John Doerr, a multi-billion dollar venture capitalist and Silicon Valley pioneer, preaches his goal-setting gospel to a bevy of industry-defining entrepreneurs. Through his system of objectives and key results, or OKRs, Doerr explains the importance and effectiveness of his method, while demonstrating OKRs specific application in various industries and work environments. Doerr aims to convince his audience that his collaborative and communicative approach to goal-setting, coupled with integrity, leadership, and culture, lead to organizational and individual growth far beyond the previously conceived limits of possibility.
The Importance of Goal Setting
Most, if not all, modern businesses have methodologies in place aimed at setting benchmarks for organizational and individual growth. Business leaders choose to do this because of the overwhelming evidence of benefits for companies that set and execute goals. However, research in the field of management theory demonstrates drastic deficiencies in employers’ ability to engage their employees with said goals.
- “Among experiments in the field [of management theory], 90 percent confirm that productivity is enhanced by well-defined, challenging goals” (p. 10).
- Furthermore, studies have shown that “less than a third of U.S. workers are ‘involved in, enthusiastic about and committed to their work and workplace.’ Of those disengaged millions, more than half would leave their company for a raise of 20 percent or less” (p. 10).
- Similar research has shown that “two out of three employees” in the technology industry believe they could find a better job within two months (p. 10).
- A two-year Deloitte study found clearly defined, written down, and freely shared goals as the single largest factor impacting the creation of company-wide alignment, clarity, and job satisfaction (p. 10).
- Specifically, “‘hard goals’ drive performance more effectively than easy goals. Second, specific hard goals ‘produce a higher level of output’ than vaguely worded ones” (p. 9).
- OKR is an acronym consisting of two parts: Objectives and Key Results.
- OKRs are “a management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization” (p. 7).
- “An OBJECTIVE … is simply WHAT is to be achieved, no more and no less. By definition, objectives are significant, concrete, action oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution” (p. 7).
- “KEY RESULTS benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable … You either meet a key result’s requirements or you don’t; there is no gray area, no room for doubt” (p. 7).
- “Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. Once [the key results] are all completed, the objective is necessarily achieved” (p. 8).
- If the goal-setter fails to reach his/her objective upon completion of all of the key results, it implies poor construction of the OKR in the first place (p. 8).
The Four “Superpowers” of OKRs
The four superpowers of the OKR framework act as guidelines for creating and implementing the framework effectively. They prove absolutely necessary in order to achieve the best results. The superpowers are as follows: focus and commit to priorities, align and connect for teamwork, track for accountability, and stretch for amazing (pp. 33-34).
- #1. Focus and Commit to Priorities: Honing in on what matters most at the heart of the company’s mission creates a clear and direct focus that can become visible to everyone within the organization. This allows everyone to naturally gravitate towards the “true North” direction the leaders pull everyone in (pp. 47-51).
- #2. Align and Connect for Teamwork: As the executives in the company move the business towards their “true North” by delegating and delivering objectives down the “corporate ladder,” executives should expect feedback from the bottom up regarding the method in which subordinates feel as though they can execute these objectives with key results. Executives must invite a balanced, top-down-bottom-up approach to OKRs. Every individual should give his or her opinion without the fear of retribution from his or her peers and superiors in order to allow for the creation of the best OKRs (pp. 77-90).
- #3. Track for Accountability: Anticipate the unexpected, and adjust accordingly when the unexpected inevitably occurs. Leaders and individuals should adjust or even discard key results, especially if the key results no longer appear relevant or in service of the objective (pp. 113-116).
- #4. Stretch for Amazing: Goal-setters must set objectives beyond what they believe achievable. However, this does not mean setting all objectives beyond what is remotely realistic. Leaders should aim to set some OKRs within their company’s comfort zone, and some beyond it. Given an understanding of the company’s direction, an organization should expect to fail in service of making progress towards the ultimate goal (pp. 133-138).
Constructing OKRs is a team effort centered around the relationship between communication and the four superpowers. Effective utilization of the four superpowers requires integrity, leadership, and a growth-oriented culture.
- Leaders selecting company-wide objectives must effectively communicate the “why” of that objective to every subordinate in the company. The “why” explanation the leader gives is rooted in a focus and commitment to the company’s mission (superpower #1).
- Then, leaders will engage in horizontal feedback from their subordinates, fostering ideas about how to achieve the objective(s), eventually creating the specific and measurable key results for each worker at every level of the organization in service of the objective(s) (superpower #2).
- Throughout the process of creating the key results, individuals must decide how often they will discuss their progress with and receive feedback from their superiors, subordinates, and any other relevant members of the organization (weekly, monthly, quarterly, or however often best suits the needs of the team). Likewise, OKRs should include deadlines for both key results and objectives, in order for individuals to hold themselves and others accountable (superpower #3).
- Finally, individuals must approach OKRs with the understanding that failure is encouraged. OKRs are not effective when individuals set goals that are “safe.” Since growth remains as a fundamental principle of goal-setting, individuals should receive recognition for achieving their goals. However, they must also receive recognition for pushing past their limits, even if they happen to fail. Individuals should feel as though they work in an environment where leaders and peers value progress above all else (superpower #4).
- Lastly, write down the OKRs and make them public to everyone in the organization.
- After setting the OKRs, companies and individuals must reflect upon their growth.
- Many adopters of the OKR goal-setting method suggest rating key results from 0.0 to 1.0. For example, if someone created and rated a key result as follows: “I plan on opening ten new accounts for the firm by October of this year [0.8],” this means that the individual only completed this KR 80 percent of the way. However, this might not simply mean that the individual opened eight out of the ten accounts he/she had planned to. Context is imperative (pp. 73, 119).
- Continuing with the previous example, assume the objective associated with the above key result was, “I plan to generate 100,000 dollars in profit by the end of the calendar year.” An exceptionally reflective utilizer of the OKRs will consider this context when he/she rates his/her key result. Therefore, next to his/her rating, he/she may write “I was only able to open six new accounts for the firm, but I expect to generate 80,000 dollars from them by the end of the year.” Conversely, she may write, “I opened ten new accounts for the firm, but I suspect only four of them will be profitable” (pp. 119, 121).
- After this deep reflection, goal-setters will have a clear picture of where they came from, where they are now, and, using communication, integrity, leadership, and an innovative culture, can begin to create, recycle, or repurpose objectives in order to continue the growing process (p. 125).
Continuous Feedback Management
In tandem with companies and individuals reflecting on the execution of their respective OKRs, managers and contributors alike should engage in continuous feedback up, down, and across departments and the corporate hierarchy. As opposed to annual performance reviews, which HR leaders have decided are rarely useful in driving business value, continuous feedback allows for regular monitoring of and adjustment towards goal achievement. A continuous feedback implementation instrument known as CFRs encourages “transparency, accountability, empowerment, and teamwork” across all levels of an organization, making it a good companion to OKRs (pp. 17, 175-176).
- CFR is an acronym that stands for “Conversation, Feedback, and Recognition” (p. 17).
- Conversation: “An authentic, richly textured exchange between manager and contributor, aimed at driving performance.” One-on-one conversations between leaders and their subordinates can increase productivity. “By talking about specific problems and situations, the supervisor teaches the subordinate his skills and know-how, and suggests ways to approach things. At the same time, the subordinate provides the supervisor with detailed information about what he is doing and what he is concerned about.” Conversations afford a subordinate the opportunity to notify his/her superiors about what he/she needs in order to accomplish his/her goals and grow as an individual within the company. This, in turn, keeps the entire team/organization on track (pp. 176, 182-183).
- Feedback: “Bidirectional or networked communication among peers to evaluate progress and guide future improvement.” Not only should individuals assess their own progress throughout the goal-setting process, but they should also receive assessment from others in order to obtain the fullest understanding of their achievement. Additionally, multidirectional feedback encourages continuous and real-time adjustments. When feedback givers provide feedback in real-time, they give more specific comments. This allows feedback takers to utilize feedback in the most constructive manor (p. 176, 184-185).
- Recognition: “Expressions of appreciation to deserving individuals for contributions of all sizes.” In order to build an engaged team, leaders and peers should frequently recognize individual growth. Several methods exist by which organizations can implement high and continuous recognition, such as: instituting peer-to-peer recognition, establishing clear criteria for recognition, sharing recognition stories, and marrying recognition to company goals and strategy. “As soft as it seems, saying ‘thank you’ is an extraordinary tool to building an engaged team … Every cheer is a step toward operating excellence, the crowning purpose of OKRs and CFRs” (pp. 176, 186-188).
The Interaction between Culture and OKRs
Culture dictates the actions of the individual when he/she acts autonomously as a member of the organization. Culture determines and gets determined by OKRs. Company leaders use their values to determine the company’s objectives, which convey said values to everyone else who works towards those objectives. When an individual buys into an organization’s objectives, he/she concurrently buys into the organization’s culture. It is this commitment to achieving the organizational objectives that determines an individual’s decisions. “OKRs … build top-down alignment, team-first networking, and bottom-up autonomy and engagement—the pillars of any vibrant, value-driven culture” (pp. 215, 219-222).
Doerr, J. (2018) Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs. New York: Penguin Publishing Group.