By Boris Korenfeld, CTO and Tech Executives Advisor at Sphere Partners
This is a summary of the critical concepts from Measure What Matters by John Doerr. We strongly recommend that you read the entire book – however, if you are pressed for time, the basic concepts are summarized nicely in this post.
Measure What Matters is a management system that ensures your company is focused on the right things and that you really understand what goals will move your company forward, and how to measure them. Measure What Matters shows you how to use the OKR management system to identify your priorities, set ambitious goals, clearly measure and track them, and motivate and align everyone on your team around those goals.
ABOUT JOHN DOERR (from Wikipedia)
John Doerr is an American investor and venture capitalist at Kleiner Perkins in Menlo Park, California. In February 2009, Doerr was appointed a member of the President’s Economic Recovery Advisory Board to provide the President and his administration with advice and counsel in trying to fix America’s economic downturn.
“There are so many people working so hard and achieving so little.” —Andy Grove
“I can’t tell you how many times I’ve seen people walk out of meetings saying, ‘I’m going to conquer the world’…and three months later, nothing has happened. You get people whipped up with enthusiasm, but they don’t know what to do with it. In a crisis, you need a system that can drive transformation — quickly. That’s what the key result system did for Intel. It gave management a tool for rapid implementation. And when people reported on what they’d gotten done, we had black-and-white criteria for assessment.” —John Doerr
Important Definitions and Concepts
OKRs refers to a management methodology developed by John Doerr that helps ensure that the company focuses efforts on the same important issues throughout the organization. OKRs surface your primary goals. They channel efforts and coordination. They link diverse operations, lending purpose and unity to the entire organization.
You start with OBJECTIVES. An OBJECTIVE is simply WHAT is to be achieved, no more and no less. By definition, objectives are significant, concrete, action oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution.
KEY RESULTS (KRs) 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.
It’s not a key result unless it has a number.
You either meet a key result’s requirements or you don’t; there is no gray area, no room for doubt. At the end of the designated period, typically a quarter, we declare the key result fulfilled or not. Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. Once they are all completed, the objective is necessarily achieved. And if it isn’t, the OKR was poorly designed in the first place.
HARD GOALS drive performance more effectively than easy goals. 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. A two-year Deloitte study found that no single factor has more impact than “clearly defined goals that are written down and shared freely. Goals create alignment, clarity, and job satisfaction.”
Many companies try to keep themselves flat to simplify communication. This creates another problem of managing too many direct reports. With OKRs, everyone is aligned against the same objectives and key results – regardless of the reporting structure.
Four Superpowers of OKR management:
SUPERPOWER ONE: Focus and Commit to Priorities
Measuring what matters begins with the question: What is most important for the next three (or six, or twelve) months?
Successful organizations focus on the handful of initiatives that can make a real difference, deferring less urgent ones.
Their leaders commit to those choices in word and deed.
By standing firmly behind a few top-line OKRs, they give their teams a compass and a baseline for assessment. Wrong decisions can be corrected once results begin to roll in. Nondecisions—or hastily abandoned ones—teach us nothing.
- What are our main priorities for the coming period?
- Where should people concentrate their efforts?
An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.
- With a select set of OKRs, we can highlight a few things—the vital things—that must get done, as planned and on time.
Leaders must get across the WHY as well as the WHAT. Their people need more than milestones for motivation. They are thirsting for meaning, to understand how their goals relate to the mission. The process can’t stop with unveiling top-line OKRs at a quarterly all-hands meeting. As LinkedIn CEO Jeff Weiner said: “When you are tired of saying it, people are starting to hear it.”
Key results are the levers you pull, the marks you hit to achieve the goal. If an objective is well framed, three to five KRs will usually be adequate to reach it. Too many can dilute focus and obscure progress. Besides, each key result should be a challenge in its own right. If you’re certain you’re going to nail it, you’re probably not pushing hard enough.
For the feedback to be effective, it must be received very soon after the activity it is measuring occurs. Accordingly, an [OKR] system should set objectives for a relatively short period. For example, if we plan on a yearly basis, the corresponding [OKR] time should be at least as often as quarterly or perhaps even monthly.
The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results—to measure “both effect and counter-effect”.
Less is More. As Steve Jobs understood, “Innovation means saying no to one thousand things.” In most cases, the ideal number of quarterly OKRs will range between three and five. It may be tempting to usher more objectives inside the velvet rope, but it’s generally a mistake. Too many objectives can blur our focus on what counts, or distract us into chasing the next shiny thing.
“The art of management,” Andy Grove wrote, “lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.
SUPERPOWER TWO: Align and Connect for Teamwork
Research shows that public goals are more likely to be attained than goals held in private.
Once top-line objectives are set, the real work begins. As they shift from planning to execution, managers and contributors alike tie their day-to-day activities to the organization’s vision. The term for this linkage is alignment, and its value cannot be overstated. According to the Harvard Business Review, companies with highly aligned employees are more than twice as likely to be top performers.
Bottoms Up. Precisely because OKRs are transparent, they can be shared without cascading them in lockstep. If it serves the larger purpose, multiple levels of hierarchy can be skipped over. Rather than laddering down from the CEO to a VP to a director to a manager (and then to the manager’s reports), an objective might jump from the CEO straight to a manager, or from a director to an individual contributor. Or the company’s leadership might present its OKRs to everyone at once and trust people to say, “Okay, now I see where we’re going, and I’ll adapt my goals to that.”
When goals are visible and public, over time they all converge because the top OKRs are known and everyone else’s OKRs are visible. Teams that are grossly out of alignment stand out, and the few major initiatives that touch everyone are easy enough to manage directly.
Innovation tends to dwell less at the center of an organization than at its edges. The most powerful OKRs typically stem from insights outside the C-suite. As Andy Grove observed, “People in the trenches are usually in touch with impending changes early. Salespeople understand shifting customer demands before management does; financial analysts are the earliest to know when the fundamentals of a business change.”
Micromanagement is mismanagement. A healthy OKR environment strikes a balance between alignment and autonomy, common purpose and creative latitude. The “professional employee,” Peter Drucker wrote, “needs rigorous performance standards and high goals. . . . But how he does his work should always be his responsibility and his decision.”
An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their key results. People are led to stretch above and beyond, to set more ambitious targets and achieve more of those they set: “The higher the goals, the higher the performance.” People who choose their destination will own a deeper awareness of what it takes to get there. When our how is defined by others, the goal won’t engage us to the same degree.
High-functioning teams thrive on a creative tension between top-down and bottom-up goal setting, a mix of aligned and unaligned OKRs.
When goals are public and visible to all, a “team of teams” can attack trouble spots wherever they surface.
SUPERPOWER THREE: Track for Accountability
In God we trust; all others must bring data. —W. Edwards Deming
One underrated virtue of OKRs is that they can be tracked—and then revised or adapted as circumstances dictate.
Contributors are most engaged when they can actually see how their work contributes to the company’s success. Quarter to quarter, day to day, they look for tangible measures of their achievement. Extrinsic rewards—the year-end bonus check—merely validate what they already know. OKRs speak to something more powerful, the intrinsic value of the work itself.
The best-in-class platforms feature mobile apps, automatic updating, analytics reporting tools, real-time alerts, and integration with Salesforce, JIRA, and Zendesk. With three or four clicks, users can navigate a digital dashboard to create, track, edit, and score their OKRs.
These platforms deliver transformative OKR values:
- They make everyone’s goals more visible. Users gain seamless access to OKRs for their boss, their direct reports, and the organization at large.
- They drive engagement. When you know you’re working on the right things, it’s easier to stay motivated.
- They promote internal networking. A transparent platform steers individuals to colleagues with shared professional interests.
- They save time, money, and frustration. In conventional goal setting, hours are wasted digging for documentation in meeting notes, emails, Word documents, and PowerPoint slides. With an OKR management platform, all relevant information is ready when you are.
Midlife tracking matters. Daniel Pink, the author of Drive, agrees: “The single greatest motivator is ‘making progress in one’s work.’ The days that people make progress are the days they feel most motivated and engaged.”
Regular check-ins—preferably weekly—are essential to prevent slippage.
OKRs are adaptable by nature. They’re meant to be guardrails, not chains or blinders. OKRs can be scored and graded. In scoring our OKRs, we mark what we’ve achieved and address how we might do it differently next time. A low score forces reassessment: Is the objective still worth pursuing? If so, what can we change to achieve it?
Google uses a scale of 0 to 1.0:
- 0.7 to 1.0 = green.* (We delivered.)
- 0.4 to 0.6 = yellow. (We made progress, but fell short of completion.)
- 0.0 to 0.3 = red. (We failed to make real progress.)
As we track and audit our OKRs, we have four options at any point in the cycle:
- Continue: If a green zone (“on track”) goal isn’t broken, don’t fix it.
- Update: Modify a yellow zone (“needs attention”) key result or objective to respond to changes in the workflow or external environment. What could be done differently to get the goal on track? Does it need a revised time line? Do we back-burner other initiatives to free up resources for this one?
- Start: Launch a new OKR mid-cycle, whenever the need arises.
- Stop: When a red zone (“at risk”) goal has outlived its usefulness, the best solution may be to drop it.*
For best results, OKRs are scrutinized several times per quarter by contributors and their managers. Progress is reported, obstacles identified, key results refined.
Reflection
The key to satisfaction is to set aggressive goals, achieve most of them, pause to reflect on the achievement, and then repeat the cycle.
The philosopher and educator John Dewey went a step further: “We do not learn from experience . . . we learn from reflecting on experience.”
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?
SUPERPOWER FOUR: Stretch for Amazing
The biggest risk of all is not taking one. —Mellody Hobson
OKRs push us far beyond our comfort zones. They lead us to achievements on the border between abilities and dreams.
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.
Studies have found that “stretched” workers were not only more productive, but more motivated and engaged: “Setting specific challenging goals is also a means of enhancing task interest and of helping people to discover the pleasurable aspects of an activity.”
Two OKR Baskets. Google divides its OKRs into two categories, committed goals and aspirational (or “stretch”) goals. It’s a distinction with a real difference.
Committed objectives are tied to Google’s metrics: product releases, bookings, hiring, customers. Management sets them at the company level, employees at the departmental level. In general, these committed objectives—such as sales and revenue goals—are to be achieved in full (100 percent) within a set time frame.
Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. They originate from any tier and aim to mobilize the entire organization. By definition, they are challenging to achieve. Failures—at an average rate of 40 percent—are part of Google’s territory.
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.”
Thousand percent improvement requires rethinking problems, exploring what’s technically possible and having fun in the process.
At Google, in line with Andy Grove’s standard, set aspirational OKRs at 60 to 70 percent attainment. In other words, performance is expected to fall short at least 30 percent of the time. And that’s considered success!
In pursuing high-effort, high-risk goals, employee commitment is essential. Leaders must convey two things:
- The importance of the outcome, and
- The belief that it’s attainable.
It’s better for leaders to set at least a modest stretch. Over time, as teams and individuals gain experience with OKRs, their key results become more precise and more aggressive.
Larry Page says, “If you set a crazy, ambitious goal and miss it, you’ll still achieve something remarkable.” When you aim for the stars, you may come up short but still reach the moon.
As a leader, you must try to challenge the team without making them feel the goal is unachievable.
Stretch goals can be crushing if people don’t believe they’re achievable. That’s where the art of framing comes in.
“OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or a creative workplace culture,” wrote John Doerr in Measure What Matters. “But if those fundamentals are in place, OKRs can guide you to the mountaintop.”
Need help or coaching with OKRs?
If you build the right OKRs and use the four superpowers, you will be surprised by your achievements. There is also a risk. If you build them wrong, you can damage your company.
Sphere’s Tech Executive Advisory helps tech executives and their teams build and validate their OKRs, as well as solve communication gaps, improve departmental productivity, and align execution with business goals. Get in touch with questions.
USEFUL OKR REFERENCES
