By: John Doerr

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John Doerr is a famous venture capitalist, helping some of the most successful technology companies on the planet get off the ground, including Amazon, Intuit, and Google.

While he was at Intel during the late 1970s, he learned an invaluable lesson from Andy Grove, who would later go on to lead the company to world dominance in the 1980s.

Grove told him that at Intel:

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."

That relentless focus on delivering results led to the creation of Objectives and Key Results (OKRs), which is the focus of this book.

It's a methodology that has gone on to be used in some of the world's most successful companies, including, most famously, Google.

Join us for the next 10 minutes as we explore what OKRs are, how they are different from MBOs, and how you can use them to transform the results your company is getting.

1. OKRS

In the fall of 1999, Doerr had placed the largest bet in his career as venture capitalist. He had pledged $11.8 million of his firm's money for a 12 percent stake in Google - which at that time as a startup founded by a pair of Stanford dropouts.

Throughout his career, Doerr had seen over and over again that ideas were the easy part - execution was everything. And while Google had an amazing idea and business plan, he wanted to make sure his huge bet paid off.

So, standing in front of a ping-pong table surrounded by Sergey Brin, Larry Page, Marissa Meyer, and about 30 or so other early employees at Google, he launched into his pitch for Google to adopt the OKR framework.

His first slide defined what OKRs actually where:

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

Then he moved on to explain what objectives and key results, the two critical elements the methodology.

An objective is what is to be achieved - nothing more, and nothing less. They are concrete, action oriented, and hopefully, inspirational. They eliminate fuzzy thinking, which ultimately leads to fuzzy execution.

A key result is the how, which is tied to a number that is time bound, aggressive, and realistic. This ensures that the results are measurable and verifiable.

As he was finishing his presentation, he gave them an example of what that would look like as it related to his presentation itself.

His objective that day was to build a planning model for their company. His key results were (1) that he would finish the presentation on time, (2) they'd create a sample set of quarterly OKRs for Google, and (3) he would gain management agreement for a three-month trial of the OKR system.

The rest, as they say, is history. Eric Schmidt, who would later be brought in as professional help for the young company, credits this system with changing the course of the company, forever.

Before we move on, here are a few takeaways about what makes a great OKR system, from the master himself, Andy Grove.

• Less is more. You should have between 3 and 5 OKRs per cycle (which is usually a quarter).
• Set goals from the bottom up. To encourage engagement in the process, half of the OKRs should be set by the teams and individuals themselves, in consultation with their managers;
• Stay flexible. If an objective or key result no longer seems to be relevant, get rid of them.
• Dare to fail. People achieve more when goals are set that require them to grow beyond their current capability.
• Be patient. This is a process, and trial and error is your friend. You'll do it poorly before you do it with excellence.

OKR Superpowers

So that's what OKRs are, now let's move on to what they can do for your organisation.

Superpower #1: Focus & Commitment to Priorities

The first thing OKRs will do for you is helping you focus on the most important priorities.

The process begins with deciding what is most important for the next three months. The lesson here is no matter how large your company is, you can't "do it all."

By deciding what can get done in a fixed period of time, you'll naturally focus on initiatives and projects that will make a real difference, right now.

But a note of caution: this is a process that requires participation from the entire organisation. Leaders, you must practice what you preach. Publicly committing to your ORKs, and making them visible to the organization, is critical.

The ultimate end result is that it will lead to real performance gains.

Superpower #2 - Align and Connect for Teamwork

In larger organisations, it’s common to find several people unwittingly working on the same thing. A lack of alignment, according to a poll of global CEOs, is the number-one obstacle between strategy and execution.

With transparent Objectives, OKRs expose redundant efforts and save time and money. In an OKR system, the most junior staff can look at everyone’s goals, on up to the CEO. Critiques and corrections are out in public view.

Transparency seeds collaboration. Colleagues can see when someone needs help and offer support. 92 percent of the US working adults said they’d be more motivated to reach their goals if colleagues could see their progress.

Public goals are more likely to be attained than goals held in private. When people see how their goals are connected with their colleagues’ goals, they can contribute more meaningfully to the company’s success and see the overall consequences of their actions.

Healthy organisations encourage some goals to emerge from the bottom up (bottom-up OKRs foster engagement and innovation), while other goals get defined by the company’s leaders (top-down alignment brings meaning to work, authority, and long-term vision).

In other words, a healthy OKR environment strikes a balance between alignment and autonomy, common purpose and creative latitude.

“Connected goal-setting is critical to enabling employees to do the best work of their lives.” – Brad Smith, Intuit CEO

Superpower #3 – Track for Accountability

“In God we trust; all others must bring data.” – W. Edwards Deming

Unlike traditional, “set and forget” business goals, OKRs are living, breathing organisms driven by data: they can be tracked and revised or adapted as circumstances dictate.

But if all OKRs are public in a general-purpose software (say, Google Docs), who would have the patience to search out connections or alignment? It’s not scalable.

Likewise, without frequent status updates, goals become irrelevant. At quarter’s end (or worse, year’s end), we’re left with on-paper, zombie OKRs devoid of meaning.

Fortunately, more and more organisations are adopting robust, dedicated, cloud-based OKR management software, where users can navigate a digital dashboard to create, track, edit, and score their OKRs, as well as see their connections with others’ OKRs.

Such platforms make everyone’s goals more visible, drive engagement, promote internal networking, and save time, money, and frustration.

Most importantly, frequently tracked OKRs speak to something powerful: the intrinsic value of the work itself. People crave to know how they’re progressing and see it visually represented, down to the percentage point.

Periodic check-ins – preferably weekly – are essential, too. Without them, the executive has no way of knowing what matters and what’s noise.

Tracking OKRs can stop you from persisting in the wrong direction. Feel free to end an obsolete Key Result or Objective midstream. Just make sure you notify everyone depending on it and reflect on what you’ve learned.

Finally, objective grading, continuous reassessment, and reflection will help you reveal information hidden inside the numbers that you couldn’t reveal otherwise.

Superpower #4 – Stretch for Amazing

OKRs motivate us to excel by doing more than we’d thought 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 organisation can achieve so far beyond the norm.

Without quantifiable tracking, how can you know when you’ve reached that amazing stretch objective?

We can learn a lot from Google: they divide their OKRs into two categories.

Committed Objectives: they are tied to Google’s metrics, such as product releases, bookings, hiring, customers. Management sets them at the company level, employees at the departmental level. These committed objectives (sales & revenue goals) are to be achieved in full (100 percent) within a set time frame.

Aspirational Objectives: they reflect bigger-picture, higher-risk, more future-tilting ideas. They originate from any tier and aim to mobilise the entire organisation. By definition, they are challenging to achieve. Failures – at an average rate of 40 percent – are part of this territory.

Leaders are forced to ask the following question: What type of company do we need to be in the coming year? Agile and daring, to crack a new market – or more conservative and operational, to firm up our existing position?

In pursuing high-effort, high-risk goals, employee commitment is essential. Stretch your team too fast and too far, and it may snap. Leaders must convey two things: the importance of the outcome, and the belief that it’s attainable.

Starting with a modest stretch, over time teams and individuals gain experience with OKRs, and their Key Results become more precise and more aggressive.

3. Continuous Performance Management and Culture

Individuals cannot be reduced to numbers. If a conversation is limited to whether you’ve achieved the goal or not, you lose context. You need continuous performance management to explore critical questions:

Was the goal harder to achieve than you’d thought when you set it?

Was it the right goal in the first place? Was it motivating?

Should we double down on the two or three things that really worked for us last quarter, or is it time to consider a pivot?

Continuous performance management is implemented with an instrument called CFR, which give OKRs their human voice:

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 improvements.

Recognition: expressions of appreciation to deserving individuals for contributions of all sizes.

Conversations

Five critical areas emerge from conversation between managers and contributors:

• Goal setting and reflection. The discussion focuses on how best to align individual Objectives and Key Results with organisational priorities.

• Ongoing progress updates. The brief and data-driven check-ins on the employee’s real-time progress, with problem solving as needed.

• Two-way coaching. It helps contributors reach their potential and managers do a better job.

• Career growth. It develops skills, identifies growth opportunities, and expands employees’ vision of their future at the company.

• Lightweight performance reviews. A feedback mechanism to gather inputs and summarise what the employee has accomplished since the last meeting.

Feedback

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

In Adobe, individuals want to know how they’re doing while they’re doing it, and also what they need to do differently. Contributors get highly specific performance feedback at least once every six weeks. This way, everybody knows where they stand and how they’re contributing value to the company.

Recognition

Modern recognition is performance-based and horizontal. Here are some ways to implement it:

• Institute peer-to-peer recognition. When employee achievements are consistently recognized by peers, a culture of gratitude is born.
• Establish clear criteria. Recognise people for actions and results: completion of special projects, achievement of company goals, demonstrations of company values.
• Share recognition stories. Newsletters or company blogs can supply the narrative behind the accomplishment, giving recognition more meaning.
• Make recognition frequent and attainable. Hail smaller accomplishments, too: that extra effort to meet a deadline, that special polish on a proposal, the little things a manager might take for granted.
• Tie recognition to company goals and strategies. Customer service, innovation, teamwork, cost cutting – any organisational priority can be supported by a timely shout-out.

To sum up, OKRs are clear vessels for leaders’ priorities and insights. CFRs help ensure that those priorities and insights get transmitted. But goals cannot be attained without a medium: an organisation’s culture.

Culture is “a set of values and beliefs, as well as familiarity with the way things are done and should be done in a company.”

An OKR culture is an accountable culture. You don’t push toward a goal just because the boss gave you an order. You do it because every OKR is transparently important to the company and to the colleagues who count on you. It’s a social contract, but a self-governed one.