Episode: 417 |
Alex Bartholomaus:
Objectives and Key Results:


Alex Bartholomaus

Objectives and Key Results

Show Notes


Alex P. Bartholomaus is President and CEO of People Stretch Solutions, a Washington DC-based management consulting firm specializing in revenue growth consulting and scaling organizations. He is a published author and professional speaker on the topic of OKRs, Sales Effectiveness, Elite Business Performance and Emotional Intelligence. On this episode, Alex talks about his company with a focus on growing sales.

Key points include:

  • 08:43: The wine industry taxes and distribution chain
  • 15:12: The business focus of objective and key results
  • 18:00: Examples of OKRs and how they differ from goals
  • 29:12: Different aspects of the management system


To learn more about Alex’s firm visit https://www.peoplestretch.com/ or message Alex on LinkedIn at http://www.linkedin.com/in/alexbartholomaus.


One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Hello, and welcome to Unleashed the show that explores how to thrive as an independent professional. I’m your host, Will Bachman. And I’m excited to be here today with Alex Bartholomaus, who runs people stretch solutions. You can check them out at people stretch.com. Alex, welcome to the show.

Alex Bartholomaus 00:21
Thanks. Well, it’s it’s great to be here. And I’m already excited just because of our Latin connection. So I’m excited for us to get gone today.

Will Bachman 00:31
Alex is referring to the fact that my wife is pet Juana. And we travel to Peru and in Latin America all the time. And Alex is from GLA. Alex, you have gone backwards in life. So a lot of consultants dream about maybe retiring and entering the wine business. And you started in the wine business and ended up in consulting. So tell us a little bit about how you joined the family wine business, you grew it. And just tell us a little bit about that about your your life as an importer before you became a consultant.

Alex Bartholomaus 01:07
Yeah, so my dad came to the States in the late 60s and did a couple of different jobs, but here and he landed in the hotel business in the Washington DC area. And and in 1977, someone said, Alfredo, you know, you’re from Chile, you should start importing wines. So he actually had the our first wine import business, he was a partner in one from 77 to 84. And he found that that partnership didn’t work out for him. So he started kind of the family business in 1985. And so he he dragged us all in, when I was in high school worked in the warehouse. So I was lucky enough to go to college, I attended college, William and Mary, and upon graduation, joined the family business. And that and that was an exciting ride. Because when I graduated college in 94, the company was only doing a million dollars in revenue. And so, you know, for the next 15 years, we grew it from a million to 37 million before we had an exit in 2009. And so that journey, I was very fortunate because, you know, early and because of some challenges with my mom’s health, my dad really didn’t want to run the business, he wanted to kind of be with her and kind of focus on the things that he liked, he didn’t really enjoy running the business. So getting the keys to run the business was a great opportunity. Oftentimes, in family businesses, succession planning is actually a big problem. And so I was able to have the ability to make decisions at a very young age, I was in my mid 20s. And so that afforded me an opportunity to practice decision making, and especially some pretty complex decisions, ranging from when to hire when to restructure sales, how to evolve our contracts, how to, you know, change our strategy, have a go to market strategy with different suppliers. So that exposed me to a bunch of different things, some of which I had been exposed to an undergraduate business school, but a lot of things that I had to go out and consume knowledge. So I was very fortunate to have a broad set of mentors, some great sources of knowledge through independent consultants. And so I had a journey which we got to I was able to be exposed to probably the thing that I was the most passionate about was just people, and how to make people more successful on the sales side, how to make people more successful on the leadership side, and also how to leverage technology to make people more successful. So you know, the big technology that I felt like we were doing for small midsize companies, that was a lot different. It’s just how to mine data in a very convoluted channel in the United States, wine is sold through the three tier system. So as an importer, I had to I had to buy wine from a country like Chile or winery, and I did import it, I would then need to sell it to a distributor in let’s say, the state of New York. And because of the laws in the state of New York, that distributor, there were some distributors who also operated in other states. But generally, you have to have different a distributor per state. And so that made it very challenging to then work with different distributors, different states, helping them sell the wine to retailers and restaurants and ultimately, to the end consumer. And so the complexity of the One business, you know, top me and forced us, if we wanted to grow, we had to be we had to adopt a lot of core competencies. So I felt like I was fortunate that I was able to work on the business. So I felt like I was an internal consultant. And being an internal consultant allowed me to personally develop a lot of expertise across sales, across leadership development, different aspects of strategy, goal setting. And so that journey, you know, reached an exit in 2009, where, you know, we went to work well, we went to work for a much larger company that acquired us for a year. And that was a great experience, because they also consumed a lot of external consultants. So I actually learned a great deal from the consultants that were working for the company required us in particular strategy. They were some very thoughtful group of consultants actually out of Boston. And they really helped this larger company, look at how they went to market differently, how they were doing the supply chain, how they were structuring the sales organization. And so I think an important aspect that I took away, and I always tell other people is they consider becoming an independent consultant is how well have you packaged, and really own the knowledge that people have shared with you. Because I think, if you’re a passionate learner, on often times, you’ll go deeper. And so I would go deeper on a topic. And I think sometimes people miss out on really becoming an expert, because they just don’t go deep enough. So I think, you know, I was able to go pretty deep and sales pretty deep in leadership, I think, pretty deep in strategy, and maybe pretty deep in certain technologies. And so that served me really well, when it was time to hang my shingle. Because I had this great practical experience of having run a company, and having made a lot of decisions. And so, you know, I was able to really empathize and understand the challenges certainly of a mid market, executive decision maker, and to a large degree, even in companies that were much larger than mine. The decisions and the problems are largely the same, the only difference is scale, and making sure that you estimate complexity. So, so that’s how we got here today well, through through a meandering path of great experiences in the wine business, and certainly, after the wine business, entering into kind of starting people stretch and continuing on the path of sales effectiveness, leadership development strategy, and, and Okay, and the Okay, our framework.

Will Bachman 08:11
Yeah. So how does the wine industry work? So you say, You are an importer, so you would go down to GLA and find a winery and contract directly with them, and then you get that wine to the US, but then you have to sell it to a distributor that’s within a given state, and then they sell it to retailers, or restaurants or hotels like and just walk me through that chain. I’m not familiar with it.

Alex Bartholomaus 08:43
Yeah, so the US government likes to tax so they liked when an importer buys the product abroad, they bring it either into their warehouse or into a dropship it straight to their distributors warehouse. So you have to have a distributor. And so, you know, federal government likes that, because then states can charge a tax to that distributor. And then the restaurant, and the retail will also be assessed the tax when it’s their turn, to sell it to the end consumer. Now, certain states have made it, they’ve tried to eliminate some of the layers. So for example, in the state of California, arena retailer could actually hold a distributor and an importer license. So a and and that retailer, famous retailer, Kermit Lynch, is has brought in some amazing French wines and a few other countries, but primarily France. He was one of the early retailer importers that was trying to go direct to consumer and so the industry Trees is has done its best to nurture that but the legalities and in states tries to at least preserve some of those layers. So there can be, you know, taxation, and regulation, taxation and regulation, because, you know, given the alcohol, I think people generally like to try to regulate it as maybe more than less. But I think that’s starting to change.

Will Bachman 10:29
Walk me through. I’m curious, really curious to hear the price breakdown. So let’s, let’s take a bottle of wine. And I’m a cheapskate, I started, I stopped drinking alcohol about a year ago. But let’s say when I was still buying wine, so let’s say a bottle of wine or buy a $10 bottle of wine. Okay, retail, right? So that $10 buy a bottle wine at retail, walk me through the whole kind of price sequence. What would the actual winery in ci lay and receive for that? $1 $10 bottle of wine? What does the winery get?

Alex Bartholomaus 11:04
Ah, probably anywhere from as little as $3 to as much as $4.

Will Bachman 11:09
Okay, three or $4. So the importer pays three or $4. And then gets the US. But roughly, what would it cost you per bottle to do the whole process of getting it from GLA, through, you know, on the, you know, shipped through customs, all that stuff, you know, actually into a warehouse in the US? What would your cost be per bottle?

Alex Bartholomaus 11:35
You know, it’s funny, I’ve walked through this. So if we said it costs three, cost to get it here is $1 per bottle. Okay, rounding up a little, a little less, but some tape, some states with tax, get it up to a buck a bottle.

Will Bachman 11:51
Okay, but don’t include tax because I want to understand it separately. So, like, okay, on that on that $10 bottle of wine all together? Like, you know, you know that on that first of all, how much how much of that is tax that you’re paying?

Alex Bartholomaus 12:08
About 40 cents?

Will Bachman 12:09
Oh, that’s it on a $10? bottle one?

Alex Bartholomaus 12:13
Yeah, because in most cases, wine is not taxed by monetary it’s taxed by volume.

Will Bachman 12:21
Hmm. Okay.

Alex Bartholomaus 12:22
And so expensive wine gets by. And I think you make a case and people have thought about trying to change and tax it by value as opposed to tax it by volume. But that’s, I guess the expensive wines have lobbied to avoid that. Because I actually think I’ve always been a fan of that idea. But somehow, no one has really ever driven it.

Will Bachman 12:48
Okay, so 1001, the winery gets three to $4. It costs $1 to get it here. And then the dish, what would the distributor pay to the importer for that to know a bottle of wine?

Alex Bartholomaus 13:02
Ah, I mean, it varied five, maybe $5 550.

Will Bachman 13:09
Okay, so the importers making like a buck on that $10 bottle of wine,

Alex Bartholomaus 13:13
then anywhere from one to $2 depending on on what it was purchased. I mean, I think one of the keys an importer, if they ship it direct can make more. I think one of the one of the things that we actually pioneered early is pricing consistency. So so we we were willing to make less to have a more consistent price across the United States. And, and what influenced price is the overland freight. So the money if we could just ship it direct, then someone could offer a better price. And if we wanted to maintain price and continuity, someone had to absorb that and distributors generally don’t mind doing that. So we would just would be willing to make less as a kind of more holistic strategy. And it really paid off for our brands.

Will Bachman 14:11
So the distributors paying call at $5 for a $10 bottle of wine. What does the retailer pay for to the distributor for that? $10 bottle one?

Alex Bartholomaus 14:21
Probably six a bottle

Will Bachman 14:26
and then they’re marking it up another basically 50% to get that’s Yeah, that’s right. Interesting. Okay. Okay, interesting. Little side side path there into the wine business. Let’s talk about your work and people stretch. So you, my understanding is of your business is you know, you have some work around sales effectiveness. You also work on okrs which is a bit of a specialized thing. I don’t know a ton of people that that help set up okrs talk to me about that business a little bit. And we should mention that you’ve grown from being an independent consultant to having about, I think eight employees and and about that many subcontractors, right? So you have 15 people or so running around.

Alex Bartholomaus 15:12
That’s right. That’s right. So okay, R stands for objective and key results. It’s a methodology that Andy Grove at Intel, actually came up with it in the 70s. And started really getting some visibility in 80s, and 90s. Because he wasn’t a fan of management by objectives. He felt like if you set just numbers for people and categories, that it would wear people out. And ironically enough, when I added the wine business, while it’s, you know, metrics, whether you comment MBO, or you call it a KPI, if if you just drive outcomes with numbers, it becomes very antiseptic. So you so he, you know, was very wise, he understood that. And he wanted his team’s to articulate the the objective in the form of what and why. And so that way, it wasn’t grow, sales wasn’t good enough. We had to grow sales to be a market leader, and maintain our number one positioning in the chip, Chip market it by articulating that everyone was clear why growing sales was so important. And so it was an interesting behavioral hook. Because first, he would get more people saying why things were important, which is positive, and then every quarter, he would make people revisit it and re restate rewrite based on how they performed the previous quarter. So I think that was very powerful. The other thing, he didn’t let numbers go away, numbers are key results. But what he wanted people to be aggressive, yet realistic. And so on quarter to quarter basis, he found people, it was very easy to get complacent. And so what he wanted people to get out of their comfort zone. And he wanted people to say, Okay, what did I do before? And how can I attempt to push the envelope a little more next quarter? And so I think he was always really good about pushing his people, but knowing he could only push so far.

Will Bachman 17:37
So I guess I’m not quite clear. How are okrs different than just standard goals? You know, like, yeah, I mean, it’s not uncommon to give employees objectives for the year. So can you give us a few more examples of okrs? or explain how they’re different than than just sort of the typical objectives that people are given? And,

Alex Bartholomaus 18:00
yeah, yeah, so oftentimes, when people set goals, the the VA will, a lot of leaders tend to be driven by efficiency. So they might use the SMART goal methodology like Specific, Measurable, Attainable, Realistic, have a time and time bound. And so one of the things about objet okrs Grove, and others have really been fans of is that there’s a certain inspirational and aspirational aspect of okrs. So I think that that’s an important difference. In a lot of cases, we find that the smart methodology aligns well to the key result aspect, but really forcing, pushing, challenging a leader to articulate a goal. A lot of people struggle with that. And so, people always, when they go to set goals, they it will be generally simple, and often times, maybe antiseptic, and not get anyone excited. So I think with okrs, Now, that doesn’t mean someone can keep it, anybody can set a goal, and how can you make it more inspirational and aspirational? okrs is, it’s just built in programmatically. So an organization when they adopted, they’re always practicing a lot of organizations that don’t that have that built in structure, that only the more progressive, ambitious leaders and employees will gravitate towards that practice just intuitively. And I think more companies have said okay, smart ambitious people, the top 20% would get there on their own, regardless of of the system. It’s the remaining 80%. How do you most How do you help them mobilize? And so okrs, I feel really makes a huge impact for the 80%. Because you know, the 8020 rule that 20% that’s doing 80% of the work, that that proves itself out time and time again. But if you can help an organization with the, to get a better result from the other 80% a systematic process, like the okera framework, is has that impact others, there are others as well. But as you can imagine, I’m I’m a little partial to okrs given, I think, the balance between there’s, there’s a lot of flexibility with okrs. And I think it’s it’s a it’s a it’s an agile framework, in the sense of it being a light, and companies of all sizes, being able to use it.

Will Bachman 21:03
Okay, so getting, maybe give me some more examples, because I still don’t quite get exactly what they, you know, I don’t I don’t have this intuitive feel for it yet. So maybe for a CEO or a CEO or a VP of finance, or a, you know, a director of accounts receivable, you know, maybe for a few different levels of an organization, can you give me what an example of an OKR? Would would be?

Alex Bartholomaus 21:28
Yeah, so So, from at a top level, let’s say fanatically, an organization wants to focus on people. So the, and a lot of times the people that they they think about people that are thinking, Okay, attract retain good people, and then they immediately go into measurements, how many people do we need to hire? How many people do we, what’s our churn rate. And the missing piece is that statement, that is a guiding light to its leaders. So a sample OKR, at the top level is engaged employees learning and development, career opportunities, and create an inclusive culture. So we’ve made an objective at the top, and we might measure it with some of the things that we measured. And so let’s say the churn rate is going to be measured, the number of net employee hires is going to be measured. And so at the next level down, there might be a fast growth department. So for example, we work a lot in SAS, so the CTO generally has a lot of pressure to be adding to keep up with growth. And so he’s he or she are gonna then craft something around. How do they add people? How do they ramp them up faster? How do they develop them in order to improve development performance? And so the it’s all people centric, and it’s trying to align to that engage employees through learning and development career opportunities. Does that make does that give you a little bit more texture?

Will Bachman 23:24
Yeah, that’s helpful. Maybe just give me a couple more examples like to really help bring it home? So I can, I want to start under kind of getting a feel for how these are different than just like a normal objective. Like if I didn’t have OCR training, and I was just at a company assigning annual objectives. I might, it feels like I might have come up with something kind of similar like, okay, you’re the head of HR, you’re responsible for reducing churn and creating a great culture and developing people with the skills we need and having good benefits and what I mean, it just seems like those would be kind of straightforward. I don’t, I don’t quite get what is so distinctive, yet about okrs.

Alex Bartholomaus 24:10
No problem. So So the difference in okrs in from comparing it to other types of goals, is, is nuanced. So So if we look at it, let’s say it helped us, and there is an IT services company, and one of the things that they do is IT Helpdesk and so the, the CEO wanted to make sure that they were surprising and delighting their customers with the best in class service. And so that means different things to for the consultants who have to go on site to perform work versus what’s going on at their call center, and so the SVP Have ops that manages the call center, we’ll be looking at me at Net Promoter Score. And then through okrs. I think what you’re presuming will is that organizations, one are organized in making sure that everyone has goals aligned to a theme, generally organizations where they struggle, the goals are similar. So so an OKR in and of itself, if you compare it, it’s not that different. It’s not that different. But what what organizations struggle, especially as they get large, so smaller organizations don’t have structure. And so they don’t align well. They don’t align the next couple of levels down, well, they, they don’t get organized the synchronizations off. So so in comparing the goal itself, there’s that you could argue to your point, they’re not that different. But companies aren’t always good about being systematic about, let’s say, reviewing the results every quarter. They’re not systematic about setting expectations about how to interact with goals on a weekly basis. okrs tends to be a little bit more prescriptive. And it helps organizations that, you know, smaller organizations need structure, larger organizations, it becomes more of, Okay, let’s take away structures that aren’t helping you. So when you add okrs, it’s making, it’s helping you because what I’m thinking right now is a large bank, actually in Argentina, that we’re starting to work with. And, okay, ours okrs for them are about helping the organization, be focused and cut through the clutter, and be able to say, Okay, let’s get organized around setting these top level objectives. Let’s then cascade it down. And the act of cascading is informal. So so that motion is what’s different. The goal, the goal that was yielded by a top level objective, that’s not going to be different than maybe a goal exercise, you might facilitate. But the problem and, and for independent consultants, especially, we’re giving some amazing advice, helping them get to the good place. But when we leave, what system helps them stay focused, and working towards those goals. And okrs has a system that helps companies leverage the this this goal, this output, which is the OKR. So okay, there’s two meanings. It’s, it’s a goal itself, but it’s also a system that helps a company, set it at the top, and then set it in a cascading fashion down to the front line, and then work with it through the quarter. So that way, at the end of the quarter, they review results, and then they reset. And then there are some companies that have those motions, independent of okrs, they don’t run okrs, they, they were able to get to a level of, of process awareness that they needed to get organized. But that’s a really, really small percentage of companies out there.

Will Bachman 28:33
Okay, got it. So it’s not so much that the the kind of goal aspect of an individual OKR something magical, but it’s more about that it comes as part embedded in a system where they are cascaded. And then there’s a management system to kind of review on a regular basis, the and have discussions about them, it sounds like is one of the distinctions. Yes, tell us a little bit more about that system about. Okay, so now we have all these okere plays are all written down. describe to me the different aspects of the system, the periodic reviews, and so forth.

Alex Bartholomaus 29:12
So the first stage of the OKR cycle is strategic planning. So it’s a two week process in which all those okrs that you mentioned, get written. But there’s something when you pop the hood, there’s something underneath this that I think is very powerful that I want to highlight before we go into what execution looks like, through the process of setting the goals. There’s more interaction than what most companies are used to in goal setting, and strategic planning. So the increased conversation tends to drop, increase alignment. So that’s a byproduct of the process that’s very powerful. Towards the end of strategic Planning at a minimum employees, or let’s say you’re my, you’re the CEO, and I’m on level two I report to you, what’s going to be very powerful is that before we exit strategic planning, you and I are going to have a meeting. And you’re going to be like Alex, these are good. Or Alex, these, the key results are a little conservative, let’s, let’s, let’s tweak that. And to really get you out of your comfort zone, I come back, here they are, you feel good about it, I feel good about it, I’ve made a commitment to you. So that commitment for the quarter is a powerful behavioral hook. And so companies aren’t good at securing these small commitments. It’s just that, you know, there’s a small percent that are, but there’s a large percent that just aren’t because they, they kind of expected, there’s an implicit understanding that, hey, I work for you, I should be doing this. But if you secure this commitment, you’ve increased the probability that I’m going to deliver. And so okrs systematically get drive that the other thing that we encourage our clients to do, and okrs is to do a group share of what everyone is doing. So that that peer that transparency, that everyone sees what I’ve committed to, and I get to see what everyone else is committed to that is very powerful. A lot of organizations don’t have that transparency. So okrs forces this to be far more transparent, and far more steps to drive greater commitment. And so that’s, that’s, that’s huge. Now, the unintended consequence of the transparency is a company’s forced to deal with dysfunction and problems it’s had, because it becomes very apparent who is performing and who isn’t. It’s apparent which departments are collaborating with one another, and who aren’t because of that transparency. And so now to your question, when an organization exit strategic planning, it roughly has nine to 10 weeks to work on this before the final week of a quarter, or a retrospective will take place. So in those nine to 10 weeks, organizations tend to not have the best cadence. So are there some organizations that are good about having a weekly leadership team meeting and weekly one on ones, there are some, what we’ve seen in the pandemic is the frequency of meetings, has gone in the opposite direction. And so when the leadership team maybe is only getting together twice a month, or even once a month, and then one on ones have been scaled the back back to either bi weekly, or even monthly, the ability for you if I was reporting to you, for you to interact with me to hold me accountable and help me stay focused. That’s just, it’s just the way it goes down now. In organizations, the top 20% don’t need that. It’s the 80%, that this prescribed focus interaction around the goals, helps to get extract a better performance. So that’s where I try to get leaders to focus on it’s like, the people at the top, they like it just because the top 20% appreciated because of its efficacy, but they would be successful with or without it. It’s the 80% that need the structure on a weekend week out basis, that really tend to do well. And then the last piece is the retrospective. You know, you I know that you’ve had a fair amount of experience with technology, and you’ve sat in retrospectives on the tech side with agile teams, outside of of the software development world, the concept of a retrospective. It’s not as common with any level of consistency. You know, there’s certainly look backs post mortems. That meeting has different names and every organization. But most organizations just don’t do them with the frequency that they could or should. So the okrs tends to be, you know, formulaic and you have to do it, you have to do it at all levels. And by doing it, too, we go back to the behavioral hook. So one important behavioral hook from a performance perspective is an organization is nurturing the sense of accomplishment of its team more frequently and systematically. So that’s very positive. If If you’re working on a goal, it’s very unsatisfying. At the end of the first quarter, I might be ahead. But I’m ahead. I’m not, I didn’t hit what I needed to hit. And so, you know, science tells us that, you know, if I reach a goal, that’s a great dopamine hit. And that’s, that keeps me that gives me more focus, it tends to drive things. So that that quarterly sense of accomplishment, that’s what I think is is another benefit. Additionally, when people learn from the things that they fell short, I mean, as human beings, we tend to be intuitive, and self correcting more than people realize. And so people, they, when they roll out of bed, you know, most people want to do their best. And so a retrospective is a good ritual, that the process of getting ready, and then doing it is very insightful, in terms of not just what you did well, but learning from what you didn’t. And I think without going down the self actualization rabbit hole on a Friday morning, I think, you know, learning and being introspective is is very powerful. So that’s another benefit of the retrospective.

Will Bachman 36:22
Fantastic. Well, this has been a great overview of okrs. Alex, if a listener wants to follow up with you or learn a little bit more about your firm, where would you point them online?

Alex Bartholomaus 36:33
I would say look me up on LinkedIn, or visit us at people stretch.com you can drop us an email. Those are the two best ways to look me up on LinkedIn, Alex P. Bartholomew us or go to www.hp people stretch.com

Will Bachman 36:50
fantastic, and we will include those links in the show notes and listeners. If you’re new to the show, you can go to umbrex.com. Click on the Unleashed tab and you can sign up for a weekly email, where I’ll tell you about all the most recent episodes. We occasionally have some bonus material in there. And you don’t want to listen to every episode of Unleashed. You can get the summaries and pick and choose the ones that are interesting to you. Alex, this has been a great discussion. Thanks so much for joining today.

Alex Bartholomaus 37:24
Well, it was a pleasure. I look forward to more Latin conversations in the future.

Will Bachman 37:28
Sounds good.

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