Description of Dashboards and OKRs

Let’s take a deeper look at both external and internal dashboards:

External Engagement Metrics

For an ExO, tracking the right metrics is paramount. By tracking these key external engagement and growth metrics, Exponential Organizations can confidently steer towards sustained success in rapidly changing business environments. The importance of metrics cannot be overstated: they are the beacons that guide organizations through the unchartered waters of exponential growth.

Here are some key engagement and growth metrics that ExOs track:

• Monthly Recurring Revenue (MRR): the amount of revenue a company expects to receive each month from its customers

• Annual Recurring Revenue (ARR): the total amount of recurring revenue a company expects to receive from its customers annually

• Customer Acquisition Cost (CAC): the cost a company incurs to acquire a new customer

• Lifetime Value (LTV): the total revenue a company can expect to receive from a single customer over the lifetime of their relationship with the company

• Gross margin: the percentage of revenue that a company retains after deducting the costs associated with producing and selling its products or services

• Burn rate: the rate at which a company is spending its cash reserves to finance its operations

• Runway: the length of time that a company can continue to operate with its current cash reserves, given its current burn rate

• Net Promoter Score (NPS): a measure of customer satisfaction and loyalty, based on how likely customers are to recommend a company’s products or services to others

• Churn: the rate at which customers stop using a company’s products or services over a given time period 

• Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC) ratio: measures the relationship between the lifetime value of a customer and the cost of acquiring that customer

• Viral coefficient: measures the rate at which a company’s customers are bringing in new customers through word-of-mouth marketing

• Customer Retention Cost (CRC): measures the cost of retaining existing customers

• Magic number: a formula that helps companies determine the efficiency of their sales and marketing efforts by comparing their revenue growth to the cost of acquiring new customers

Objectives and Key Results (OKRs) 

Business thinker and investor Robert Goldberg thinks of OKRs as a company’s operating system. Goldberg has implemented OKRs in more than 40 companies with considerable success; he is probably the most practiced OKR guru in the world. He believes that OKRs are the key to a revival of America’s declining Rust Belt companies. By looking beyond their day-to-day operations and setting Objectives and Key Results, even the most hidebound and traditional companies can break away from their normal operations and pursue the equivalent of MTPs. (Goldberg’s work, “Reinventing American Exceptionalism”, will be the subject of a future ExO book.)

• OKRs continuously ask, “Where do I want to go?” (Objective) and “How will I know I’m getting there?” (Key Results)

• OKRs are not determined top-down, but bottom-up.

• Objectives are the dream; Key Results are the success criteria of that dream (that is, they are a way to measure incremental progress toward the objective).

• Objectives are qualitative, and Key Results are quantitative.

• OKRs are not the same as employee evaluations—rather, they are about the company’s goals and how each employee contributes to those goals.

• Instrumenting early and often is key to implementing Dashboards.

• Objectives are ambitious and should stretch those pursuing them.

• Five Objectives and four Key Results per Objective are optimal.

• Key results should see an achievement rate of not more than 60 to 70%. If results are higher, the bar has been set too low.

While the best Dashboards monitor continuously, the monitoring of OKRs is necessarily periodic and varies according to apparent need:

• Frequency/cadence: Cadence sets the frequency with which an enterprise establishes and reviews its Objectives and Key Results. Ideally, an ExO would pursue its OKRs at different cadences, which allows them to be addressed in turn and in detail. Most companies address their initial OKRs a year after implementation.

• Transparency: Google is a prime example of a company that has chosen to share its Dashboards with most of its employees, partly as a matter of trust but also as an incentive and motivator. This is probably the best approach for ExOs. Note, however, that some very successful ExOs have chosen the opposite path, largely to reduce peer pressure among employees who have not yet reached their full objectives.

• A company’s MTP, which may be seen as the ultimate OKR, is established and inviolable. Like an OKR, it needs to be revisited regularly to determine if the enterprise is on track. That said, MTP is rarely fundamentally altered. Rather, the rest of the company’s strategy and operations continuously align around it as external and internal conditions change.