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

by John Doerr

So I’d come to a philosophy, my mantra: Ideas are easy. Execution is everything.

The practice that molded me at Intel and saved me at Sun—that still inspires me today—is called OKRs. Short for Objectives and Key Results.

first PowerPoint slide defined OKRs: “A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.”

An OBJECTIVE, I explained, 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.

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. (As prize pupil Marissa Mayer would say, “It’s not a key result unless it has a number.”) You either meet a key result’s requirements or you don’t; there is no gray area, no room for doubt. At the end of the designated period, typically a quarter, we declare the key result fulfilled or not. Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the wor...

In 1968, the year Intel opened shop, a psychology professor at the University of Maryland cast a theory that surely influenced Andy Grove. First, said Edwin Locke, “hard goals” drive performance more effectively than easy goals. Second, specific hard goals “produce a higher level of output” than vaguely worded ones. In the intervening half century, more than a thousand studies have confirmed Locke’s discovery as “one of the most tested, and proven, ideas in the whole of management theory.” Among experiments in the field, 90 percent confirm that productivity is enhanced by well-defined, challenging goals.

But exactly how do you build engagement? A two-year Deloitte study found that no single factor has more impact than “clearly defined goals that are written down and shared freely. . . . Goals create alignment, clarity, and job satisfaction.”

2017, for the sixth year in a row, Google ranked number one on Fortune magazine’s list of “Best Companies to Work For.” This runaway success is rooted in strong and stable leadership, a wealth of technical resources, and a values-based culture of transparency, teamwork, and relentless innovation.

Then he said something that left a lasting impression on me. He referenced his previous company, Fairchild, where he’d first met Noyce and Moore and went on to blaze a trail in silicon wafer research. Fairchild was the industry’s gold standard, but it had one great flaw: a lack of “achievement orientation.” “Expertise was very much valued there,” Andy explained. “That is why people got hired. That’s why people got promoted. Their effectiveness at translating that knowledge into actual results was kind of shrugged off.” At Intel, he went on, “we tend to be exactly the opposite. 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.” It almost doesn’t matter what you know. . . . To claim that knowledge was secondary and execution all-important—well, I wouldn’t learn that at Harvard. I found the proposition thrilling, a real-world affirmation of accomplishment over credentials.

I was mesmerized. A few unvarnished excerpts, straight from the father of OKRs:* Now, the two key phrases . . . are objectives and the key result. And they match the two purposes. The objective is the direction: “We want to dominate the mid-range microcomputer component business.” That’s an objective. That’s where we’re going to go. Key results for this quarter: “Win ten new designs for the 8085” is one key result. It’s a milestone. The two are not the same. . . . The key result has to be measurable. But at the end you can look, and without any arguments: Did I do that or did I not do it? Yes? No? Simple. No judgments in it. Now, did we dominate the mid-range microcomputer business? That’s for us to argue in the years to come, but over the next quarter we’ll know whether we’ve won ten new designs or not. It was a “very, very simple system,” Grove said, knowing simplicity was catnip to an audience of engineers.

Eventually, though, the limitations of MBOs caught up with them. At many companies, goals were centrally planned and sluggishly trickled down the hierarchy. At others, they became stagnant for lack of frequent updating; or trapped and obscured in silos; or reduced to key performance indicators (KPIs), numbers without soul or context. Most deadly of all, MBOs were commonly tied to salaries and bonuses.

MBOs vs. OKRs MBOs Intel OKRs “What” “What” and “How” Annual Quarterly or Monthly Private and Siloed Public and Transparent Top-down Bottom-up or Sideways (~50%) Tied to Compensation Mostly Divorced from Compensation Risk Averse Aggressive and Aspirational

OBJECTIVE Demonstrate the 8080’s superior performance as compared to the Motorola 6800. KEY RESULTS (AS MEASURED BY . . .) Deliver five benchmarks. Develop a demo. Develop sales training materials for the field force. Call on three customers to prove the material works.

Intel managers “leave our stripes outside when we go into a meeting.” Every big decision, he believed, should begin with a “free discussion stage . . . an inherently egalitarian process.”

After I’d logged eighteen months as a product manager, Jim Lally—by then the head of systems marketing, and a great mentor and hero of mine—said to me, “Doerr, if you want to be a really good general manager someday, you need to get out in the field, sell, get rejected, and learn to meet a quota. You can have all the technical expertise in the world, but you’ll succeed or fail in this business based on whether your team makes their numbers.”

Less is more. “A few extremely well-chosen objectives,” Grove wrote, “impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.” A limit of three to five OKRs per cycle leads companies, teams, and individuals to choose what matters most. In general, each objective should be tied to five or fewer key results.

They stopped selling to programmers and started selling to CEOs.

“We will achieve a certain OBJECTIVE as measured by the following KEY RESULTS. . . .”

As Jim Lally told me: “I was a skeptic on objectives and key results until Grove sat down with me and explained why they mattered. If you tell everybody to go to the center of Europe, and some start marching off to France, and some to Germany, and some to Italy, that’s no good—not if you want them all going to Switzerland. If the vectors point in different directions, they add up to zero. But if you get everybody pointing in the same direction, you maximize the results.

When you’re really high up in management, you’re teaching—that’s what Andy did. Objectives and key results were embedded in the management system at Intel, but they were also a philosophy, a seminal teaching system. We were all taught that if you measured it, things got better. We wrote our top-level goals with Andy in our executive staff meetings. We sat around the table and decided: “This is it.” As a division manager, I adopted any relevant company key results as my objectives. I brought them to my executive team, and we’d spend the next week talking about what we would do that quarter. What made the system so strong is that Andy would say, “This is what the corporation is going to do,” and everybody would go all out to support the effort. We were part of a winning team, and we wanted to keep winning.

“Bad companies,” Andy wrote, “are destroyed by crisis. Good companies survive them. Great companies are improved by them.”

It is our choices . . . that show what we truly are, far more than our abilities. —J. K. Rowling

Measuring what matters begins with the question: What is most important for the next three (or six, or twelve) months? Successful organizations focus on the handful of initiatives that can make a real difference, deferring less urgent ones. Their leaders commit to those choices in word and deed. By standing firmly behind a few top-line OKRs, they give their teams a compass and a baseline for assessment. (Wrong decisions can be corrected once results begin to roll in. Nondecisions—or hastily abandoned ones—teach us nothing.)

In a survey of eleven thousand senior executives and managers, a majority couldn’t name their company’s top priorities. Only half could name even one.

Leaders must get across the why as well as the what. Their people need more than milestones for motivation. They are thirsting for meaning, to understand how their goals relate to the mission. And the process can’t stop with unveiling top-line OKRs at a quarterly all-hands meeting. As LinkedIn CEO Jeff Weiner likes to say, “When you are tired of saying it, people are starting to hear it.”

The history of the infamous Ford Pinto shows the hazards of one-dimensional OKRs.

Looking back, Ford didn’t lack for objectives or key results. But its goal-setting process was fatally flawed: “The specific, challenging goals were met (speed to market, fuel efficiency, and cost) at the expense of other important features that were not specified (safety, ethical behavior, and company reputation).”

Google CEO Sundar Pichai once told me that his team often “agonized” over their goal-setting process: “There are single OKR lines on which you can spend an hour and a half thinking, to make sure we are focused on doing something better for the user.” That’s part of the territory. But to paraphrase Voltaire: Don’t allow the perfect to be the enemy of the good.* Remember that an OKR can be modified or even scrapped at any point in its cycle. Sometimes the “right” key results surface weeks or months after a goal is put into play. OKRs are inherently works in progress, not commandments chiseled in stone.

The one thing an [OKR] system should provide par excellence is focus. This can only happen if we keep the number of objectives small. . . . Each time you make a commitment, you forfeit your chance to commit to something else. This, of course, is an inevitable, inescapable consequence of allocating any finite resource. People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.” . . . We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing.

We learned the three watchwords for entrepreneurs: Solve a problem Build a simple product Talk to your users

As companies scale, people need to see the CEO’s priorities and how they can align for maximum impact. And they need to see it’s okay to make a mistake, to correct it and move on. You can’t fear screwing up. That squelches innovation.

But at a start-up, the only constant is change,

Doing too much too soon will definitely end in pain.

By definition, start-ups wrestle with ambiguity.

We don’t hire smart people to tell them what to do. We hire smart people so they can tell us what to do.

Steve Jobs

A lack of alignment, according to a poll of global CEOs, is the number-one obstacle between strategy and execution.

“People in the trenches are usually in touch with impending changes early. Salespeople understand shifting customer demands before management does; financial analysts are the earliest to know when the fundamentals of a business change.”

“The higher the goals, the higher the performance.” People who choose their destination will own a deeper awareness of what it takes to get there.

I worked for a number of companies before cofounding MyFitnessPal. None of them used formal goal-setting systems. They had annual financial plans, revenue numbers to hit, and broad strategies around them, but nothing structured or continuous. Not coincidentally, those organizations shared something else in common: a glaring lack of alignment. I’d have no clue as to what other teams were doing, or how we might work together toward a common objective. We’d try to compensate with more meetings, which only wasted time. If you put two people in a boat and have one row east and the other row west, they’ll use up lots of energy going nowhere.

It’s not easy to predict the market for the conceptually new; we’d wildly beat our metric or wildly miss. So we switched it up. We began pinning our key results to deadlines instead of revenue or projected users. (Example: “Launch MFP Premium by 5/1/15.”)

including Connected Fitness stakeholders across the company. Since Under Armour followed an annual cadence, department heads were to present what they aimed to achieve that year. At MyFitnessPal, we were accustomed to investing the time to frame our objectives correctly. Our group was ready. As the meeting unfolded, Albert and I were surprised to discover that the ecommerce team was counting on us to drive significant traffic from our apps. The data team assumed we’d deliver a mass of data. The media sales team had marked us down for a set dollar amount in new ad revenues. All three had preconceived notions of what they could expect from us, with no visibility into what other teams were asking. Nor could anyone see how their targets might align with our own growth objectives, much less the bigger company picture. There were unacknowledged dependencies wherever we looked. It was our old problem at MyFitnessPal, on steroids. There was simply no way we could get all these things done.

First, we had to define our capacity constraints for developing new software. Then we had to clarify our core priorities. By sharing our high-level OKRs for Connected Fitness, I could explain why certain projects required the allocated time, and where we should be doubling down on the company’s top goals. “This is the process we use,” I said, “and I’m showing you our objectives and key results. You need to let me know if you see anything missing, or if you think we’re working on the wrong things.” It was one-way transparency, and I felt a little nervous going in, but it worked. People began to recognize our limits and adjust their expectations accordingly. For our part, we worked to align with them by finding projects that met cross-departmental objectives. When Albert took hold of our MapMyFitness product team, first he examined the road map and said, “We need to cut half of this, right? We need to strip it down to the things that really matter.” Now we evaluate product features the MyFitnessPal way: “If we take this one off the road map this quarter, what happens? Would it really affect the user experience?” More often than not, the feature in question wouldn’t make a big difference. These calls are not subjective; we have metrics to measure impact. We’re making tougher, sharper choices about where to place our bets these days, and they all stem from the OKR process.

When people understand your priorities and constraints, they’re more apt to trust you when something goes sideways.

There’s an art to goal setting, and more than a few judgment calls. If you choose to temporarily elevate a key result, it helps to be candid about it. Leaders need to explain, “Yes, I want us to focus on that one right now as a top-level objective. When it no longer needs the extra attention, we’ll let it drift back down into a KR.” It’s a dynamic system. You’re always adjusting the altitude.

Contributors are most engaged when they can actually see how their work contributes to the company’s success. Quarter to quarter, day to day, they look for tangible measures of their achievement.

In philanthropy, I see people confusing objectives with missions all the time. A mission is directional. An objective has a set of concrete steps that you’re intentionally engaged in and actually trying to go for. It’s fine to have an ambitious objective, but how do you scale it? How do you measure it? I think it’s getting better, though. Philanthropy is bringing in more people from high-performance business environments, and they’re tilting the culture. Having a good mission is not enough. You need a concrete objective, and you need to know how you’re going to get there.

my favorite definition of entrepreneurs: Those who do more than anyone thinks possible . . . with less than anyone thinks possible.*

Two OKR Baskets Google divides its OKRs into two categories, committed goals and aspirational (or “stretch”) goals. It’s a distinction with a real difference. Committed objectives are tied to Google’s metrics: product releases, bookings, hiring, customers. Management sets them at the company level, employees at the departmental level. In general, these committed objectives—such as sales and revenue goals—are to be achieved in full (100 percent) within a set time frame. Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. They originate from any tier and aim to mobilize the entire organization. By definition, they are challenging to achieve. Failures—at an average rate of 40 percent—are part of Google’s territory. The relative weighting of these two baskets is a cultural question. It will vary from one organization to the next, and from quarter to quarter. Leaders must ask themselves: 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? Are we in survival mode, or is there cash on hand to bet big for a big reward? What does our business require, right now?

goal-setting is extremely important if you want peak performance from yourself and your subordinates.” Intel treasured calculated risk takers. It was the place I learned to stretch and to dare to fail. In Operation Crush, the do-or-die campaign to dominate the 16-bit chip microprocessor market, the company’s salespeople were measured by design wins, the number of products designed around our 8086 microprocessor. Led by Bill Davidow, the Crush task force set one of the bolder goals I’ve ever seen: one thousand design wins in a single calendar year, 50 percent more than sales had logged the year before.