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

by John Doerr

“the gospel of 10x.” Consider Gmail. The main problem with earlier web-based email systems was meager storage, typically 2 to 4 megabytes. Users were forced to delete old emails to make room for new ones. Archives were a pipe dream. During Gmail’s development, Google’s leaders considered offering 100MB of storage—an enormous upgrade. But by 2004, when the product was released to the public, the 100MB goal was dead and forgotten. Instead, Gmail provided a full gigabyte of storage, up to five hundred times more than the competition. Users could keep emails in perpetuity. Digital communication changed forever. That, my friends, is a Big Hairy Audacious Goal. Gmail didn’t merely improve on existing systems. It reinvented the category and forced competitors to raise their game by orders of magnitude. Such 10x thinking is rare in any sector, on any stage. Most people, Larry Page observes, “tend to assume that things are impossible, rather than starting from real-world physics and figuring out what’s actually possible.”

The way Page sees it, a ten percent improvement means that you’re doing the same thing as everybody else. You probably won’t fail spectacularly, but you are guaranteed not to succeed wildly.

At Google, in line with Andy Grove’s old standard, aspirational OKRs are set at 60 to 70 percent attainment. In other words, performance is expected to fall short at least 30 percent of the time. And that’s considered success!

Rethinking the Browser By then we’d set up something new for Google, a team to build client software. We had people working on Firefox to help improve Mozilla’s browser. By 2006, we were beginning to rethink the browser as a computing platform, almost like an operating system, so that people could write applications on the web itself. That fundamental insight gave birth to Chrome. We knew we needed a multiprocess architecture to make each tab its own process and protect a user’s Gmail if another application crashed. And we knew we had to get JavaScript working a lot faster. But we were up for the task of building the best browser possible. Eric Schmidt, our CEO, knew how hard it was to construct a browser from scratch: “If you’re doing it, you had better be serious about it.” If Chrome wasn’t going to be dramatically different and better and faster than the traditional browsers already on the market, there was no point in moving ahead. In 2008, the year of Chrome’s rollout, our product management team formulated a top-level annual objective that would have an enduring influence on Google’s future: to “develop the next-generation client platform for web applications.” The main key result: “Chrome reaches 20 million seven-day active users.”

As a leader, you must try to challenge the team without making them feel the goal is unachievable.

In 2008, Larry and Sergey wrote a beautiful OKR that truly captured people’s attention: “We should make the web as fast as flipping through a magazine.” It inspired the whole company to think harder about how we could make things better and faster.

Success was not instantaneous. In 2009, we set another stretch OKR for Chrome—50 million seven-day active users—and

Reach 1 billion hours of watch time per day [by 2016], with growth driven by: KEY RESULTS Search team + Main App (+XX%), Living Room (+XX%). Grow kids’ engagement and gaming watch time (X watch hours per day). Launch YouTube VR experience and grow VR catalog from X to Y videos.

pursuing our mission over the next four years, we weren’t 10x absolutists. In fact, we’d commit to some watch-time-negative decisions for the benefit of our users. For example, we made it a policy to stop recommending trashy, tabloid-style videos—like “World’s Worst Parents,” where the thumbnail showed a baby in a pot on the stove. Three weeks in, the move proved negative for watch time by half a percent. We stood by our decision because it was better for the viewer experience, cut down on click bait, and reflected our principle of growing responsibly.

A manager’s “first role,” Drucker said, “is the personal one. It’s the relationship with people, the development of mutual confidence . . . the creation of a community.” Or as Albert Einstein observed, “Not everything that can be counted counts, and not everything that counts can be counted.”

That transformational system, the contemporary alternative to annual reviews, is continuous performance management. It is implemented with an instrument called CFRs, for: Conversations: an authentic, richly textured exchange between manager and contributor, aimed at driving performance Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvement Recognition: expressions of appreciation to deserving individuals for contributions of all sizes

“If a conversation is limited to whether you achieved the goal or not, you lose context. You need continuous performance management to surface the critical questions: Was the goal harder to achieve than you’d thought when you set it? Was it the right goal in the first place? Is it motivating? Should we double down on the two or three things that really worked for us last quarter, or is it time to consider a pivot?

You need to elicit those insights from all over the organization.

Table 15.1: Annual Performance Management Versus Continuous Performance Management Annual Performance Management Continuous Performance Management Annual feedback Continuous feedback Tied to compensation Decoupled from compensation Directing/autocratic Coaching/democratic Outcome focused Process focused Weakness based Strength based Prone to bias Fact driven

since OKRs reflect a person’s most meaningful work, they’re a source of reliable feedback for the cycle to come. But when goals are used and abused to set compensation, employees can be counted on to sandbag. They start playing defense; they stop stretching for amazing. They get bored for lack of challenge. And the organization suffers most of all. Let’s say Contributor A set extreme stretch goals and somehow attained 75 percent of them.

Early on in your career, when you’re an individual contributor, you’re graded on the volume and quality of your work. Then one day, all of a sudden, you’re a manager. Let’s assume you do well and move up to manage more and more people. Now you’re no longer paid for the amount of work you do; you’re paid for the quality of decisions you make. But no one tells you the rules have changed. When you hit a wall, you think, I’ll just work harder—that’s what got me here. What you should do is more counterintuitive: Stop for a moment and shut out the noise. Close your eyes to really see what’s in front of you, and then pick the best way forward for you and your team, relative to the organization’s needs. What’s neat about OKRs is that they formalize reflection. At least once each quarter, they make contributors step back into a quiet place and consider how their decisions align with the company. People start thinking in the macro. They become more pointed and precise, because you can’t write a ninety-page OKR dissertation. You have to choose three to five things and exactly how they should be measured. Then when the day comes and someone says, “Okay, you’re a manager,” you’ve already learned how to think like one. And that’s huge.

instead, “My KR is at risk,” it’s less charged and more constructive. Since our company has total alignment, the entire team has already agreed to the key result and the dependency it entails. There’s no judgment, just a problem to be solved.

so the question becomes: How do companies define and build a positive culture? While I have no simple answer, OKRs and CFRs provide a blueprint. By aligning teams to work toward a handful of common objectives, then uniting them through lightweight, goal-oriented communications, OKRs and CFRs create transparency and accountability, the tent poles for sustained high performance. Healthy culture and structured goal setting are interdependent. They’re natural partners in the quest for operating excellence.

pulses are simple, quick, and wide-ranging. For example: Are you getting enough sleep? Have you met recently with your manager to discuss goals and expectations? Do you have a clear sense of your career path? Are you getting enough challenge and motivation and energy—are you feeling “in the zone”?

“We needed a process of discipline to keep us from trying to do everything.”

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. I’m always scared that we’re going to go corporate and try to beat every quarterly goal. We needed John to remind us, “If everything’s at green, you failed.” That was counterintuitive for a lot of people, especially now that we’re financed up and have the best and the brightest working here. But John kept saying, “More red!” He was right. We needed more big ambitions because that’s what we’re good at. We’re less good at the incremental stuff.

Ideas are easy; execution is everything.