The book Measure What Matters by John Doerr describes a goal-setting system called Objectives and Key Results (OKRs).
Why should we use OKRs?
‘There are so many people working so hard and achieving so little.’ – Andrew Grove
Does it work? Let’s see what Larry Page, Bill Gates and Sheryl Sandberg think:
- ‘I wish I had this book nineteen years ago, when we founded Google. Or even before that, when I was only managing myself! As much as I hate process, good ideas with great execution are how you make magic. And that’s where OKRs come in’ – Larry Page, Google co-founder
- ‘I’d recommend John’s book for anyone interested in becoming a better manager’ – Bill Gates
- ‘Measure What Matters shows how any organization or team can aim high, move fast, and excel’ , Sheryl Sandberg – Facebook COO
How does it work?
OKRs allow an organisation to focus on metrics and KPIs. This makes a cultural shift from output to outcomes. They also create alignment and transparency within the organisation.
- Objectives define what is to be achieved. They are significant, concrete, action-oriented and inspirational.
- Each objective is measured by 3-5 key results. These KRs benchmark how we get to the objective. They are specific, time-bound, aggressive yet realistic, measurable and verifiable. Typically include numbers like revenue, growth, active users, quality, safety, market share, customer engagement. Marissa Mayer used to say “It’s not a key result unless it has a number“. In the case of new products or features where you don’t have any idea of revenue or projected users, MyFitnessPal pined key results to deadlines: “e.g. Launch this by 20/7/2019.”
- The organisation, every department and every employee, including the CEO, should have their own 3 – 5 goals. Leaders can’t have just team goals.
- After the leadership presents their OKRs, they can trust people to set some of their own objectives bottom-up and most of their key results. If a person or team is misaligned, it will stand out as all OKRs can be seen and commented by anyone in the company. Due to this transparency, frontline employees thrive as they can see how their work aligns to the company’s overall goals. Moreover, this also means that all objectives of an employee don’t necessarily need to align with her managers’ but can support other departments or directly top OKRs.
- You should have goals which must be accomplished and others that stretch you to do something 10 times better. Try to have an achievement of 70%. If you aim for 100%, you’re not setting challenging enough goals / key results.
- If you achieve your key results but not your goals, your key results were poorly chosen.
- It’s better not to tie salaries/bonuses to OKRs. Otherwise, people won’t choose really challenging objectives.
- If an objective or key result is not relevant anymore, it can be dropped or changed.
- Objectives and Key results usually have a 1, 3 or 12-month lifespan. 1-month usually for early-stage companies still finding product-market fit.
Edit: Although the book doesn’t say, some companies like Spotify and Gitlab use OKRs up to the team level, they do not have individual OKRs.