By now you’re probably familiar with the five main so-called superpowers of OKRs. The goal-setting system turbocharges focus, alignment, commitment, the ability to track progress and build a risk-taking culture.
Today we want to add another key advantage to using OKRs: they will help you attract investment. This will be particularly important to start-ups that need money from backers, but it can also apply to mature businesses launching a new product or service.
An entrepreneur may have put blood, sweat, tears, and all their dreams into their venture, but investors will want to know the hard, cold facts. They need to see a proper understanding of business strategy, performance, and the realistic potential to create long-term value.
This will include a strong business plan, a forecast model, financial statements, a strong sales pipeline, and a committed workforce. A strong performance management system, like OKRs, will give investors confidence and help convince them that the business aims are realistic. Put simply, having OKRs shows that you know what you’re doing!
Tech start-ups used to be inundated with offers from venture capitalists who wanted a slice of the pie, but even in this sector, the balance of power has shifted. OKRs could be the competitive edge.
Let’s say your company needs to raise capital to fund growth plans. This objective will probably be owned by the chief executive officer or chief financial officer. It could be set out along these lines:
Double our size through consistent and sustainable growth
Increase investment from external stakeholders from £10m to £25m
Increase organic turnover from £2m to £5m
Undertake 3 acquisitions
Contact 15 lenders and venture capitalists
Increase subscribers from 10k-20k
Engage with a business acquisition partner
There’s a classic episode of South Park that has found its way into business lectures and many thought pieces. It’s the one where the boys have to present a piece at school about successful corporations, and in typical South Park fashion the next thing we see are a bunch of gnomes who go around stealing people’s underpants in the middle of the night with the aim of making lots of money.
The boys question what they’re doing. The gnomes have a three-phase approach to creating a successful business:
Phase 1: Collect underpants
Phase 3: Profit
The problem is, there is no Phase 2!
The message in the episode is clear – many businesses and governments simply don’t connect the pieces in order to reach their goals. Either their strategy doesn’t align with their operational capability, or their activity doesn’t align with their strategy. They know what they want to do, and they know what outcome they are looking for, but there’s no clear path to get from one to the other. No “Phase 2”.
The companies that use OKRs today are a roll call of incredible success – Google, LinkedIn, Facebook, Microsoft, Spotify – I could go on. These organisations were once start-ups that showed themselves at an early stage to be quality businesses that could be trusted to make good decisions.
Therefore, show potential investors the OKRs you’ve been working on and the ones you want to introduce in the future. OKRs are another tool in the box to increase your odds of getting funding, otherwise you might just be collecting underpants.