Alexandre Lim

I heard a lot about Objectives and Key Results(OKRs) and read Measure What Matters to learn more about it. OKRs is a compelling management methodology, but it comes at a cost. It's harder to implement than you think. This book will help you grasp how powerful OKRs can be and help you succeed in adopting this methodology.

Notes

Ideas are easy. Execution is everything.

OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or creative workplace culture. But if those fundamentals are in place, OKRs can guide you to the mountaintop.

OKRs: “A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.”

An OBJECTIVE, I explained, is simply WHAT is to be achieved, no more and no less. By definition, objectives are significant, concrete, action-oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking— and fuzzy execution.

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. It’s not a key result unless it has a number.

Like any management system, OKRs may be executed well or badly; the aim of this book is to help you use them well. But make no mistake. For anyone striving for high performance in the workplace, goals are very necessary things.

First, said 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.”

OKRs clarify expectations: What do we need to get done (and fast), and who’s working on it? They keep employees aligned vertically and horizontally.

Where OKRs take root, merit trumps seniority. Managers become coaches, mentors, and architects. Actions— and data— speak louder than words.

The four OKR “superpowers” are: focus, align, track, and stretch.

At Intel, Andy Grove 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.”

Half a century later, Peter Drucker— professor, journalist, and historian— took a wrecking ball to the Taylor-Ford model. He conceived a new management ideal, results-driven yet humanistic. A corporation, he wrote, should be a community “built on trust and respect for the workers— not just a profit machine.” Further, he urged that subordinates be consulted on company goals. Instead of traditional crisis management, he proposed a balance of long and short-range planning, informed by data and enriched by regular conversations among colleagues.

When people help choose a course of action, they are more likely to see it through.

On an assembly line, it’s easy enough to distinguish the output from activity. 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?

“Doerr, if you want to be a really good general manager someday, you need to get out in the field, sell, get rejected, and learn to meet a quota. You can have all the technical expertise in the world, but you’ll succeed or fail in this business based on whether your team makes their numbers.”

Less is more. “A few extremely well-chosen objectives,” Grove wrote, “impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.” A limit of three to five OKRs per cycle leads companies, teams, and individuals to choose what matters most. Generally, each objective should be tied to five or fewer key results.

“Bad companies,” Andy wrote, “are destroyed by crisis. Good companies survive them. Great companies are improved by them.”

Good ideas aren’t bound by hierarchy. The most powerful and energizing OKRs often originate with frontline contributors.

Regardless of how leaders choose a company’s top-line goals, they also need their own goals.

OKRs require a public commitment by leadership, in word and deed.

For sound decision-making, esprit de corps, and superior performance, top-line goals must be clearly understood throughout the organization.

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.

Key results are the levers you pull and the marks you hit to achieve the goal. If an objective is well framed, three to five KRs will usually be adequate to reach it. Too many can dilute focus and obscure progress. Besides, each key result should be a challenge in its own right. If you’re certain you’re going to nail it, you’re probably not pushing hard enough.

The best practice may be a parallel, dual cadence, with short-horizon OKRs (for the here and now) supporting annual OKRs and longer-term strategies. Keep in mind, though, that it’s the shorter-term goals that drive the actual work. They keep annual plans honest— and executed.

The best OKR cadence is the one that fits the context and culture of your business.

The history of the infamous Ford Pinto shows the hazards of one-dimensional OKRs.

The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results— to measure “both effect and counter-effect,”

Remember that an OKR can be modified or even scrapped at any point in its cycle. Sometimes the “right” key results surface weeks or months after a goal is put into play. OKRs are inherently works in progress, not commandments chiseled in stone.

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

In most cases, the ideal number of quarterly OKRs will range between three and five.

Too many objectives can blur our focus on what counts or distract us by chasing the next shiny thing.

In a high-functioning OKR system, top-down mandates to “just do more” are obsolete. Orders give way to questions and to one question in particular: What matters most?

Three watchwords for entrepreneurs:

What am I doing today to move the company forward?

You can’t fear screwing up. That squelches innovation.

You need to build your goal muscle gradually, incrementally. Doing too much too soon will definitely end in pain.

For structured goal setting to prosper, executives need to commit to the process.

Transparency seeds collaboration. Say Employee A is struggling to reach a quarterly objective. Because she has publicly tracked her progress, colleagues can see she needs help. They jump in, posting comments and offering support. The work improves. Equally important, work relationships are deepened, even transformed.

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:

Innovation tends to dwell less at the center of an organization than at its edges. The most powerful OKRs typically stem from insights outside the C-suite.

Micromanagement is mismanagement. A healthy OKR environment strikes a balance between alignment and autonomy, common purpose, and creative latitude.

The “professional employee,” Peter Drucker wrote, “needs rigorous performance standards and high goals…. But how he does his work should always be his responsibility and his decision.”

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.

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

I’d underestimated how much scaling slows you down.

Alignment is about helping people understand what you want them to do.

Are we meeting everyone’s needs for buy-in? Is a team overstretched? If so, how can we make their objectives more realistic?

Co-ownership weakens accountability. If an OKR fails, I don’t want two people blaming each other. Even when two or more teams have parallel objectives, their key results should be distinct.

We’re making tougher, sharper choices about where to place our bets these days, and they all stem from the OKR process.

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.

Intuit’s story demonstrates the benefits of an OKR pilot project before (or even without) a full-company rollout. A few hundred users may suffice for an OKR laboratory to iron out any kinks before deployment at scale.

Studies have told us forever that frontline employees thrive when they can see how their work aligns with the company’s overall goals. I’ve found this especially true at our remote sites.

Without frequent status updates, goals slide into irrelevance; the gap between plan and reality widens by the day.

If you can’t come up with OKRs that get you excited about coming to work every day, then something must be wrong.

“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.”

OKRs don’t require daily tracking. But regular check-ins— preferably weekly— are essential to prevent slippage.

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

OKRs are adaptable by nature. They’re meant to be guardrails, not chains or blinders.

While OKRs are primarily a positive force for more, they also stop us from persisting in the wrong direction.

Whenever a key result or objective becomes obsolete or impractical, feel free to end it midstream. There’s no need to hold stubbornly to an outdated projection— strike it from your list and move on. Our goals are servants to our purpose, not the other way around.

When an objective gets dropped before the end of the OKR interval, it’s important to notify everyone depending on it. Then comes reflection: 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?

For best results, contributors and their managers scrutinize OKRs several times per quarter. Progress is reported, obstacles identified, and key results refined. On top of these one-on-ones, teams and departments hold regular meetings to evaluate progress toward shared objectives. Whenever a committed OKR is failing, a rescue plan is devised.

OKRs do not expire with the completion of the work. As in any data-driven system, tremendous value can be gained from post hoc evaluation and analysis. In both one-on-one and team meetings, these wrap-ups consist of three parts: objective scoring, subjective self-assessment, and reflection.

Googlers are encouraged to use their OKRs in self-assessments— as guides, not as grades.

The point of objectives and key results is to get everyone working on the right things.

OKR scores pinpoint what went right or wrong in the work and how the team might improve, and self-assessments drive a superior goal-setting process for the next quarter. There are no judgments, only learnings.

We borrowed from Jim Collins: “What can you be the best at in the world?”

When a goal is too aspirational, it’s bad for credibility. In philanthropy, I see people confusing objectives with missions all the time. A mission is directional. An objective has a set of concrete steps you’re intentionally engaged in and trying to go for. It’s fine to have an ambitious objective, but how do you scale it? How do you measure it?

OKRs push us far beyond our comfort zones. They lead us to achievements on the border between abilities and dreams. They unearth fresh capacity, hatch more creative solutions, and revolutionize business models.

If companies “don’t continue to innovate, they’re going to die— and I didn’t say iterate, I said innovate.”

Regardless of scope or scale, they fit my favorite definition of entrepreneurs: Those who do more than anyone thinks possible… with less than anyone thinks possible.

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?

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. In pursuing high-effort, high-risk goals, employee commitment is essential. Leaders must convey two things: the importance of the outcome and the belief that it’s attainable.

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.

In Google’s OKR climate, it was understood that 70 percent of achievement (on average) was considered a success. You weren’t supposed to strive for greens on every OKR you wrote— that wouldn’t stretch the team.

As a leader, you must try to challenge the team without making them feel the goal is unachievable.

OKRs are especially useful for young companies just starting to build their culture.

OKRs require organization. You need a leader to embrace the process and a lieutenant to ride herd over scoring and reviews.

Engineers struggle with goal setting in two big ways. They hate crossing off anything they think is a good idea and habitually underestimate how long it takes to get things done.

Stretch OKRs tend to set powerful forces into motion, and you can never be sure where they’ll lead.

Individuals cannot be reduced to numbers.

CFR means:

Like OKRs, CFRs champion transparency, accountability, empowerment, and teamwork at all levels of the organization. As communication stimuli, CFRs ignite OKRs and then boost them into orbit; they’re a complete delivery system for measuring what matters.

OKRs and CFRs are mutually reinforcing.

If a conversation is limited to whether you achieved the goal or not, you lose context. You need continuous performance management to surface the critical questions:

For companies moving to continuous performance management, the first step is blunt and straightforward: Divorce compensation (both raises and bonuses) from OKRs.

Peter Drucker was one of the first to stress the value of regular one-on-one meetings between managers and their direct reports. Andy Grove estimated that ninety minutes of a manager’s time “can enhance the quality of your subordinate’s work for two weeks.”

Feedback must be integral to the process to reap the full benefits of OKRs. If you don’t know how well you’re performing, how can you possibly get better?

Today’s workers “want to be ‘empowered’ and ‘inspired,’ not told what to do. They want to provide feedback to their managers, not wait a year to receive feedback from them. They want to discuss their goals on a regular basis, share them with others, and track progress from peers.”

A continuous performance management system has three requirements:

OKRs and CRFs have more subtle, internal, quotidian effects— like grooming better executives or allowing less vocal contributors to shine.

Everybody faces resource constraints: time, money, people. And the bigger an organization, the more entropy— it’s like thermodynamics.

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. And often, they do figure it out. But I think they’re missing an opportunity to teach people how to be executives before the company scales. If those habits aren’t ingrained early on, one of two things happens: Unsuccessful companies scale beyond the leadership team’s capacity, and they die. Successful companies scale beyond the team’s abilities, and the team gets replaced. Those are both sad outcomes. The better way is to train people to think like leaders from the start when their departments have a staff of one.

I like to start with three questions: What makes you very happy? What saps your energy? How would you describe your dream job?

Who do we want to be as an organization? How do we want people to feel about their work and our product? What’s the impact we want to make on the world?

I try to understand an organization before I charge in and break things.

Time is the enemy of transformation.

One benefit of OKRs is leading managers to hire people who can compensate for their limitations.

OKRs have such enormous potential because they are so adaptable. There is no dogma, no one right way to use them.

Continuous performance management is a two-part, interwoven process. The first part consists of setting OKRs; the second entails regular and ongoing conversations tailored to your needs.

Use OKRs to promote transparency, clarity, purpose, and big-picture orientation. Deploy CFRs to build positivity, enthusiasm, stretch thinking, and daily improvement.