Measure What Matters

by John Doerr

Unfortunately, alignment is rare. Studies suggest that only 7 percent of employees “fully understand their company’s business strategies and what’s expected of them in order to help achieve the common goals.” A lack of alignment, according to a poll of global CEOs, is the number-one obstacle between strategy and execution.

Having goals improves performance. Spending hours cascading goals up and down the company, however, does not …. We have a market-based approach, where over time our goals all converge because the top OKRs are known and everyone else’s OKRs are visible. Teams that are grossly out of alignment stand out, and the few major initiatives that touch everyone are easy enough to manage directly.

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.”

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.

In a push for accountability, we set one big dedicated goal for each leader. We created company OKRs for people instead of matching people to our OKRs—we had it backward. Some objectives were too narrow, others too nebulous. If an HR manager got stuck trying to connect to the high-level goals for product or revenue, we’d add a top-line objective just for that person. Soon we had a cornucopia of company OKRs, but what really mattered at MyFitnessPal? We’d lost the forest for the trees.

When you come down to it, alignment is about helping people understand what you want them to do. Most contributors will be motivated to ladder up to the top-line OKRs—assuming they know where to set the ladder. As our team got larger and more layered, we confronted new issues. One product manager was working on Premium, the enhanced subscription version of our app. Another focused on our API platform, to enable third parties like Fitbit to connect to MyFitnessPal and write data to it or applications on top of it. The third addressed our core login experience. All three had individual OKRs for what they hoped to accomplish—so far, so good. The problem was our shared engineering team, which got caught in the middle. The engineers weren’t aligned with the product managers’ objectives. They had their own infrastructure OKRs, to keep the plumbing going and the lights on. We assumed they could do it all—a big mistake. They got confused about what they should be working on, which could change without notice. (Sometimes it boiled down to which product manager yelled loudest.) As the engineers switched between projects from week to week, their efficiency dragged. When returning to a product after an interruption, they’d have to ask themselves: How does this go again? The Premium work was especially urgent for revenue, yet it went in fits and starts. I felt super-frustrated. We’d hired all these talented people and were spending tons of money, but we weren’t going any faster. Things...

A few weeks after our acquisition, my boss called an off-site leadership meeting for twenty people, 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. It took eighteen months to straighten out our division’s alignment, and we couldn’t have done it without OKRs. 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 com...

People can’t connect with what they cannot see; networks cannot blossom in silos. By definition, OKRs are open and visible to all parts of an organization, to each level of every department. As a result, companies that stick with them become more coherent.

A few years ago, to help the IT department adapt as Intuit moved to the cloud, Atticus introduced OKRs to his direct reports. The following quarter, he rolled the system down to the director level; the quarter after that, to all six hundred IT employees. He was determined not to force the new process. “We didn’t want bureaucratic compliance,” Atticus says. “We wanted enthusiastic compliance. I wanted to see if the OKR system would succeed on its own—and it really did.”

It was a stressful, exciting time. The organization was pivoting in several directions at once: from desktop software to cloud-based software, from a closed platform to one that was open to thousands of third-party apps, from a North American company to a global company. As we leaned into our long-term strategy to become an integrated ecosystem, we gradually changed from a house of brands (TurboTax, Quicken, QuickBooks) to the branded house of Intuit. In the storm of any disruption, IT will bear the brunt of in-house frustrations. Partly it’s because the operation tends to be opaque. Any thirty-plus-year-old company accumulates layers of complex technology—especially a technology company. In IT, we’re always juggling the needs of internal partners with the demands of our end users. We bridge technology and business outcomes. Maybe toughest of all, we must balance the task of making systems work perfectly today (as our people expect) with our mandate to invest in the future. For example: Intuit used to have nine different billing systems to serve our array of products, and each of them had special challenges. When you’re putting out fires every day, it’s hard to build a next-generation billing technology.

Modern IT goes way beyond checking off boxes to process help tickets or change requests. It’s about adding value to the business—shedding redundant clone systems, creating new functionality, finding future-oriented solutions. To become the team Intuit needed, our EBS would need to change root and branch. Our leaders had to give people air cover to back-burner some day-to-day tasks and focus on more valuable, longer-term initiatives. Today, every employee in my department owns three to five business objectives per quarter, along with one or two personal ones. The system is powerful precisely because it is so simple—and so transparent. For our OKRs to be effective, I knew they’d have to be visible through all of Intuit, even if no one outside EBS used them. I wanted everyone in the company to know exactly what we were doing, and how, and why. When people understand your priorities and constraints, they’re more apt to trust you when something goes sideways.

At a desktop software company, leaders look at operations through a twentieth-century retail lens. They postmortem sales reports and channel flow. While they do their best to predict where the business might be headed, their line of sight is largely limited to the rearview mirror. By contrast, a cloud-based business wants to know what is happening now. How many subscriptions came in this week? How many trials are ongoing? What’s our conversion rate? A customer can Google an online product, skim the marketing page, take it for a spin, and make a purchase—all in ten minutes or less. For leaders to keep pace, they should be checking their funnel on a daily basis. At EBS, we need to be thinking about real-time reporting, data, and analytics, even as we build out features like wholesale billing. We’ve captured this necessity in a top-level objective: OBJECTIVE Enable every Intuit worker to make decisions based on “live” data. KEY RESULTS 1. Deliver functional data marts for HR and Sales. 2. Complete migration to new Enterprise Data Warehouse built for real-time access. 3. Create single team operating all data visualization tools across Intuit to drive a unified strategy. 4. Create teaching module to help people in other teams use data visualization tools.

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.

Studies have told us forever that frontline employees thrive when they can see how their work aligns to the company’s overall goals. I’ve found this especially true at our remote sites. I’ve heard it from people in Bangalore: “My objective is directly a key result of my manager’s OKR, which ties directly to the top-level EBS objective, which ties to the company’s shift to the cloud. Now I understand how what I’m doing in India connects to the company mission.” That’s a powerful realization. OKRs have consolidated our far-flung department. Thanks to structured, visible goal setting, our boundaries have melted away.

Our ecommerce and billing teams work under separate vice presidents who roll up to me. If ecommerce is building a shopping cart, billing needs to bring related features to market. In the old way, the two engineering teams ran independently and reported to their respective program managers, who tried (with variable success) to connect from above. The people doing the actual work had no direct contact. Now, with horizontally transparent OKRs, our engineers intentionally connect as they link to each other’s objectives. Quarter by quarter, they iterate against the department’s objectives while devising how best to coordinate with their peers. We’re trending away from senior committee mandates and toward real autonomy. Our EBS leaders still set the context, ask the big questions, and furnish relevant data. But it’s our interconnected groups whose insights are propelling us forward—together.

One underrated virtue of OKRs is that they can be tracked—and then revised or adapted as circumstances dictate. Unlike traditional, frozen, “set them and forget them” business goals, OKRs are living, breathing organisms.

In 2014, when Bill Pence came to AOL as global chief technology officer, top-line company and division goals were presented on a spreadsheet and rolled down from there. “But they never really had a home, where they connected on a daily basis with people,” Pence says. 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. 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. Extrinsic rewards—the year-end bonus check—merely validate what they already know. OKRs speak to something more powerful, the intrinsic value of the work itself.

For an OKR system to function effectively, the team deploying it—whether a group of top executives or an entire organization—must adopt it universally. No exceptions, no opt-outs. Yes, there will be late adopters, resisters, and garden-variety procrastinators. To prod them to join the flock, a best practice is to designate one or more OKR shepherds.

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.”

OKRs are adaptable by nature. They’re meant to be guardrails, not chains or blinders. As we track and audit our OKRs, we have four options at any point in the cycle: • Continue: If a green zone (“on track”) goal isn’t broken, don’t fix it. • Update: Modify a yellow zone (“needs attention”) key result or objective to respond to changes in the workflow or external environment. What could be done differently to get the goal on track? Does it need a revised time line? Do we back-burner other initiatives to free up resources for this one? • Start: Launch a new OKR mid-cycle, whenever the need arises. • Stop: When a red zone (“at risk”) goal has outlived its usefulness, the best solution may be to drop it.fn1

Until you set a really big goal, like vaccinating every child everywhere, you can’t find out which lever or mix of levers is most important. Our annual strategy reviews began with: “What is the objective here? Is it eradication or is it expanding the reach of vaccines?” Then we could get more practical with our key results—like the 80/90 rule at the Global Alliance for Vaccines and Immunization, where 80 percent of districts would have 90 percent or more coverage. You need those key results to align your everyday activities, and over time you keep moving them to be even more ambitious against that really big goal. Sometimes, to be honest, we were probably measuring the wrong thing. But the effort was always there to hold ourselves accountable. At private foundations, where you lack a market effect to gauge impact, you have to pay close attention to whether your data is getting you to the ultimate goal.

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?

as Albert Einstein observed, “Not everything that can be counted counts, and not everything that counts can be counted.”

At Google, according to Laszlo Bock, OKRs amount to a third or less of performance ratings. They take a backseat to feedback from cross-functional teams, and most of all to context. “It’s always possible—even with a goal-setting system—to get the goals wrong,” Laszlo says. “Maybe the market does something crazy, or a client leaves their job and suddenly you have to rebuild from scratch. You try to keep all of that in consideration.” Google is careful to segregate raw goal scores from compensation decisions. Their OKR numbers are actually wiped from the system after each cycle!

When an organization isn’t yet ready for total openness and accountability, culture work may be needed before OKRs are implemented. 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.

Andrew Cole: When I came to Lumeris, they had been working with OKRs for three quarterly cycles—on paper. They had an outstanding employee participation rate, or so I was told. But after a deep-dive analysis, I realized the process was superficial. At the end of the quarter, a lone HR person ran around like a Jack Russell, nipping at managers’ heels to get updated numbers before the board meeting. People dropped into the software platform, conveniently adjusted an objective’s metrics, and said, “Oh yeah, I got that done.” They’d slap on a date and check off a box. It looked great on PowerPoint, but it wasn’t real. Few of our people understood the business rationale behind OKRs. We were missing explicit buy-in from executive leadership. Most of all, nobody held anybody accountable for getting the system right. When I examined people’s objectives, they weren’t connected to the actual work. I’d go to managers and ask, “Why does this show up in your OKRs?” In many cases, they had no idea how their objectives linked up to what we were working to achieve. It was so much window dressing.

HR Transformation People watch what you do more than what you say. Lumeris had some senior leaders with an old-school, autocratic approach. They weren’t living our core values: ownership, accountability, passion for the job, loyalty to the team. Nothing else would matter until those leaders exited the organization. We made sure they left us with their dignity and respect intact, a telling moment in any transformation project. At each and every culture meeting, we told our employees: “You have the right—no, the obligation—to hold your executive team accountable for what we’re saying our culture should be. If we’re not following through, make an appointment or send an email. Or just walk up to us in the hallway and tell us we are not getting it done.”

The following April, we relaunched the platform with a sixty-day pilot program for a hundred employees in our operations group. Our senior vice president for operations and delivery, had his doubts going in. But with sharpened training, plus improvements to the software, he became an enthusiast. Within less than two weeks, he was shooting emails to the pilot group: Why did you write this objective that way? What’s the metric here? I don’t get this OKR, it isn’t what I’m seeing from client feedback. And his people were thinking, He’s paying attention! I’d better look at this more closely. Winning our troops over to OKRs wasn’t easy or instantaneous, far from it. Transparency is scary. Admitting your failures—visibly, publicly—can be terrifying. We had to rewire people from how they’d been raised since kindergarten. It’s like your first scuba dive, when you go thirty-five feet down and the adrenaline is pumping and you’re scared out of your wits. But when you come back up, you’re exhilarated. You have a new insight into how things work beneath the surface.

Our people stopped dancing around their setbacks. They began to realize there was no shame in trying your hardest and failing, not when OKRs help you fail smart and fail fast. The tide turned. We began hearing comments like “I was a complete naysayer, but now I see how this can work for me.” Ninety-eight percent of the pilot group became active users of our OKR platform; 72 percent set at least one objective aligned to the company’s goals. And 92 percent of the pilot group said they now understood “what my manager expects of me.”

I was working with Art Glasgow, who came on board in the spring of 2016 as our president and COO. The two of us agreed there was no point to OKRs unless we went all the way. Art volunteered to be executive sponsor, our goal-setting shepherd. He stood up in front of an all-hands meeting and said, “OKRs are how we’re going to run the company, and we’re going to use them to measure your bosses.” (That was the carrot that balanced the stick.) Art’s role in the crusade cannot be overestimated. He set the tone for what he calls “brutal transparency without judgment.” And he made my job less lonely.

Goal setting is more art than science. We weren’t just teaching people how to refine an objective or a measurable key result. We had a cultural agenda, as well. • Why is transparency important? Why would you want people across other departments to know your goals? And why does what we’re doing matter? • What is true accountability? What’s the difference between accountability with respect (for others’ failings) and accountability with vulnerability (for our own)? • How can OKRs help managers “get work done through others”? (That’s a big factor for scalability in a growing company.) How do we engage other teams to adopt our objective as a priority and help assure that we reach it? • When is it time to stretch a team’s workload—or to ease off on the throttle? When do you shift an objective to a different team member, or rewrite a goal to make it clearer, or remove it completely? In building contributors’ confidence, timing is everything. There is no handbook to address these questions. The wisdom resides in leaders with personal connections to their teams, to managers who can show what success looks like and know when to declare victory. (My advice: Not too soon.)

When our top-line OKRs are projected on a screen, it’s clear to see which leaders are making their objectives. Art doesn’t like yellows, so every OKR is either green (on track) or red (at risk). There’s no bell-curve ambiguity, no place for problems to hide. The reviews run for three hours, with a dozen senior executives taking their turn. Little time is spent on people’s greens. Instead, they “sell” their reds. The team votes on the most important at-risk OKRs for the company as a whole, then brainstorms together as long as it takes to get the objectives back on track. In the spirit of cross-departmental solidarity, individuals volunteer to “buy” their colleagues’ reds. As Art says, “We’re all here to help. We’re all in the same bathwater.” As far as I know, “selling your reds” is a unique use of OKRs, and one well worth emulating.

Resource 1 Google’s OKR Playbook

Resource 2 A Typical OKR Cycle

Resource 3 All Talk: Performance Conversations

Resource 4 In Sum