Organizations of all sizes and in every industry are always looking for ways to increase efficiency and drive performance. However, most businesses set up a top-down goal-structure system which usually ends ups stuck in its original stages.
Objectives and Key Results (OKRs) is an effective, simple and straightforward management framework that helps every team member understand the organization’s common goals and seek progress towards them. They help you establish and focus on great strategic goals, measure your progress and keep every member of the team on the right track.
Measuring what matters
Leading investor and venture capitalist John Doerr is rightfully considered one of the most influential experts of the Objectives and Key Results (OKRs) methodology.
The development of OKRs is attributed to Andy Grove, whom Doerr refers to in his book as ‘the father of OKRs’. Doerr initially picked on the technique at Intel where Andy Grove had successfully introduced the technique in an attempt to crush Intel’s competition.
In Measure What Matters, Doerr continues Andy Grove’s legacy, by presenting an engaging, straightforward and practical read that shows how OKRs can help any type of organization achieve excellence. More and more companies are now acknowledging OKRs as an ideal framework for setting and achieving goals, mainly due to success stories in companies like Google and Intel.
What are OKRs?
OKRs consist of 2 parts; Objectives and Key Results; objectives represent what you want to achieve while Key Results monitor how you will get there.
John Doerr explains that the basis for OKRs is to align and focus all efforts within organizations by providing the various teams and individuals with visible and measurable objectives. Typically, every team member should have 3-5 objectives per quarter. OKRs should have the same time constraint in each department to help with coordination.
Objectives; what are you trying to accomplish?
Objectives express an organization’s goals and intentions and point us to the direction we want to go. Good objectives are significant, inspirational, ambitious, concrete, and action-oriented.
There can be no progress without clear objectives because people cannot determine their real progress towards unclear objectives. In setting up the objectives one question is paramount; what is the most important thing that I or my team must accomplish in the next 3, 6, or 12 months?
Key Results; How will you measure your accomplishments?
Although objectives are key in pointing us in the right direction, they may be somewhat distant. This is where Key results come in; to measure your progress and outcomes. They are the specific, measurable ways to achieving our objectives.
The ideal Key results should be specific, concrete, time-bound, but most of all they must be measurable and verifiable. You either fulfill the requirements of a key result or you don’t; there should be no doubt about it.
Each key result should also be aggressive yet realistic and challenging in its own right. Key Results are what the levers you need to pull to achieve the objective.
Every member of the team should have their own objectives and key results to meet. For instance, the objective of an ice cream shop in the summer may be to develop the top leading product in the area. Key results for the Chief Product Officer may be; to sell 1 million ice cream cones to returning customers and attain customer recommendation score of at least 90% on customer surveys.
Execution is everything
Having watched too many startups struggle with growth and getting things right, John Doerr came up with his personal philosophy and mantra ‘Ideas are easy. Execution is everything.’’ There is usually no shortage of goals and ideas in organizations, but employees and departments rarely ever think about them. OKR systems will turn your great ideas and goals into great execution.
John Doerr reminds readers that just like any management framework, OKRs may be executed well or poorly. The aim of this book is to teach you how to use OKRs properly.
OKRs are particularly important in smaller startups, where individuals need to pull in the same direction for the organization to survive. Doerr explains how big shots including; Google, Bill Gates Foundation, Twitter, LinkedIn, and Uber used (OKRs) in their early stages to realize explosive growth. He further illustrates how any outcome-oriented organization can equally benefit from properly implementing OKRs.
Measure What Happens is divided into 2 complementary parts. In the first part; OKRs in Action, Doerr focuses on the definition, history, and significance of OKRs.
Doerr provides a series of first-person experiences with top industry leaders such as Larry Page, Sergey Brin, Bill Gates, Bill Campbell, Musician Bono, and others, to illustrate just how much OKRs can contribute to an organization’s success. In the book’s foreword, Larry Page, CEO of Alphabet and co-founder of Google, states that OKRs have led to 10x growth, many times over in Google.
Part 2 of the book; The New World of Work, introduces a new management model called CFRs (Conversations, Feedback, Recognition) and their relationship with OKRs. Doerr talks about reinventing CFRs with specific attention human resource management, cores value, and corporate culture.
OKRs in action
The OKRs management system should be established on four superpowers:
1. Focus on core principles
Objectives and Key results motivate leaders to think about what matters most. The first step in rolling out OKRs must be in upper management. It is the leader’s responsibilities to ensure that the organization focuses all its efforts on the same issues.
As Nuna CEO Jini Kim explains in the book, executives need to commit to the process first. Until the executives are fully on board, you cannot expect other individuals to follow suit.
OKRs need to be established gradually and incrementally, doing too much at first will fail. This is because the more difficult the new Objectives and Key Results are, the more likely it is for team members to abandon them.
Furthermore, OKRs can only be achieved if the numbers of objectives and key results are kept small and precise. Too many objectives obscure progress by diluting focus because each time your team commits to one objective they forfeit their chance to commit to another.
Consider one of the simple objectives from Nuna, a leading healthcare technology company during their start-up days;
Objective: Build a world-class team in 3 months
• Hire 10 highly-qualified engineers
• Recruit a highly-qualified commercial sales leader
• 100% of the candidates will have a well-organized, professional experience even if we don’t extend an offer
2. Alignment and teamwork
Studies indicate that only 7% of employees fully understand the policies of their company or what is expected of them to assist in achieving the common objectives. Alignment ensures that the efforts of every team member are aimed at the same vision and goals.
The OKR system promotes transparency and cross-team integration. Transparency helps each team member understand the role they play towards the common objective and works to promote work satisfaction.
For OKRs to function efficiently, they must be adopted universally without exceptions. Each staff will be able to look at everyone’s goals, including the management. In addition, critiques and corrections can be conducted in open view.
Take the example of Intuit, the financial software company with more than US$ 900 million net revenue per year. Each employee views their manager’s OKRs 7 times per Quarter (which is collectively more than 4,000 times per quarter). This creates a powerful platform for collective commitment and teamwork.
3. Track for Accountability and Audit
Any objective without reflection slides into irrelevance. One of the best things about OKRs is that they can be tracked and then revised or adjusted as circumstances require. OKRs live and breath, unlike the traditional, ‘set them and forget them’ frozen goals common in many organizations.
OKRs are dynamic tools that need frequent status updates- (preferably weekly, for startups and monthly for larger corporations) to make sure everybody is on track.
OKRs systems use objective scoring to provide a numerical representation of everybody’s achievements. It shows the areas someone is doing right and the areas for improvement
Take a look at Google’s tracking scale from 0-1.0:
• 0.7- 1.0; Green (Delivered)
• 0.4 -0.6; Yellow (Progress made but fell short of completion)
• 0.00- 0.3; Red (Failed to make real progress)
In addition, letting people know how they are progressing will drive engagement, encourage and challenge your team and promote internal networking.
Alex Garden Co-founder and Co-CEO of Zume Pizza explains in the book how they step back in a quiet place and have conversations, where every contributor is given a chance to reflect on their actions and decisions. Garden states that this process has made Zume experience high performance and exponential growth.
4. Stretch for Amazing
Innovation is essential to the success of an organization but to bring in innovation you need your team to stretch beyond the existing solutions and limits. OKRs provide focus, alignment and tracking all of which are necessary for people to stretch limits and deliver breakthrough innovations.
At the beginning of each Quarter, differentiate between objectives that have to be achieved 100% (Committed OKRs) and objectives that are being stretched for (aspirational OKRs).
Aspirational OKRs serve as a unifying focal point, motivating people and creating team spirit as everybody strives towards the finish line. They create an audacious ambition among your team members and giant leaps in productivity.
To achieve aspirational objectives, chunk them into measurable objectives and realistically achievable steps for each team and individual- quarter by quarter.
One good example of a company that utilizes aspirational OKRs efficiently is Google. From its startup days, Google has been driven by a moonshot culture- the most ambitious, ground-breaking and extremely hard projects.
In the company’s first year of incorporation, Google’s co-founder Larry Page and Sergey Brin told John Doerr that they intended to reach a market capitalization of $100 billion in revenue. This was to be achieved by organizing the world’s information and making it universally accessible and useful. Whenever Google invents something new, they always think- how can we scale it into a billion? They set measurable objectives for every team and break them down, Quarter by Quarter each year.
Cofounders Larry and Sergey came up with an inspiring OKR for Google in 2008 ‘To make the web as fast as flipping through a magazine’. The aspirational OKR inspired everybody in the company to think and work harder. The key results involved a 10x improvement on the existing speed. OKRs provide clear, quantitative targets for Google to take its qualitative leaps.
Continuous performance management
On the 2nd part of Measure What Matters, John Doerr introduces Continuous Performance Management and explains how Conversations, Feedback, and Recognition (CFRs) contribute to effective OKR systems.
For organizations to reap the full benefit of OKR systems, it is essential for managers to have frequent conversations with staff. This helps them identify and address obstacles before they threaten the Key results. CFRs enables leaders to determine the kind of additional support a certain employee needs to achieve their OKRs.
“Ideas are easy. Execution is everything” — John Doerr
According to Doerr the concept of using CFR tools with OKRs was pioneered by Doug Dennerline from BetterWorks. The Continuous Performance Management system has since then revolutionized review processes in organizations with regular check-ins and real-time feedback.
Doerr gives several case studies to show that Continuous Performance Management is much more effective than Annual Performance Reviews. In fact, 10% of the leading companies on the Fortune companies 500 list have already replaced annual review in HR systems with CFRs.
For instance, Adobe Inc discovered that annual performance reviews cost the business eight manager hours per employee (80,000 manager hours per year) and demoralized everyone involved in the process. They dropped the annual reviews in 2012, in favor of Continuous Performance Management which involves quarterly goals and tracking of OKR coupled with the more effective CFRs.
In the Continuous Performance Management model, the manager takes on the role of a mentor or a coach rather than micromanaging. The coaching and feedback need to be done continuously and not saved up for a single review every year. It is also important for managers to ensure feedback flows between peers. Constructive feedback will enhance communication and bonding among peers.
Additionally, managers must find a way to recognize and celebrate the achievements of their team members. Simple recognition based on performance has immense potential to trigger an employees’ strength. The key results and efforts must be recognized at the moment of completing projects and achieve their goals.
Who can benefit from this book
Key stakeholders and leaders will greatly benefit from reading this book. Measure what Matters provides a framework for you to discover, establish and realize your organization’s strategic goals.
Anyone in a leading position can greatly relate to the hundreds of examples, studies, and interviews with leaders from the most valuable companies illustrating how OKRs have helped them achieve high performance and exponential growth in their respective industries.
Seeing how much Measure What Matters has to offer, it is not surprising that the recently published book is already a New York Times bestseller. John Doerr illustrates how OKRs generate more focus, transparency, and alignment for every member- from C-level executives to team members, to understand the goals of the company, the role they play in meeting those goals through a set of specific and measurable actions.
Have you implemented OKRs? Do you have a success story to share with community? Do you use any special software to implement OKRs for personal or professional use? Let me know in the comments below and as always thanks for reading.
To learn more, you can find resources on WhatMatters.com – it’s there where you can download worksheets and templates and get daily inspiration to stay on track with your OKRs.