More and more often, we encounter teams that want to expand their discovery with Teresa Torres‘ OST but are already working with OKRs – or the other way around.
So the question quickly arises, how does this work together?

I got to the bottom of it. I came across an answer in the CDH Community that I would like to share with you.

 

Recap: What are Opportunity Solution Trees and OKRs?

OKRs:

Objectives provide a qualitative level of your goal. They provide an orientation, almost an inspiration, as to where you want to develop. The Key Results below them provide the quantitative level. They provide measurable values that you can use to determine how well you are approaching your objective.

OSTs:

To quote Torres: „A business outcome measures how well the business is progressing. A product outcome measures how well the product is moving the business forward.”

The business outcome therefore indicates where you want to develop as a company. Just in a way that can be quantified. Below that are the Product Goals. They are measurable, i.e. also quantitative goals within our product. Underneath that, we identify opportunities that we want to use to contribute to the Product Goal. Because if we achieve them, we can get closer to our business outcome.

There is a very obvious parallel here.

 

What they have in common: One goal with measurable sub-goals

In both cases, we have ONE overall goal, which is sorted by one or more measurable sub-goals that we want to use to get closer to the overall goal.

If we wanted to make it easy for ourselves, we could now simply determine:

Business Outcomes are comparable to Objectives. Product Goals are comparable to Key Results. And in a way this is true …

However, it can also look different. After all, the OST continues downwards and does not end with the Product Goals. Below them, many opportunities are collected, which in turn are supposed to contribute to the higher level, the Product Goals. Think of parent key results, each of which has subordinate child key results.

 

Transforming OSTs into OKRs

Let’s take a look at what OKRs might look like if we set them up based on a Business Outcome and a Product Outcome. The following examples originated from Teresa Torres in a post on the CDH Slack Community. You’ll recognize it from her classic streaming service examples. I supplement them here with graphics and my own thoughts.

Business Outcome -> OKR

So let’s say we are focused on increasing viewing engagement because we think it can “improve subscriber retention” (Business Outcome), we can represent that with an OKR:
Objective: Create a service that keeps customers over the long term.
KR: Increase average subscription length from x to y.
KR: increase lifetime value of the customer from x to y.
In this scenario the Business Outcome becomes a qualitative Objective AND measurable Key Results.

Click for large view

One challenge that repeatedly arises when creating an OST is committing to ONE Product Outcome. Sometimes we don’t yet know the best way to determine how to drive change in the product to impact our Business Outcome. Maybe there are too many options? Maybe we don’t know which is the right metric to measure?

With OKRs, we are able to define a number of different KRs, which we can then use to gradually identify which one is best suited to contribute towards our business outcome.

Product Outcome -> OKR

We can do the same for Product Outcomes. If you think about a product outcome like “increase average viewing minutes” for a streaming entertainment service, we might translate that to an OKR as follows:
Objective: Create happy and engaged customers.
Key result: Increase average viewing minutes per week from x to y.
Key result: Maintain CSAT score of at least x.
In this scenario the Product Outcome becomes differently measurable Key Results.

Click for large view

Sometimes it’s not enough to just eyeball the optimization of a single metric, but to check how user sentiment is behaving at the same time. You could put a sentiment metric next to your first Key Result to balance it out (e.g., increasing the percentage of customers using the product weekly WHILE increasing CSAT).

 

6 ways OKRs and OSTs differ

• OSTs are always related to the business goal. We thus get a connecting theme from „the very top to the bottom“. It represents a cascade in the company where, properly implemented, we allow decisions to emerge in the teams that fuel the company’s goal.
• Objectives in the OKRs of different teams tend to be different. Teams should not have OSTs with different business outcomes. Accordingly, OSTs provide alignment between multiple product teams by focusing on one outcome.
• OSTs are designed to look at a product through the Product Outcome. OKRs are not necessarily geared towards product development.
• OSTs have more levels or dimensions than OKRs, allowing for a more granular breakdown of steps from experimenting with solution assumptions to achieving desired outcomes.
• With OSTs, we commit to a measurable Product Outcome to create focus for the opportunities. OKRs give us the opportunity to figure out, with different Key Results existing in parallel, the best way to measure whether we are getting closer to our outcomes.
• OKRs typically have a quarterly cadence, while continuous discovery with an OST is … well, continuous.

 

Bringing OKRs and OSTs together: Why not try?!

We have come to the conclusion that both approaches are justified. And both have the ambition to provide guidelines from management and thus freedom for the product teams to come up with worthwhile solutions.

So why don’t we try to bring OKRs and OSTs together?

Click for large view

The structure could then look as follows:

1. We start with an overarching Business Outcome that gives everyone in the company an orientation as to where we want to develop as a company over the next few years.

2. Now the management and the product leads define objectives for each product team. It may also be possible to set the same objective for several teams. Ask “what can we do to get closer to our business outcome in the next quarter?“ This CAN be measurable, but SHOULD be inspiring in any case. This is where guard rails and scope are defined.

3. Based on the objectives, key results are defined in the product teams with which they want to contribute up to the objective. They should represent a change in product behavior and make this measurable.

4. From here, the team is given the necessary guidelines and trust (it is, isn’t it?!) to identify opportunities through continuous user interviews.

5. From here, proceed with the Opportunity Solution Tree as described by Teresa Torres.

Just try it out as a mental experiment if you already have OKR or OST at the start. But don’t forget:

 

Don’t overcomplicate things!

OKRs and OSTs really have the power to bring your company closer to its goals. When done properly, these methods have the power to clarify focus, align your organization and tap into the positive influence of every member of your organization.

While the theory sounds quite simple, the execution often fails because of things that are not in the textbook. Come together, talk to each other, and do it in a way everyone else understands. Empowerment and communication is key to an organization-wide strategy.