Accelerated Growth is a term that is often used in business, but what does it actually mean? And more importantly, how can you achieve it for your company?
Accelerated Growth is a phenomenon that can be described as a sudden and dramatic increase in the rate of growth of a company or organization
Objectives and Key Results (OKRs) are a deceptively simple tool that help thousands of companies every year put the right plans, measure and track progress and accelerate growth.
Objectives and Key Results (OKRs) is a goal setting framework created by Intel, but became better known when one of Google’s investors, John Doerr, introduced the methodology to the founders and contributors. The method is adopted by several Silicon Valley like Twitter, LinkedIn, Dropbox, Oracle and others
The method gained fame for supporting Google’s growth – the company went from around 40 people in 1999 to over 85,000 today – showing that it can be used by both small businesses and large corporations.
I. What are the main benefits of OKRs? How do OKRs help employees?
When everyone in an organization has a clear understanding of the organization’s objectives, it can help to improve clarity of purpose. This can lead to increased focus and a greater sense of alignment within the organization.
Better communication can also be a result of using OKRs. By having a common framework for discussing and tracking progress towards objectives, it can help to ensure that everyone is on the same page. This can lead to more efficient and effective decision-making.
By setting specific, measurable, and achievable objectives, OKRs help employees to focus on the most important tasks and priorities and to measure their own progress. This can help to improve motivation and productivity, and can also help employees to feel more engaged and connected to the company.
II. How different sizes of companies use OKRs to achieve fast business growth?
There are three main stages of a company’s life, and each stage has a different OKR. Firstly identify stage of your company and focus on maximum 3 metrics. Depending on the stage of your company set the OKRs.
1. The beginning stage: This is the stage where you are just starting out and have not yet established your business. Your main focus should be on getting your business off the ground and making it successful.
What metrics can you use in your Startup?
Net Promoter Score (NPS) is a customer loyalty metric that is used to measure the willingness of customers to recommend a company’s products or services to others. The score is calculated by subtracting the percentage of customers who are detractors (those who give a score of 0-6) from the percentage of customers who are promoters (those who give a score of 9-10).
Daily/Weekly/Monthly Active Users: This metric measures the number of unique users who engage with your product on a given day, week, or month. It’s a valuable measure of engagement and can help you track the growth of your product.
Retention rate is the percentage of a company’s customer base that continues to do business with the company over a given period of time. A high retention rate is generally seen as a good thing, as it indicates that customers are satisfied with the company’s products or services. A low retention rate, on the other hand, may indicate that the company is not meeting its customers’ needs or expectations.
Activation rate is the number of active users of a service or product over a given period of time. It is used as a measure of how well a company is doing in attracting and retaining customers.
Monthly Recurring Revenue (MRR) is a metric used in subscription businesses to indicate the value of the subscription contracts signed by customers.
Signups is the number of people who sign up for the service. This metric is important because it measures how successful the business is in acquiring new users.
2. The growth stage: This is the stage where your business is starting to grow and you are starting to see some success. Your main focus should be on continuing to grow your business and making it even more successful.
What metrics can you use in your Scaleup?
Number of leads is the number of potential customers that a company has. How many new users sign up for your product every day/week/month?
Activation rate: How many signups turn into active users? This is a key metric for businesses that want to measure how successful they are at acquiring and retaining customers.
Customer Acquisition Cost (CAC): is an important metric for businesses because it helps them to understand how much they are spending to acquire new customers. This information can help businesses to make more informed decisions about where to allocate their marketing resources.
Retention rate is the percentage of a company’s customer base that continues to do business with the company over a given period of time. It is used as a measure of customer loyalty and is calculated by dividing the number of customers who have remained loyal to a company by the total number of customers who have ever done business with the company.
Conversion rate: How many users turn into paid customers?
Monthly Recurring Revenue (MRR) is a metric used in subscription businesses to indicate the value of the subscription contracts signed by customers.
The Annual Recurring Revenue (ARR) is the amount of revenue a company expects to generate in a given year from subscriptions, usage-based fees, and other long-term contracts. This metric is important to companies that rely on recurring revenue streams to generate a majority of their sales, as it can help them forecast future sales and plan for future growth.
Churn: What’s the percentage of customers that drops every month?
3. The maturity stage: This is the stage where your business is starting to reach its full potential. Your main focus should be on maintaining the success of your business and ensuring that it continues to grow fast
What metrics can you use in your Maturity Stage?
Free Cash flow is the money a company has left over after paying its operating expenses and capital expenditures.
Customer Lifetime Value, or life-time value: a prognostication of the net profit contributed to the whole future relationship with a customer.
Customer acquisition costs: the cost related to acquiring a new customer. In other words, CAC refers to the resources and costs incurred to acquire an additional customer.
Growth rate: the amount in which the business increases Month on Month or Year on Year (MoM or YoY).
Monthly Recurring Revenue (MRR) is a metric used in subscription businesses to indicate the value of the subscription contracts signed by customers.
The Annual Recurring Revenue (ARR) is the amount of revenue a company expects to generate in a given year from subscriptions, usage-based fees, and other long-term contracts. This metric is important to companies that rely on recurring revenue streams to generate a majority of their sales, as it can help them forecast future sales and plan for future growth.
Conversion rate: the number of conversions divided by the total number of visitors and client meetings.
Annual Contract Size (ACV) Annual Contract Value (ACV) is the average annual revenue generated from each customer contract, excluding fees.
Net Dollar Retention (NDR) is a SaaS metric that represents how much revenue growth or churn your company had over time from your existing pool of customers, revealing the health and growth potential of your business.
III. Basic OKR Pitfalls & How to Avoid it
While OKRs can be a great way to achieve success, there are a few common pitfalls that can prevent organizations from reaching their goals.
1. The first common pitfall is setting goals that are too vague. Objectives should be specific and measurable, and key results should be quantifiable. Without specificity, it can be difficult to determine whether or not a goal has been achieved.
2. Another common pitfall is setting goals that are too ambitious. While it is important to set high goals, it is also important to make sure they are achievable. Unrealistic goals can lead to frustration and disappointment.
3. A third common pitfall is setting OKRs as task lists.
4. The last common pitfall is failing to track progress. It is important to track progress towards objectives and key results so that adjustments can be made as needed.
How can you avoid these common pitfalls? Here are a few tips:
1. Set specific, measurable, and achievable objectives.
2. Set realistic key results that are aligned with your objectives.
3. Craft OKRs as Customer (and Team) End-states, Not Tasks
4. Track progress and make adjustments as needed.
5. Celebrate successes and learn from failures. Goal setting can be a difficult process, but following these tips can help you create effective OKRs that will help your organization achieve success.
There is no one-size-fits-all answer to what makes for effective OKRs, but there are some best practices that can help you create successful ones. Here are a few examples of best practices in using OKRs.
