at a score between 0 and 100%. It’s important, if you decide to use a scoring methodology, to never move the goalposts after they are set. If you decided at the outset that getting a recommended meal was critical, but one of the three other criteria would not be the end of the world, it will always be a failure if the waiter says he/she hates everything on the menu. It may be a 67% however, if the only fail is that the meal is too similar to the app but it’s fish and filling.
Adopting an OKR practice for your self-funded startup
There are lots of methodologies for OKR frameworks, we at Low Finance have quarterly objective setting looking at a rolling 12 months and identify one to three due on any given upcoming quarterly milestone. We then spend a few moments at the end of each month noting our progress on each of these objectives for our next 12 months. For our key results we ensure they are measurable so that when the deadline occurs we can give ourselves a pass/fail grade. If you are curious about how an OKR framework can be applied in a more complex organizational structure we enjoy hearing Rick Klau discuss how google implements this strategy and you can easily adopt your own simpler framework. However you run your OKRs, it’s important to maintain a few core fundamental principles of the practice namely:
Your objectives should be broad enough to be likely to at least be relevant by their deadline. The further you look out the broader they may need to be but generally this means not focusing on the ‘how’ but instead the ‘what’ you intend to accomplish.
Your objectives should be narrow enough to have a demonstrable and quantifiable test (the key result) that is directly aligned with that objective. Remember you want to be able to recognize a grade for yourself, even if its a binary pass/fail using this key result.
Your key result should be achievable but not easy. Some OKR guides will give you a ratio for the number you should be hitting, and in a big organization that can make sense, but for the typical entrepreneur we focus less on the ratio and just that you feel some pressure to achieve it but not a hopelessness in doing so.
At the end of the period you will inevitably find that some of your objectives, particularly early on were totally irrelevant (often because human nature makes it tough to totally cut out the ‘how’ we imagine for ourselves at the time of drafting) or that the key result was off, or maybe everything was dead on for strategic importance but we forgot about the 3 major objectives that needed to happen first. In all these cases, we shine a light on the final core principle for us at Low Finance in running an OKR which is never re-write or adjust in hindsight. Once you have set your OKRs for a period they are not editable, when the deadline comes for any of the above scenarios you market it as a fail and explain why. If the goal is still relevant you re-draft it as a new goal with a new deadlines such that you are never moving goalposts. If you don’t recognize your failures then the methodology isn’t accomplishing its purpose of measuring your progress. That includes failures purely based on incorrect assumptions when you set them. Let yourself fail for those simple assumption reasons, note that fact, and you will find yourself improving the targeting of your OKRs in the next period.