https://www.listennotes.com/e/6fa89f370413491db7f7fb12fb3c2f04

It's hard to motivate anyone with goals. Right. But it is extremely easy to demotivate someone with the wrong goals. This is something that motivates you, but it's something that creates clarity. And that clarity is a prerequisite for accountability.

Today I am excited to welcome Philip Shett to the show. Now, Philip is joining us from Germany. So that was fun. And he also spends some time, as he' you'll hear in, in San Francisco. So. But today we talk all about the whole idea of OKRs, which stand for object objectives and key results. And so it's just a really interesting conversation where we get into the whole idea of what is an okr, why are they important? And there was even a few areas in there where I wasn't sure I completely agreed with him. And, and so we talk about it. So it was really fun and a really good, good conversation. So show notes can be found over@gembapodcast.com this is episode 585 again, gembapodcast.com and look for episode 585. Okay, enough from me. Let's get to the show. Philip, welcome to the show. How are you?

Thank you very much. Yeah, I'm doing great, thank you.

All right, where are you calling in from?

Right now? I'm in Berlin in my home country, Germany. But yeah, I'm spending my time in the US and in Germany nowadays. Moved to San Francisco in 2014.

Oh, wow. Okay. That's a big difference. Berlin versus San Francisco, huh?

It is, yes. But both are amazing places. Berlin is great in the summer with long days and Silicon Valley and San Francisco are great places all year round, of course.

Yeah, yeah. Awesome. Well, very good. All right. Well, hey, Philip, you know, we like to get all of our shows started with our guests sharing a quote. So do you have one?

Yeah. If I, if I may, I might even break the rules a tiny bit. Very German of me, but maybe a bit more Silicon Valley style. I would love to present two.

Oh, wonderful. Let's go.

So the first quote is really there are no solutions, only trade offs. And I like that one because it's especially as overthinkers, we are trying to often find the perfect solution to a challenge we have in life and let that be the perfect place to live or the perfect house, the perfect flat, the perfect soulmate, whatever it is. And there are rarely perfect solutions. There are only, only trade offs. And so that has been a big learning for me.

Let me. I want to explore this one a little bit because it's really Interesting. It's making me think, so what is your thought on like the famous saying, what is truth? Like, is there truth?

I think there is perspective, but maybe there isn't truth. So, okay, let me.

But think about the law of gravity. Like the law of gravity, right?

Yes, that is truth. So in many things there is truth. There is observable, objective truth. And like the law of gravity or in physics and in many others there is. That's true. But in business and in organizations, we sometimes think there are just rules of nature as well, but then there aren't. And there is maybe not one truth to run an organization the perfect way. There are perspectives, but there is no law of gravity for organizations.

That's a pretty deep thought, man. You could probably talk for days on this. Somebody's listening. No, I don't agree or whatever. So. No, that's great. That's making me think. That's good. All right, so what's your second one?

Yeah, so the second one is because there are no solutions and only trade offs, you gotta act. So nothing good ever happens if no one does it. So that's a free translation by from a German quote. But yeah, that's really. You gotta put it into action. And the German side in me has a strong challenge with that very often. And it's something that I deeply appreciate about the US and the American culture where, yeah, there's a lot higher bias to action.

That's interesting that you would think I would, as I've worked with a lot of Germans and to this day I do. I don't see them as not biased for action. It's interesting that you say that. Like, why do you say that?

So I would say that you probably have a strong bias in the population of Germans you interact with. That's my hypothesis. Because I think the Germans you interact with are probably people that have comparatively high bias to action and have learned English and have moved maybe abroad and are working in international environments. But generally Germans like to think and really like to build consensus.

That's true. No, I don't, I don't disagree with that. Yeah, yeah, yeah, yeah. Okay. Yeah.

So it's. And it's. And it's not black or white. Right? It's not like, oh, Germans completely have that and Americans don't, or Americans completely have it and Germans don't. It's just that there are nuances on a, on a spectrum.

Yeah, well, you can, you can make a statement. You know, many, many Americans can be. Not think enough and, you know, ruled by our passions or Whatever it might be. Right. And can get us into trouble, but it can also, you know, create the airplane, you know.

Yes.

So. Yeah, yeah, yeah, Wonderful. All right, well, I'm excited for today's interview. So it's maybe, let's maybe start with. I want to talk about just the whole idea of accountability. And when we think about accountability, we often think about people like, oh, you're accountable, like with my children or whatever, you know, like they're accountable to do X, Y and Z and, and something like this. But what's your take on accountability and in particular in business and building it into systems? What's that look like?

Yeah. And maybe just quickly, before I answer the question directly, why am I talking about accountability? Right. So maybe super quickly. Philip Schad moved to Silicon Valley in 2014 because I was, well, I was looking for the magic secret sauce of Silicon Valley. That was what interested me since I was a teenager and worked on something new and exciting called the Internet and that. And back then I knew I wanted to move into Silicon Valley and that I did in 2014, believing that silicon Valley would run on ideas and Silicon Valley would run on, well, on just finding the new innovation. And so then I moved into Silicon Valley and quickly I realized, okay, ideas, they are probably not as too different from back home. I mean, they're people with great ideas. But what really differentiates, yeah, differentiates Silicon Valley and many US companies from the rest of the world is a strong bias to action and a really, really good muscle of execution. So not only having those ideas, but executing on them. And I think that's what fascinated me even more than those ideas. So I left the innovation space and moved into the operational excellence and strategy execution space. And that's how I found okrs. And then later on created a company called wave9 and we have done now a few hundred okr implementations and have helped organizations implement transparency, alignment and accountability at scale. And we believe that that doesn't happen by accident, but it happens because you install the structures, rhythms and rituals that actually drive accountability. So in practice, accountability again, doesn't happen by accident or doesn't happen by everyone saying, oh yeah, we are going to be accountable and we are going to think and we are going to do the things that we said we do and we are all giving our best. But it comes from again, the clear structure, clear rhythms and clear rituals. And so at scale, that means that everyone has a clear ownership of their tasks, that we install the results rituals so that we install the meeting cadences, the one on ones, the Progress meetings and that we also install and install software. You don't install it nowadays anymore, but you implement software that helps us automate that and then you, yeah, you create that at scale. That's what I think about accountability systems.

Okay, so you mentioned okr, so we all love our three letter acronyms. So what is an OKR for? If folks aren't familiar with okr, of.

Course, OKR stands for Objectives and Key results. And it's a goal setting methodology implemented again in Silicon Valley, has a long history since the 1970s. Actually the acronym is around for, well, almost 50 years or more than 50 years now. But yeah, it's in short, a really simple goal setting methodology that combines qualitative objectives that describe where we want to go and quantitative key results that help teams align on how they measure, that they're actually making progress, how they measure success. And together okrs, it's what we call a shared success language across organizations.

Now you said, because you said it quickly, I just want to make sure, because I've always understood it to be like objectives and key results. Is that what you said?

Yes, yes.

Oh, okay.

Okay.

Yeah, you said it really fast. So I wasn't sure. I was like, wait, did I hear it wrong?

Sorry, I probably said it a million times in my life. And.

Yeah, yeah, okay. All right, so, but, but think about, so talk a little bit then more about just like just that whole idea of accountability because that's a really difficult word for some people, again, depending on your culture or what a. Don't tell me what they do. Right. So, so talk a little bit more about how something like an OKR could be beneficial in, in this whole idea of accountability.

Of course. So when we talk about accountability, I like to define it first. And in our definition of accountability it is, we define it as we say what we do and then we do what we say. So the first part is really, really simple. We say what we do. So basically I'm making public to the rest of the organization. This is what I'm working towards. These are my priorities and this is how I measure success. And then I have announced that. And if everything goes to plan, of course, sometimes life happens, but if everything goes to plan, I do what I say. So I am true and we are true to our word. And I think that definition, honestly is probably hard to disagree with, I hope, and it doesn't mean. And that's important. We want to install accountability for outcomes. So accountability for the key results we're driving towards and accountability for the value we create. Or the accountability for the metrics we move. Not necessarily accountability on a, on a task level or accountability on, well, oh, but you need to be in the office at 8am and that's how I hold you accountable. That's not what we want and therefore I think it is in everyone's, in every hopefully or let's say in most self respecting professionals. They probably want to work in organizations where people are saying what they do and then actually do those things. Because if not, then you're working in an organization that is really hard to get stuff done because you can't rely on. Yeah. You can't rely on your team members, you can't rely on your colleagues, you can't rely on the teams you're dependent on. And I think that makes typically for much more stressful organizations and much more chaos.

Yes, yeah, yeah, no, for sure. Well, even within our, most people listening aware on this, in this Lean and Six Sigma world, continuous improvement. And you know, one of our major tenants of like Toyota's production system is this whole idea of what we call standard work. You know, and it's, and this is basically like kind of exactly what you're saying, like find the best way and then do that and then when you find a better way. But this is the, what's interesting about this idea though is that you know, standards are and should be improvable. Right. You should improve them and then when you improve this process. Right. Then you update your standard. Would you agree with that?

Yes.

Okay. I was hoping you said no. Then we're gonna have a good conversation. Not skinny, but you had hesitation. Why, what's making you hesitate? On the idea that standards are meant to be improved.

No, standards should always improve and you can see that even on the example of OKRs themselves. OKRs have been around as the acronym for more than 50 years, but the standards have changed. The standards of how we are setting them, the standards of how we are tracking them. So there's no disagreement. I just didn't want to give you a half hearted answer.

Yeah, no, I appreciate that. That's good to think and deliberate because hey, it's a, in a way sometimes this whole idea of continuous improvement is, can be uncomfortable because you know, as human beings we want stability, you know, we, and we want consistency. And so but if we're sort of searching for a better way, you know, all the time it's like can you ever be content? Can you ever be satisfied? And this is an interesting dilemma, you know, quite honestly because sometimes things are, I hate to say it good enough, leave it. Right. Move on to something else, right. That might need your attention. Right? So this is this delicate balance that we guys, we have really human beings find ourselves in, right. It's like, okay, great, with an airplane that flies us across, I can go to see you in Germany in eight hours. Right. And this is wonderful doing. Find a better way to do that.

Right.

Like you see this as the struggle of human nature maybe. I don't know. What do you think?

Absolutely. And that's also why we don't set OKRs for everything. We set OKRs for a very few topics that actually need improvement. So in your example of the airplane, maybe the airplane itself or the time doesn't need much improvement, or there isn't much room for improvement. But if you think about your airport experience, your check in experience, your security experience, where you maybe still have to, well, get your shoes off. And so there are things that can benefit from improvement. But you're right, that's not everything. And we want to focus on the few things that actually, again, move the needle or actually make a, make a difference in the, in the experience.

So that said, I know in talking before we hit record that I, that I understand that you've been really successful in helping organizations save a lot of money and a lot of time and different types of situations. I'm curious to hear maybe what sort of like structural changes have you made that you've seen a, you know, a big impact?

Yes, of course, when we introduce OKRs and a software system called Workboard, we see some major, major efficiency gains and major time savings through, well, first of all, through aligning on outcomes, not outputs. And so when you think about that.

Let me say that again, on outcomes, not outputs.

Yes. Let me give you an examp example. Okay, so let me give you a few examples. So an output is. We define an output, for example, as, hey, I'm recording 50, 50 podcast episodes, right? So okay, that's, that's great. And if, if that's really the goal, then fantastic. But for many organizations, that's not necessarily the goal they actually want to hit achieve. So for many it might be, well, creating new inbound flow of leads, right? So that might be a reason to create podcast episodes or blog posts or something like that. So we are not necessarily aligning on the outputs. And then I have to track, oh, how are we doing for this, this episode, how we're doing here for this blog post, but we are only aligning on the outcome that I'm actually trying to achieve. And those outcomes are less frequently changing and they are also requiring less status updates. If again, if I install the right accountability systems and if I potentially work with automated updates and that's again, if you scale that up throughout an organization and you replace often cumbersome updates on tasks by more frequent updates and alignment on those outcomes, then you can actually save a lot of time.

Yeah, it's interesting that you put it that way within our continuous improvement world. In specific, like on the six sigma side, there's a famous formula. Yeah, Equals F of X or Y is a function of X. And so Y could be your output. In our, in our six sigma language, we would say, you know, sales or whatever, I don't know, just something general like that is a function of X's are the inputs then. So, so what inputs do we need to generate sales? Right? Well, we need to have, you know, number of sales calls or meetings or whatever it might be. And so you stack up these X's and then would even want to go and figure out which of those X's are the most critical. Right. And so then we've identified three or four X's that really make a difference. And then we optimize those X's to the, to their fullest potential, thus maximizing that Y of that output. Is that sort of, kind of along, along the same lines as what you're talking about?

Yes. And we, we then try to identify the, well, the bottleneck that is limiting the system's capacity. So we are basically looking at, okay, what is the end goal that we're trying to achieve? And yeah, we have all those inputs or outputs, however we call them in this example. And then we try to identify, okay, what is the bottleneck that is only us get to X. And that's another change with OKRs that we see from traditional goal setting because many organizations, let me give you the example of sales, right? They have $5 million sales goal that they maybe hit or didn't hit. And then next year they are setting a $5.5 million sales goal even though they might not have hit the $5 million goal. And just changing that goal doesn't make it reality or doesn't move you closer to it. So instead you're trying to identify the bottleneck and then you're making that your key result.

Okay, got it, got it. Okay, so let's talk a little bit now on the whole idea of accountability, maybe transparency, these different topics. So accountability in particular can get a really bad, you know, rap sometimes. Especially I would just. For sure, I think I can safely say in American culture people don't want to be accountable sometimes. So how do you, how do you balance this idea of accountability without making your company or your culture like the so called surveillance culture?

When I think about accountability, I try to model accountability from let's say if you look at a sports team, a really good sports team in soccer or in football doesn't has a high degree of accountability. Right. You can count on me that I will run as fast as I can after the ball and I will do whatever is in my power to help us win the game. But that doesn't come from surveilling them or even tracking every step that they make. But they have clarified what is your role in this move. And it is absolutely clear that this is your move. And I made that transparent to the whole team. You are now responsible for this and this move in this and this play. And that really helps. So first of all, accountability, I think surveillance even is the completely wrong way to drive accountability because that would really only drive accountability for maybe actions. But you can't really create accountability for these outcomes with surveillance because most often honestly outcomes are the result of cross functional and team collaboration. So you can't hold an individual even again for the soccer example, I can't hold an individual in this team accountable for the win. Right. So that, that doesn't weaken, that doesn't work. And so we are, yeah, we are thinking about accountability again as, as exemplary by a sports team. And we do that by making absolute clear to everyone what is your role in this and what are you accountable for. And then we make that transparent and then we celebrate that we hit those and we maybe more in privacy give feedback when someone didn't hit or wasn't accountable and didn't hit their goal. And then we, we see why and so, and we try and understand why. And most often it's not because they, they didn't want to but because maybe they weren't enabled or maybe something else happened. And so you, you really want to have again the psych psychological safety here with clear expectations on performance and clear expectations on accountability. But you, yeah, you can't create that with surveillance. You have to create, you have to work with trust and you have to work with coaching and then you can really create a country.

And I keep thinking of Dan Pink's work and the different types of motivation, intrinsic and extrinsic motivation in particular. Intrinsic, if I remember right, mastery, autonomy, purpose. Right. The, these are the things that, that are required for intrinsic motivation. Right. Like we want These folks to be intrinsic. Intrinsically motivated. Right. To want to do a good job. But then coming back full circle, we talked, you know, earlier about standards and, you know, making sure that everybody knows this is what we do to win. Right. And then we. Then we play those things. We play the winning playoff if we're playing in sports or something like, you know, what we've practiced to play, and we know how to do it. Right. So now let's actually go out and do it. So it's interesting how these things all sort of tie together.

Yes. And goals can't motivate, or it's hard to motivate anyone with goals. Right. But it is extremely easy to demotivate someone with the wrong goals. So that's why it's sometimes. So okrs are a very simple methodology. Right. Everyone that listens to this podcast now knows that it's objectives and key results, and that objectives are qualitative and. And key results are qualitative. That's extremely easy. But you can do a lot of damage with the wrong goals, because goals can really demotivate people, and you can also set them in the wrong way. If you just inform your team but don't involve them, then that's probably also most often harmful. And so we, yeah, we really think about goals not from a. Hey, this is. This is something that motivates you, but it's something that creates clarity, and that clarity is a. Is a prerequisite for accountability.

Yeah, got it, Got it. Okay, well, hey, maybe to wrap things up, and we've already touched on this a little bit, but maybe we can go a little bit deeper. I'm curious to get your thoughts on the balance between transparency and autonomy, in particular, when we're talking about sort of this whole idea of accountability.

Yeah. So when we install a system for accountability, we can create full transparency. And of course. And that would mean that everyone sees everyone's documents, everyone's emails, everyone's calendar, everything. Right. And typically, that's not a great way to run an organization because there is. There's often too much noise. I mean, it's. It. It feels weird to be in an organization that has. Where everyone just has full access to your Slack messages and full access to everything. And it would be a very unnatural organization. But we want. And so you. You have to have autonomy about some of those things. And so again, we. We try and create transparency on the outcomes that everyone is driving towards and the priorities that they set. And so that's typically the three to five objectives. So three to five top priorities that they have and then maybe three, four key results, key metrics for each of those objectives, those that we make transparent. But then you have autonomy and I trust you to do everything in your power to reach those goals. But then you have autonomy in how you get there. I would not manage your calendar, I would not manage your to do lists. Of course I can help you with some priorities and clarifying priorities and removing bottlenecks if necessary. But you have autonomy on how you get there. And so that's how we balance transparency and autonomy.

Got it. Good stuff. Good stuff. Well, hey, this has been a lot of fun, Philip. I appreciate you coming on. And, and it's always interesting to have folks that are not necessarily in our sort of small little lean world, but you say many of the same things and many of the same principles and it's, it's, it's, it's, it's encouraging really to see that these ideas are, are, are really all around us. So good stuff. Hey, to. If folks wanted to connect with you personally, what would be the, the best way?

The best way is really on LinkedIn. You will find me via Wave 9 or Philip Shet.

Okay. And we'll, we'll, we'll get that all linked up in the show notes so people can go connect. But any final words of wisdom or parting thought thoughts that you want to.

Leave us with, don't overthink it. Act and then iterate and what?

Oh, iterate. Okay. Yeah, yeah. Love it. Good stuff, good stuff. All right, well, hey, I appreciate you coming on, Philip. It's been a lot of fun.

Thank you.

All right, take care. Thanks for listening. Whether you've been on the continuous improvement journey for many years or perhaps you're just getting started, GEMBA Academy is here to support you. And while we're best known for our more than 1500 lean and 6 Sigma teaching and virtual tour videos, we also have a team of experienced Lean and Six Sigma practitioners available for one on one coaching, as well as a variety of Lean and Six Sigma certification options. To learn more and to schedule a demo, head on over to gembaacademy.com.