Businesses the world over will be familiar with the frustration that comes with setting themselves a target and then falling short. The solution may be to focus less on KPIs and more on OKRs, management gurus argue. California-based Profit.co, which is today announcing an $11 million funding round, wants to help more organisations do exactly that.
OKRs, for the uninitiated, are “objectives and key results”; they differ from the more-familiar “key performance indicators” (KPIs), in that they describe what the business wants to achieve and how it is making progress towards that goal.
KPIs are static measurements – the monthly revenue that the company is generating, say. An OKR by contrast, sets an objective – to achieve a 20% revenue uplift over the next 12 months – as well as defining the key results necessary to get there – perhaps, i this case, the launch of a new product, an expansion into a new market, or development of a new marketing strategy.
OKRs are most closely associated with the IT company Intel, which pioneered the use of this approach in the 1970s. But Bastin Gerald, Profit.co’s founder and CEO, believes many companies would benefit from following Intel’s example. “We are all trying to improve performance in key areas, but very often failing to do so,” he says. “Part of the problem is that tracking a bunch of different initiatives and how they combine towards a goal has always been very difficult.”
That’s where Profit.co aims to help. It offers a software platform through which companies can track their OKRs – both at an over-arching corporate level and in individual business units. For any business objective, companies can track progress towards each one of the set of key results that they think will enable them to hit their targets. They can then identify why they’re failing to achieve their desired goals – that could be because they’re not delivering the key results identified, or because they are delivering, but the key results are not, after all, what is necessary to secure their objective. Either way, they can then change tack to increase their chances of achieving their goals.
“Business leaders struggle to see and action cross-functional dependencies between key results, thus making leaders more reactive and restricting the success rate of the company’s priority initiatives,” argues Gerald. “Profit.co seamlessly integrates individual employee success with business strategy to ensure that OKR setting is a reliable and value additive exercise.”
Profit.co’s software integrates with leading enterprise software solutions such as Saleforce, Tableau, Hubspot so that the business’s key data automatically flows into its framework. The software then provides business leaders with a constant read-out on how they’re progressing towards their objectives, and what is driving – or not driving – that progress.
Profit.co founder Bastin Gerald
So far, Profit.co has sold the idea to around 1,300 organisations worldwide, with revenues growing nine-fold over the past two years. Clients, which include public-sector organisations and charities, as well as commercial businesses, report a 50% increase in their ability to achieve their goals over four to six quarters, Bastin says, and a 50% improvement in the alignment of OKRs in business units and functions to the overall OKRs of the company.
Alongside its technology, Profit.co also runs a coaching and consulting program advising companies on how to move to an OKR approach – and how to set objectives and key results appropriate for their businesses, including more radical challenges for the organisation as well as traditional performance improvements.
“We recommend that at least a third of their goals should be ‘stretch OKRs’,” says Bastin. “This encourages teams to think about creative solutions for long-existing problems and helps organisations to achieve much more through their OKR programs.”
Founded four years ago, Profit.co has grown quickly, winning new customers almost entirely through its inbound marketing efforts. Bastin now believes the company is ready to invest in its go-to-market activities in order to accelerate growth.
Today’s fund-raising announcement should help in that regard. The company has raised $11 million in a round led by the venture capital investor Elevation Capital, with the funding earmarked for expanding sales and customer success teams in North America, Europe and Asia Pacific.
Akarsh Shrivastava, Principal at Elevation Capital, says Profit.co’s software has given businesses a way to turn management theory into practice. “OKR as a philosophy has been appreciated across the globe and has seen strong tailwinds,” he says. “The challenge has always been with execution, with a lot of programs failing because they are not implemented well or for the want of a good product. Bastin and his team have created an offering to bridge this gap.”