Forward-thinking franchisors are now embracing Objectives and Key Results or OKR .The framework was originally developed by Andy Grove at Intel and has been used by organizations such as Google, Twitter, and LinkedIn. While the framework has documentation in the form of videos, bestselling books, and worksheets, the three main concepts will help you through their use, for the purpose of Business Plans.
Objectives and Key Results Key Terms
The Objective is your goal which aligns everyone in simple terms.
Example: Grow business with sales and marketing.
Key Results (KR)
Key Results is how you measure success, which you cannot control 100%.
Example: Add 250 new customers to our loyalty mailing list.
Initiatives are activities trying to achieve objectives, which you can control 100%.
Example: Perform three marketing campaigns on Social Media.
How to Use OKRs in Franchising
The birthplace of OKRs was in the technology sector. Today, OKRs are used across different industries and business models. Franchising has some unique elements to it that matter when it comes to business planning.
- Shared Risk: An advantage of the franchise model is shared risk – since the franchisee signs the lease and commits to various contracts. This shared responsibility matters when thinking of many aspects of the business, from profitability to marketing expenses.
- Motivation: No one is more motivated than a person who has invested their money into the business. But, when engaging in planning activities, you want to remember that the person standing before you is not an employee, they are a business owner. With that, including some set objectives from a franchisor level of reasonable. At the same time, franchisees who set some of their own Objectives, Key Results or Initiatives will ultimately be more engaged.
- New Markets: Franchising allows brands to expand to new markets, where customs and tastes are not necessarily understood by the franchisor. So when setting OKRs with your Master Franchise, or franchises in markets that have significant differences from your own, you may want to keep those in mind in terms of what to keep consistent, and what to change.
At the heart of these considerations is to include collaboration when building your plans. OKRs are also loved for their transparency, which will further accountability and engagement.
Getting Started with OKRs
Setting OKRs together with your Franchise Advisory Committee (FAC) and other key stakeholders from the franchisor level is key. Some choose to have an OKR workshop including collaborative documents if online, and whiteboards if off. At the end of the session, you want to have agreement on what you want achieved by the beginning of the following year.
How to Set Objectives
When sitting down to write objectives, the first question you want to have in mind is “what challenge am I trying to solve?” John Doerr, who famously implemented OKR at Google, and wrote the authoritative book on the subject, Measure What Matters, had the following formula:
I will (Objective) as measured by (this set of Key Results).
Objectives should be aligned, high-impact and time-bound. They don’t necessarily need to be SMART (Specific, Measurable, Actionable, Results-Oriented and Timely). In fact, they can be more of a big picture. If you think of yourself steering a boat, the Objective is the place where you are aiming to go.
How to Set Key Results Aligned with Objectives
Creating key results can be tough to untangle from initiatives. A simple rule of thumb is to think “how can I measure it”. For example, if your objective is to Create an Extraordinary Customer Experience, then your key results could include: Receive a Net Promoter Score (NPS) of 30 for the Year.
Notice that this is not telling you the “how” it is telling you how you will measure it. Similarly, a Marketing objectives may be measured by conversions, but it does not get into specifics around “how”. Key results should be high impact, specific and within influence.
How to Set Initiatives Aligned with Objectives
Initiatives are in the form of tasks or projects. For the NPS objective above, for example, you can have the tasks that will make your customers happier. Related to that Objective, you could have a new Customer Service training to improve that experience.
An example of a Marketing initiative is a Facebook Campaign. Initiatives are just a “best guess” or a “hypothesis” on what may deliver the highest impact because a veteran marketer knows that a campaign will not always get the results that you are looking for, since ultimately the control lies with the prospect (and tastes can be fickle). Initiatives should be specific and within control.
Franchise-Wide planning for OKRs usually happens annually. On the location-level, frachisors can choose Annual Objectives or Quarterly Objectives. Finding the right rhythm depends on how quickly your target market changes or if your business deals with more uncertainty than most.
If you are new to the process, setting an Annual rhythm can be a good start. Either way, engaging in monthly or quarterly reviews of goals with franchisees is helpful.
Having OKRs in a central location is key to the process as is tracking them every step of the way. This way, you can see a history of check-ins, and understand what was discussed in previous meetings. FranchiseBlast’s Business Plan application is a fantastic tool to further this goal. Click here to learn more about Business Plans in FranchiseBlast.