Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs

by John Doerr

Feedback can be highly constructive—but only if it is specific. Negative feedback: “You started the meeting late last week, and it came off as disorganized.” Positive feedback: “You did a great job with the presentation. You really grabbed their attention with your opening anecdote, and I loved how you closed with next action steps.”

By fostering connections among teams, peer feedback is especially valuable in cross-functional initiatives. When horizontal communication blows open, interdepartmental teamwork becomes the new normal. As OKRs are combined with 360-degree feedback, the silo will soon be a relic of the past.

Continuous recognition is a powerful driver of engagement: “As soft as it seems, saying ‘thank you’ is an extraordinary tool to building an engaged team. . . . ‘[H]igh-recognition’ companies have 31 percent lower voluntary turnover than companies with poor recognition cultures.”

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. At Zume Pizza, the Friday all-hands “roundup” meeting concludes with a series of unsolicited, unedited shout-outs from anyone in the organization to anyone else who’s done something remarkable. Establish clear criteria. Recognize people for actions and results: completion of special projects, achievement of company goals, demonstrations of company values. Replace “Employee of the Month” with “Achievement of the Month.” 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 organizational priority can be supported by a timely shout-out.

Once teams and departments start connecting in this fashion, more and more people get on board, and a recognition engine revs up an entire company. Anyone can cheer anyone else’s goal, irrespective of title or department. And mark this: Every cheer is a step toward operating excellence, the crowning purpose of OKRs and CFRs.

With characteristic energy and persuasiveness, Donna hustled to bring the company around. As she wrote on Adobe’s intranet, the challenge at hand was to “review contributions, reward accomplishments, and give and receive feedback. Do they need to be conflated into a cumbersome process? I don’t think so. It’s time to think radically differently. If we did away with our ‘annual review,’ what would you like to see in its place? What would it look like to inspire, motivate, and value contributions more effectively?” Her post sparked one of the most widely engaged discussions in company history.

Lightweight, flexible, and transparent, with minimal structure and no tracking or paperwork, Check-in features three focus areas: quarterly “goals and expectations” (Adobe’s term for OKRs), regular feedback, and career development and growth. Sessions are called by contributors and decoupled from compensation.

Corrective feedback is naturally difficult for people. But when done well, it’s also the greatest gift you can give to someone—because it can change people’s mindset and modify their behavior in the most positive, valuable way. We’re creating an environment where people say, “You know what? It’s okay to make a mistake, because that’s how I’m going to grow the most.” That’s a big part of our culture change.

The true mechanisms for success are the ones that build capabilities and enable people to deliver for the company.

For a service business, nothing is more valuable than engaged employees who feel they can make a difference and want to stay with the organization. Turnover is costly. The best turnover is internal turnover, where people are growing their careers within your enterprise rather than moving someplace else. People aren’t wired to be nomads. They just need to find a place where they feel they can make a real impact. At Adobe, Check-in is making that happen.

As we’ve seen, OKRs and CFRs are proven vehicles for high performance and exponential growth. They also have more subtle, internal, quotidian effects—like grooming better executives, or giving less vocal contributors an opportunity to shine. On the long and demanding road to operating excellence, they help organizations improve each and every day. Leaders become better communicators and motivators. Contributors grow into more disciplined, rigorous thinkers. When imbued with meaningful conversations and feedback, structured goal setting teaches people how to work within constraints even as they push against them—an especially critical lesson for smaller, scaling operations.

OKRs are a superb training tool for executives and managers. They teach you how to manage your business within existing limits. It’s important to push the envelope, but the envelope is real. Everybody faces resource constraints: time, money, people. And the bigger an organization, the more entropy—it’s like thermodynamics.

Old-school business models suggest that your role as an executive gets more abstract as you rise in the ranks. Your middle managers buffer you from the operational day-to-day, freeing you to focus on the big picture. Maybe that worked in a slower-paced era. But in my experience, OKRs can’t be effective unless the people at the top are unconditionally committed—like a religious calling. And proselytizing is hard and thankless work. Your people may not like you very much through the adoption curve, which can take up to a year. But it’s worth it.

Most start-ups aren’t too eager to plunge into structured goal setting: We don’t need that. We go super-fast. We just figure stuff out. And often they do figure it out. But I think they’re missing an opportunity to teach people how to be executives before the company scales. If those habits aren’t ingrained early on, one of two things happens: Unsuccessful companies scale beyond the leadership team’s capacity, and they die. Successful companies scale beyond the team’s abilities and the team gets replaced. Those are both sad outcomes. The better way is to train people to think like leaders from the start, when their departments have a staff of one.

At a start-up, you can get lost in tactical minutiae—especially in my department, where we wear so many hats. That’s dangerous, because you’re swimming in tumultuous seas and it’s easy to lose sight of land. But those OKR meditations helped me reset my compass: How do I contribute to the scheme of things? Then it’s not just another report or campaign or field event. It connects to something bigger and more meaningful.

Culture is the common language that allows for individuals in an organization to be sure they’re all talking about the same thing—and that what they’re talking about has meaning. Beyond that, culture establishes a common framework for decision making. In its absence, people are at a loss for how to make key functions replicable and scalable.

You need a culture that high-fives small and innovative ideas. —Jeff Bezos

Culture, as the saying goes, eats strategy for breakfast. It’s our stake in the ground; it’s what makes meaning of work. Leaders are rightly obsessed with culture. Founders ask how they can protect their companies’ cultural values as they grow. Chiefs of large companies are turning to OKRs and CFRs as tools for culture change.

Andy Grove understood the paramount importance of this interplay. “Put simply,” he wrote in High Output Management, 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. The point is that a strong and positive corporate culture is absolutely essential.”

High-motivation cultures, they concluded, rely on a mix of two elements. Catalysts, defined as “actions that support work,” sound much like OKRs: “They include setting clear goals, allowing autonomy, providing sufficient resources and time, helping with the work, openly learning from problems and successes, and allowing a free exchange of ideas.” Nourishers—“acts of interpersonal support”—bear a striking resemblance to CFRs: “respect and recognition, encouragement, emotional comfort, and opportunities for affiliation.”

Where people have authentic conversations and get constructive feedback and recognition for superior accomplishment, enthusiasm becomes infectious. The same goes for stretch thinking and a commitment to daily improvement. The companies that treat their people as valued partners are the ones with the best customer service. They have the best products and strongest sales growth. They’re the ones who are going to win.

In our open-sourced, hyperconnected world, behavior defines a company more meaningfully than product lines or market share. As Dov said to me recently, “It’s the one thing that can’t be copied or commoditized.”

Where Andy Grove added qualitative goals to balance quantitative ones, Dov has found a way to quantify seemingly abstract values like trust. His “trust index” measures specific behaviors—the direct “hows” of transparency, for example. “I avoid asking people about their perceptions,” Dov told me. “I don’t ask, ‘Do you feel your company is honest with you?’ I look at information flows. Does the company hoard information, does it mete it out on a need-to-know basis, or is it flowing freely? If you go around your boss and talk to somebody more senior, are you punished or celebrated?”

When Dov told me there was no more powerful cultural force than “active transparency,” where “human beings are opening up, sharing the truth, bringing others in, being vulnerable,” I could see Andy Grove smiling. An OKR/CFR culture is above all a transparent culture.

As Dov observes, “Collaboration itself—our ability to connect—is an engine of growth and innovation.”

As Jim Collins observes in Good to Great, first you need to get “the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Only then do you turn the wheel and step on the gas.

Time is the enemy of transformation. We took less than eighteen months to replace 85 percent of our HR professionals. Once senior management and frontline employees were fully on board, we tackled the tougher nut: strengthening middle management. That’s typically a three-year process, from start to steady state. When it’s complete, your new culture is assured.

First, Lumeris needed to nurture the right culture for OKRs to take root. Then it needed OKRs to sustain and deepen that new culture, to help it win people’s hearts and minds. That’s a campaign that never ends.

Having Sudanese businessman and philanthropist Mo Ibrahim on our board is just transformative. In Africa, he is the real deal, a proper rock star. He and his daughter, Hadeel, give us the intellectual static on the continent that we were missing—and that was so necessary to tune in to stronger channels. Before we met him, Mo was properly rude about some of our objectives. He steered us to transparency as a central goal—not just in Africa, but in Europe and America. We put in the research and found that corruption drains a trillion dollars a year from developing countries. “This is more important than HIV/AIDS,” Mo told us. “This will save more lives.”

Is there a downside to OKRs? Well, if you read them incorrectly, I suppose you could get too organized. ONE mustn’t get institutional; we need to stay disruptive.

OKRs may be called a tool, or a protocol, or a process. But my image of choice is a launch pad, a point of liftoff for the next wave of entrepreneurs and intrapreneurs. My dream is to see Andy Grove’s brainchild transform every walk of life. I believe it can have a huge impact on GDP growth, health care outcomes, school success, government performance, business results, and social progress.

My ultimate stretch OKR is to empower people to achieve the seemingly impossible together. To create durable cultures for success and significance. And to prime the pump of inspiration for all the goals—especially your goals—that matter most.

Andy Grove, the brilliant originator of the OKR, is remembered in fair detail in these pages. “Coach” Bill Campbell’s wisdom is invoked more fleetingly. Here, then, is our opportunity to celebrate Bill, a man who gave so much to so many. From his gift for honest, open communication to his zeal for data-driven operating excellence, the Coach embodied the very spirit of OKRs. So it’s only fitting that he graces our close.

As Google CEO Sundar Pichai recalls, “He cared about operating excellence day in, day out.” It went back to Bill’s deceptively modest-sounding motto: “Be better every day.” There is nothing more challenging—or more fulfilling—than that.

Steve harangued Bill forever to choose Apple and leave Google, but the Coach refused: “Steve, I’m not helping Google with their technology. I can’t even spell HTML. I’m just helping them be a better business every day.” When Steve persisted, the Coach said, “Don’t make me choose. You are not going to like the choice I’m going to make.” And Steve backed down because the Coach was his one true confidant. (He “kept Steve Jobs going,” as Eric Schmidt told Forbes. Bill was Steve’s “mentor, his friend. He was the protector, the inspiration. Steve trusted him more than he trusted anybody else.”)

We use OKRs to plan what people are going to produce, track their progress vs. plan, and coordinate priorities and milestones between people and teams. We also use OKRs to help people stay focused on the most important goals, and help them avoid being distracted by urgent but less important goals. OKRs are big, not incremental—we don’t expect to hit all of them. (If we do, we’re not setting them aggressively enough.) We grade them with a color scale to measure how well we did: 0.0–0.3 is red 0.4–0.6 is yellow 0.7–1.0 is green

Writing good OKRs isn’t easy, but it’s not impossible, either. Pay attention to the following simple rules: Objectives are the “Whats.” They: express goals and intents; are aggressive yet realistic; must be tangible, objective, and unambiguous; should be obvious to a rational observer whether an objective has been achieved. The successful achievement of an objective must provide clear value for Google.

The corollary is that every new OKR is likely to involve some amount of escalation, since it requires a change to existing priorities and commitments. An OKR that requires no changes to any group’s activities is a business-as-usual OKR, and those are unlikely to be new—although they may not have previously been written down.

Aspirational OKRs The set of aspirational OKRs will by design exceed the team’s ability to execute in a given quarter. The OKRs’ priority should inform team members’ decisions on where to spend the remaining time they have after the group’s commitments are met. In general, higher priority OKRs should be completed before lower priority OKRs.

Team managers are expected to assess the resources required to accomplish their aspirational OKRs and ask for them each quarter, fulfilling their duty to express known demand to the business. Managers should not expect to receive all the required resources, however, unless their aspirational OKRs are the highest priority goals in the company after the committed OKRs.

Continuous performance management is a two-part, interwoven process. The first part consists of setting OKRs; the second entails regular and ongoing conversations, tailored to your needs.

Focus and Commit to Priorities

Set the appropriate cadence for your OKR cycle. I recommend dual tracking, with quarterly OKRs (for shorter-term goals) and annual OKRs (keyed to longer-term strategies) deployed in parallel.

To work out implementation kinks and strengthen leaders’ commitment, phase in your rollout of OKRs with upper management first. Allow the process to gain momentum before...

Designate an OKR shepherd to make sure that every individual devotes the time each cycle to ...

Commit to three to five top objectives—what you need to achieve—per cycle. Too many OKRs dilute and scatter people’s efforts. Expand your effective capacity by deciding what not to do, and discard, defer, or deemphasize accordingly.

In choosing OKRs, look for objectives with the most leverage for outstanding performance.

Find the raw material for top-line OKRs in the organization’s mission statement, strategic plan, or a bro...

To emphasize a departmental objective and enlist lateral support, elevat...

For each objective, settle on no more than five measurable, unambiguous, time-bound key results—how the objective will be attained. By definition, completion of all key resu...