Introduction
In today's fast-paced business world, organizations often struggle to set clear goals and keep everyone aligned and focused on what truly matters. Many companies have so many objectives that they might as well have none at all, leaving employees feeling directionless and unmotivated. In his book "Measure What Matters," John Doerr introduces a powerful solution to this common problem: Objectives and Key Results (OKRs).
OKRs are a revolutionary management philosophy that helps organizations set clear, measurable goals and track progress towards achieving them. This system, which has been adopted by some of the world's most successful companies, including Google, Intel, and the Gates Foundation, allows businesses to stay focused, agile, and innovative in an ever-changing marketplace.
Throughout the book, Doerr shares his personal experiences with OKRs, from his early days at Intel to his work with numerous high-profile companies and organizations. He explains how OKRs can transform the way businesses operate, fostering a culture of transparency, accountability, and continuous improvement.
The Birth of OKRs at Intel
The story of OKRs begins in the 1970s at Intel, where Doerr worked as an intern. It was here that he first encountered Andy Grove, one of Intel's cofounders and the mastermind behind the OKR system. Grove's leadership philosophy centered on the idea that execution is more important than knowledge alone. He believed that to achieve great things, companies needed to focus on a small number of critical objectives and measure their progress with clear, quantifiable results.
At Intel, one of the company's objectives at the time was to become the leader in the midrange computer component industry. To measure progress towards this goal, they set key results such as winning ten designs for the Intel 8085 microprocessor. These key results were simple yes-or-no metrics that everyone in the company could understand and track.
By implementing this system, Grove was able to grow Intel by an impressive 40 percent every year during his eleven-year tenure as CEO. Witnessing the power of OKRs firsthand, Doerr became a lifelong advocate for this management philosophy and dedicated himself to spreading its use to other organizations.
The Power of Focus: Less is More
One of the key principles of OKRs is that organizations should focus on a limited number of objectives at any given time. This approach helps ensure that everyone in the company is working towards the same goals and prevents the dilution of effort that often occurs when there are too many competing priorities.
Doerr recommends that companies set between three and five organization-wide OKRs for each quarter. This limited number allows for a laser-like focus on what's truly important. For each objective, there should be no more than three to five key results that help measure progress towards achieving the goal.
The time frame for OKRs is also crucial. By setting and reviewing OKRs on a quarterly basis, companies can stay nimble and adapt to changes in the market quickly. This regular cadence allows for frequent assessment of progress and the ability to course-correct as needed.
The power of this focused approach is illustrated through the story of Remind, an education start-up that implemented OKRs with great success. When Remind experienced rapid growth in 2014, CEO Brett Kopf realized that his team needed to prioritize their efforts to continue expanding. By using OKRs, Remind was able to stay focused on their most important objectives, such as increasing teacher engagement, and avoid getting sidetracked by less critical features or projects.
This disciplined approach to goal-setting helped Remind secure $40 million in Series C funding and grow their team to 60 employees by 2016. The company's success demonstrates how OKRs can help organizations of all sizes maintain focus and achieve remarkable results.
Transparency and Alignment: The Keys to Collaborative Success
Another fundamental aspect of the OKR system is transparency. Doerr emphasizes that for OKRs to be truly effective, they must be visible to everyone in the organization. This openness creates a sense of shared purpose and increases motivation among employees.
Research has shown that people are more likely to achieve their goals when others can see their progress. In a survey of 1,000 Americans, respondents indicated that they would be far more motivated to reach their objectives if their colleagues could view their progress. This transparency fosters a culture of accountability and collaboration.
However, transparency alone is not enough. For OKRs to drive real success, they must also be aligned throughout the organization. This means that individual and team OKRs should support and contribute to the company's overarching goals. Doerr advocates for a hybrid approach that combines top-down direction with bottom-up input, allowing for both strategic alignment and employee autonomy.
Google's "20 percent time" concept is a prime example of how this hybrid approach can foster innovation while still aligning with company objectives. By allowing engineers to spend 20 percent of their time on projects of their choosing that could benefit Google, the company encourages creativity and initiative while still keeping efforts aligned with overall goals. This policy led to the creation of Gmail, which began as a "20 percent time" project called "Caribou" in 2001.
Implementing aligned OKRs can be challenging, as demonstrated by the experience of MyFitnessPal founders Mike and Albert Lee. When they first introduced OKRs, they discovered that many employees' goals were not aligned with the company's overall objectives, and different departments were struggling to coordinate their efforts. To address this, the Lee brothers instituted quarterly meetings where department heads presented their OKRs and identified areas where collaboration was needed. This process helped ensure that teams were working together effectively towards common goals.
Tracking Progress: The Power of Continuous Monitoring
Setting goals is just the first step; tracking progress is equally crucial for the success of OKRs. Regular monitoring allows organizations to stay on course, identify obstacles early, and make necessary adjustments along the way.
Google, for example, holds monthly check-ins where employees discuss their progress on quarterly OKRs. These meetings provide an opportunity to address challenges, update key results if needed, and ensure that efforts remain aligned with overall objectives. During these reviews, OKR contributors have four options: continue, update, start, or stop an objective.
To make tracking progress easier and more visual, Google uses a color-coded scale from 0 to 1.0:
- 0.0 to 0.3 (red): No progress
- 0.4 to 0.6 (yellow): Some progress, but key results not yet met
- 0.7 to 1.0 (green): Key result successfully attained
This simple system allows everyone in the organization to quickly understand the status of various OKRs and where additional effort might be needed.
Intel used a similar scoring system when they were working to demonstrate that their 8086 chipset had the best performance of any microprocessor in 1980. One of their key results was to send out 500 samples of its arithmetic coprocessor by the end of the quarter. They managed to ship 470, resulting in a KR score of 0.9 – a significant achievement that helped drive the company's success in the microprocessor market.
The importance of tracking and being willing to adjust course is further illustrated by Remind's experience. CEO Brett Kopf once had to stop an OKR mid-cycle when it became clear that prototyping a peer-to-peer payment system wasn't solving any clear problem. Instead, he pivoted to a new OKR focused on building a feature that allowed teachers to ask students about participation in school events. This flexibility and willingness to adapt based on ongoing tracking and assessment led to an instant success for the company.
Stretch Goals: Pushing the Boundaries of Achievement
While setting achievable goals is important, Doerr also emphasizes the value of stretch goals – ambitious objectives that push an organization to its limits. These challenging OKRs can drive innovation and extraordinary performance, much like NASA's moonshot goal in the 1960s.
Google distinguishes between two types of OKRs: committed objectives and stretch objectives. Committed objectives are typically related to day-to-day metrics like sales or hiring and are expected to be met with 100% success. Stretch objectives, on the other hand, are more ambitious and are designed to push the boundaries of what's possible. At Google, it's expected that about 40% of stretch objectives will not be fully achieved.
The development of Google Chrome is a prime example of how stretch goals can drive remarkable progress. When the Chrome team set their initial OKR in 2008, they aimed to make web browsing as quick and effortless as flipping through a magazine. Their first stretch goal was to reach 20 million weekly users by the end of 2008 – an ambitious target that they didn't actually achieve until early 2009.
However, the difficulty of this goal inspired the team to continually improve and focus on their end goal, even when it seemed out of reach. They continued setting stretch goals in subsequent years, aiming for 50 million users in 2009 (achieving 38 million) and finally meeting their stretch goal of 111 million users in 2010. Today, Chrome is used by over a billion people on mobile devices alone – a testament to the power of setting and pursuing stretch goals.
It's important to note that not all companies have the resources to pursue high-risk stretch goals like Google. However, when implemented thoughtfully and with appropriate resources, stretch goals can lead to breakthrough innovations and exceptional performance.
Continuous Performance Management: CFRs and the Future of HR
While OKRs focus on organizational and team goals, Doerr also addresses the need for a more effective approach to individual performance management. He introduces the concept of Continuous Performance Management and its associated tool: Conversations, Feedback, and Recognition (CFRs).
Traditional annual performance reviews are often time-consuming, costly, and ineffective. Doerr notes that these reviews cost an average of 7.5 management hours per employee, yet only 6% of HR leaders believe the process is worth the cost. In response to this, many Fortune 500 companies have begun to abandon annual reviews in favor of more frequent, ongoing performance discussions.
CFRs are designed to complement OKRs by facilitating regular, two-way conversations between managers and employees. Unlike traditional annual reviews, CFRs encourage real-time feedback and recognition throughout the year. This approach allows for more timely course corrections and helps ensure that individual efforts remain aligned with organizational goals.
The benefits of this approach are illustrated by Adobe's experience. After replacing their annual review system with a CFR-like process called "check-ins," Adobe saw a significant decrease in voluntary employee attrition. The more frequent, less formal conversations allowed for better communication, clearer expectations, and improved employee engagement.
Creating a Culture of Success
The implementation of OKRs and CFRs can have a profound impact on an organization's culture. By fostering transparency, accountability, and continuous improvement, these systems help create a more dynamic and engaged workforce.
OKRs give meaning to employees' work by connecting individual efforts to larger organizational goals. CFRs provide the ongoing support and feedback needed to achieve these objectives. Together, these systems create an environment where employees are treated as partners rather than subordinates, leading to higher levels of motivation and performance.
The culture that emerges from this approach is one of optimism, collaboration, and ambition. Employees are encouraged to set challenging goals, take risks, and learn from both successes and failures. This mindset, combined with clear objectives and regular feedback, can drive organizations to achieve remarkable results.
Implementing OKRs in Your Organization
For those interested in implementing OKRs in their own organizations, Doerr offers several key pieces of advice:
Start small: Begin by implementing OKRs in a single team or department before rolling them out company-wide.
Keep it simple: Focus on a limited number of objectives (3-5) with clear, measurable key results.
Make them public: Ensure that OKRs are visible to everyone in the organization to promote transparency and alignment.
Allow for bottom-up input: While top-level OKRs should guide the organization, allow teams and individuals to set their own supporting OKRs.
Be flexible: Don't be afraid to adjust OKRs mid-cycle if circumstances change or new priorities emerge.
Separate OKRs from compensation: To encourage ambitious goal-setting, avoid directly tying OKRs to bonuses or raises.
Embrace failure: Recognize that not all OKRs will be fully achieved, especially stretch goals. Use these instances as learning opportunities.
Review regularly: Hold frequent check-ins to discuss progress and address any obstacles.
Be patient: It may take several cycles for your organization to fully adapt to the OKR system. Stay committed and refine your approach over time.
Conclusion: The Transformative Power of OKRs
"Measure What Matters" presents a compelling case for the adoption of OKRs and continuous performance management in organizations of all sizes and industries. Through numerous real-world examples and case studies, Doerr demonstrates how these systems can drive focus, alignment, and exceptional results.
The power of OKRs lies in their simplicity and flexibility. By focusing on a limited number of critical objectives, organizations can channel their energy and resources more effectively. The transparency and alignment inherent in the OKR system foster collaboration and shared purpose across all levels of the company.
Moreover, the combination of OKRs with continuous performance management through CFRs creates a holistic approach to organizational and individual growth. This system not only helps companies achieve their goals but also nurtures a culture of innovation, accountability, and continuous improvement.
As businesses face increasingly complex challenges in a rapidly changing world, the need for effective goal-setting and performance management has never been greater. OKRs offer a proven framework for navigating this complexity and driving sustained success.
Whether you're leading a small startup or a global corporation, the principles outlined in "Measure What Matters" can help transform your organization. By implementing OKRs and embracing a culture of transparency, alignment, and continuous improvement, you can unlock your team's full potential and achieve remarkable results.
The journey to implementing OKRs may not always be smooth, but as Doerr's numerous examples show, the potential rewards are immense. From driving innovation and growth to fostering employee engagement and satisfaction, OKRs have the power to revolutionize the way organizations operate and succeed.
As you consider how to apply these principles in your own context, remember Doerr's core message: focus on what truly matters, measure your progress diligently, and never stop striving for excellence. With OKRs as your guide, your organization can navigate the challenges of today's business landscape and emerge stronger, more agile, and better equipped for long-term success.