Full title: Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs
Objectives & Key Results (OKRs)
- An objective is WHAT is to be achieved – significant, concrete, action-oriented, and (ideally) inspirational. It is the direction.
- KEY RESULTS benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. Think of them as milestones.
- Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses.
- Ensure key results have an end-user impact.
- To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results— to measure “both effect and counter-effect.” For instance, quantity & quality.
- Completion of all key results must result in attainment of the objective. A common error is writing key results that are necessary but not sufficient to collectively complete the objective.
- To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results— to measure “both effect and counter-effect.” For instance, quantity & quality. In addition, include a mix of outputs and inputs (aka leading and lagging indicators).
- The best OKR cadence is the one that fits the context and culture of your business.
- For an OKR system to function effectively, the team deploying it— whether a group of top executives or an entire organization— must adopt it universally. No exceptions, no opt-outs.
- A best practice is to designate one or more OKR shepherds.
- Google divides its OKRs into two categories, committed goals and aspirational (or “stretch”) goals. It’s a distinction with a real difference. The relative weighting of these two baskets is a cultural question.
- Committed objectives are tied to Google’s metrics: product releases, bookings, hiring, customers. In general, these committed objectives— such as sales and revenue goals— are to be achieved in full (100 percent) within a set time frame. The expected score for a committed OKR is 1.0; a score of less than 1.0 requires an explanation for the miss, as it shows errors in planning and/ or execution.
- Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. Aspirational OKRs have an expected average score of 0.7, with high variance.
- Teams who cannot credibly promise to deliver a 1.0 on a committed OKR must escalate promptly. This is a key point: Escalating in this (common) situation is not only OK, it is required.
Superpower 1: Focus & Commit to Priorities
- Ask yourself, “What matters most?” Steve Jobs understood, “Innovation means saying no to one thousand things.”
- Ideas are easy. Execution is everything.
- Make difficult choices; less is more.
- Impose a limit of 3 to 5 OKRs per person per cycle.
- To promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs.
- OKRs require a public commitment by leadership, in word and deed.
- You need to build your goal muscle gradually, incrementally. It may take 6 or more OKR cycles to get things humming.
- No dictating. OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Even after company objectives are closed to debate, their key results continue to be negotiated.
- The most important things need to get done first or they won’t get done at all.
Superpower 2: Align & Connect for Teamwork
- Research shows that public goals are more likely to be attained than goals held in private.
- Micromanagement is mismanagement. A healthy OKR environment strikes a balance between alignment and autonomy, common purpose and creative latitude.
- An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their key results.
- Every OKR has a single owner, with other teams linking up as needed. As I see it, co-ownership weakens accountability.
- Associate objectives are often their manager’s key results. In OKR chart 3, the Head Coach’s KRs are good. However, the SVP of Marketing’s KRs are a mess. They are unmeasurable, not specific, and not time bound. How do we define “improvement,” for example, in the team’s media coverage?
Superpower 3: Track for Accountability
- (In accordance with company tradition, the executive team will also grade Google’s OKRs from the prior year, with failures unblinkingly dissected.)
- Google uses a scale of 0.0 to 1.0 to measure KRs.
- Green = 0.7 to 1.0 (We delivered)
- Yellow = 0.4 to 0.6 (We made progress but fell short of completion)
- Red = 0.0 to 0.3 (We failed to make real progress)
- One underrated virtue of OKRs is that they can be tracked— and then revised or adapted as circumstances dictate.
- Without frequent status updates, goals slide into irrelevance;
- Research suggests that making measured headway can be more incentivizing than public recognition, monetary inducements, or even achieving the goal itself.
- OKRs don’t require daily tracking. But regular check-ins— preferably weekly— are essential to prevent slippage.
- In both one-on-ones and team meetings, these wrap-ups consist of three parts: objective scoring, subjective self-assessment, and reflection.
- Where OKR scores pinpoint what went right or wrong in the work, and how the team might improve, self-assessments drive a superior goal-setting process for the next quarter. There are no judgments, only learnings.
- Here are some reflections for closing out an OKR cycle: Did I accomplish all of my objectives? If so, what contributed to my success? If not, what obstacles did I encounter? If I were to rewrite a goal achieved in full, what would I change? What have I learned that might alter my approach to the next cycle’s OKRs?
- OKR wrap-ups are retrospective and forward-looking at the same time.
Superpower 4: Stretch for Amazing
- “Hard goals” drive performance more effectively than easy goals. Second, specific hard goals “produce a higher level of output” than vaguely worded ones. Among experiments in the field, 90 percent confirm that productivity is enhanced by well-defined, challenging goals.
- Setting stretch goals is an art. When a goal is too aspirational, it’s bad for credibility.
- If companies “don’t continue to innovate, they’re going to die— and I didn’t say iterate, I said innovate.” Conservative goal setting stymies innovation. And innovation is like oxygen: You cannot win without it.
- Most people, Larry Page observes, “tend to assume that things are impossible, rather than starting from real-world physics and figuring out what’s actually possible.” Page expects Googlers to create products and services that are ten times better than the competition.
- At Google, in line with Andy Grove’s old standard, aspirational OKRs are set at 60 to 70 percent attainment.
Continuous Performance Management via CFRs (Conversation, Feedback, Recognition)
- Divorce compensation (both raises and bonuses) from OKRs. These should be two distinct conversations, with their own cadences and calendars.
- Five questions:
- What are you working on?
- How are you doing; how are your OKRs coming along?
- Is there anything impeding your work?
- What do you need from me to be (more) successful?
- How do you need to grow to achieve your career goals?
- Five critical areas have emerged of conversation between manager and contributor:
- Goal setting and reflection, where the employee’s OKR plan is set for the coming cycle. The discussion focuses on how best to align individual objectives and key results with organizational priorities.
- Ongoing progress updates, the brief and data-driven check-ins on the employee’s real-time progress, with problem-solving as needed.*
- Two-way coaching, to help contributors reach their potential and managers do a better job.
- Career growth, to develop skills, identify growth opportunities and expand employees’ vision of their future at the company.
- Lightweight performance reviews, a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting, in the context of the organization’s needs. (As noted earlier, this conversation is held apart from an employee’s annual compensation/ bonus review.)
- As OKRs are combined with 360-degree feedback, the silo will soon be a relic of the past.
- Modern recognition is performance-based and horizontal. It crowdsources meritocracy. Institute peer-to-peer recognition. Establish clear criteria.
- When performance management is a networked, two-way street, individuals grow into greatness.
Importance of Culture
- Healthy culture and structured goal setting are interdependent.
- You can’t fear screwing up. That squelches innovation.
- An OKR/ CFR culture is above all a transparent culture.
- Vision-based leadership beats command-and-control.
Additional Wisdom
- The higher the ratio of [direct] reports [to managers], the flatter the org chart— which means less top-down oversight, greater frontline autonomy, and more fertile soil for the next breakthrough. OKRs help make all of these good things possible.
- The best way to solve a management problem, [Intel’s Andy Grove] believed, was through “creative confrontation”— by facing people “bluntly, directly, and unapologetically.”
- Three watchwords for entrepreneurs:
- Solve a problem
- Build a simple product
- Talk to your users
- I see people confusing objectives with missions all the time. A mission is directional. An objective has a set of concrete steps that you’re intentionally engaged in and actually trying to go for.