By Senthil Rajagopalan, President & COO Profit.co
The startup ecosystem has come a long way in recent years. In India alone, an average of 1,300 startups are registered every year, 70% of which are tech startups. According to a report by Nasscom, the investments in startups had crossed 4.4 Billion USD in May 2019. But how many of these startups survive in the long run?
As per reports, it is also said that 9 out of 10 startups shut down within the first five years of inception. Most startups fail because they do not find the right business model -they could not find the Product /Market fit and could not find enough paying customers.
OKRs (Objectives and Key Results) play an important role in helping you succeed. This is how it helps the team and you
Focus: With limited resources, it is important that everyone in the startup concentrate their energies on achieving the chosen objective. By clearly defining the OKRs and the time frame to achieve them, everyone absolutely knows what they need to do on a particular week or even day.
Transparency: While using OKRs, everyone is clear about their goals and the achievement status of each of the OKR. This keeps everyone on the same page and helps in the reallocation of resources, as required to the teams that are falling behind.
Early Identification of Problems: One of the biggest benefits of using OKRs is the “bubbling up of problems” early. The weekly reviews is the process that forces the surfacing of problems as every team needs to report their progress as well as confidence level in achieving their Key Result. In the case of early-stage startups, reviews can be done even twice a week till they find the product/market fit.
Alignment: OKRs ensure that everyone is aligned towards the overarching goals. In our example, while the Sales team is focused on the Key Result of “Selling to 1000 customers in 4 weeks, the Customer Success team is focused on achieving a repeat order rate of 50%.
So how to make the best use of OKRs, here are a few tips:
Three Objectives or Less: As resources are limited, it will be a good idea to focus on just one or two objectives till the Product/Market fit is established. The upper limit should be three.
Plan Shorter Cycles: Aim for 2/3-week cycles to test hypotheses. Quarterly cycles are OK after Product/Market fit is established.
Focus on Learning: Startups should plan to obsessively learn during this phase. Having internal tools that can be used to record client interviews, have hashtagged conversations so that the field lessons are quickly disseminated across Sales, Customer Success, Product, and Marketing teams.
Data before Ego: Not everyone can be a Steve Jobs – Having a great intuition about the market and designing products without market research is difficult for an overwhelming majority. Founders should put their ego aside and respect the ‘market” while testing their hypotheses and be ready to Pivot early while they still have the funding left.
OKRs, are a great tool for startups of any size provided they are used diligently applying the core principles stated here. Teams need to have an open culture valuing transparency, should be ready to go out to the market and test their hypotheses and rapidly recalibrate their offerings till they find the Product/market fit.
