There are few better books to kick-off your planning and goal setting than Measure What Matters. The book summarizes the concept of objectives and key results (OKRs), my personal favorite goal setting approach, by one of its fathers.
John Doerr didn’t just have a front seat at the birth of OKRs by Intel’s Andy Grove and later became the key disciple of the measurement gospel. He also implemented the concept in Google, the most successful case study of OKRs to date.
In Measure What Matters, Doerr builds the case for OKRs and gives us all the necessary tools to use the approach, with actionable advice and a ton of examples that bring the ideas to life.
I will try to present the key concepts from the book here, but I definitely still recommend reading it for all the examples.
What are OKRs?
Doerr defines OKRs as “a measurement methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.”
OKRs are usually discussed in the context of company management. However, I can confidently state they are perfect for planning your own personal goals. In fact, I’ve been using it for a few years already. So even if you’re not a manager in a company, read on – I’m sure you’ll find the approach applicable on a personal level.
The acronym OKR stands for “objectives and key results”. These are the two key components of the methodology:
- An Objective is simply WHAT is to be achieved. “Objectives are significant, concrete, action oriented, and (ideally) inspirational.” They are “a vaccine against fuzzy thinking” – they help you remember what are the most important things you need to focus on and give you a license to say “no” to anything else.
- Key Results 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. You either meet a key result’s requirements or you don’t; there’s no gray area, no room for doubt.”
Objectives remind you what’s at stake and where you want to be. They can be long-lived, rolled over for a year or longer, Key results are the way you get where you’re going and they evolve as the work progresses. You can use objectives set at the start of the year that will take you a few planning cycles to achieve. Then you’ll set KRs for each cycle that will bring you closer to the end goal.
Objectives are the stuff of inspiration and far horizons. Key results are more earth-bound and metric-driven. Key results are the levers you pull, the marks you hit to achieve the goal.
It’s important to note that key results are not just a collection of steps to achieve the objective. They are not a plan but can be achievements in themselves. That’s why they are usually a mix of inputs (processes) and outputs (outcomes of said processes). For example, Doerr presents an objective to “Win the Indy 500”. The key results listed include “Reduce pit stop errors by 50%” (an output of a job well done) and “Practice pit stops one hour per day” (an input, the process by which we can expect to reduce pit stop errors).
Here’s Doerr’s own quick take on OKRs in video form:
The connection between objectives and key results
According to Doerr, once the key results are completed, the objective is necessarily achieved. I personally find this statement a bit problematic. We can rarely formulate goals that are completely within our control. The example he gives in the book is related to “demonstrating the performance” of a processor. But it relies not only on the benchmarks the team develops and all the other KRs they set but also on the public’s perception of the vendor, etc.
In this sense, I would opt to rephrase and say that key results are, to the best of your current knowledge, the way to achieve the objective. It’s a small, but important distinction. In time, as your knowledge improves, new key results might be needed. Or there might be a situation where environmental factors come into play. So even after completing the key results, the objective might still not be achieved.
Setting up OKRs
When you set your OKRs, you should ideally end up with three to five objectives, each of which would have up to five key results tied to it. The actual setup process will be very contextual to the entity you’re goal setting for, but there are a few key elements to keep in mind.
There is no one size fits all. “The best OKR cadence is the one that fits the context and culture of your business,” Doerr says. There are more stable mature businesses where OKRs can be set for a longer period of time while if you’re just starting out in a very dynamic industry, you might opt for shorter periods of time, e.g. monthly. Quarterly cadence is probably best to start with – you can later decide if you need to change this. Some companies, especially engineering teams, use 6-week cadences.
If there’s one key thing, it’s that OKRs need to be publicly visible and transparent to everyone in the company. Visible OKRs facilitate cooperation within the company and ensure commitment from everyone. And this is where success comes from.
OKRs and compensation
Doerr is adamant that goal completion must be divorced from compensation. Performance bonuses, far too common in most companies, mean that everyone wants to play it safe in order to get a fatter paycheck. Decoupling the two can “encourage risk-taking and prevent sandbagging”.
Cascading OKRs vs self-agency
The traditional way of goal setting dictates that the leadership team sets company goals which then get translated to department goals which then get cascaded down to individual employees or teams. This ensures alignment – or so we think.
In moderation, cascading makes an 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 – since goals need to come all the way from the top, goal setting can take weeks or even months to administer across a big company;
- A lack of flexibility – since goal setting takes a ton of time, people are reluctant to revise objectives mid-cycle;
- Marginalized contributors – cascading goals come from management only and they shut out input from frontline employees;
- One-dimensional linkages – while this approach ensures vertical alignment, it’s not effective in connecting peers horizontally, across departments.
So what is the right way? “An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their key results.” This makes people feel like active agents that have a say in the company’s direction. Which, in turn, means they are more motivated to see things through. “People who choose their destination will own a deeper awareness of what it takes to get there.”
Pairing of key results
A rookie mistake when setting goals is to just aim for more. More users, more revenue, more, more, more… In this gauntlet of more, it’s easy to forget that we need to strive for quality, as well.
“To safeguard quality while pursuing for quantitative deliverables, one solution is to pair key results – to measure both “effect and counter-effect”, as Grove writes in High-Output Management.”
This will mean that at any point you need to balance these KR pairs. For example, if your goal is to “attract four times more users compared to the previous quarter”, you might need to tie this with a customer satisfaction score or an average order value. This will ensure you don’t attract lower-quality users and count on vanity metrics.
Goals set on a conference room whiteboard might as well be set in stone. Or at least that’s how it often feels. But according to the OKR methodology, this is not so. “OKRs are adaptable by nature. They’re meant to be guardrails, not chains or blinders.”
“For best results, OKRs are scrutinized several times per quarter by contributors and their managers. Progress is reported, obstacles identified, key results refined.” This approach ensures that you are on top of what’s going on and you’re ready to make changes whenever needed.
At any point in the OKR cycle, you can review your objectives and the key results and choose between four options:
- Continue a “green zone” goal (one that is on track to completion) as-is;
- Update an objective to respond to environmental or workflow changes. This can be anything from revising the timeline to putting other goals on the back burner in order to pull more power in. This is probably the most common scenario as long as you see promise in the objective or if it’s one that’s not droppable;
- Start – provided that it makes sense, there’s no rule against launching a new objective mid-cycle. This will most often happen if you’ve set an easy objective that gets completed way ahead of schedule;
- Stop – if some goal has outlived its usefulness, the best thing might be to stop it. This will ensure you pour more energy into objectives with higher potential.
“Our goals are servants to our purpose, not the other way around.” You might not change anything about your objectives when you review them – but it’s key to know that you can. “Real-time measurement prevents us from persisting in the wrong direction.”
An interesting concept from one of the book’s case studies is the idea of “selling your reds”. In Lumeris, the regular objective reviews focus little on the goals on track. But managers showcase the objectives they are running behind on and try to enlist the rest of the team to help. The team votes on the most important at-risk OKRs for the company as a whole then brainstorms together as long as it takes to get the objectives back on track. This ensures that people are not sheepish about sharing failures but they rather work together to the company’s benefit.
Finally, at the end of the cycle comes the time for post hoc evaluation and analysis. The wrap-ups consist of three parts:
- Scoring – score an objective by averaging the completion percentage of its associated KRs. This is usually measured in percentage scores, like 1.0 or 0.6.
- Self-assessment – this step is more subjective, looking for “the goal-setter’s thoughtful, subjective judgement”. It shows more than what can be gleaned from a simple numeric assessment. For example, missing your mark on a goal to secure 5 articles for your product is one thing. But having one of the articles you managed to secure appear in a tier-one publication is a different matter. “The numbers are probably less important than contextual feedback and a broader discussion with the team.”
- Reflection – generate learnings from your experience that you can apply down the line. “OKR wrap-ups are retrospective and forward-looking at the same time.” The key questions you’ll want to ask include:
- 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?
We often put so much weight on goal setting that we completely forget the point is not whether we achieve our objectives or not. A far more interesting question is why. And the OKR wrap-up is designed to help us uncover that so that we can move forward stronger.
Why you need OKRs?
This might be a little late in the article to try to convince you why OKRs are useful – but if you still need a bit of a push to try them out, Doerr lists four “superpowers” that OKRs give the teams that use the approach.
OKRs help you focus and commit to priorities
“By standing firmly behind a few top-line OKRs, they give their teams a compass and a baseline for assessment.” Once you define the objectives you want to focus on, this gives you the license to say “No” to everything else. Keep your OKRs top of mind and you’ll have no trouble focusing on what really matters.
Of course, this doesn’t come easily – which is why team leaders need to serve as reminding officers to everyone. Doerr quotes LinkedIn’s CEO Jeff Weiner who puts it very clearly: “When you’re tired of saying it, people are starting to hear it.”
And when we’re talking about commitment – leaders need to commit first. They need to set their own OKRs before they can expect anyone else to follow suit.
OKRs help you align and connect for teamwork
With OKRs, every employee understands how their work contributes to the bigger whole. As a methodology, it creates true alignment (not just the apparent one of cascading goals) and a sense of connection.
As a species, we crave connection. In the workplace, we’re naturally curious about what our leaders are doing and how our work weaves into theirs. OKRs are the vehicle of choice for vertical alignment.
Additionally, when goals are public and visible to all, a “team of teams” can attack trouble spots wherever they surface, thus ensuring cross-functional coordination.
OKRs are a way to track for accountability
When OKRs are accessible and visible, a great thing happens. First off, people are more engaged and motivated because they can understand how they contribute to the company mission. Visible OKRs promote internal networking – it’s easier to see who’s working on the same things and see how you can collaborate. Finally, an easy OKR system saves time, money, and frustration as all OKRs are ready when you are.
The tracking and accountability of OKRs are ensured in two ways:
- You use a tool that serves as a real-time dashboard for all your objectives and key results – this can be as simple as a Google Sheets template or as complex as a dedicated tool.
- You appoint an “OKR shepherd” who reminds people to set and grade their OKRs when needed.
OKRs motivate you to stretch for amazing
Typically, goals are set with the notion that they need to be achieved in full – especially when they are tied to performance bonuses. But OKRs are much more aggressive. They need to be set just outside the realm of possibility, thus motivating teams to do more.
Andy Grove wrote it best: “Output will tend to be greater when everybody strives for a level of achievement beyond [their] immediate grasp… Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.” And Doerr adds: “Not everyone is a natural-born achiever. For the rest, “stretched” goals could elicit maximum output.”
So in OKR best practice, there are two types of objectives: committed and aspirational (stretched). Committed objectives are tied to metrics and set by management at the company level or the department level, and they need to be achieved in full. These are usually the revenue or user growth goals, or maybe the launch of a new product you definitely need to do. Aspirational objectives reflect “the bigger-picture, higher-risk, more future-tilting ideas”, and they are prone to failure.
The balance between the two is a cultural question and one of the external factors. You might want to foster more risk-taking – or your company might be fighting for financial stability and your committed objectives are the way to ensure you live to see another day.
Stretch goals need to be ambitious but just ambitious enough. “To succeed, a stretch goal cannot seem like a long march to nowhere. Nor can it be imposed from on high without regard to realities on the ground. Stretch your team too fast and too far, and it may snap.” I’ve personally seen that happen in real life and it’s not a pretty picture. To make sure stretch goals are accepted well and fulfill their role of motivating the team, leaders must convey two things: the importance of the outcome, and the belief that it’s attainable.
Continuous performance management (CFRs)
While OKRs are a concept known by many, it was the first time I heard of CFRs. This is a way to ensure continuous performance management – a way to reflect together with your team on how goals are set, how the execution is managed, and how you can achieve more.
Continuous performance management is implemented with an instrument called CFRs:
- Conversations: “an authentic, richly textured exchange between manager and contributor, aimed at driving performance”. This is an honest conversation about the objectives set and the process to get there;
- Feedback: “bidirectional or networked communication among peers to evaluate progress and guide future improvement”. We need to create an open dialogue between team members;
- Recognition: “expressions of appreciation to deserving individuals for contributions of all sizes”. This is a way to show you appreciate wins both big and small because they all are linked to the higher goals you’ve set.
Simply put CFRs are conversations that happen within the company to ensure OKRs are set and managed right. The key questions that Doerr mentions are designed for the manager-contributor 1-on-1 conversations:
- What are you working on?
- How are you doing: how are your OKRs coming along?
- Is there anything impeding your work?
- What do you need from me to be (more) successful?
- How do you need to grow to achieve your career goals?
Your way to growth
Wrong decisions can be corrected once results begin to roll in. Nondecisions – or hastily abandoned ones – teach us nothing.
For more than 10 years, I’ve been taking the time to set goals right. Once I learned about OKRs, something started to click in my head. It was a wonderfully elegant approach that I have used both for personal goal setting and team planning. Measure What Matters can be a great first step for you in the world of OKRs – or a way to dive deeper into a concept you’ve just heard of before.
But the book is nothing without putting Doerr’s advice to practice. You can start by reading up some other classics like Google’s OKR Playbook or checking out some OKR examples (there’s a lot of them online). But you will definitely need to put pen to paper and write your first OKR. Better do it now!
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