7 simple rules for company-wide OKRs

We’re getting ready to set our Q3 company OKRs. This morning we discussed 7 rules we’re following that describes our current OKR process.

Reminder: for something to be a company OKR

  1. Describable and scopeable (is it ‘baked’?)

  2. Sized based on internal or external data. Impact $ can be annualized or for Q3

  3. Threshold should be material contribution (e.g. 5% revenue uplift)

  4. Work should require cross functional support from scarce resources: tech, data, & senior leadership time

  5. Co-leads should be appointed, with at least one from the global leaders team

  6. Commitment is a scoping doc & timeline, weekly meeting and weekly reporting

  7. Requirements for a functional OKR are much more relaxed, although these can also be lightly cross functional. Rigor around opportunity sizing and scoping is important.

My Thoughts on the Evolution of the Travel Agent Industry

Earlier this week a friend forwarded me a teaser from Phocuswright on the strength of the travel agency industry. The headline is that contrary to general belief & lots of discussions I have with friends & entrepreneurs, the US travel agency industry is:

  • Growing consistently, not shrinking

  • Arbitrarily large ($112 billion in 2017) 

  • Still the largest consumer of travel products. 

Screen Shot 2018-12-14 at 3.40.39 PM.png

Context Travel has been selling through travel advisors for many years, and is a preferred supplier of the two largest agent consortia - Virtuoso & Signature. onefinestay was as well. It would be impossible for anyone who attends Virtuoso Travel Week, with 6,000+ attendees spanning 3 hotels in Las Vegas every August, to believe travel advisors are on the way out. It’s the one week every year Bellagio employees aren’t allowed to take off. 

Here’s my take on the resilience of the travel agent industry, & a few thoughts about how advisors can ensure ongoing relevancy. 

What’s contributing to the resilience of the travel agents industry? 

Customer rate parity (+) - suppliers guarantee rate parity to their own published rates on site - it costs the same for the consumer to book through an agent. once consumers realize that booking a hotel or activity provider costs the same as it would if they booked direct, working with an agent suddenly becomes much more of a no-brainer. 

Additionally, if book the Four Seasons direct as an individual vs through an advisor or agency who sells a lot of Four Seasons product, which customer is more likely to get the upgrade when the suite is unsold? 

Supplier commission competitiveness & storytelling - in many ways the rise of the OTA was the best thing that could have happened for the agency industry. It created a structural reason for suppliers to seek alternative sources of demand. Booking.com is a $100 billion dollar company partially due to the juicy margins OTAs command from suppliers - standard for B.com & Expedia is 25%. This makes OTAs actually more expensive - certainly on a direct commission basis - than travel agent distribution. 

The OTA environment also creates real challenges providing suppliers with proper merchandizing for their products - it's really hard for differentiated suppliers to actually communicate what makes them differentiated with the standard templates and lack of branding. Advisors play a valuable role in product marketing for suppliers: working with advisors ends up also being a brand building activity. 

Consumer information overload & time scarcity - we are now bombarded with rich media about where to visit, where to stay, & what to do. As the mobile and desktop experiences have evolved and retina screens are in everyone’s pocket, lots of travel products have come online. It’s now easy to self-serve, but this has also resulted in a paradox of choice: sure it's straightforward to book all of these things now, but what do I actually want to do and who can I trust? Time spent traveling is precious time. Advisors can help cut through the noise and curate a personalized experience for their customers because they really know their preferences. For the most part, this is still not being done well online today. 

And here are a few things that need to happen for the agent industry to ensure it stays relevant. 

Structuring rules of engagement for cobranding & comarketing - suppliers like Context Travel are getting really good at direct to consumer marketing & brand building, and are making significant investments in these areas. Additionally, these businesses are being built around the idea of direct communication with customers prior to, during & after the event. 

Yet often advisors are overly protective of customer contact information to avoid getting cut out in subsequent transactions, which can create real operational challenges on the ground and missed opportunities for future trips. 

This will ultimately end up hurting the advisor, supplier, & customer. Suppliers need a way to market directly to customers, advisors need reasonable rules to protect commissions, & customers should be able to harness the investments suppliers are making in personalization for better awareness of destinations, accommodation & activities. 

Providing best practices & onboarding opportunities for new suppliers - most agent websites don’t have a way for new suppliers to pitch their products. This means that products offered by travel agents generally are from suppliers with the means to afford to market to agents or invest in becoming a preferred supplier of the consortia. Yet even that comes with speculative ROI for new suppliers who are time & money-constrained. The game favors those with the big marketing budgets & sales teams, hence why a lot of suppliers never get beyond the OTA and direct distribution. 

Creating simpler ways for quality suppliers without the same reach as more established companies to enter the consideration mix for agencies will ensure that travel advisors can offer innovative products alongside the more established ones. 

A parting thought 

Travel products have many routes to market - OTAs, the various direct to consumer acquisition techniques, in-destination, & travel advisors. It’s hard to be really good at even one of these. However I’d argue for a differentiated, quality supplier the travel agent industry belongs near the top of the list. 

OKRs (20 cycles later...)

I’ve been using OKRs to set and measure organizational objectives since 2013 or 2014, when we first implemented them at onefinestay. I took the OKR process to Context Travel when I joined earlier this year. One of my top reads of 2018 was John Doerr’s ode to OKRs, Measure What Matters.

Full disclaimer: I love OKRs and think they are the best goal-oriented management tool I’ve seen in practice. I’d enthusiastically recommend implementing OKRs to any size & type of organization. However I am very much approaching OKRs still as a student, not teacher: it’s a work in progress.

What are OKRs?

A lot has been written about OKRs - objectives & key results - so I won’t attempt to rehash here. OKRs were invented by Andy Grove at Intel and popularized at Google. At its essence, OKRs are an process and an alignment tool to provide organizational focus in order to achieve better business outcomes by clearly expressing ‘objectives’ (goals) and' ‘key results’ - how we will know if we achieved the goal. OKRs are what turns organizational aspirations - wishes - into actionable initiatives.

OKRs become particularly important as organizations scale beyond very small teams ( < 10 people) and begin to split out into functions or different locations. Informal systems of communication - e.g. open plan office chats - begin to break down. Functions inadvertently become siloed from each other - yet cross functional collaboration is needed to harness the full potential of the organization.

Here’s an example of a multi-year OKR for Youtube, from Measure What Matters:

A multi-year OKR example from Youtube

A multi-year OKR example from Youtube

At Context we run a quarterly OKR cycle. We have not yet attempted an annual OKR process, although this is common. The way we balance short term initiatives - quarterly - with long term initiatives - annually and beyond - is through a combination of the budgeting process (which lays out base case growth plans) and expressing our mission & vision. We typically ladder our OKRs, starting with mission/vision:

Mission/vision —> long term aspirations —> key initiatives over the next 12-18 months —> quarterly OKRs

When OKRs are working well, they serve several functions in an organization. They:

  • clearly communicate top priorities for the organization

  • provide transparency & visibility into what every function (& potentially individual) is working on at any given time

  • create a naturally accountable process

  • protect a team’s time from ad-hoc requests

  • help avoid the ‘try something new every week’ risk at a fast-paced company by putting some structure around medium-term planning cycles

OKRs are a process, not a deliverable

One of the biggest risks with OKRs is that a lot of upfront time and effort is spent in setting OKRs at the beginning of the planning period, and then the OKRs end up in some document to be dusted off 30 or 90 days later. OKRs should form the drumbeat of the organization - it’s what we set out to achieve every month or quarter. I’ve found getting this to work in practice is really difficult. It’s still a work in progress for us.

Our current OKR process begins about 15-30 days before the measurement period. We create a Google Doc & the leadership team inputs candidate company-wide OKRs. Functional leaders go back to their teams for feedback over the course of a few days, and we then gather for a half day together to decide at a high level what we are going to focus on in the upcoming quarter.

An OKR isn’t a freebie that happens on top of lots of other initiatives - its the top initiative in the company and will create hard decisions around trade-offs. I’ve experienced lots of cake-and-eat-it-too OKR setting, & it doesn’t work. By committing to a handful of key things, another handful of things is not going to happen.

So in practice here’s what we commit to when we set a company OKR:

  1. A sponsor in the leadership team who takes overall accountability for delivery of the OKR

  2. Drafting a charter that lays out a specific project plan and all of the stakeholders involved (we are currently using a variant of the RACI framework for this)

  3. A launch meeting & weekly project status update that includes all relevant stakeholders & supported with performance data

  4. Weekly progress reporting to all@

  5. Unlocking appropriate resourcing and/or budget support to achieve the OKR

  6. An end of period wash-up that includes lessons learned. OKRs are not about achievement only, but learning.

Once company-wide objectives are set, these are cascaded down to the functions, who in turn create their own set of OKRs. Good functional OKRs first and foremost are in direct or indirect support of company-wide OKRs, but this doesn’t need to exclusively be the case. Often functional OKRs have a little more leeway for long-term capability building & are at the discretion of the functional leader. However once set, they should follow a similar process with a written charter, accountable stakeholders (this time largely within the team), & a regular project cadence.

Here are some other lessons we’ve learned along the way:

OKRs are big bets, not to-do lists - OKRs should reflect a material departure from business as usual outcomes. It’s OK if a lot of the work that one does on a daily basis is not reflected in the OKRs. OKRs are all about what time is spent doing on the margin while busy doing other work, in addition to the overall the redistribution of that time generally.

Less is more - there’s often the temptation for OKRs to become a wish-list of everything the leadership team wants to get done. I’ve never worked in an organization that can get more than a few big things done every quarter. Last quarter at Context, we actually set only 1 company-wide OKR, and it was way more impactful than the prior quarter when we had 4. This upcoming quarter we will have 2 company-wide OKRs. I would never suggest more than 4 for a company or a function.

Good OKRs involve the majority of stakeholders - there’s often really important work that needs to happen at the functional level. However in my experience having a company-wide OKR that is really specific to a function - just because it’s really important - isn’t a great practice.

Good OKRs should have the majority of relevant stakeholders - functional leaders at the company level, key team members at the functional level - knowing ‘what to do about it’ after the OKR has been set. If actions taken at the individual level to achieve an OKR aren’t obvious, it may be appropriate to recut the OKR itself or drop it down to functional OKRs or individual initiatives.

Don’t fetishize the software or format - I spent a long time demoing OKR software to find the perfect tool for our organization, and it looks like we are just going to revert back to Google docs. Of paramount importance is that OKRs are living and breathing in the organization. The best OKR platform is probably one you are already using, so I would suggest hitching OKRs to whatever tools are common in the org - Slack, Google docs, etc.

Similarly, we had long debates over what makes a ‘perfect’ OKR. There are lots of opinions:

  • Objectives shouldn’t contain financial metrics

  • Is this an ‘initiative’ or a KR? Is this a KR or an objective?

  • This objective needs to have more key results

And so on.

Don’t obsess. Just having a structured forum where team members explicitly convene around common goals is 90% of the magic. I’ve read a lot about Google’s OKR process, & even they don’t follow one specific OKR format consistently.

Use OKRS to build your org design & ID key gaps - OKRs are an amazing way to identify key gaps in the organization. It’s fairly common for personnel needs to be a bottoms-up activity that only somewhat relates to the key goals of the organization. All leaders should want more resources - that’s normal. However it’s hard to then figure out what trade offs to make when setting or freeing up budgets.

The OKR process, with all stakeholders laid out for everyone to see, will give a great window into where the real needs are. Don’t have enough data to measure success against? Maybe it’s time for a dedicated business insights hire. Find the OKR management cadence to be too difficult? Maybe it actually makes sense invest in a project manager. And so on.

What are some of other lessons or OKR best practices that others have learned at their own companies?

What's real and what's a story?

One of Yuval Noah Harari’s hallmark ideas is that humans ultimately became the dominant species on earth due to its ability to invent & share stories that led to large scale cooperation. Some stories are good for humanity as a whole - e.g. the story of human rights - and some are harmful - ideologies such as Nazism.

Other stories are neither good nor bad - e.g. corporations are stories, and money is a story. A piece of paper is intrinsically worthless - it only becomes infused with meaning because we all choose to believe in it. A piece of paper is intrinsically worthless.

One way Harari brings the unique human trait of believing in stories to life is through an illustration of chimpanzees seeking out food in the jungle. Can you imagine trying to convince a group of chimps to sacrifice eating a banana when hungry because of the promises of a monkey Heaven?

At the personal level as well, we tell ourselves stories all day long. We’re in constant dialogue with ourselves. We invent narratives with ourselves as the central character. Rather than pay attention to the present moment - what’s happening right now - we’re busy spinning up versions of an anticipated future conversation, or looping on something that happened to us earlier in the day or years ago. We often become so absorbed we miss the simple joy of being alive.

If everything is essentially a story, what’s real?

Harari has a simple rubric: real things can suffer. Stories cannot. Human rights cannot suffer. Corporations and countries cannot suffer. But people can suffer. And that suffering is very real.

Which brings me to the news of yet another mass shooting in America - this time 12 victims at a college bar in Malibu. Less than two weeks ago it was 11 victim attending services in a synagogue in Pittsburgh.

Politics have become too intricate and divisive in this country for me to be able to competently follow. Red states and blue states. Trump and the media. The NRA. These are just stories.

But the pain inflicted is very real. 23 more people senselessly killed. Their families living with this pain for the rest of their lives. Above the political debate itself, we all need to set our sights on ending this unnecessary suffering.

The Rise of the Independent Affluent Traveler

Earlier this year, Skift published an interesting research paper on US Affluent Traveler trends.

Affluent Americans, defined as household income greater than $100,000, make up 20% of the US population but account for 51% of travel spend.

That affluent Americans comprise the most important segment of travelers isn’t surprising. What is a little more surprising is just how much of this travel is trending toward more independent vs packaged options. Thanks to offerings like Uber, HotelTonight, & Airbnb, affluent travel is becoming much more unbundled & spontaneous. As the need for logistical coordination subsides, the destination management company’s stronghold on in-destination travel is also weakening for this segment.

Additional information about the affluent traveler:

  • Affluent travelers are self-sufficient planners and bookers

  • They prioritize experiences that can teach them new things  

  • They would rather spend money on travel than on other things or possessions at home (81%), but they don’t think that spending more makes a trip more meaningful

Perhaps most interesting is the growth of the alternative accommodation segment within these higher end travelers. In 2018, 50% have stayed in a short-term vacation rental at least once, compared to 38% in 2017. This number rises to 56% for family travelers.

There’s a movement happening between the traditionally defined categories of budget and luxury travel. The independent affluent traveler is a mega segment that’s trading the airport transfer for Uber, the 4 or 5* hotel for an Airbnb, & stitching together itineraries of local restaurants & activities based on their own research or agent recommendations. Within the travel agent industry, this segment is booking hotels & activities while eschewing integrated packages. Some agents report 75% of their business is now independent vs packaged options, particularly in Europe.

The independent affluent traveler will define much of the travel industry in the coming decades. It’s exciting to be a part of it.

Talking things out

In team catchups lately I’ve started to share an insight across multiple team members, one on one. It would be more efficient to put these thoughts in an email, or bring them up when everyone is together in a meeting. Yet I find that the process of talking things out, hearing different perspectives, & iterating serially - rather than seem repetitive - does wonders for clarity of thought.

One on ones can seem procedural. Some people view them as another meeting in the calendar - something to get through them as quickly as possible, or to freely cancel when something else comes up.

It may in fact be the most important time of the week - the best opportunity to craft and refine a company strategy.

The Evolving Story of Brands & Distributors in Travel

One of the key themes emerging over the past decade of travel startups has been the convergence of what it means to be an operator ‘brand’, and what it means to be a travel ‘distributor’. This convergence was articulated well by Ritesh Agarwal, founder of OYO Rooms, in this Skift interview from 2015 (excerpt here):

“Today the brands and distributors are fighting with each other, but in the next five or 10 years, companies are going to be created that are going to be Internet-first and also brands” 

A decade ago, when you booked a hotel on Expedia (classic distributor) and the stay went awry, as a consumer you probably wouldn’t have tried to call Expedia to make it right - you’d walk down to the front desk and plead your case.

The situation is totally different now. The rise of Airbnb & the hotelier of 1 has introduced an entirely different dynamic - the ‘branded distributor’. While it’s not how the legalese is structured (e.g. ‘hey, we’re just a ‘network’, we have no accountability in practice’), clearly the expectation is different. Consumers routinely call Airbnb when something goes wrong, and for the most part their issues are resolved by Airbnb acting as a principal if not possible with host directly.

But what does it mean to be a ‘brand’ when your 'operations’ devolves into a marketplace managed through guidelines and behavioral norms rather than traditional accountability systems?

Clearly as an Airbnb consumer, you are much more attuned to the fact that things can go wrong when you book an apartment rather than hotel stay - it’s now part of the generally accepted risk-reward tradeoff in the accommodation market. As long as these tradeoffs are well understood, extra choice has been great for the overall consumer.

Likewise, a similar trend is playing out in tours & activities. GetYourGuide, historically a tours & activities distributor, launched a new ‘Originals’ product line with the following promise:

World-class guided tours. We took exceptional guides and experiences and perfected them, based on feedback from our customers. More time to explore. Special access and entrances minimize time spent waiting in line. Zero stress. Exceptional guides.

Does this make GetYourGuide a brand or a distributor?

Is the tour development process and consumer promise from a distribution-first business like GetYourGuide really that different from a more traditional brand? More importantly, is the consumer experience, on average, that much different? (for a mass market consumer, I would argue no)

Can traditional brands afford to not build distributor-like distribution capabilities if they hope to scale? (I would also argue no)

Distribution matters, as the rise of Booking.com over the past decade demonstrates. Similarly with the quick traction of early days GetYourGuide.

But brands matter too. The cost of product development - with a smartphone in your pocket & possibility of an Internet shop front in minutes - is incredibly low. Costs this low means noise level are high - there’s never been more choice.

Which is precisely why brands - the ones that really stand for something that’s clearly expressed to the consumer - matter more than ever. Just don’t forget about your distribution.

More communication is never a bad thing

Earlier this week we set up a lunch & learn with our Philadelphia office. Usually lunch & learns are reserved for new learnings or presentations by functional leaders or contractors on a project. In this case the lunch & learn had no special topic - just a rehash of some of the themes at Context over the past few months, and an excuse to break bread together. It was casual and fun, some questions, and good practice for me to present some of our recent insights.

Today I did something similar with email. There was no special news or organizational announcement to share. I summarized a few conversations I’d had this past week about Context with some potential partners, and offered a window into a strategic opportunity I’ve been wrestling with in my head. Honestly I didn’t anyone would be too interested.

Several members of the team replied with warm emails - ‘this was awesome’, ‘it was great to hear what’s on your mind’, ‘thanks for sending’. It led to one new helpful introduction for a partnership opportunity, & another side discussion with a few other team members, We wouldn’t have connected these dots in this way, at this time, if I never sent the email around.

It was a useful reminder: more communication is never a bad thing.

Giving gifts generously

Halloween in NYC is visiting shops instead of houses. One of the shops we visited last night was a fancy new coffee place in Tribeca - nitro cold brew, etc. They gave out homemade Rice Krispie Treats in a lightweight branded paper bag with the name of the shop. Beautiful presentation.

Upon opening the bag, the treat inside was tiny - a fraction of the size of a normal Rice Krispie Treat. It was more like a sample.

I was reminded of one of Danny Meyer’s maxims in Setting The Table:

Some restaurants [during Restaurant Week], unfortunately, offer inexpensive fare and propose very limited menu options as a way to manage costs and do a bit better than break even on a three-course meal. We take the opposite approach. I am convinced that if you’re going to offer a gift, it’s important to give it graciously. We approach Restaurant Week by offering a generous number of choices for the appetizer, main course, and dessert, representing considerably more than $20 worth of food and quality. The point is to make people feel a sense of abundance and value.

What is lost today in the cost of generosity is a fraction of what stands to be gained through the act of that generosity. It’s a rounding-error marketing expense. Customers don’t miss obviously generous and gracious gestures. In fact, as the average major metro retail business is no doubt aware, opportunities for the kind of exposure and new customer acquisition like that of Halloween are rare - a few times a year at most. A few times a year to really bring in new customers who can tell their friends & come back repeatedly. Walking around the city yesterday, it was surprising how few shops appreciated this & did anything to stand out - basically none.

Take advantage of the rare opportunities for new customer touchpoints to put your absolute best foot forward.