The book in a paragraph
Objectives and key results (OKRs) provide a simple and collaborative goal-setting methodology that can be used by any organisation, team or individual. OKRs comprise of an objective – WHAT we’re seeking to achieve, and one or more key results – HOW we’re going to achieve the objective. OKRs have successfully helped many organisations, including – most famously – Google, prioritise what’s most important, create alignment and connection, increase accountability and stretch for ambitious goals.
Summary of Measure What Matters by John Doerr
This is my summary of Measure What Matters by John Doerr. It covers only part 1 of the book (chapters 1 to 14), which presents the concept of OKRs in detail. Part 2 of the book (chapters 15 to 21), explores how continuous performance management and culture complement OKRs to drive high performance. We will add a summary of part 2 in the future. These notes are informal and may contain quotes from the book, mixed with my thoughts.
- OKRs were developed at Intel in the 1970s by future CEO Andy Grove and have since been adopted by many companies. The most extensive and famous application of OKRs has taken place at Google, where they were adopted in 1999 and have been applied religiously for each quarter since. OKRs have also been adopted by hundreds of organisations of all types and sizes, including the Bill and Melinda Gates Foundation, Dropbox, Oracle, Spotify, Samsung, Disney and BMW.
- Research studies demonstrate that well-defined and challenging goals enhance productivity. Clearly documented and shared goals build employee engagement by creating alignment, clarity and job satisfaction.
- OKRs comprise an objective, which sets a direction and captures WHAT you aspire to achieve, and a set of key results (KRs), which state HOW the objective will be achieved. Completion of all KRs equates to the attainment of the objective.
- Objectives are significant, concrete, action-oriented and – ideally – inspirational. KRs are measurable, specific and timebound, and aggressive, yet realistic. At the end of a planning cycle, you can look at an OKR and ask “Did I do that…? Yes? No? Simple. No judgements in it”.
- The following example illustrates a basic OKR
- Objective: Win the Indy 500
- KR: Increase lap speed by 2%
- KR: Test at wind tunnel 10 times
- KR: Reduce average pit stop time by 1s
- KR: Reduce pit stop errors by 50%
- KR: Practice pit stops for 1 hr/day
- John Doerr identifies four ‘superpowers’ that can be used to maximise the impact of OKRs.
TIP: Try our free Team Alignment Canvas for capturing your organisation or team OKRs
- Superpower 1: Focus and commit to priorities
- Successful organisations identify the vital few things that are most important for the next quarter and have a laser focus on them, avoiding the trivial many things that could interfere with them.
- To be successful, leaders need to publicly commit to the organisation’s OKRs and role model their individual focus on those vital few priorities.
- OKRs for an organisation or team should therefore be limited to a maximum of three to five objectives, each paired with a maximum of three to five KRs. This provides a clear compass to people, to know what’s most important and where they should focus their efforts.
- Communicate the top level OKRs to the entire organisation, including a rationale as to why they’re important. Repeatedly so, to ensure that everyone has a clear understanding of what is most important, right now.
- Best practice involves setting both annual and quarterly OKRs, although some organisations may first ease into it with just annual OKRs.
- To safeguard quality while pushing for ambitious quantitative targets, KRs can be paired with qualitative outcomes. For example, a quantitative KR of ‘3 new features’ could be paired with a qualitative KR of ‘Fewer than 5 bugs per feature in quality assurance testing’.
- Superpower 2: Align and connect for teamwork
- According to Harvard Business Review, organisations with highly aligned team members are more than twice as likely to be top performers. However, other studies indicate that only 7% of employees “fully understand their company’s business strategies and what’s expected of them… to help achieve common goals”.
- While cascading goals down throughout an organisation can be appealing and – when used in moderation – effective at creating alignment, it leads to a loss of agility (cascading from one organisational level to the next in serial takes too long for goals to trickle down), a lack of flexibility (given how much effort cascading takes, people are reluctant to revise OKRs mid-cycle, even when it may be justified to respond to a changing operating environment), marginalised contributors (rigidly cascading systems tend to exclude input from frontline team members) and one-dimensional linkages (while cascading locks in vertical alignment, it’s less effective in creating horizontal cross-department connections).
- An optimal OKR system “strikes a balance between alignment [top down] and autonomy [bottom up], common purpose and creative latitude” and frees contributors to set at least some of their own objectives and most or all their KRs.
- Alignment is created and engagement built by showing a clear line of sight from an individual team or team member’s objectives and the organisation’s top priorities.
- Google uses the approach of setting and publicising its top level OKRs to the entire organisation and then allows teams and people at all levels to start ‘laddering up’ their own set of OKRs in parallel to one another, each in consultation with their respective manager. Teams that are wildly out of alignment tend to stand out.
- Horizontally connected OKRs can increase cross-department collaboration and eliminate silos. For example, an IT team working on a new customer product may set an OKR that connects with one of the customer service team’s OKRs (and which has nothing to do with the IT team’s boss’s OKRs).
- Superpower 3: Track for accountability
- Team members are most engaged when they can see how their work contributes to the organisation’s success, and how they are progressing against their measures of achievement.
- There are three phases in the OKR lifecycle.
- Setup: Many organisations are adopting fit for purpose OKR management software that makes everyone’s goals visible (i.e. anyone can see their boss’s, direct reports’ and peers’ goals), drive engagement by allowing people to track their own progress, and save time, money and frustration by providing all the relevant information at their fingertips.
- A best practice is to appoint one or more OKR shepherds who hold/s others accountable for getting their OKRs completed properly and on time.
- Midlife tracking: People crave to know how they’re progressing against their goals. Weekly OKR check-ins are ideal: people who share weekly progress on goals achieve 40% more of their objectives than those who just think about them. This also provides ample opportunity for course correction, as events unfold and our understanding evolves. OKRs shouldn’t be abandoned just because they’re too hard, but people shouldn’t blindly persist with them when conditions change either.
- Wrap up: There are three steps. Objective scoring assesses the level of progress against each KR, self-assessment assesses the performance of the team or individual (which, although correlated, can differ from the OKR scores) and reflection celebrates achievements and identifies learnings to apply through the next OKR cycle.
- An OKR scoring scale of 0 to 1.0 is typically used, as follows:
- 0.7 to 1.0 Green/we delivered
- 0.4 to 0.6 Yellow/we made progress, but fell short of completion
- 0.0 to 0.3 Red/we failed to make real progress
- Ideally, a team should be shooting for an average of around 0.7. Higher scores suggest that the team didn’t stretch and set its sights too low.
- Superpower 4: Stretch for amazing
- The harder the goal, the higher the performance. Stretched workers are not just more productive, but also more motivated and engaged.
- Steven Levy said in a Wired article: “The way [Larry] Page sees it, a 10% 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”.
- OKRs can be divided into two types: committed OKRs, which must be attained 100%, and aspirational OKRs, which are stretching for an audacious goal.
- Google’s aspirational OKRs target a 60 to 70% attainment level, so successful performance is expected to fall short at least 30% of the time. Achieving 100% of a team’s aspirational OKRs suggests it wasn’t being ambitious enough.
- “If you seek to achieve greatness, stretching for amazing is a great place to start”.