John Doerr’s seminal private equity case study – when he insisted a condition of Kleiner Perkins’ 20% investment in start-up Google be the application of OKRs – is now the stuff of legend. Twitter, LinkedIn and Uber are other well-known users of OKRs; the complete list is a who’s who of innovative, high-growth businesses who have used OKRs because they work. The visibility over strategy execution offered by OKRs has for some years provided a valuable sense of direction and progress check for venture capital and private equity investors looking for assured growth.
Whether venture capital, managing a large portfolio of start-ups and seeking to increase the odds of a successful return, or mid-market private equity making larger investments and demanding execution of an ambitious growth strategy, OKRs go above and beyond typical financial KPIs in terms of the insight and levels of reassurance delivered to investors.
OKRs go above and beyond typical financial KPIs in terms of the insight and levels of reassurance delivered to investors.
It may be straightforward to tick-off items from the ubiquitous “100-day plan” but what about progress towards your strategic objectives across your 3 – 5 years of ownership? Monthly board-packs and weekly catch-ups with your CEOs can only provide so much visibility, whereas OKR metrics can signal live updates on the things that really matter in the quest for growth. OKRs can help avert surprises by acting as early warning signs of underperformance. OKR software tools created by companies such as GtmHub and WORKPATH can now provide real-time visibility not only for management/employees of portfolio companies but investment professionals too. Data can be viewed on multiple media platforms for complete but secure transparency.
AuxinOKR is already working with a growing number of investors seeking to enhance fund returns by leveraging our associates’ management experience. Investment professionals are taking advantage of our OKR expertise to ensure maximum return on investment (time and money) when using OKRs to drive growth. In addition to the usual post-purchase ‘100-day’ plan what about the investee’s moon-shot goal or 1000-day intentions? How exactly do you intend to grow EBITDA and position the business best for exit? You’ll have your monthly board packs, weekly catch ups with the CEO etc. but how much visibility do you really have? OKR metrics can signal live updates on the things that really matter in the quest for growth, helping avert surprises by acting as early warning signs of achievement or shortfall. Once OKRs have been used with one or two portfolio companies we’re confident you will want to use them across the fund.
If you are venture capital or private equity investment professional interested in understanding how OKRs can help drive performance in your portfolio, we’d welcome the opportunity to share our experiences with you.