Measure What Matters - by John Doerr

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Measure What Matters is about using Objectives and Key Results (OKRs), a revolutionary approach to goal-setting, to make tough choices in business. The OKR model objectives define what we seek to achieve and key results are how those top­ priority goals will be attained. OKRs surface an organisation's most important work as everyone's goals from entry-level to CEO are transparent to the entire institution. This book will show you how to collect timely, relevant data to track progress - to measure what matters. It will help any organisation or team aim high, move fast, and excel.


This book was written by venture capitalist John Doer. In 1999, Doerr invested nearly $12 million in a startup that had amazing technology, entrepreneurial energy and sky-high ambitions, but no real business plan. Doerr introduced the founders to OKRs and with them at the foundation of their management, the startup grew from forty employees to more than 70,000 with a market cap exceeding $600 billion. The startup was Google.



Key Learnings

By having a handful of flexible, reachable and transparent goals, organisations can work together in an efficient way to achieve success. Objectives and key results (OKRs) are a revolutionary tool that can help organisations reimagine their approach to management. As opposed to setting yearly goals, OKRs allow organisations, and teams within them to continuously set, track and achieve goals in a transparent and accountable way. When combined with regularly having conversations with employees about their performance, instead of once per year, OKRs can bring about a healthy and high-performance workplace culture. 

When it comes to setting your organisational objectives, you should only have between 3 - 5 per quarter. That way, you'll be forced to figure out which priorities matter most to you organisation before you begin working on them, and this will ensure that they'll contribute to your future success.



OKRs were born at microchip giant Intel, where John Doerr worked in the 1970s.

The luminary behind OKRs was Andy Grove, one of Intel’s cofounders. Then the vice president, he’d go on to become the CEO, and his visionary leadership would be integral to the company’s transformation from a small business into the global giant it is today. The use of OKRs was, of course, a central part of his approach. After getting hired, the John Doerr attended one of Grove’s seminars, where he explained that OKRs aren’t about what you know, but what you do with what you know. If you want things to get done, execution must trump knowledge.

For example, one of Intel’s objectives (Os) at the time was to be number one in the midrange computer component industry. By setting just a few such objectives, Grove explained, the company as a whole could truly focus on pursuing them. But how would they know that they’d reached this objective? That’s where key results (KRs) come in, Grove went on. For example, one KR at the time was to “win” ten designs for the Intel 8085 microprocessor – a win being every time the microprocessor was used in products designed by other companies. Such KRs had to be measured simply with a clear yes or no. Everyone involved – known as contributors – would have to be able to understand whether the KR had been met or not, without argument.

By implementing this management system at Intel, Grove was able to grow the company by 40 percent every year throughout his eleven-year tenure as CEO. Seeing the impact of OKRs in action, the Doerr began a lifetime of commitment to spreading this revolutionary management philosophy to other companies.


OKRs allow organisations to stay focused on reaching their goals.

Anyone who’s worked at a high-performance organisation is aware that to move ahead as a team, everyone needs to know which direction they’re headed in. But what’s equally important is knowing where one is not headed.


There are 3 important characteristics of OKRs: 
  1. There should only be a handful of organisation-wide OKRs at any one time. That way, everyone from top management to lower-level employees can stay focused on achieving a limited number of important goals – together.
  2. Next, once management has determined these top-level objectives, between three and five KRs are needed per objective to help everyone at the company know when each objective has been reached. Any more than this, and focus will become diluted to the point where progress is hard to measure.
  3. Finally, you’ll need a clear time frame, so that departments across the organisation can stay focused on collectively meeting deadlines. The author recommends setting OKRs every quarter to keep abreast of today’s fast-paced market changes.
Every three months, then, your company should come together and see whether OKRs have been achieved, and whether or not you need to build upon existing progress – or set a new course.

Example:
Brett Kopf, CEO of Remind, employed OKRs at the recommendation of the Doerr to transform his small education start-up into a company with millions of users. After Remind hit the big time in 2014, with 300,000 downloads per day, Kopf realized his team of 14 needed to focus if they wanted to continue company growth. Luckily, the Doerr’s venture-capital firm had provided Remind with Series B funding. It was during this time that he briefed Kopf on OKRs, which helped considerably when Remind faced the major test of figuring out how to most effectively allot time and energy across their rapidly growing organisation. For example, one of their most-requested features was to add a “repeated message” function, so that teachers wouldn’t have to manually send out the same messages to students every week. But Remind’s objective during that quarter was to increase teacher engagement, and since this “repeat” feature wouldn’t have helped them meet this time-sensitive objective, it was shelved. By using OKRs to stay focused on their objectives – and not get distracted – the company continued to grow, securing Series C funding of 40 million dollars and, by 2016, employing 60 people.


Having a transparent, aligned OKR system helps organisations move forward efficiently – and collaboratively.


One important aspect of OKRs is that they must be transparent to everyone in your organisation. Research shows that being transparent with goals increases motivation. In a survey of 1,000 Americans, respondents indicated that they would be far more motivated to reach their goals if their fellow workers could view their progress.

OKRs are more than just the overarching business goals of an organisation; teams, departments and individual employees use them for their own individual work as well. But once top-level and individual OKRs become part of an organisation’s public domain, they must be aligned to truly succeed. This means that employees’ individual OKRs must align with the company’s vision, as set out in the top-level.

However, this doesn’t mean that employees’ day-to-day work is dictated by those at the top. Such a top-down approach hinders autonomy in the workplace and decreases employee motivation. It’s best to instate a hybrid approach that is both top-down and bottom-up; this will foster collaboration, transparency and innovation.

One way of doing this is the 20 percent time concept employed by Google. This allows engineers to spend one day’s worth of time every week (20 percent of their workweek) on projects that they feel would contribute to Google’s overarching top-level OKRs. A result of this philosophy - a young Google engineer spent his 20 percent on a project called “Caribou” in 2001. Today, this project is known as Gmail, and it’s the most popular email client in the world. 

But alignment isn’t always easy to implement. Take Mike and Albert Lee’s MyFitnessPal app. In 2013, Doerr explained the importance of OKRs for their company’s continued growth. As the Lee brothers implemented the system, they discovered that a great number of people had OKRs that weren’t aligned with the company’s overarching goals. Making matters worse, the lack of alignment between individual departments’ OKRs meant that different teams were having problems reaching their individual OKRs. In short, coordination of OKRs was severely lacking. So the Lee brothers scheduled a quarterly meeting with departmental heads. Each one presented their OKRs to the room and identified potential teams without whose collaboration their OKRs wouldn’t succeed. By doing so, they could dive into the quarter knowing that their teams wouldn’t become overstretched, and would be able to depend on other teams for support.



By constantly tracking OKRs, organisations can make sure that they’re heading in the right direction.

Writing down a goal raises the chances of your reaching it. The same can be said for tracking your goals as you pursue them.

In fact, a California study showed that friends who both wrote down their goals and shared their progress with friends on a weekly basis were 43 percent more likely to achieve their objectives. The same goes for organisational OKRs.

Google, for example, usually has monthly sit-downs where employees touch base on how they are getting along with their quarterly OKRs. Not only is progress discussed; roadblocks are also pointed out and key results updated accordingly. 

During such meetings – or, indeed, at any time in the quarterly OKR life cycle – four options are available to OKR contributors: continue, update, start and stop.

If an objective is on track, it makes sense to continue it. However, if external conditions have made key results unobtainable, then it’s best to update them to meet new realities.

It might even be necessary to start a new OKR in the middle of the quarter. And, sadly, unsuccessful OKRs sometimes need to be put to rest, which means stopping it mid-cycle.

Example:
Remind’s Brett Kopf once had to put a stop to an OKR that was meant to prototype a peer-to-peer payment system. Mid-cycle, he identified it as a failure, since it wasn’t solving any clear problem, and so he canceled the objective immediately. To replace it, he set a new OKR in motion – building a feature that allowed teachers to ask students whether they would participate in school events. It was an instant success. 

How, though, can an OKR contributor best recognise how far along they’ve come in reaching their key results? Google uses a 0-1.0 colour-coded scale that enables OKR contributors to assess how successfully they’ve completed key results. 
  • 0.0 to 0.3 (red) means no progress has been made. 
  • 0.4 to 0.6 (yellow) means progress has been made, but key results remain unmet. 
  • 0.7-1.0 (green) is a sign of the key result having been successfully attained.
Intel used a similar scoring system. When the company wanted to demonstrate that its 8086 chipset had the best performance of any microprocessor in 1980, one of the key results was to send out 500 samples of its arithmetic coprocessor by the end of the quarter. They managed to ship 470, which resulted in a KR score of 0.9.


Implementing stretch goals allows organisations to truly excel.

In 1969, humanity set foot on the moon for the first time. This was a previously unimaginable, daunting feat with a high risk of failure, and it stretched NASA to its limits.

But once an organisation has the necessary focus, alignment and tracking systems in place, such high-risk challenges can be undertaken. These challenges are called stretch goals. Stretch goals are OKRs that are a daunting challenge to OKR contributors. Research backs up the effectiveness of stretch goals, with studies showing that stretched employees exhibit higher levels of motivation, productivity and engagement.

But how does an organisation know whether stretch goals are right for them?
Well, at Google, OKRs are separated into two distinct categories: stretch objectives and committed objectives.

Committed objectives usually have to do with day-to-day metrics such as sales or hiring, stretch objectives are all about bigger-picture ideas. And while committed objectives are meant to be met with 100-percent success Stretch objectives at Google fail about 40 percent of the time.

Example:
Unlike Google, not all companies have a safety net of cash to fall back on if a high-risk stretch OKR fails. But with enough cash on hand, stretch goals have the chance of a big payoff. Take Google’s web browser Chrome, for example. The initial 2008 OKR behind the development of the browser stated that the goal was to make browsing the web as quick and effortless as flipping through a magazine.The Chrome team’s first stretch goal was overambitious: they wanted to get 20 million weekly users by the end of 2008. But the difficulty of achieving this goal inspired the team to keep upping their development game and focusing on the end goal, however unreachable it seemed. The goal of twenty million weekly users was only reached in early 2009, but that didn’t deter the Chrome team from setting more stretch goals to keep up the challenge. For 2009, the stretch goal was set at 50 million, but they only reached 38. However, by 2010, they finally managed to meet their stretch goal of 111 million users. In 2018, Chrome is used by over a billion people on mobile devices alone.


Coupling OKRs with continuous performance management will help bring about a transparent, healthy workplace culture.

If you work for a large organisation, it’s possible that you’ve sat through an annual performance review. These reviews end up costing an average of 7.5 management hours per employee – a huge amount. Meanwhile, only six percent of HR leaders think the process is worth the cost. Now, just imagine you’re a manager with 30 employees under you. That would mean one and a half months of reviews. Luckily, change is in the air. Not only have over fifty Fortune 500 companies gotten rid of annual performance reviews, but many are replacing them with continuous performance management and their associated instrument of change CFRs.

CFRs are the OKRs of the HR world, and are all about having conversations with employees that entail both feedback and recognition. CFRs are a two-way street. Instead of the unidirectional annual performance review, CFRs involve conversations where real-time feedback and recognition go both ways. And, in the same way that OKRs replace annual goals, CFRs should happen regularly so that performance improvements can be made throughout the year.

As opposed to traditional annual reviews, which only answer whether or not employees have reached their annual goals, CFRs allow leaders and contributors to sit down and discuss vital topics. Is the objective you’re working toward realistic? Is it even the right objective to be working on? And is it motivating?

Example
Take Adobe, for example. It used to be that every February, right after the annual performance reviews, there would be a brief increase in voluntary attrition – that is, employee resignations and retirements. However, after ditching their review system in favour of a CFR-esque system called “check-ins,” Adobe’s voluntary attrition has decreased dramatically.

Implementing OKRs and CFRs at an organisation will undoubtedly contribute to a better workplace culture. Having teams of contributors working toward common goals – coupled with transparent communication and individual accountability – should be a clear way to increase an organisation’s performance. And whereas OKRs give meaning to contributors’ goals, CFRs provide the life juice needed to complete them. Together with ambitious stretch thinking, organisations can use these techniques to reach for the stars, and nourish the optimistic and people-oriented workplace culture that comes with them. Organisations that treat their employees as partners, not subordinates, tend to be the most successful.


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About Post Author

Hi, my name is Christine Calo and I'm a designer by trade who has an engineering background. I have an interest in design, technology and science which I like to read, watch and write about from time to time. This blog contains random ramblings of these topics and may tangent off to other topics. Want to say hello, you can contact me on: calo.christine@gmail.com

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