Measure What Matters | OKRs— Notes

Measure What Matters by John Doerr book notes

Chapter 1: Google, Meet OKRs

Edwin Locke, “hard goals” drive performance more effectively than easy goals. Second, specific hard goals “produce a higher level of output” than vaguely worded ones.

But exactly how do you build engagement? A two-year Deloitte study found that no single factor has more impact than “ clearly defined goals that are written down and shared freely. . . . Goals create alignment, clarity, and job satisfaction.”

Goal setting isn’t bulletproof: “ When people have conflicting priorities or unclear, meaningless, or arbitrarily shifting goals, they become frustrated, cynical, and demotivated.” An effective goal management system — an OKR system — links goals to a team’s broader mission.

Then come the four OKR “superpowers”: focus, align, track, and stretch.

Superpower #1 — Focus and Commit to Priorities (chapters 4, 5, and 6): High-performance organizations home in on work that’s important, and are equally clear on what doesn’t matter. OKRs impel leaders to make hard choices. They’re a precision communication tool for departments, teams, and individual contributors. By dispelling confusion, OKRs give us the focus needed to win.

Superpower #2 — Align and Connect for Teamwork (chapters 7, 8, and 9): With OKR transparency, everyone’s goals — from the CEO down — are openly shared. Individuals link their objectives to the company’s game plan, identify cross-dependencies, and coordinate with other teams. By connecting each contributor to the organization’s success, top-down alignment brings meaning to work. By deepening people’s sense of ownership, bottom-up OKRs foster engagement and innovation.

Superpower #3 — Track for Accountability (chapters 10 and 11): OKRs are driven by data. They are animated by periodic check-ins, objective grading, and continuous reassessment — all in a spirit of nojudgment accountability. An endangered key result triggers action to get it back on track, or to revise or replace it if warranted.

Superpower #4 — Stretch for Amazing (chapters 12, 13, and 14): OKRs motivate us to excel by doing more than we’d thought possible. By testing our limits and affording the freedom to fail, they release our most creative, ambitious selves.

Chapter 2: The Father of OKRs

Fairchild was the industry’s gold standard, but it had one great flaw: a lack of “achievement orientation.”

“Expertise was very much valued there,” Andy explained. “That is why people got hired. That’s why people got promoted. Their effectiveness at translating that knowledge into actual results was kind of shrugged off.” At Intel, he went on, “we tend to be exactly the opposite. It almost doesn’t matter what you know. It’s what you can do with whatever you know or can acquire and actually accomplish [that] tends to be valued here.” Hence the company’s slogan: “Intel delivers.”

It gets trickier when employees are paid to think. Grove wrestled with two riddles: How can we define and measure output by knowledge workers? And what can be done to increase it?

Fabricating semiconductors is a tough business. Without rigor, nothing works; yields plummet, chips fail. OKRs were constant reminders of what our teams needed to be doing. They told us precisely what we were achieving — or not.

The essence of a healthy OKR culture — ruthless intellectual honesty, a disregard for self-interest, deep allegiance to the team — flowed from the fiber of Andy Grove’s being. But it was Grove’s nuts-and-bolts approach, his engineer’s mentality, that made the system work. OKRs are his legacy, his most valuable and lasting management practice.

Chapter 4: 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) months? What are our main priorities for the coming period? Where should people concentrate their efforts? An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.

How do they decide what truly matters most? Google turned to its mission statement: Organize the world’s information and make it universally accessible and useful.

OKRs require a public commitment by leadership, in word and deed. When I hear CEOs say “All my goals are team goals,” it’s a red flag. Talking a good OKR game is not enough. To quote the late, great Bill Campbell, the Intuit CEO who later coached the Google executive team: “ When you’re the CEO or the founder of a company . . . you’ve got to say ‘This is what we’re doing,’ and then you have to model it. Because if you don’t model it, no one’s going to do it.”

Objectives and key results are the yin and yang of goal setting — principle and practice, vision and execution. Objectives are the stuff of inspiration and far horizons. Key results are more earthbound and metric-driven. They typically include hard numbers for one or more gauges: revenue, growth, active users, quality, safety, market share, customer engagement. If you’re certain you’re going to nail it, you’re probably not pushing hard enough.

Clear-cut time frames intensify our focus and commitment; nothing moves us forward like a deadline. In my experience, a quarterly OKR cadence is best suited to keep pace with today’s fast changing markets.

There is no religion to this protocol, no one-size-fits-all. An engineering team might opt for six-week OKR cycles to stay in sync with development sprints. A monthly cycle could do the trick for an early-stage company still finding its product-market fit. The best OKR cadence is the one that fits the context and culture of your business.

Looking back, Ford didn’t lack for objectives or key results. But its goal setting process was fatally flawed: “ The specific, challenging goals were met (speed to market, fuel efficiency, and cost) at the expense of other important features that were not specified (safety, ethical behavior, and company reputation).”

A few goal-setting ground rules: Key results should be succinct, specific, and measurable. A mix of outputs and inputs is helpful. Finally, completion of all key results must result in attainment of the objective. If not, it’s not an OKR. *

What matters most? The one thing an [OKR] system should provide par excellence is focus. This can only happen if we keep the number of objectives small. . . .We must realize — and act on the realization — that if we try to focus on everything, we focus on nothing.

“ The art of management,” Grove wrote, “lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.”

Chapter 7: Align and Connect for Teamwork

With the eruption of social media, transparency is the default setting for our daily lives. It’s the express lane to operating excellence. 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.

As general manager, I cascade my goal down to the next level of management, the head coach and the senior vice president of marketing. My key results become their objectives.

Rather than laddering down from the CEO to a VP to a director to a manager (and then to the manager’s reports), an objective might jump from the CEO straight to a manager, or from a director to an individual contributor.

Having goals improves performance. Spending hours cascading goals up and down the company, however, does not. . . .

The antithesis of cascading might be Google’s “20 percent time,” which frees engineers to work on side projects for the equivalent of one day per week. By liberating some of the sharpest minds in captivity, Google has changed the world as we know it. In 2001, the young Paul Buchheit initiated a 20 percent project with the code name Caribou . It’s now known as Gmail, the world’s leading web-based email service.

An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their key results. People are led to stretch above and beyond, to set more ambitious targets and achieve more of those they set: “ The higher the goals, the higher the performance.” People who choose their destination will own a deeper awareness of what it takes to get there.

In business, I have found, there is rarely a single right answer. By loosening the reins and backing people to find their right answers, we help everybody win. 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. But when the numbers are strong and a company has grown too cautious and buttoned-up, a lighter touch may be just right. When leaders are attuned to the fluctuating needs of both the business and their employees, the mix of top-down and bottom-up goals generally settles at around half-and-half. Which sounds about right to me.In business, I have found, there is rarely a single right answer. By loosening the reins and backing people to find their right answers, we help everybody win. 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. But when the numbers are strong and a company has grown too cautious and buttoned-up, a lighter touch may be just right. When leaders are attuned to the fluctuating needs of both the business and their employees, the mix of top-down and bottom-up goals generally settles at around half-and-half. Which sounds about right to me.

Transparency creates very clear signals for everyone. You kick off virtuous cycles that reinforce your ability to actually get your work done. And the management tax is zero — it’s amazing.”

Chapter 8: Align: The MyFitnessPal Story

OKRs are not islands. To the contrary, they create networks — vertical, horizontal, diagonal — to connect an organization’s most vital work. When employees align with a company’s top-line goals, their impact is amplified. They stop duplicating efforts or working counterproductively against the grain.

I found that entropy begins when you have two great people directly under you. You want to give each of them something big and purposeful to work on, and they both naturally want to move their piece of the project, and soon they’re pulling out of alignment and charging in different directions. Before you know it, they’re working on two different things. It doesn’t help to push them harder. If two nails are even slightly misaligned, a good hammer will splay them sideways…And I thought to myself: That was how we’d get our company aligned.

At scale, alignment grows exponentially more complex. How would we show four hundred people what we were trying to achieve, to help them align with us and with one another? How could we get everybody rowing in the same direction? In the beginning, I found it really hard to do; I can hardly imagine how Amazon or Apple manages. When we introduced OKRs throughout our division, it made a big difference.

“We need to cut half of this, right? We need to strip it down to the things that really matter.” Now we evaluate product features the MyFitnessPal way: “If we take this one off the road map this quarter, what happens? Would it really affect the user experience?” More often than not, the feature in question wouldn’t make a big difference. These calls are not subjective; we have metrics to measure impact. We’re making tougher, sharper choices about where to place our bets these days, and they all stem from the OKR process.

When we face a trade-off between our customers and a business goal, we align with the customer.

Chapter 9: Connect: The Intuit Story

People can’t connect with what they cannot see; networks cannot blossom in silos. By definition, OKRs are open and visible to all parts of an organization, to each level of every department. As a result, companies that stick with them become more coherent.

Studies have told us forever that frontline employees thrive when they can see how their work aligns to the company’s overall goals. I’ve found this especially true at our remote sites. I’ve heard it from people in Bangalore: “My objective is directly a key result of my manager’s OKR, which ties directly to the top-level EBS objective, which ties to the company’s shift to the cloud. Now I understand how what I’m doing in India connects to the company mission.” That’s a powerful realization. OKRs have consolidated our far-flung department. Thanks to structured, visible goal setting, our boundaries have melted away.

Chapter 10: Superpower #3: Track for Accountability

These platforms deliver transformative OKR values:

They make everyone’s goals more visible. Users gain seamless access to OKRs for their boss, their direct reports, and the organization at large.

They drive engagement. When you know you’re working on the right things, it’s easier to stay motivated.

They promote internal networking. A transparent platform steers individuals to colleagues with shared professional interests.

They save time, money, and frustration. In conventional goal setting, hours are wasted digging for documentation in meeting notes, emails, Word documents, and PowerPoint slides. With an OKR management platform, all relevant information is ready when you are.

We have so many great opportunities before us (search, ads, display, YouTube, Android, enterprise, local, commerce, Chrome, TV, mobile, social . . .) that if you can’t come up with OKRs that get you excited about coming to work every day, then something must be wrong. In fact, if that’s really the case, come see me.

In the meantime, please do your OKRs on time, grade your previous quarter’s OKRs, do a good job at it, and post them so that the OKR link from your moma [intranet] page works. This is not administrative busywork, it’s an important way to set your priorities for the quarter and ensure that we’re all working together.

“ 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 Peter Drucker observed, “ Without an action plan, the executive becomes a prisoner of events. And without checkins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.”

What did I learn that I didn’t foresee at the beginning of the quarter?
And: How will I apply this lesson in the future?

Scoring
In scoring our OKRs, we mark what we’ve achieved and address how we might do it differently next time. A low score forces reassessment: Is the objective still worth pursuing? If so, what can we change to achieve it?

Self-assessment
In evaluating OKR performance, objective data is enhanced by the goal setter’s thoughtful, subjective judgment. For any given goal in a given quarter, there may be extenuating circumstances. A weak showing by the numbers might hide a strong effort; a strong one could be artificially inflated.

Learning “from direct experience,” a Harvard Business School study found, “can be more effective if coupled with reflection — that is, the intentional attempt to synthesize, abstract, and articulate the key lessons taught by experience.” The philosopher and educator John Dewey went a step further: “ We do not learn from experience . . . we learn from reflecting on experience.”

Here are some reflections for closing out an OKR cycle:

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?

Chapter 12: Superpower #4: Stretch for Amazing

Aspirational goals draw on every OKR superpower. Focus and commitment are a must for targeting goals that make a real difference. 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?

The Gospel of 10x
The way Page sees it, a ten percent improvement means that you’re doing the same thing as everybody else. You probably won’t fail spectacularly, but you are guaranteed not to succeed wildly.
That’s why Page expects Googlers to create products and services that are ten times better than the competition. That means he isn’t satisfied with discovering a couple of hidden efficiencies or tweaking code to achieve modest gains. Thousand percent improvement requires rethinking problems, exploring what’s technically possible and having fun in the process.

Google has had its share of colossal misfires, from Helpouts to Google Answers. Living in the 70 percent zone entails a liberal sprinkling of moonshots and a willingness to court failure. At the start of the period, not a single goal may look possible. And so the Googlers are pushed to ask harder questions: What radical, high-risk action needs to be considered? What do they need to stop doing? Where can they move resources or find new partners? By deadline, a healthy fraction of those impossible goals are somehow attained in full.

There is no one magic number for the “right” stretch. But consider this: How can your team create maximum value? What would amazing look like? If you seek to achieve greatness, stretching for amazing is a great place to start. But by no means, as Andy Grove made clear, is it the place to stop:

You know, in our business we have to set ourselves uncomfortably tough objectives, and then we have to meet them. And then after ten milliseconds of celebration we have to set ourselves another [set of] highly difficult-to-reach objectives and we have to meet them. And the reward of having met one of these challenging goals is that you get to play again.

Chapter 14: Stretch: The Youtube Story

On a dedicated team named Sibyl, Jim McFadden was building a system for selecting “watch next” recommendations, aka related videos or “suggestions.” It had tremendous potential to boost our overall views. But were views what we really wanted to boost? As Microsoft CEO Satya Nadella has pointed out: In a world where computing power is nearly limitless, “ the true scarce commodity is increasingly human attention.” When users spend more of their valuable time watching YouTube videos, they must perforce be happier with those videos. It’s a virtuous circle: More satisfied viewership (watch time) begets more advertising, which incentivizes more content creators, which draws more viewership. Our true currency wasn’t views or clicks — it was watch time. The logic was undeniable. YouTube needed a new core metric.

Watch Time, and Only Watch Time
Google Search was designed as a switchboard to route you off the site and out to your best destination as quickly as possible. Maximizing watch time was antithetical to its purpose in life. Moreover, watch time would be negative for views, the critical metric for both users and creators. Last (but not least), to optimize for watch time would incur a significant money hit, at least at the start. Since YouTube ads were shown exclusively before videos started, fewer starts meant fewer ads. Fewer ads meant less revenue. * My argument was that Google and YouTube were different animals.

Principled Stretching
Stretch goals can be crushing if people don’t believe they’re achievable. That’s where the art of framing comes in. Clever manager that he is, Shishir cut our BHAG down to size. While one billion daily hours sounded like an awful lot, it represented less than 20 percent of the world’s total television watch time.

“By the way, we’re way behind. I’m freaked out and I hope that you’re at least a little freaked out. And when you’re making decisions about what to prioritize and where to lean, please keep in mind that we are not going to meet this watch-time OKR if we don’t do something about it.”

Daily watch time is driven by two factors: the average number of daily active viewers (or DAVs) and the average amount of time those viewers spend watching.

Cristos: Whenever you get new leadership, everything’s up for review. When Susan took over YouTube, she wasn’t obligated to get behind the billion-hour OKR. That was the previous administration’s goal. She could have reverted to a views goal, or one more oriented toward revenue. Or she could have kept the watch-time OKR but added three others of equal or greater priority. Had she done any of those things, we would never have reached the billion hours on time. We’d have gotten distracted and never caught up.

Chapter 15: Continuous Performance Management: OKRs and CFRs

Talking can transform minds, which can transform behaviors, which can transform institutions. — Sheryl Sandberg

In short, we need a new HR model for the new world of work. That transformational system, the contemporary alternative to annual reviews, is continuous performance management . It is implemented with an instrument called CFRs, for:
Conversations : an authentic, richly textured exchange between manager and contributor, aimed at driving performance
Feedback : bidirectional or networked communication among peers to evaluate progress and guide future improvement
Recognition : expressions of appreciation to deserving individuals for contributions of all sizes

“We embraced OKRs because our performance management process was moving to a more frequent cadence. When Pact adopted OKRs, we officially killed our annual performance review. We replaced it with a set of more frequent touch points between managers and employees. Internally, we’ve dubbed this ‘Propel.’ It consists of four elements:

“The first is a set of monthly one-on-one conversations between employees and their managers about how things are going.

“The second is a quarterly review of progress against our OKRs. We sit down and say, ‘What did you set out to accomplish this quarter? What were you able to do — and what weren’t you able to do? Why or why not? What can we change?’

“Third, we have a semiannual professional development conversation. Employees talk about their career trajectory — where they’ve been, where they are, where they want to go. And how their managers and the organization can support their new direction.

“The fourth bit is ongoing, self-driven insight. We’re constantly surrounded by positive reinforcement and feedback, but many of us haven’t been trained to seek it out. Say you give a presentation to your team.

Chapter 17: Baking Better Every Day: The Zume Pizza Story

But in my experience, OKRs can’t be effective unless the people at the top are unconditionally committed — like a religious calling. And proselytizing is hard and thankless work. Your people may not like you very much through the adoption curve, which can take up to a year. But it’s worth it.

What you should do is more counterintuitive: Stop for a moment and shut out the noise. Close your eyes to really see what’s in front of you, and then pick the best way forward for you and your team, relative to the organization’s needs. What’s neat about OKRs is that they formalize reflection. You have to choose three to five things and exactly how they should be measured.

The better way is to train people to think like leaders from the start, when their departments have a staff of one. So OKRs forge your people. They mint stronger executives and help them avoid rookie mistakes. They implant the rigor and rhythm of a very large company into the framework of a very small company. When we implemented OKRs at Zume, the immediate benefit was the process itself. The simple act of forcing people to think about the business — thoughtfully, transparently, interdependently — was a huge accelerant to their performance.

What makes you very happy? What saps your energy? How would you describe your dream job?

Julia: Culture is the common language that allows for individuals in an organization to be sure they’re all talking about the same thing — and that what they’re talking about has meaning. Beyond that, culture establishes a common framework for decision making. In its absence, people are at a loss for how to make key functions replicable and scalable. Then there’s the more aspirational layer of culture: the values conversation. Who do we want to be as an organization? How do we want people to feel about their work, and about our product? What’s the impact we want to make on the world?

Julia: I’ve worked for some great leaders in my day. They were all very different, but one thing they had in common was this cold, sober focus. If you sat down with them for twenty minutes, they were completely uncluttered in their thinking. They could drill down very clearly on what needed to be done. When you’re fund-raising and making pizza with robots and building out kitchens, there’s a lot of rapid context switching. It can feel a little frenetic at times. But when you know your company objectives like you know your last name, it’s very calming. OKRs help me to be that focused, clearheaded leader. No matter how crazy things get, I can always default back to what matters.

Chapter 18: Culture

Culture, as the saying goes, eats strategy for breakfast. By aligning teams to work toward a handful of common objectives, then uniting them through lightweight, goal-oriented communications, OKRs and CFRs create transparency and accountability, the tent poles for sustained high performance.

The first item on this list — structure and clarity — is the raison d’être for objectives and key results. The others are all key facets of a healthy workplace culture, and tie directly to OKR superpowers and CFR communication tools. Consider peer-to-peer “dependability.” In a highfunctioning OKR environment, transparency and alignment make people more diligent in meeting their obligations. At Google, teams assume collective responsibility for goal achievement — or for failures. At the same time, individuals are held responsible for specific key results. Peak performance is the product of collaboration and accountability.

Chapter 19: Culture Change: The Lumeris Story

I knew that OKRs could eventually be our lingua franca, a way to connect everyone’s goals, but that would need to wait. Without cultural alignment, the world’s best operational strategy will fail.

People watch what you do more than what you say.

HR can be a potent vehicle for operating excellence. It’s also the place where culture change is crystallized — at the end of the day, culture is about the people you recruit and the values they bring to bear.

Transparency is scary. Admitting your failures — visibly, publicly — can be terrifying. Once you start having honest, vulnerable, two-way conversations with your direct reports, you begin to see what makes them tick. You feel their yearning to connect to things bigger than themselves. You hear their need for recognition that what they’re doing matters.

Goal setting is more art than science. We weren’t just teaching people how to refine an objective or a measurable key result. We had a cultural agenda, as well.

Why is transparency important? Why would you want people across other departments to know your goals? And why does what we’re doing matter?

What is true accountability? What’s the difference between accountability with respect (for others’ failings) and accountability with vulnerability (for our own)?

How can OKRs help managers “get work done through others”? (That’s a big factor for scalability in a growing company.) How do we engage other teams to adopt our objective as a priority and help assure that we reach it?

When is it time to stretch a team’s workload — or to ease off on the throttle? When do you shift an objective to a different team member, or rewrite a goal to make it clearer, or remove it completely? In building contributors’ confidence, timing is everything.

The wisdom resides in leaders with personal connections to their teams, to managers who can show what success looks like and know when to declare victory. (My advice: Not too soon.)

Today’s transformed Lumeris values interdependence. It prizes intentional coordination. “OKRs make you focus on working on the business, instead of just working in the business,” says Jeff Smith, senior vice president for U.S. markets.

Chapter 21: The Goals to Come

Ideas are easy. Execution is everything.

I’m convinced that if structured goal setting and continuous communication were to be widely deployed, with rigor and imagination, we could see exponentially greater productivity and innovation throughout society.

My ultimate stretch OKR is to empower people to achieve the seemingly impossible together. To create durable cultures for success and significance. And to prime the pump of inspiration for all the goals — especially your goals — that matter most.

Resource 1: Google’s OKR Playbook