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

by John Doerr

While Sergey crafted the commerce of technology, Larry toiled on the product and imagined the impossible.

Andy Grove, the greatest manager of his or any era, ran the best-run company I had ever seen.

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

OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or a creative workplace culture.

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.

Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. Once they are all completed, the objective is necessarily achieved. (And if it isn’t, the OKR was poorly designed in the first place.)

OKRs surface your primary goals. They channel efforts and coordination. They link diverse operations, lending purpose and unity to the entire organization.

“hard goals” drive performance more effectively than easy goals. Second, specific hard goals “produce a higher level of output” than vaguely worded ones.

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.” Goal setting isn’t bulletproof: “When people have conflicting priorities or unclear, meaningless, or arbitrarily shifting goals, they become frustrated, cynical, and demotivated.”

Together, the triumvirate brought a decisive ingredient for OKR success: conviction and buy-in at the top.

At medium-size, rapidly scaling organizations, OKRs are a shared language for execution. They clarify expectations: What do we need to get done (and fast), and who’s working on it? They keep employees aligned, vertically and horizontally. In larger enterprises, OKRs are neon-lit road signs.

Many companies have a “rule of seven,” limiting managers to a maximum of seven direct reports. In some cases, Google has flipped the rule to a minimum of seven. (When Jonathan Rosenberg headed Google’s product team, he had as many as twenty.) The higher the ratio of reports, the flatter the org chart—which means less top-down oversight, greater frontline autonomy, and more fertile soil for the next breakthrough. OKRs help make all of these good things possible.

With OKR transparency, everyone’s goals—from the CEO down—are openly shared. Individuals link their objectives to the company’s game plan, identify cross-dependencies, and coordinate with other teams.

“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.”

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.

Peter Drucker—professor, journalist, historian—took a wrecking ball to the Taylor-Ford model. He conceived a new management ideal, results-driven yet humanistic. A corporation, he wrote, should be a community “built on trust and respect for the workers—not just a profit machine.”

He discerned a basic truth of human nature: When people help choose a course of action, they are more likely to see it through. In 1954, in his landmark book The Practice of Management, Drucker codified this principle as “management by objectives and self-control.” It became Andy Grove’s foundation and the genesis of what we now call the OKR. By the 1960s, management by objectives—or MBOs, as the process was known—had been adopted by a number of forward-thinking companies.

(He kept a set of rubber stamps on his desk, including one engraved BULLSHIT.)

Set goals from the bottom up. To promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs, in consultation with managers. When all goals are set top-down, motivation is corroded.

Dare to fail. “Output will tend to be greater,” Grove wrote, “when everybody strives for a level of achievement beyond [their] immediate grasp. . . . Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.”

To encourage risk taking and prevent sandbagging, OKRs and bonuses are best kept separate. (See chapter 15, “Continuous Performance Management: OKRs and CFRs.”)

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.

If Andy had run the San Jose meeting without it, how could he have simultaneously kicked off all those Crush activities? I can’t tell you how many times I’ve seen people walk out of meetings saying, “I’m going to conquer the world” . . . and three months later, nothing has happened. You get people whipped up with enthusiasm, but they don’t know what to do with it. In a crisis, you need a system that can drive transformation—quickly. That’s what the key result system did for Intel. It gave management a tool for rapid implementation.

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

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.”

Objectives are the stuff of inspiration and far horizons. Key results are more earthbound and metric-driven.

In my experience, a quarterly OKR cadence is best suited to keep pace with today’s fast-changing markets.

The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results—to measure “both effect and counter-effect,” as Grove wrote in High Output Management. When key results focus on output, Grove noted: [T]heir paired counterparts should stress the quality of [the] work. Thus, in accounts payable, the number of vouchers processed should be paired with the number of errors found either by auditing or by our suppliers. For another example, the number of square feet cleaned by a custodial group should be paired with a . . . rating of the quality of work as assessed by a senior manager with an office in that building.

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.

completion of all key results must result in attainment of the objective. If not, it’s not an OKR.*

In most cases, the ideal number of quarterly OKRs will range between three and five.

We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing.

“The art of management,” Grove wrote, “lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.”

It’s no news that the U.S. education system needs help. A Brown University study pointed to one possible solution: better communication between teachers and families. When summer school teachers made daily phone calls and sent texts or written messages home, their sixth-graders completed 42 percent more homework. Class participation rose by nearly half.

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

When you listen to enough educators in the trenches, you learn pretty quickly that off-site communication ranks high among their pain points.

By the time John Doerr saw our goals posted above our office toilet, they were more concrete. We listed three metrics: Weekly Active Teachers (WAT), Monthly Active Teachers (MAT), and retention.

Meritocracy flourishes in sunlight. When people write down “This is what I’m working on,” it’s easier to see where the best ideas are coming from.

Innovation tends to dwell less at the center of an organization than at its edges. The most powerful OKRs typically stem from insights outside the C-suite. As Andy Grove observed, “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.”

At Intel, Grove took a dim view of “managerial meddling”: “[T]he subordinate will begin to take a much more restricted view of what is expected of him, showing less initiative in solving his own problems and referring them instead to his [or her] supervisor. . . . [T]he output of the organization will consequently be reduced. .

High-functioning teams thrive on a creative tension between top-down and bottom-up goal setting, a mix of aligned and unaligned OKRs.

Even as modern goal setting successfully transcends the org chart, unacknowledged dependencies remain the number one cause of project slippage.

If two nails are even slightly misaligned, a good hammer will splay them sideways.

When departments counted on one another for crucial support, we failed to make the dependency explicit.

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

Without frequent status updates, goals slide into irrelevance; the gap between plan and reality widens by the day. At quarter’s end (or worse, year’s end), we’re left with zombie OKRs, on-paper whats and hows devoid of life or meaning.

As the Fitbit craze attests, people crave to know how they’re progressing and see it visually represented, down to the percentage point. Research suggests that making measured headway can be more incentivizing than public recognition, monetary inducements, or even achieving the goal itself. Daniel Pink, the author of Drive, agrees: “The single greatest motivator is ‘making progress in one’s work.’ The days that people make progress are the days they feel most motivated and engaged.”

Whenever a key result or objective becomes obsolete or impractical, feel free to end it midstream.