We sat down with Tien Tzuo, CEO of Zuora, to talk about how they’re using OKRs to unlock growth. Tien talks about why OKRs are important in scaling a fast-growing organization, what impact they’ve had, and the primacy of teams to organization performance.
Tien, welcome. Let’s get started with the background of the story of your company. Tell us how it started and what you saw way ahead of everyone else.
Tien Tzuo, CEO of Zuora We started the company 12 years ago with this idea that you and I would buy less and less products and instead we would subscribe to services. We saw the trend happening to software. People don’t really buy software anymore. They subscribe to it. Well we believe that was going to happen to all other industries, media companies, car companies. And that’s exactly how it’s played out over the last decade.
So Tien, what are some of the challenges of being a high growth company and what changes? What breaks as you scale and the organization gets larger?
One of the challenges of growing a high growth high tech company is that the organizational size really goes through different inflection points. When we started the company, it was just a handful of us — me and two co founders — and now we’re 1300 people. And so there have been successive break points in the company where, because of company size, the way we operate, the way we communicate, the way we coordinate, the way we make decisions, really starts to break as successive layers of management come in.
Starting about a year ago, the company size was starting to break to a different level. Decision making had to be pushed down in the organization. We found that we needed a whole new set of tools and systems in order to continue to scale as an organization.
One of the reasons we started working with WorkBoard was that it wasn’t just a software tool. It was a set of people that were going to come in and coach our organization how to do this right.
Tell us a little bit about how team of teams enable your organization to be more nimble.
One of the things that was really important to us is, we have a cultural value we call ZEOs. We call ourselves ZEOs, and we have a dynamic set of values that we communicate through stories we tell each other about what it means to be a ZEO. At the heart of it is a sense of empowerment, a sense of leadership. And so it was really, really important to us to retain that ZEO value and allow every employee to be empowered as we scale as an organization.
And the key thing in allowing to do that was teams. So, rather than a hierarchical structure, we wanted the company to be thought of as a set of teams where every ZEO is part of one or two or more teams. And we want the teams to be semi-autonomous and executing the goals that they have, but also recognizing there’s a lot of dependencies between teams. Especially as we grow as an organization.
What led you to OKRs and the WorkBoard platform for OKRs? What drove that decision?
We were seeking the right system that really embodied a team concept, but with clarity of what the team’s objectives are, allowing teams to have a transparent way of collaborating with each other.
One of the reasons we started working with WorkBoard was that it wasn’t just a software tool. It was a set of people that were going to come in and coach our organization how to do this right. You hear stories about other people and their OKR systems and that it takes a year or two years and sometimes involve only one part of the organization. We really wanted something for the entire company.
With the transparency of what people are doing, we’re seeing teams reach out to each other.
I always say friends don’t let friends do OKRs alone the first time — you really don’t have to mess it up for three quarters before you get value and you get impact.
Having a set of coaches from WorkBoard come and teach us how to do that was important. We took about a hundred folks to an offsite in Monterey, California, right by the aquarium, and we did a bunch of legwork in the two months proceeding that to come up with our five corporate objectives.
And then at the offsite we divided the folks up into about 12 or 13 teams. We spent about half a day explaining the context for the five corporate goals, and the next day and a half localizing the five corporate objectives across the 12 or 13 teams.
We came out of that offsite a completely unified organization. The response has been incredibly positive. After the offsite, we continued to refine the objectives and the key results across the 12 or 13 teams. But then we also started localizing these, so now we have about 120 teams with objectives and key results documented in the system. Our goal is to get to about 140.
And what we’re seeing now is that the level of collaboration is high, which is exactly where we want it.
How has the WorkBoard process and platform helped?
Each team had to be able to crystallize their objectives and key results, and then they realized that in order to achieve some of those key results, there were dependencies on other teams. With the transparency of what people are doing, the level of collaboration, we’re seeing teams reach out to each other. There’s always a magical moment when we start seeing crosslinked KRs, where the different teams are actually on the same key results. And that’s exactly what we wanted.
We were worried that we were getting to a scale where the left hand and the right hand didn’t really know what each other was doing. With the WorkBoard system giving complete transparency on what people are working on, that’s really started to break down.
We’ve gone beyond just the exercise of setting the five objectives, the exercise of thinking about key results. Other companies might say, “We’ll set the objectives, we’ll set the key results in, and then we’ll look at them at the end of the quarter.”
But to really bring OKRs to life, it really works when you can start looking at them every single week. So in our staff meetings every week, we will start off with a Biz Review dashboard inside of WorkBoard. We’ll go around the table and say, “Where are we on every one of the key results against our five objectives? Are we on target to hit it?” It keeps us focused on exactly what it is that we set out to do as an organization, and not get distracted and pulled into too many other areas.
The other thing we’re starting to do now is to delve one level deeper. So once we are aligned on how are we doing against our five corporate objectives, what are the spots in the company that we’re worried about? And so we’re getting to the point where if we have a question, the first thing we do is fire up WorkBoard and go search for the team — we get an understanding of what their OKR is first, right? So that when we engage with them, we know exactly what it is that they’re trying to do, and how we can support them.
But to really bring OKRs to life, it really works when you can start looking at them every single week. So in our staff meetings every week, we will start off with a Biz Review dashboard inside of WorkBoard.
So what advice would you give other GMs and CEOs and their Chiefs of Staff as they try to get everyone aligned on their 2020 growth plans?
There’s a whole concept that WorkBoard really started teaching our teams in terms of output versus outcome. We tend to go too far too quickly to the task, right? What is the action item that we need to do? What is the deliverable that we’re going to produce? And when the company is smaller, and the people in the company feel the direct impact, or the marketplace: Are the customers happy? Are we making our numbers? Is the system delivering the uptime and the reliability it needs?
You feel that when you’re a 30 person company, right? You feel that when you’re 300 person company. When you’re 1300 people and you’ve got a team, what happens is the team is spending more time with themselves, or with people in their functions, and they just tend to be further removed from what the market is telling them. In order to overcome that, we really need to transition to understanding outcomes. What is the outcome that you’re trying to produce?
The other thing is when you’re looking at cross functional alignment, or multi-team alignment, and you’re trying to understand what a team over there is doing. When you’re small, you’ve got so much interaction with each other that you kind of understand what they’re doing. When you’re larger and you’re looking at what another team is doing in terms of the output they’re creating, or the task that they’re doing, it’s harder to understand, right? It’s harder to understand “Why is that important?” It’s hard to negotiate with the other team in terms of “Are these the right outcomes that we’re looking for?” And it’s hard to drive accountability. So there’s a whole learning process that we’re going through of saying, “Okay, these are the action items, but what are the outcomes that we’re looking for?”
The role of leadership and the role of managers becomes even more important at our size and scale. And it’s going to continue to elevate. There’s a role for leaders — not dictating the work, but really understanding if these are the business objectives of the company, if these are the outcomes that we’re looking for, and then to empower their teams to figure out how to achieve those outcomes. What WorkBoard is really allowing us to do is to develop better managers and better leaders.
What advice would you give other executives or leaders that are thinking about how they scale their outcomes, scale the organization and maybe scale themselves as leaders.
Don’t try to do too much, right? I think the power of the WorkBoard system — the power of the OKR system — is the balance between long term outcomes and short term plans. You set up 12/15/18 month objectives and 12/15/18 months key results that you would like to have at the end of that period, and then you do things on a quarterly basis. And that quarterly rhythm allows you to say, “look, if I don’t get it perfect in this 90 days, I’ll have another chance to reset and learn.” So the power of iteration and the power of learning is ultimately what you’re trying to take advantage of. So don’t try to get it perfect. It’s a learning process — let the organization learn.
