Do you make New Year’s resolutions? It’s only mid-January 2021 so there’s still time. On the other hand, it’s mid-January and plenty of people have already abandoned theirs.
Maybe New Year’s resolutions are broken so often because they’re so vague, like lose weight, exercise more, save money. Plus it’s not enough to have a goal, you need a plan for achieving it. You need both the what and the how.
Organizations face the same problem when they do their planning: how to set clear, meaningful goals, and how to lay out a plan for achieving them. Many organizations, especially in the tech sector where I work, use a system called Objectives and Key Results, or OKRs.
Measure What Matters, by John Doerr is the reference manual for OKRs.
Measure What Matters
By John Doerr
Portfolio Penguin, New York, 2018
OKRs were pioneered by the late Andy Grove, formerly CEO of Intel Corp. Doerr worked at Intel early in his career and seems to have been taken under Grove’s wing. It was there he learned the nuts and bolts of OKRs. He clearly idolizes Grove and calls him the “Father of OKRs.”
The OKR framework is deceptively simple.
- An Objective is a goal. It describes what is to be achieved. Objectives should be concrete, action oriented, significant and ideally inspirational. A corporation might have an objective to lead the market in some product or service. A basketball team could have an objective to win the league championship. A personal objective might be to pay off your credit card debt.
- Key Results are milestones that measure how we get to the objective. They are specific, time-bound, measurable, and verifiable. At the end of the time period, there should be no doubt or debate about whether a key result has been achieved. Key results should be aggressive yet realistic. Examples of key results might be gain 10% market share by June 30, increase average points scored per game to 90 by the end of the season, or create a budget for monthly personal expenditures in the next 30 days.
In Measure What Matters, Doerr details how organizations and teams can adopt OKRs, and what the benefits and challenges are. He provides numerous case studies of organizations that have adopted them, like Google and The Gates Foundation.
The first challenge, and also the first benefit of OKRs is focus. An organization cannot succeed if it has dozens of objectives. Neither can an individual. OKRs force you to focus on the most important things to work on, in other words, to focus on what matters. This can be a painful exercise. Everyone has pet projects, and no one likes to see them postponed or dropped. But in my experience with OKRs once you narrow your focus down to the small handful of things that really matter, OKRs give you great clarity.
They also give you permission to say “no.” When someone – your manager, a peer, or someone in another department – asks you to do something unplanned, you can say, “I’m sorry that doesn’t fit into my OKRs for this quarter. Can we talk about doing it next quarter?” This is really empowering.
Another important benefit that Doerr describes is alignment. OKRs help different groups align their efforts to achieve shared goals. For example, the objective I mentioned earlier of leading the market in some product will likely have implications for the marketing, production, sales, and research departments of the company. Each of these departments will need to formulate OKRs to achieve their part of the overall objective. Similarly, teams within departments and individuals within teams will each have their own OKRs that cascade from higher-level objectives. (Doerr warns about cascading too rigidly.) OKRs also need to be aligned across teams since groups often need to collaborate on larger objectives.
Doerr stresses that OKRs are not just a mechanical, hierarchical goal setting and tracking system. They require a cultural shift within organizations too, especially towards transparency and accountability. He says OKRs should be openly published by everyone in an organization, from the CEO on down, and everyone needs to be accountable for achieving theirs. This isn’t intended to be punitive. Instead, individuals should honestly assess their performance against their OKRs at the end of each period, and when they’ve fallen short, analyze why so they can improve and grow.
Many of the case studies that Doerr presents in the book show how difficult and lengthy these cultural changes can be for organizations that adopt OKRs.
Successfully managing a team or on organization isn’t simply a matter of setting the right goals and measuring progress against key results. Managing is a human activity. So Doerr recommends doing away with annual performance reviews and moving towards continuous performance management using CFRs: conversation, feedback and recognition. The last third of the book is devoted to understanding and implementing CFRs in conjunction with OKRs.
One area of the book that I found a little unclear is the relationship between OKRs and employee performance reviews, specifically raises and bonuses. Doerr says that an individual’s performance against their OKRs should not be the only factor used to set salaries and bonuses. Abusing OKRs in this way will stifle risk-taking and experimentation and lead employees to “sandbag” or set less ambitious objectives.
But Doerr doesn’t provide much guidance on how evaluations should be done. Maybe he didn’t want to be prescriptive here because performance evaluations are done very differently at different companies. I’ve spent most of my career working at places where evaluations are done by managers using some sort of “calibration” process. (Stack ranking employees has thankfully gone out of fashion in recent years.) However, I know there are many companies where evaluations are mainly determined by peer feedback. Still, it’s inescapable that performance against your OKRs will have significant impact on your overall performance evaluation and on your compensation.
Measure What Matters is a quick but informative read. There’s not much management theory here, it’s all very practical. I’d say nearly half the book is made up of case studies about companies and non-profits that have adopted OKRs. I skimmed through some of these, but they do contain useful lessons about the challenges of fully implementing OKRs.
Doerr is a chatty writer. The book is filled with incidents and stories from his own career. Sometimes he gets a little carried away with his enthusiasm:
“Like OKRs, CFRs champion transparency, accountability, empowerment, and teamwork, at all levels of the organization. As communication stimuli, CFRs ignite OKRs and boost them into orbit …” [p. 176]
Still, whether you’re aiming for leadership in a particular market, or just trying to stick to your New Year’s resolutions, OKRs are a valuable framework for planning and achieving your goals.
Measure What Matters can help get you started.
Ted Talk: Why the secret to success is setting the right goals by John Doerr, April 2018.