Draft OKRs

MEMORANDUM

TO: Grace Mensah, Chief Product Officer FROM: Staff Product Manager DATE: October 3, 2024 SUBJECT: Q3 OKR Post-Mortem & Proposed Q4 Product OKRs

*

1. The Disconnect: What Q3 OKRs Actually Tell Us

At our recent all-hands, a product OKR score of 0.81 was celebrated as a “great quarter.” In reality, Q3 was a business failure: * Net Revenue Retention (NRR) dropped from 103% to 102% (Target: 108%). * Quarterly Logo Churn rose from 3.1% to 3.4% (Target: 2.5%).

The 0.81 score is a vanity metric masking acute operational disconnects across four distinct areas:

``` [Output Orientation: 9/16 KRs] ──> Shipped features, missed business outcomes [Metric Manipulation] ──> Completion rate rose via relaxed definition (100% -> 80%) [Activation Breakdown] ──> 31 days to 1st learner (Goal: 14) fuels 45% of churn [Premature Expansion] ──> Pushed upgrade prompts while seat activity fell to 29% ```

#### A. Feature Delivery Was Confused with Value Creation Nine of our 16 Key Results were binary outputs (shipping features or running counts). Teams scored 1.0 on outputs—shipping offline mode, streaks, dashboards, upgrade prompts, and integrations—while customer-facing outcomes collapsed: * Learner App scored 1.0 on features, yet Weekly Active Learners per seat fell from 0.31 to 0.29 (Target: 0.40). * Growth scored 1.0 on experiments and upgrade prompts, yet Seats added in existing accounts fell from 9,200 to 8,100 (Target: 14,000). * Admin delivered 3 HRIS integrations (misclassified as an “outcome”), but the actual outcome—Days from contract to first learner—only improved from 34 to 31 days (Target: 14).

#### B. Vanity Gains and Metric Redefinition Content claimed a 1.0 score by driving Course Completion Rate from 41% to 58% (Target: 55%). However, this was largely engineered by lowering the completion threshold on August 1 from 100% of modules to 80%. Artificially inflating course completions obscured stagnant baseline learner demand.

#### C. Product Neglect Directly Fed Q3 Exit Drivers Our exit interviews across 38 churned accounts reveal direct causation with our product failures: 1. "Our people didn’t use it" (17 accounts / 45%): Directly caused by dropping learner engagement (0.29 weekly active learners per seat). Gamification (streaks/badges) failed to solve core utility. 2. "Moved to HR system’s LMS" (7 accounts / 18%): While we launched 3 HRIS integrations, we treated them as tick-box deliverables rather than driving customer activation. 3. Budget cuts (9 accounts / 24%): When CFOs review seat utilization below 30%, unused seats are cut at renewal. 4. Onboarding Lag: Accounts reaching first learner within 14 days churn at one-third the rate of slower accounts. By taking 31 days to activate, Admin is losing accounts before they even start.

---

2. Strategic Narrative for Q4

We cannot expand accounts that are not using the product. To move NRR to 106% and logo churn down to 2.6%, the product strategy must execute in strict sequence across the account lifecycle:

``` [Admin: Days 1–14] [Learner App: Days 15–365] [Growth: Renewal & Expansion] Compress onboarding to <14d ──> Drive habitual weekly usage ──> Monetize 80%+ utilized accounts (Reduces churn by 66%) (Eliminates "nobody used it") (Reverses NRR contraction) ```

1. Admin (Time-to-Value): Compress onboarding to under 14 days using automated HRIS provisioning to unlock the 66% churn reduction.
2. Learner App (Habitual Engagement): Drive weekly active learners per seat from 0.29 to 0.40 to resolve the #1 churn driver and defend against budget cuts.
3. Growth (Expansion Based on Utilization): Stop spamming low-usage accounts with prompts; identify accounts reaching >80% active seat capacity and drive contract tier expansion.

---

3. Proposed Q4 OKRs (Learner App, Admin, Growth)

``` ┌──────────────────────────────────────────────────────────────────────────────────┐ │ COMPANY OBJECTIVE (CEO) │ │ Grow by keeping and expanding the customers we have │ │ NRR: 102% -> 106% │ Logo Churn: 3.4% -> 2.6% │ └───────────────────────┬──────────────────────────┬───────────────────────────────┘ │ │ ┌───────────────┴──────────┐ ┌───────────┴──────────────┐ ▼ ▼ ▼ ▼ ┌──────────────┐ ┌──────────────┐ ┌──────────────┐ │ ADMIN │ │ LEARNER APP │ │ GROWTH │ │ Time-to-1st- │ │ Weekly Active│ │ High-Utility │ │ Learner <14d │ │ Learners >38%│ │ Seat Growth │ └──────────────┘ └──────────────┘ └──────────────┘ ```

#### A. Admin Team * Objective: Accelerate customer time-to-value to protect new cohort retention. * Context: Closing the activation gap from 31 to 14 days addresses our highest-leverage retention vector. * Key Results: * KR 1 (Outcome): Reduce median Days from contract to first learner from 31 days to 14 days. * KR 2 (Outcome): Increase % of newly signed accounts with active HRIS employee sync within 7 days from 22% to 65% (Baseline: internal onboarding sample). * KR 3 (Outcome): Increase the percentage of invited admins who configure reporting within 10 days of signature from 28% to 60% (Baseline: Q3 dashboard launch data).

#### B. Learner App Team * Objective: Establish enduring learning habits to eliminate non-usage churn. * Context: Attacking the #1 churn reason ("people didn't use it") by lifting routine learner engagement rather than vanity completions. * Key Results: * KR 1 (Outcome): Increase Weekly active learners per seat from 0.29 to 0.38. * KR 2 (Outcome): Increase 4-week active learner retention (learners active in Week 1 who return in Week 4) from 34% to 48% (Baseline: Q3 cohort average). * KR 3 (Outcome): Reduce the percentage of licensed seats with zero activity in the trailing 30 days from 52% to 35%.

#### C. Growth Team * Objective: Capitalize on active accounts to drive sustainable seat expansion. * Context: Expansion must be an outcome of account saturation, not blind in-app prompts. * Key Results: * KR 1 (Outcome): Increase Seats added in existing accounts from 8,100 to 12,500. * KR 2 (Outcome): Increase account-level seat utilization (accounts with >80% active seats in past 30 days) from 19% to 32% (Baseline: Q3 active accounts). * KR 3 (Outcome): Convert 35% of accounts reaching >90% seat capacity into expanded contracts within 30 days (Baseline: 18%).

---

4. OKR Governance Rules for Q4

To ensure we never celebrate a 0.81 score while missing core business commitments again, I propose three immediate operating changes:

1. Zero Pure Output KRs: No KR may simply measure shipping code, closing tickets, or running experiments. Every KR must measure a verifiable shift in customer or business behavior.
2. Target Continuity & Definition Lock: Any changes to metric definitions (such as completion percentages) must maintain restated historical baselines and require Product Operations sign-off.
3. Cross-Functional Dependencies on Onboarding: Admin and Learner App will review weekly leading indicators (TTFL and weekly seat activation) jointly with Customer Success to intercept at-risk renewals early in the contract cycle.

To: Grace Mensah, CPO From: Staff PM Re: What Q3 OKRs told us, and Q4 team OKRs that add up to the company goal

Bottom line

Q3 looked like a good quarter (0.81 average) but failed on the goal it was meant to serve. We shipped almost everything we planned and moved the customer numbers the wrong way. Q4 needs to be built around the three things customers told us drive churn: people not using the product, slow time to first learner, and seat growth that depends on usage. Output shipping stays, but it no longer counts as success on its own.

What Q3 actually tells us

The 0.81 is a shipping score. Of 16 key results, nine were outputs (things we built, published, or closed). All nine scored 1.00. Outcomes scored 0.56 on average, and the outcome KRs that map to the company goal mostly failed:

• Net revenue retention: 102% against a 108% target, and down from the 103% baseline.
• Quarterly logo churn: 3.4% against a 2.5% target, and worse than the 3.1% baseline.
• Seats added in existing accounts: 8,100, down from 9,200. Growth shipped 13 experiments and a prompt, and expansion still fell.
• Weekly active learners per seat: 0.29, down from 0.31. Usage declined while we shipped streaks and offline mode.
• Days from contract to first learner: 31, down from 34 against a target of 14. We barely moved the number that most affects churn.

The bright spots are real but don't map to the goal: app rating rose from 4.2 to 4.5, and uptime is ahead of target.

Why the goal didn't move: the team KRs never owned it. No team had NRR or churn as its KR. Each team optimized its own outputs, and the company numbers fell in the gaps between them.

The exit interviews say where the gaps are. Of 38 accounts that left in Q3:

• 17 (45%): "Our people didn't use it." This is adoption, which sits with the Learner app and with the onboarding that Admin owns.
• 9 (24%): budget cut. Hard to move directly, but more likely when usage is low.
• 7 (18%): moved to the LMS that came with their HR system. Our three HRIS integrations did not stop this. We need to know which HR systems these accounts used.
• 5 (13%): content didn't fit their industry. This is Content's problem, and it isn't in this memo's scope.

The most useful finding is the activation data: accounts that reached a first learner within 14 days churned at one-third the rate of the rest. Our average is 31 days. Activation speed is probably our highest-leverage lever, and Q3 barely touched it.

The completion rate score can't be trusted. On 1 August we changed the definition of "complete" from every module finished to 80% of modules finished. The 41→58 movement (scored 1.00) mixes two definitions, and the new definition is looser. Some or all of that gain is a measurement change, not learning. We should restate the Q2 baseline on the new definition before anyone cites this number. Until then it should not count as a win.

A smaller measurement issue: "Launch 3 HRIS integrations" was labeled an outcome but is really a count of shipped work. It should be an output, paired with an adoption outcome.

What this means for Q4

We should commit to the company numbers and make the team KRs add up to them. My proposal:

• Net revenue retention: 102% → 106% at Q4 end (108% stays the year-end target, but I don't think it's reachable in one quarter from 102%).
• Quarterly logo churn: 3.4% → 2.8%.

Churn and expansion both depend on usage, so I've set team targets on usage and activation rather than on shipping. Finance should confirm how much each lever contributes to NRR. I've assumed both churn and seat expansion have to move for the 106% target to hold.

Q4 team OKRs

Each team has two outcome KRs. Output KRs can sit underneath as supporting work but are not scored toward the goal. "TBD" baselines need to be pulled in week one, before targets are locked.

How the teams connect to the goal

• Learner app reduces the 17 "didn't use it" churns. Higher weekly usage also feeds expansion, since seat growth needs people actually learning.
• Admin targets the 14-day activation link. Getting the median from 31 to 21 days should move the share of accounts inside 14 days, which is where the churn gap is. The HRIS KR should be reviewed in week 2 by checking which HR systems the seven accounts that left for their HR LMS were using.
• Growth stops measuring success as experiments run and starts measuring seats added in accounts that use the product. Expansion in low-usage accounts is a risk, not a win, so the renewal-risk KR makes Growth own the save motion for the budget-cut and low-usage accounts.

Decisions I need from you

1. Agree the company targets (NRR 106%, churn 2.8%), or tell me to hold 108% and accept the risk.
2. Restate completion rate. Finance or Data should back-calculate the Q2 baseline under the new definition. Until then Content's completion KR cannot be scored.
3. Assign the churn-reason KR to a single owner. Right now no one owns the 38 exit interviews. I suggest Customer Success, reporting to you monthly.
4. Content's fit problem. Five churns cited content fit. Content's Q4 OKRs should include an industry-fit KR. I'd like to discuss this with the Content lead before it's locked.

I can have the baselines pulled and the final targets locked by the end of week two.