Measure What Matters:
How Google, Bono, and the Gates Foundation Rock the World with OKRs
by John Doerr
In this book, you will learn about OKRs, a management methodology to identify the most pressing issues in your organization, your department, your team, or in your own work, and get your people aligned and in action on them. It’s the management approach, in part, behind Google’s massive success and that of other businesses and nonprofits.
OKRs stands for “Objectives” and “Key Results.” An objective describes what’s to be accomplished. Key results are the measures to achieve the Objective and the benchmarks to monitor results.
OKRs bring the organization’s primary goals into focus and channel efforts toward those goals. They create a sense of unity of purpose across the organization and link diverse operations.
Measure What Matters was written by John Doerr, a Silicon Valley venture capitalist and long-time champion of OKRs; Doerr learned (was steeped in) the process while working at Intel in its early days. He says that then Intel president and CEO Andy Grove is the creator of the OKR system. It was the product of Grove’s engineer’s mind applied to a very human process.
The book is divided into two parts. Part 1, OKRs in Action, explains what OKRs are about and outlines their four superpowers. Part 2, The New World of Work, introduces the companion to OKRs: Continuous Performance Management and proposes ditching traditional annual performance reviews in favor of CFRs (Conversations, Feedback, and Recognition).
There’s an appendix that includes five resource documents. The why, what, and how chapters are interspersed with chapter-long stories that chronicle a business’s or nonprofit’s journey through some aspect of the OKR management process.
This summary reflects my takeaways from a useful book I recommend to others. Reading a summary isn’t a substitute for reading the book. There’s much more than I can cover here. Plus, this is my interpretation. If these ideas resonate with you, I encourage you to get a copy of the book from your favorite bookseller. Here are the Amazon links: eBook | Audiobook | Print
OKRs can help turn big, ambitious visions into smaller actionable objectives and milestones. They “turn good ideas into great execution.”
- Objectives define “what” you want to accomplish. Objectives should be “significant, concrete, action-oriented, and inspirational.” They are change-oriented and should point to new horizons.
- Key results define “how and how much;” they provide the milestones by which to measure progress. Key results should be “specific, time-bound,” and “aggressive but realistic.” Above all, they must be verifiable and measurable. You should be able to look at a Key Result measure and tell, without question or argument, whether a milestone has been met or not.
When it comes to setting and achieving Objectives, Key Results are essential. They provide a framework for measuring progress and determining whether Objectives have been met. They also help to ensure that everyone involved in achieving an Objective knows what they need to do and how to track progress.
Key results should be treated as a set. They aren’t independent goals. They’re steppingstones on the path to reaching the Objective.
“Objectives and Key Results are the yin and yang of goal setting – principle and practice, vision and execution.”
OKRs answer two vital questions: “Where do we want to go?” And “How will we know when we get there?” The answer may lead to one of two types of OKRs: committed or aspirational.
- Committed OKRs are those that all agree will be fulfilled by the end of the cycle. If necessary, you are ready to change plans and redirect resources to ensure they are achieved. It’s an ambitious goal that will stretch the team, but it’s doable. For a committed OKR, the Key Results measures must be met on time and in full.
- Aspirational OKRs, in contrast, describe the desired world, even if you have no idea how to get there or the resources to make it possible. They stretch your team, and achieving 100% of an aspirational OKR is rare (some organizations consider 70% success). Falling short or failing can lead to learning, plus you’re closer to the finish line than you would have been without the attempt.
Committed and aspirational OKRs each reflect a different attitude toward success. Committed OKRs are “must-dos.” Aspirational OKRs are out of reach – taking significant risks, and the prospect of failure is expected. But failure is celebrated as a brave attempt to get closer to the goal, not as a sign of a team’s flaws. Committed OKRs leave less room for error.
OKRs have four “superpowers”:
- Superpower #1 — Focus and Commit. High-performance organizations focus on the work that matters and know what doesn’t. OKRs force leaders to make hard decisions. OKRs give us the focus and clarity to succeed.
- Superpower #2 — Align and Connect. OKRs is a transparent system — everyone’s goals are shared in the open, from the CEO down. People link their goals to the company’s game plan, figure out how their goals affect each other, and work with other teams. Top-down alignment gives work meaning by showing how each person contributes to the success of the whole. Bottom-up OKRs encourage engagement and innovation by giving people a stronger sense of ownership.
- Superpower #3 — Track: OKRs are driven by data. They are kept going by regular check-ins, objective grading, and constant reassessment, all done in a way that doesn’t judge. When a Key Result is in danger, steps are taken to get it back on track or, if necessary, to change or replace it.
- Superpower #4 — Stretch. Aspirational OKRs spur us to excel in ways we never thought possible. We are our most creative, ambitious selves when we test our limits and are given the freedom to fail.
Aspirational OKRs use all four superpowers. Focus and commitment are crucial to the achievement of meaningful Objectives. Results beyond the norm require an organization to be transparent, collaborative, aligned and connected. And quantifiable tracking ensures you can tell when you’ve reached your stretch goal.
OKRs are a survival tool in small organizations and startups, ensuring everyone is “pulling in the same direction.”
OKRs provide a “shared language for execution” for larger organizations.
Implementing OKRs starts with a question: what is most important in the next 3, 6, or 12 months? Focus on the initiatives that make an impact and defer less urgent ones. Commit to your choices not just in words but in action.
Standing firmly behind a few key OKRs will give your teams a compass and a benchmark for evaluation. Once results begin to flow in, poor choices can be corrected, and you’ll be wiser as a result. Non-decisions/non-action won’t teach you anything.
Communicate the “why,” not just the “what.” Milestones alone won’t inspire your people. They want to know how their Objectives fit into the mission.
Less is more. A few well-chosen Objectives convey a clear message about what you say “yes” to and what you say “no” to. Companies, teams, and individuals choose what matters most by limiting OKRs to three to five per cycle. There should be no more than five Key Results attached to each Objective.
Half of OKRs should be set “bottom up.” If all OKRs are set top-down, motivation will be seriously compromised. Plus, bottom-up can lead to innovation. Innovation is more likely to be found on an organization’s outskirts rather than its core. People in the trenches are frequently the first to notice looming changes.
Individuals and teams should be responsible for creating at least half of their OKRs and ALL their Key Results for cascaded and locally generated OKRs alike. “High-functioning teams thrive on a creative tension between top-down and bottom-up goal setting, a mix of aligned and unaligned OKRs.”
Don’t dictate. OKRs represent an agreement — a social contract of sorts — to establish priorities and define how to measure progress. This sort of collective agreement is essential.
Stay flexible. Some OKRs may need to be adapted (even scrapped) mid-cycle if they prove faulty or the situation becomes more apparent. Similarly, some Key Results criteria may need to be modified or even discarded mid-cycle if the climate or Objective has changed. OKRs are not set in stone; they are always a work in progress.
Dare to fail. When you want peak performance, aspirational OKRs are essential. While particular operational Objectives must be fulfilled to the letter, aspirational Objectives must be challenging and possibly unachievable. To reach new heights, you need to set stretch goals.
OKRs are a tool, not a weapon. The OKR system is meant to set a person’s or team’s pace but give them their stopwatch so they can measure their performance. It is not a legal document that can be used to evaluate someone’s work. OKRs and bonuses should be kept separate.
Be patient and persistent. OKRs, especially aspirational ones, involve some trial and error. Getting up to speed on the process will take time. Embracing the new system may take four or five quarters, and mastering it can take even longer.
Make your OKRs public. Goals that are publicly shared are more likely to be achieved than goals that are kept private. Making them public fosters better communication and creates opportunities for collaboration and synergy. A study found that 92 percent of working Americans would be more motivated to achieve their goals if their colleagues could see their progress.
Your top-most Objectives must be significant. They should be tied to the larger purpose your organization is trying to achieve. OKRs shouldn’t be a laundry list of mundane tasks or a catchall wish list. They should be carefully chosen Objectives that call for special attention. Objectives that will move people forward in the present.
Cascading Objectives top-down improves vertical coherence but should be done sparingly. If all Objectives are cascaded, the process risks becoming mechanical and can impair agility and flexibility. It can also marginalize front-line contributors. But most significant is the loss of horizontal coherence — the opportunity to connect individuals, teams, and departments (horizontally) across reporting lines, not just down them (vertically).
It’s okay for some OKRs to transcend the org chart. Many projects fail to meet deadlines due to unacknowledged dependencies. Creating cross-functional teams is the solution — connecting peers with peers and teams with teams. When developing new ideas or solving complex problems, isolated people cannot beat a connected group.
Status updates keep OKRs relevant. OKRs are “living, breathing organisms.” Without updates, you’re left with “zombie OKRs” at quarter’s end (or, worse yet, year’s end) — docs that outline the what’s and how’s but are “devoid of life or meaning.”
Frequent check-ins, preferably once a week, are necessary to avoid slippage. “Without an action plan, the executive becomes a prisoner of events. And without check-ins to re-examine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.” – Peter Drucker
Appoint one or more OKRs shepherds. To function well, the group must adopt an OKR system universally, whether that’s the top executives, the department, or the entire organization. No exclusions, no withdrawals. There will be the usual procrastinators, resisters, and late adopters. A smart practice is to appoint one or more OKR shepherds to tend the flock.
OKRs are adaptable. As you review and track OKRs, you have four options:
- Continue if the goal is on track.
- Update an Objective or Key Result that needs attention because of changes in the external environment or the workflow.
- Start a new OKR whenever the need arises.
- Stop an at-risk goal that has outlived its usefulness.
Learn from experience. Conduct one-on-ones and team meetings to score results Objectively, conduct subjective self-assessments, and engage in reflection. A Harvard study found that reflection helps us process the lessons that experience teaches, making the experience more productive and building confidence.
Continuous Performance Management: OKRs plus CFRs
Annual performance reviews are expensive, time-consuming, and for the most part, pointless. On average, they take up 7.5 hours of each direct report’s manager’s time. But only 12% of HR leaders think the process is “highly effective” at driving business value. Only 6% think the time it takes is worth it.
The alternative is continuous performance management. A transformational system that combines OKRs with CFRs, which stands for:
- Conversations: genuine, nuanced discussions between managers and contributors to enhance performance. In one-on-ones with subordinates, they should be considered the subordinate’s meeting – they should set the agenda and tone. The supervisor’s role is to learn and coach.
- Feedback: networked or bidirectional communication between peers to assess progress and direct future improvement. Feedback can only be constructive if it is specific. It should also be an opportunity for managers and subordinates to say what they need from each other to be successful.
- Recognition: expressions of gratitude to deserving people for their contributions, regardless of the size of the contribution. Recognition is a powerful driver of engagement.
CFRs are the perfect companion to OKRs, for stimulating and tracking aspirations, action, and results. “They give OKRs their human voice.”
Replacing or supplementing the yearly review with ongoing interactions leads to improvements throughout the year. Transparency and alignment become almost a given.
Continuous performance management can improve performance from bottom to top. For both leaders and contributors, it does wonders for morale and personal growth. And it can be much more effective when combined with the quarterly goals and built-in tracking of OKRs.
OKRs and salary decisions should be kept separate. These should be two conversations with different foci and schedules. OKRs don’t take into account the totality of an employee’s performance. A person can reach goals and still underperform in their role. Similarly, one can miss a stretch goal and still be exceptionally good at other aspects of their job. Plus, OKRs tend to be a team effort.
The Importance of Culture
“Goals cannot be attained in a vacuum. Like sound waves, they require a medium. For OKRs and CFRs, the medium is an organization’s culture, the living expression of its most cherished values and beliefs.”
OKRs combined with CFRs provide a framework that sustains high performance by aligning teams on a few common but critical Objectives, connecting teams through goal-oriented communications, and promoting transparency and accountability.
An OKR culture is a culture of accountability. People push towards their goals because each OKR is vital to the organization, and their colleagues rely on them. Everybody takes pride in the progress being made. “It’s a social contract, but a self-governed one.”
The OKR framework is a versatile goal-setting framework that can be adapted to any work setting or personal use. OKRs provide a blueprint for better refining your goals and outlining a plan for accomplishing them. The formula is simple: Objective (aims) + Key Results (milestones & measures) + CFRs. It’s a simple but powerful “system to amplify human potential.”
NOTE: I encourage you to check out the book’s companion website, whatmatters.com. It has a plethora of additional information, including a free course on implementing OKRs. The website articles answered most of the questions I had after reading the book, such as:
- What’s the role of KPIs in OKRs, if any?
- Should Key Measures track only outcomes? Where do Inputs and outputs fit in the OKR framework?
- How to track progress toward OKRs?
It also discusses a third type of OKR: The Learning OKR. –DT
Book details and where to buy it:
Get the book on Amazon: Ebook | Audiobook | Print (affiliate links*)
Amazon rating: 4.5 of 5
Goodreads rating: 4.0 of 5
Page count: 320
Publication date: April 24, 2018
Author website: whatmatters.com
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