Google, Meet OKRs
Ideas are easy, execution is everything.
OKRs: A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.
An OBJECTIVE – WHAT is to be achieved. By definition, objectives are significant, concrete, action oriented and ideally inspirational.
KEY RESULT benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. It’s not a key result unless it has a number.
Goals can be problematic if not handle carefully. Goals may drive very narrow focus. An OKR system links goals to a team’s broader mission.
Many companies have a »rule of seven«, limiting managers to a maximum of seven direct reports.
Objectives and key results drive clarity, accountability and the inhibited pursuit of greatness.
OKRs’ younger sibling CFRs (Conversation, Feedback, Recognition).
The Father of OKRs
Intel was Grove’s laboratory for management innovation.
The objective is the direction. The key results have to be measurable.
Peter Drucker aimed to map out “a principle of management that will give full scope to individual strength and responsibility and at the same time give common directions of vision and effort, establish team work and harmonize the goals of the individual with the common goals.” In 1954, in his book The Practice of Management, Drucker codified this principle as “management by objectives and self-control”. It became Andy Grove’s foundation and the genesis of what we now call the OKR.
MBO (Management by Objective) versus OKR:
- What versus what and how
- Annual versus Ouaterly or Monthly
- Private and Siloed versus Public and Transparent
- Top-down versus Bottom-up or Sideways
- Tied to Compensation versus Non-compensation tied
- Risk Averse versus Aggressive and Aspirational
The essence of a healthy OKR culture – ruthless intellectual honesty, a disregard for self-interest, deep allegiance to the team. A limit of three to five OKRs per cycle is ok. While certain operational objectives must be met in full, aspirational OKR’s should be uncomfortable and possibly unattainable – stretched goals.
To encourage risk taking and prevent sandbagging, OKRs and bonuses are best kept separate.
Operation Crush: An Intel Story
Operation Crush – the fight for survival by young Intel Corporation. Crush illustrates all four OKR superpowers: focus, alignment, tracking and stretching. It was about how to fight with its product 16-bit microprocessor to become market leader. They stopped selling to programmers and started selling to CEOs. Their moto was: we will achieve a certain OBJECTIVE as measured by the following KEY RESULT.
If the vector point in different directions, they add up to zero. But if you get everybody pointing in the same direction, you maximize the results. OKRs were Grove’s secret weapon in Operation Crush.
Andy Grove: “Bad Companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.”[1]
Superpower #1: Focus and Commit to Priorities
Measuring what matters begins with the question: What is most important for the next three (or six, or twelve) moths? Successful organizations focus on the handful of initiatives that can make a real difference, deferring less urgent ones.
No one individual – or company – can “do it all”. With a select set of OKRs we can highlight a few things – the vital things – that must get done; as planned and on time.
OKRs require a public commitment by leadership in word and deed.
LinkedIn CEO Jeff Weiner likes to say, “When you are tired of saying it, people are starting to hear it.”
Objectives are the stuff of inspiration and gar horizons. Key results are more earth-bound and metric-driven (revenue, growth, active users, quality, safety, market share, customers engagement).
A quarterly OKR cadence is best suited to keep pace with today’s fast-changing markets. For the feedback to be effective, it must be received very soon after the activity it is measuring occurs.
The more ambitious the OKR, the greater the risk of overlooking a vital criterion. One solution is to pair key results – to measure “both effect and counter-effect”.
Don’t allow the perfect to be the enemy of the good. An OKR can be modified or even scrapped at any point in its cycle. Sometimes the “right” key result surface weeks or months after a goal is put into play. Key results should be succinct, specific and measurable. A mix of outputs and inputs is helpful. Competition of all key results must result in attainment of the objective.
As Steve Jobs understood: “Innovation means saying no to one thousand things.”
Focus: The Remind Story
The three watchwords for entrepreneurs:
- Solve a problem
- Build a simple product
- Talk to your users
Superpower #2: Align and Connect for Teamwork
Research shows that public goals are more likely to be attained than goals held in private.
It is really hard for employees to see what they should work on first. Everything seems important; everything seems urgent. But what really needs to get done? The answer lies in focused, transparent OKRs.
Cascading OKR from top to bottom. Cascading makes and operation more coherent. But when all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with four adverse effects:
- A loss of agility. Even medium-size companies can have six or seven reporting levels. Tightly cascading organizations tend to resist fast and frequent goal setting.
- A lack of flexibility. Since it takes so much effort to formulate cascaded goals, people are reluctant to revise them mid-cycle.
- Marginalized contributors. Rigidly cascaded systems tend to shut out input from frontline employees.
- One-dimensional linkages. While cascading lock in vertical alignment, it’s less effective in connecting peers horizontally.
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.
High-functioning teams thrive on a creative tension between top-down and bottom-up goal setting, a mix of aligned and unaligned OKRs. In times of operational urgency, when simple doing takes precedence, organizations may choose to be more directive.
Align: The MyFitnessPal Story
When you come down to it, alignment is about helping people understand what you want them to do. Alignment doesn’t mean redundancy. We began pinning our key results to deadlines instead of revenue of projected users.
When we face a trade-off between our customers and a business goal, we align with the customer.
Connect: The Intuit Story
At a desktop software company, leaders look at operations through a twentieth-century retail lens. By contrast, a cloud-based business wants to know what is happening now.
Superpower #3: Track for Accountability
Unlike traditional, frozen, “set them and forget them” business goals, OKRs are living, breathing organisms. Their life cycle unfolds in three phases, which I’ll consider in turn.
As the bar for structured goal setting rises, more organizations are adopting robust, dedicated, cloud-based OKR management software. These platforms deliver transformative OKR values:
- They make everyone’s goals more visible.
- They drive engagement.
- They promote internal networking.
- They save time, money and frustration.
Daniel Pink in his Drive: “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.”
As we track and audit our OKRs, we have four options and any point in the cycle:
- Continue
- Update
- Start
- Stop
OKRs do not expire with completion of the work. As in any data-driven system, tremendous value can be gained from post hoc evaluation and analysis.
In scoring our OKRs, we mark what we’ve achieved and address how we might do it differently next time:
0.7-1.0 = green (We delivered)
0.4-0.6 = yellow (We made progress, but felt short of completion)
0.0-0.3 = red (We failed to make real progress)
OKRs are inherently action oriented. John Dewey: “We don’t learn from experience…we learn from reflecting on experience.”
OKR wrap-ups are retrospective and forward-looking at the same time.
Track: The Gates Foundation Story
You need to understand what can you be the best at in the world. Once you figured that out, we laid the OKR system on top of it.
In philanthropy 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.
Superpower #4: Stretch for Amazing
OKRs push us far beyond our comfort zones. They lead us to achievements on the border between abilities and dreams. When stretch goals are chosen wisely, the payoff merits the risk and then some. “Big Hairy Audacious Goals”.
Not all stretch goals are so rarefied. Sometimes they sometimes represent “ordinary” work at an extraordinary level.
Only a transparent, collaborative, aligned and connected organization can achieve so far beyond the norm. And without quantifiable tracking, how can you know when you’ve reached that amazing stretch objective?
Google divides its OKRs into two categories, committed goals and aspirational (or “stretch”) goals. Committed objectives are tied to Google’s metrics. Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. The relative weight of these two baskets is a cultural question.
If Andy Grove is the patron saint of aspirational OKRs, Larry Page is their latter-day high priest. The company is synonymous with exponentially aggressive goals, or what author Steven Levy calls “the gospel of 10x”.
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.
The way Page sees it, a ten percent improvement means that you’re doing the same thing as everybody else. That’s why 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.
Stretch: The Google Chrome Story
As a leader, you must try to challenge the team without making them feel the goal is unachievable.
In 2008, Larry and Sergey wrote a beautiful OKR that truly captured people’s attention: “We should make the web as fast as flipping through a magazine.”
Stretch OKRs are an intense exercise in problem solving.
Stretch: The YouTube Story
Susan Wojicki, according to the Time magazine, is “the most powerful woman on the internet”. In 2014, as the new CEO of YouTube, she inherited one of the most aggressive goals anytime, anywhere. Over a span of four years, the mission was to reach a billion hours of people watching YouTube every day – to grow by a factor of ten.
OKRs require organization. You need a leader to embrace the process and a lieutenant to ride herd over scoring and reviews.
In a world where computing power is nearly limitless, “the true scarce commodity is increasingly human attention.” Our true currency wasn’t views or clicks – it was watch time.
Maybe the best thing about OKRs is how they track your progress to a target, especially when you’re behind schedule.
Daily watch time is driven by two factors: the average number of daily active viewers and the average amount of time those viewers spend watching. It is easier to expand a relationship than to get a new one started.
Continuous Performance Management: OKRs and CFRs
To reach goals almost beyond imagining, people must be managed at a higher level. Our systems for workplace communication cry out for an upgrade.
The contemporary alternative to annual reviews, is continuous performance management. It is implemented with and instrument called CFRs, for:
- Conversations
- Feedback
- Recognition
Like OKRs, CFRs champion transparency, accountability, empowerment and teamwork, at all levels of the organization.
For companies moving to continuous performance management, the first step is blunt and straightforward: Divorce compensation (both raises and bonuses) from OKRs.
As companies transition to continuous performance management, OKRs and CFRs become mostly independent from compensation and formal evaluation.
Based on BetterWorks’ experience with hundreds of enterprises, five critical areas have emerged of conversation between manager and contributor:
- Goal setting and reflection
- Ongoing progress updates
- Two-way coaching
- Career growth
- Lightweight performance reviews
Sheryl Sandberg: “Feedback is an opinion, grounded in observation and experiences, which allows us to know what impression we make on others.”[2]
Modern recognition is performance-based and horizontal. It crowdsources meritocracy. Continuous recognition is a powerful driver of engagement.
Ditching Annual Performance Reviews: The Adobe Story
“Check-in” is Adobe’s new mode of continuous performance management. Lightweight, flexible and transparent, with minimal structure and no tracking or paperwork, Check-in features three focus areas: quarterly “goals and expectations” (Adobe’s term for OKRs), regular feedback and career development and growth.
For service business, nothing is more valuable than engaged employees who feel they can make a difference and want to stay with organization. Turnover is costly.
CFR has three requirements: executive support, clarity of company objectives and how they align with individual objectives and investment in training to equip managers and leaders to be more effective.
Baking Better Every Day: The Zume Pizza Story
Most start-ups aren’t too eager to plunge into structured goal setting: We don’t need that. We go super-fast. We just figure stuff out.
In one-on-one conversation, they usually reply on questions like: What makes you verry happy? What saps your energy? How would you describe your dream job?
Culture is the common language that allows for individuals in an organization to be sure they’re all taking about the same thing. Beyond that, culture establishes a common framework for decision making.
Culture
OKRs are clear vessels for leader’s priorities and insights. CFRs help ensure that those priorities and insights get transmitted. For OKRs and CFRs, the medium is an organization’s culture, the living expression of its most cherished values and beliefs.
The qualities prized by Andy Grove – collective accountability, fearless risk taking, measurable achievement – are also highly esteemed at Google. Standout performance correlated to affirmative responses to these five questions:
- Structure and clarity
- Psychological safety
- Meaning at work
- Dependability
- Impact of work
In The Progress Principle, Teresa Amabile and Steven Kramer define high-motivation cultures, as the ones that rely on mix of two elements. Catalyst, defined as “actions that support work”. Nourishers – “acts of interpersonal support”.
In the past, when employees just needed to do the next thing right – to follow orders to the letter – culture didn’t matter so much. But now we’re living in a world where we’re asking people to do the next right thing. A rulebook can tell me what I can or can’t do. I need culture to tell me what I should do.
An OKR/CFR culture is above all a transparent culture. Vision-based leadership beats command-and-control.
Culture Change: The Lumeris Story
When an organization isn’t yet ready for total openness and accountability, culture work may be needed before OKRs are implemented.
Without cultural alignment, the world’s best operational strategy will fail. People watch what you do more than what you say. Time is the enemy of transformation.
Institute a culture that attracts and retains A player.
Transparency is scary. Admitting your failures – visibly, publicly – can be terrifying.
Goal setting is more art than science. We weren’t just teaching people how to refine an objective or a measurable key result.
Important elements to address are also:
- Why transparency important?
- What is true accountability?
- How can OKRs help managers get work done through others?
- When is it time to stretch a team’s workload – or to ease off on the throttle?
Culture Change: Bono’s ONE Campaign Story
From the time we first meet, author was struck by Bono’s passion for factivism or fact-based activism.
Nobody has ever before measured activists’ passion. It sounds odd, but it’s totally OKR. So, you’re passionate – how passionate?
If everything is green, you failed. We need more red. We need more big ambitions because that’s what we’re good at.
The Goals to Come
OKRs may be called a tool, or a protocol, or a process. But author’s image of choice is a launch pad, a point of liftoff for the next wave of entrepreneurs and intrapreneurs.
Objectives are the Whats:
- Goals and intents
- Aggressive yet realistic
- Tangible, objective and unambiguous
- Achievement of an objective must provide clear value
Key Results are the Hows:
- Measurable milestones which, if achieved, will advance objective(s) in a useful manner to their constituents
- Outcomes, not activities
- Evidence of competition, this evidence must be available, credible and easily discoverable
Commitments are OKRs that we agree will be achieved.
Aspirational OKRs express how we’d like the world to look.
[1] In the book on page 46
[2] In the book on page 184
