Is your company focused on the right things? Do you really understand what goals will move your company forward, and how to measure them? OKRs can help. Measure What Matters shows you how to use the OKR management system to identify your priorities, set ambitious goals, clearly measure and track them, and motivate and align everyone on your team.
This is the system that helped Larry Page and Sergey Brin turn a small startup called Google into one of the most ambitious and innovative companies in the world. Whether your business is large or small, OKRs are invaluable tools. Learn to implement the same management system used by Google, Intel, LinkedIn, Disney, Twitter, and Spotify.
1-Page Summary of Measure What Matters
_Measure What Matters _is venture capitalist John Doerr’s guide to implementing the “OKR management system,” a goal-setting process he adapted from one used at Intel. The OKR system is used at LinkedIn, Disney, and Twitter, among countless other companies.
What Are OKRs?
As its name implies, Measure What Matters helps you figure out what matters at your company and how to measure its success. The first step to knowing what matters is clarifying your OKRs, objectives and key results.
The objective is the goal: what the company, team, or individual aims to achieve.
- State the overall goal or vision
- Must be tangible, concrete, and objective
- Must be action-oriented
Example: Hire new employees to meet the needs of the expanding organization.
Key results are benchmarks toward the objective.
- State the measurable sub-goals that, if achieved, will collectively result in achieving the objective
- Usually include numbers (revenue, market share, active users, growth, and so on)
- Include specific deadlines
**Objective: **Hire new employees to meet the needs of the expanding organization.
**Key Result #1: **Meet with 3 candidates this month for the role of director of finance and hire 1.
**Key Result #2: **Meet with 5 candidates this quarter for the role of marketing manager and hire 1.
**Key Result #3: **Meet with 5 candidates this quarter for the role of product manager and hire 1.
How to Implement the OKR System
**Step 1: Identify your objectives. **Start with the company’s biggest priorities. Ask yourself, “What are the most important tasks we need to accomplish in the next three months, the next six months, and the next year?”
Once you’ve identified your organization-level objectives, departments, teams, and individuals identify their own objectives. About half of an employee’s objectives trickle down from the top. The employee creates the other half herself.
- Every objective, regardless of whether it’s an individual or department objective, should align with the company’s top objectives.
- At each tier, tackle no more than 3-5 objectives.
- Everyone’s objectives need to be public, including the CEO’s.
**Step 2: Identify your key results. **For each objective, ask yourself, “What steps do I need to complete to reach my objective?”
- **Assign only 3-5 key results to each objective. **If you need more key results to reach an objective, your objective isn’t narrow enough or isn’t framed well.
- Make sure your key results are specific, comprehensive, and aligned. Successfully completing your key results _must _culminate in achieving your objective.
- Everyone’s key results need to be public.
- Employees should create most of their own key results, whether the objective comes from the top or not.
**Step 3: Decide on the length of your OKR cycle. **Your team should operate on the same goal-setting schedule, or OKR cycle. For most companies, there are two simultaneous OKR cycles, quarterly and annual. Annual cycles are for long-term OKRs, and quarterly cycles are for short-term OKRs that support the longer-term objectives.
**Step 4: Choose a cloud-based management system. **To effectively track OKRs, you need a place to store and share them. A cloud-based system is best. (Shortform note: Cloud-based OKR systems include WorkBoard, Ally, Culture Amp, and Asana. You can also simply use shared documents.)
**Step 5: Designate an “OKR shepherd.” **For the OKR system to work, everyone, from the CEO to the lowest-level employee, has to take part. But you’ll likely encounter resistance and procrastination. It’s useful to put someone in charge of keeping the rest of the team or organization accountable for setting and working toward their OKRs.
Step 6: Set stretch goals. Eventually, in addition to “committed OKRs” (objectives that must be met for your company to function and thrive), you should create “stretch OKRs,” objectives that make you feel a little uncomfortable because you’re not sure you can accomplish them. Stretch OKRs push you to achieve more than you thought possible.
**Step: 7: Check in with employees weekly or monthly, **and continually reassess OKRs. If they’re no longer relevant, jointly decide to change or discard them, even mid-cycle.
Step 8: Score and reflect. At the end of each cycle, score your performance for each OKR. Reflect on how you did and what that means about the goals you set. What will you do differently next quarter?
Step 9: Repeat this cycle every month or quarter. Realize that hitting on an effective OKR system takes time, so be patient with yourself, your colleagues, and your administration.
Four OKR Superpowers
The primary benefits of OKRs come from their four superpowers: focus, align, track, and stretch.
Superpower #1: Focus
OKRs clarify your focus by limiting you to 3-5 objectives at a time. Remember that every time you commit to something, you make yourself unavailable to commit to something else, so choose your commitments wisely. Once you’ve chosen where to put your focus, commit to those objectives.
OKRs also clarify your focus by limiting you to 3-5 key results per objective. Because the success of your key results _must _result in the success of your objective, you need to create key results carefully. For example, the three sets of key results (KRs) below are all proposed paths toward the objective of winning the Indy 500, but only one set is focused enough to get you there.
<table> <tr> <td><strong>Weak KRs</strong> </td> <td><strong>So-So KRs</strong> </td> <td><strong>Strong KRs</strong> </td> </tr> <tr> <td><strong>Objective: </strong>Win the Indy 500. <ul>
<li>KR #1: Achieve a faster lap speed.
<li>KR #2: Decrease time during pit stops. </li> </ul> </td> <td><strong>Objective: </strong>Win the Indy 500. <ul>
<li>KR #1: Achieve a lap speed that’s 2% faster.
<li>KR #2: Decrease time during pit stops by an average of 1 second/stop. </li> </ul> </td> <td><strong>Objective: </strong>Win the Indy 500. <ul>
<li>KR #1: Achieve a lap speed that’s 2% faster.
<li>KR #2: Decrease time during pit stops by an average of 1 second/stop.
<li>KR #3: Decrease pit stop errors by half.
<li>KR #4: Spend 1 hour/day practicing pit stops. </li> </ul> </td> </tr> </table>
In the example above, the weak key results aren’t specific enough. The so-so key results are better because they’re measurable and specific, but they don’t specify how to decrease pit-stop time the way the strongest key results do.
Superpower #2: Align
OKRs are good at aligning companies because OKRs are always public. CEOs can look at the goals of their executives, managers, and junior staff, and junior staff can (and should) look at the goals of their bosses and the CEO. This allows people to coordinate their goals with those of the company and their peers.
Use Both Top-Down and Bottom-Up Alignment
Generally, there are two approaches to alignment: top-down and bottom-up. In the top-down approach, directives start with the CEO and cascade down through the ranks to the junior employees. In the bottom-up approach, junior employees working on the frontlines, the people who have the most access to customers and product issues, identify pressing needs and relay them up the chain of command to the CEO.
The most effective companies are aligned in both directions, with half of an employee’s objectives coming from the top and half set by the employee herself. If you’re assigning an objective to one of your employees, make sure you clearly demonstrate how the objective connects to the company’s top priorities.
Employees should set most of their key results themselves. People who choose their goals take more responsibility for reaching them.
Superpower #3: Track
OKRs are always measurable, and at the end of each OKR cycle you score them. These scores help you track your progress, and they indicate when you need to double down on a particular goal or when you should revise or abandon it.
During the OKR cycle, check-in with your manager weekly or monthly to discuss your OKR progress and decide among four options for each goal:
**Option #1: Continue **the objective or key result—If everything’s going well and you’re making progress, keep going.
**Option #2: Revise **the objective or key result—If changes in your environment or workflow have caused the goal to get off track, update it.
**Option #3: Start **a new objective or key result—As conditions change, you may need to add new goals. If you already have five objectives, put one or two on the backburner to make room for the new goal.
**Option #4: Stop **an objective or key result—Some goals become irrelevant or impractical. Don’t stubbornly cling to a goal just because you set it. If it no longer serves your larger purpose or the company’s, toss it.
At the end of the OKR cycle, you score and reflect on your OKRs. The wrap-up phase consists of three parts: objective scoring, subjective self-assessment, and reflection.
The employee and manager assign a score to the objectives. The simplest way to score an objective is to average the completion rates of its key results. One way to score is to use a scale of 0.0 to 1.0, based on how much of the key result was completed.
- 0.7-1.0 is a “green” score, meaning the individual or team achieved the goal.
- 0.4-0.6 is a “yellow” score, meaning the individual or team made progress but didn’t complete the goal.
- 0.0-0.3 is a “red” score, meaning the individual or team failed to make progress toward the goal.
Objective data are important, but they don’t always tell the whole story. Low numbers could conceal a strong effort, and strong numbers could be inflated.
For example, let’s say your objective is to recruit more customers, and one of your key results is to make 50 phone calls to potential customers. You end up making 35 phone calls, for an objective score of 0.7. On paper, this looks like a success. But if you waited until the last minute and rushed through your calls, signing only 1 new customer, the objective score of 0.7 isn’t really indicative of your performance.
For this reason, it’s important to balance objective scores with subjective self-assessments. Work with your manager to compare objective scores with the circumstances that led to them.
To learn from your experiences and scores, use these questions as a jumping-off point for group discussion and self-reflection:
- Did you meet your objectives? If you did, what factors helped you be successful? If you didn’t, what roadblocks did you face?
- What have you learned that you want to keep in mind during the next OKR cycle?
Superpower #4: Stretch
Some of your OKRs should be especially challenging. Expect “stretch OKRs” to score between 0.4 and 0.6. Setting challenging goals allows your company to continue innovating.
This is how Google distinguishes between regular objectives (“committed objectives”) and stretch objectives (“aspirational objectives”):
- **Committed objectives **are the goals that need to be met within a set period of time for the company to prosper. Additionally, these goals need to be 100% or near-100% complete (or receive a score of 1.0) by the deadline. Committed objectives include sales and revenue goals around product releases, customer satisfaction, and hiring.
- **Aspirational objectives **are goals that reflect the bigger picture, outside of day-to-day needs, and focus on big, ambitious ideas.
Google doesn’t expect everyone to achieve their aspirational objectives, and failure is built into the process—in fact, the average rate of failure at Google is about 40%.
Your company’s balance of committed and aspirational objectives will depend on your answers to the following questions:
- Do we want to break into a new market next year? Do we have some extra cash to play around with? Can we afford to make a risky bet? (If yes, favor aspirational objectives, or stretch goals.)
- Do we want to further establish our current position in the market? Are we in survival mode, just trying to stay afloat? (If yes, favor committed goals.)
Regardless of your answers, **every company should have at least one or two aspirational objectives. **To determine yours, ask, “What would _incredible _look like for our company?”
What Are CFRs?
Measure What Matters also explores the system of **continuous performance management, **an alternative to annual performance reviews. This system allows managers to give feedback regularly, help employees improve throughout the year, and address issues as they arise.
CFRs are your tools for implementing a continuous performance management system.
- C: Conversations between employees and managers
- F: Feedback both from and to managers and among peers
- R: Recognition from peers and managers for small and large contributions toward goals
Conversations happen weekly or monthly, in both formal and informal environments.
As a manager, your conversations with employees cover** 5 main topic areas **(but you don’t need to cover all of them in one conversation):
- Reflecting on past goals and setting new ones.
- Updates on OKR progress, problem-solving if necessary.
- Coaching: Guide the employee in his or her thinking about the OKR approach, and encourage the employee to offer feedback to help you, the manager, do your job better.
- Professional development: Work with the employee to develop the necessary skills, knowledge, and mindset to succeed at the company.
- “Lightweight” performance reviews: Discuss what the employee has accomplished since your last meeting, and view this progress within the context of the company’s priorities and needs.
In order to improve, employees need to know how they’re doing—often, they don’t have enough distance from their work and performance to make this call themselves.
You can elicit and guide feedback in one-on-one meetings with these questions:
- Employee: Do you have any feedback on how I could improve my performance, make more progress toward my goals, or set more ambitious OKRs?
- Manager: What do you need from me to succeed?
Recognition should be both private and public and focused on actions. There are many ways to establish a “high-recognition” culture:
- Introduce a peer-to-peer recognition system. For example, you could end Friday meetings with the opportunity for employees to give a shout out to the work of their peers.
- Focus on actions and results. Instead of honoring an Employee of the Month, honor an Achievement of the Month. Celebrate people for what they do, particularly when they complete OKRs that contribute to company goals or they demonstrate company values.
- Link recognition to the company’s goals. When you have a particular, company-wide OKR you’re trying to push, focus recognition on the people who are helping the company make progress toward it.
Together, OKRs and CFRs Build a Positive Culture
In one study, researchers found that “high-motivation cultures” depend on two elements: catalysts and nourishers.
Catalysts are elements of a company that support the work being done. These elements include goal setting, learning from failure, transparency, engaging in meaningful work, and freely sharing ideas. All of these elements are built into the OKR system.
Nourishers are elements of a company that support the interpersonal needs of employees. These elements include positive feedback, professional development, emotional support, psychological safety, and recognition. All of these elements are built into the CFR system.
In other words, OKRs are the catalysts of a positive workplace culture; CFRs are the nourishment that sustains it.
Full Summary of Measure What Matters
Part 1 | Chapters 1-3: Introducing OKRs
In 1999, Google was a small startup with an ambitious goal: to make the internet relevant and accessible to everyone. Unfortunately, founders Larry Page and Sergey Brin had zero experience managing a company, and there were already 17 other search engines competing for market dominance. Page and Brin had to figure out how to break down their broad, ambitious mission into manageable, measurable pieces, and they had to do it quickly. Luckily, venture capitalist John Doerr, who had a 12% stake in the company, had just the tool: a management system he’d learned as an Intel employee in the ’70s….
Read the rest of the “Measure What Matters” summary at my new book summary product, Shortform.
Here’s what you’ll find in the full Measure What Matters summary:
- Part 1 | Chapters 1-3: Introducing OKRs
- Exercise: Is Your Current Management System Working?
- Chapters 4-6: Superpower #1—Focus and Commit
- Exercise: Focus on Your Priorities
- Chapters 7-9: Superpower #2—Align and Connect
- Exercise: Align Your Goals with Your Company’s
- Chapters 10-11: Superpower #3—Track
- Exercise: Track Your Progress
- Chapters 12-14: Superpower #4—Stretch
- Exercise: Stretch Yourself
- Part 2 | Chapters 15-16: CFRs—Conversations, Feedback, and Recognition
- Exercise: Implement CFRs
- Chapter 17: The Side Benefits of the OKR/CFR System
- Chapters 18-21: How to Build a Positive Culture
- Exercise: Reflect on Your Workplace Values
- Appendix: Checklist for Developing a Successful OKR System
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