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

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

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If you don’t know where you’re going, you might not get there. —Yogi Berra

Ideas are easy. Execution is everything.

OKRs. Short for Objectives and Key Results. It is a collaborative goal-setting protocol for companies, teams, and individuals.

“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.

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.

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.” An effective goal management system—an OKR system—links goals to a team’s broader mission. It respects targets and deadlines while adapting to circumstances. It promotes feedback and celebrates wins, large and small. Most important, it expands our limits. It moves us to strive for what might seem beyond our reach.

decisive ingredient for OKR success: conviction and buy-in at the top.

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.

Where OKRs take root, merit trumps seniority. Managers become coaches, mentors, and architects. Actions—and data—speak louder than words.

Superpower #1—Focus and Commit to Priorities (chapters 4, 5, and 6): High-performance organizations home in on work that’s important, and are equally clear on what doesn’t matter. OKRs impel leaders to make hard choices. They’re a precision communication tool for departments, teams, and individual contributors. By dispelling confusion, OKRs give us the focus needed to win. Superpower #2—Align and Connect for Teamwork (chapters 7, 8, and 9): 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. By connecting each contributor to the organization’s success, top-down alignment brings meaning to work. By deepening people’s sense of ownership, bottom-up OKRs foster engagement and innovation. Superpower #3—Track for Accountability (chapters 10 and 11): OKRs are driven by data. They are animated by periodic check-ins, objective grading, and continuous reassessment—all in a spirit of no-judgment accountability. An endangered key result triggers action to get it back on track, or to revise or replace it if warranted. Superpower #4—Stretch for Amazing (chapters 12, 13, and 14): OKRs motivate us to excel by doing more than we’d thought possible. By testing our limits and affording the freedom to fail, they release our most creative, ambitious selves.

There are so many people working so hard and achieving so little. —Andy Grove

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.

When people help choose a course of action, they are more likely to see it through.

Though he wasn’t demonstrative, Grove could be a compassionate leader. When he saw a manager failing, he would try to find another role—perhaps at a lower level—where the person might succeed and regain some standing and respect.

The best way to solve a management problem, he believed, was through “creative confrontation”—by facing people “bluntly, directly, and unapologetically.”

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.

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.

No dictating. OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Even after company objectives are closed to debate, their key results continue to be negotiated. Collective agreement is essential to maximum goal achievement.

Stay flexible. If the climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle.

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.” While certain operational objectives must be met in full, aspirational OKRs should be uncomfortable and possibly unattainable. “Stretched goals,” as Grove called them, push organizations to new heights.

A tool, not a weapon. The OKR system, Grove wrote, “is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review.” To encourage risk taking and prevent sandbagging, OKRs and bonuses are best kept separate.

Be patient; be resolute. Every process requires trial and error. As Grove told his iOPEC students, Intel “stumbled a lot of times” after adopting OKRs: “We didn’t fully understand the principal purpose of it. And we are kind of doing better with it as time goes on.” An organization may need up to four or five quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.

We wrote down the things that needed special emphasis.

You can tell people to clean up a mess, but should you be telling them which broom to use? When top management was saying “We’ve got to crush Motorola!” somebody at the bottom might have said “Our benchmarks are lousy; I think I’ll write some better benchmarks.” That was how we worked.

“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

An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.

For organization-level OKRs, the buck stops with senior leadership. They must personally commit to the process.

“When you’re the CEO or the founder of a company … you’ve got to say ‘This is what we’re doing,’ and then you have to model it. Because if you don’t model it, no one’s going to do it.”

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.

Objectives are the stuff of inspiration and far horizons. Key results are more earthbound and metric-driven. They typically include hard numbers for one or more gauges: revenue, growth, active users, quality, safety, market share, customer engagement.

If an objective is well framed, three to five KRs will usually be adequate to reach it. Too many can dilute focus and obscure progress. Besides, each key result should be a challenge in its own right.

In my experience, a quarterly OKR cadence is best suited to keep pace with today’s fast-changing markets. A three-month horizon curbs procrastination and leads to real performance gains.

For the feedback to be effective, it must be received very soon after the activity it is measuring occurs. Accordingly, an [OKR] system should set objectives for a relatively short period. For example, if we plan on a yearly basis, the corresponding [OKR] time should be at least as often as quarterly or perhaps even monthly.

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.

Key results should be succinct, specific, and measurable. A mix of outputs and inputs is helpful. Finally, completion of all key results must result in attainment of the objective. If not, it’s not an OKR.*

As Steve Jobs understood, “Innovation means saying no to one thousand things.” In most cases, the ideal number of quarterly OKRs will range between three and five. It may be tempting to usher more objectives inside the velvet rope, but it’s generally a mistake. Too many objectives can blur our focus on what counts, or distract us into chasing the next shiny thing.

When it came to goal setting, Andy Grove felt strongly that less is more: 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.

Above all, top-line objectives must be significant. OKRs are neither a catchall wish list nor the sum of a team’s mundane tasks. They’re a set of stringently curated goals that merit special attention and will move people forward in the here and now. They link to the larger purpose we’re expected to deliver around. “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.”

Each morning, I’d say to myself, “These are my three buckets, and what am I doing today to move the company forward?” That’s a great question for any leader, with or without a learning issue.

Alongside focus, commitment is a core element of our first superpower. In implementing OKRs, leaders must publicly commit to their objectives and stay steadfast.

It may take a quarter or two to overcome your managers’ resistance and get them acclimated to OKRs—to view them not as a necessary evil, or some perfunctory exercise, but as a practical tool to fulfill your organization’s top priorities.

Until your executives are fully on board, you can’t expect contributors to follow suit—especially when a company’s OKRs are aspirational. The more challenging an objective, the more tempting it may be to abandon it. People naturally look to their bosses in setting goals and following through. If the officers jump ship in the middle of a stormy voyage, you can’t expect the sailors to bring it into port.

To inspire true commitment, leaders must practice what they teach. They must model the behavior they expect of others.

Google: The hairier the mission, the more important your OKRs.

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

“At any given time,” Aaron said, “some significant percentage of people are working on the wrong things. The challenge is knowing which ones.”

Research shows that public goals are more likely to be attained than goals held in private. Simply flipping the switch to “open” lifts achievement across the board.

Transparency seeds collaboration. Say Employee A is struggling to reach a quarterly objective. Because she has publicly tracked her progress, colleagues can see she needs help. They jump in, posting comments and offering support. The work improves. Equally important, work relationships are deepened, even transformed.

In larger organizations, it’s common to find several people unwittingly working on the same thing. By clearing a line of sight to everyone’s objectives, OKRs expose redundant efforts and save time and money.

Once top-line objectives are set, the real work begins. As they shift from planning to execution, managers and contributors alike tie their day-to-day activities to the organization’s vision. The term for this linkage is alignment, and its value cannot be overstated.

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

The answer lies in focused, transparent OKRs. They knit each individual’s work to team efforts, departmental projects, and the overall mission. As a species, we crave connection. In the workplace, we’re naturally curious about what our leaders are doing and how our work weaves into theirs. OKRs are the vehicle of choice for vertical alignment.

My key results become their objectives.

But even if the SVP came up with stronger key results, the organization’s goal-setting approach would remain deeply flawed. The top-line objective—to make a wealthy person wealthier—lacks intrinsic motivation for the general manager, much less for the team’s East Coast scout or the PR intern slaving away at the copy machine.

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.

To avoid compulsive, soul-killing overalignment, healthy organizations encourage some goals to emerge from the bottom up.

A healthy OKR environment strikes a balance between alignment and autonomy, common purpose and creative latitude.

The “professional employee,” Peter Drucker wrote, “needs rigorous performance standards and high goals… . But how he does his work should always be his responsibility and his decision.”

An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their key results. People are led to stretch above and beyond, to set more ambitious targets and achieve more of those they set: “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.

When our how is defined by others, the goal won’t engage us to the same degree.

When goals are public and visible to all, a “team of teams” can attack trouble spots wherever they surface. Adds Bock: “You can see immediately if somebody’s hitting the ball out of the park—you investigate. If somebody’s missing all the time, you investigate. Transparency creates very clear signals for everyone. You kick off virtuous cycles that reinforce your ability to actually get your work done. And the management tax is zero—it’s amazing.”

In 2013, as we jumped from ten to thirty people, I assumed we’d become 200 percent more productive. I’d underestimated how much scaling slows you down. New engineers need extensive training before they can be as proficient as your holdovers. And with multiple engineers developing the same project, we had to build new processes to keep them from overriding one another. In the transition, productivity took a hit.

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.

Alignment doesn’t mean redundancy. At MyFitnessPal, every OKR has a single owner, with other teams linking up as needed. As I see it, co-ownership weakens accountability. If an OKR fails, I don’t want two people blaming each other. Even when two or more teams have parallel objectives, their key results should be distinct.

Where appropriate, we went for the incremental. But there were times when we told the team, “Don’t worry about monthly active user impact on this one. Just build the best feature you can. We want you to swing for the fences.”

“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.

“Look, we can’t get all of these things done. We have to choose.” We had to make it clear to the company that Premium was our number-one objective, above all else.

Every decision we make needs to square with our vision. When we face a trade-off between our customers and a business goal, we align with the customer. When an objective seems out of line with our mantra, it gets extra scrutiny. Before moving forward, we make sure it lines up with our North Star. That’s what keeps us walking the walk and connected with the people we serve. That’s what makes us who we are.

People can’t connect with what they cannot see; networks cannot blossom in silos.

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.

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.

In God we trust; all others must bring data. —W. Edwards Deming

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. Their life cycle unfolds in three phases, which I’ll consider in turn.

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.

“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.”

Most goal management platforms use visual aids to show progress toward objectives and key results.

“Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.”

the simple act of writing down a goal increases your chances of reaching it. Your odds are better still if you monitor progress while sharing the goal with colleagues—two integral OKR features.

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.*

Whenever a key result or objective becomes obsolete or impractical, feel free to end it midstream. There’s no need to hold stubbornly to an outdated projection—strike it from your list and move on. Our goals are servants to our purpose, not the other way around.

The simplest, cleanest way to score an objective is by averaging the percentage completion rates of its associated key results. Google uses a scale of 0 to 1.0: 0.7 to 1.0 = green.* (We delivered.) 0.4 to 0.6 = yellow. (We made progress, but fell short of completion.) 0.0 to 0.3 = red. (We failed to make real progress.)

Where OKR scores pinpoint what went right or wrong in the work, and how the team might improve, self-assessments drive a superior goal-setting process for the next quarter. There are no judgments, only learnings.

In my view, the key to satisfaction is to set aggressive goals, achieve most of them, pause to reflect on the achievement, and then repeat the cycle.

“We do not learn from experience … we learn from reflecting on experience.”

Here are some reflections for closing out an OKR cycle: Did I accomplish all of my objectives? If so, what contributed to my success? If not, what obstacles did I encounter? If I were to rewrite a goal achieved in full, what would I change? What have I learned that might alter my approach to the next cycle’s OKRs?

Throw a party with the team to celebrate your growing OKR superpowers. You’ve earned it.

The higher the stakes, the more important it is to track progress—to flag looming problems, double back from dead ends, and modify goals on the run.

A mission is directional. An objective has a set of concrete steps that you’re intentionally engaged in and actually trying to go for.

The biggest risk of all is not taking one. —Mellody Hobson

If companies “don’t continue to innovate, they’re going to die—and I didn’t say iterate, I said innovate.”

A BHAG is a huge and daunting goal—like a big mountain to climb. It is clear, compelling, and people “get it” right away. A BHAG serves as a unifying focal point of effort, galvanizing people and creating team spirit as people strive toward a finish line. Like the 1960s NASA moon mission, a BHAG captures the imagination and grabs people in the gut.

harder the goal the higher the level of performance… . Although subjects with very hard goals reached their goals far less often than subjects with very easy goals, the former consistently performed at a higher level than the latter.” The

The studies found that “stretched” workers were not only more productive, but more motivated and engaged: “Setting specific challenging goals is also a means of enhancing task interest and of helping people to discover the pleasurable aspects of an activity.”

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

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?

If Andy Grove is the patron saint of aspirational OKRs, Larry Page is their latter-day high priest.

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. That’s why Page expects Googlers to create products and services that are ten times better than the competition. That means he isn’t satisfied with discovering a couple of hidden efficiencies or tweaking code to achieve modest gains. Thousand percent improvement requires rethinking problems, exploring what’s technically possible and having fun in the process.

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!

To succeed, a stretch goal cannot seem like a long march to nowhere. Nor can it be imposed from on high without regard to realities on the ground. Stretch your team too fast and too far, and it may snap. In pursuing high-effort, high-risk goals, employee commitment is essential. Leaders must convey two things: the importance of the outcome, and the belief that it’s attainable.

You know, in our business we have to set ourselves uncomfortably tough objectives, and then we have to meet them. And then after ten milliseconds of celebration we have to set ourselves another [set of] highly difficult-to-reach objectives and we have to meet them. And the reward of having met one of these challenging goals is that you get to play again.

Says Astro Teller: “If you want your car to get fifty miles per gallon, fine. You can retool your car a little bit. But if I tell you it has to run on a gallon of gas for five hundred miles, you have to start over.”

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

Stretch OKRs are an intense exercise in problem solving.

OKRs require organization. You need a leader to embrace the process and a lieutenant to ride herd over scoring and reviews. When I ran OKRs for Larry, I sat in on four-hour meetings with his leadership team, where he’d debate all the company objectives and people were expected to be able to defend them and make sure they were clear. The guidance for OKRs at Google was often top-down, but with lots of discussion with experts on the team and significant give-and-take on key results: This is the direction we want to go, now tell us how you’re going to get there. Those long meetings enabled Larry to emphasize things he cared about, and also to vent frustrations, especially around service on our product OKRs. He’d say, “Tell me your speed now.” And then: “Why can’t you cut that in half?”

Engineers struggle with goal setting in two big ways. They hate crossing off anything they think is a good idea, and they habitually underestimate how long it takes to get things done.

Stretch goals can be crushing if people don’t believe they’re achievable.

Talking can transform minds, which can transform behaviors, which can transform institutions. —Sheryl Sandberg

says. “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.

For companies moving to continuous performance management, the first step is blunt and straightforward: Divorce compensation (both raises and bonuses) from OKRs. These should be two distinct conversations, with their own cadences and calendars. The first is a backward-looking assessment, typically held at year’s end. The second is an ongoing, forward-looking dialogue between leaders and contributors. It centers on five questions: What are you working on? How are you doing; how are your OKRs coming along? Is there anything impeding your work? What do you need from me to be (more) successful? How do you need to grow to achieve your career goals?

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!

In today’s workplace, OKRs and compensation can still be friends. They’ll never totally lose touch. But they no longer live together, and it’s healthier that way.

Andy made one-on-ones mandatory at Intel. The point of the meeting, he wrote, is mutual teaching and exchange of information. By talking about specific problems and situations, the supervisor teaches the subordinate his skills and know-how, and suggests ways to approach things. At the same time, the subordinate provides the supervisor with detailed information about what he is doing and what he is concerned about… . A key point about a one-on-one: It should be regarded as the subordinate’s meeting, with its agenda and tone set by him… . The supervisor is there to learn and coach.* The supervisor should also encourage the discussion of heart-to-heart issues during one-on-ones, because this is the perfect forum for getting at subtle and deep work-related problems affecting his subordinate. Is he satisfied with his own performance? Does some frustration or obstacle gnaw at him? Does he have doubts about where he is going?

Goal setting and reflection, where the employee’s OKR plan is set for the coming cycle. The discussion focuses on how best to align individual objectives and key results with organizational priorities. Ongoing progress updates, the brief and data-driven check-ins on the employee’s real-time progress, with problem solving as needed.* Two-way coaching, to help contributors reach their potential and managers do a better job. Career growth, to develop skills, identify growth opportunities, and expand employees’ vision of their future at the company. Lightweight performance reviews, a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting, in the context of the organization’s needs. (As noted earlier, this conversation is held apart from an employee’s annual compensation/bonus review.)

Unlike negative criticism, coaching trains its sights on future improvement.

“Feedback is an opinion, grounded in observations and experiences, which allows us to know what impression we make on others.”

Today’s workers “want to be ‘empowered’ and ‘inspired,’ not told what to do. They want to provide feedback to their managers, not wait for a year to receive feedback from their managers. They want to discuss their goals on a regular basis, share them with others, and track progress from peers.”

Are these the right things for me/you/us to be focused on? If I/you/we complete them, will it be seen as a huge success? Do you have any feedback on how I/we could stretch even more?

In developing organizations, feedback is generally led by HR and often scheduled. In more mature organizations, feedback is ad hoc, real-time, and multidirectional, an open dialogue between people anywhere in the organization. If we can rate our Uber drivers (and vice versa), and even rate the raters on Yelp, why can’t a workplace support two-way feedback between managers and employees? Here’s the precious opportunity for people to say to their leaders, What do you need from me to be successful? And now let me tell you what I need from you.

Modern recognition is performance-based and horizontal. It crowdsources meritocracy. When JetBlue installed a value-driven, peer-to-peer recognition system, and leaders began noticing people who’d flown under their radar, metrics for employee satisfaction nearly doubled.

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.

“review contributions, reward accomplishments, and give and receive feedback.

Individuals want to drive their own success. They don’t want to wait till the end of the year to be graded. They want to know how they’re doing while they’re doing it, and also what they need to do differently.

From Adobe’s experience, I’d say that a continuous performance management system has three requirements. The first is executive support. The second is clarity on company objectives and how they align with individual priorities—as set out in our “goals and expectations,” which equate to OKRs. The third is an investment in training to equip managers and leaders to be more effective. We’re not shipping people out to courses. We’re steering them to one-hour sessions online, with role-played vignettes: “Do you need to give difficult feedback? Here are the steps.”

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.

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.

Your people may not like you very much through the adoption curve, which can take up to a year. But it’s worth it.

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.

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.

The simple act of forcing people to think about the business—thoughtfully, transparently, interdependently—was a huge accelerant to their performance.

In another life, Mike might have called out the manufacturing lead: “What the hell, can you hurry up and get this done? I’ve been waiting forever!” When you say 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. And guess what else happens? The two leads will advocate for each other to get more resources from Alex and me.

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

For OKRs and CFRs, the medium is an organization’s culture, the living expression of its most cherished values and beliefs.

“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.”

Someone adhering to the values of a corporate culture—an intelligent corporate citizen—will behave in consistent fashion under similar conditions, which means that managers don’t have to suffer the inefficiencies engendered by formal rules, procedures, and regulations… . [M]anagement has to develop and nurture the common set of values, objectives, and methods essential to the existence of trust. How do we do that? One way is by articulation, by spelling [them] out… . The other even more important way is by example.

Structure and clarity: Are goals, roles, and execution plans on our team clear? Psychological safety: Can we take risks on this team without feeling insecure or embarrassed? Meaning of work: Are we working on something that is personally important for each of us? Dependability: Can we count on each other to do high-quality work on time? Impact of work: Do we fundamentally believe that the work we’re doing matters?

Peak performance is the product of collaboration and accountability.

An OKR culture is an accountable culture. You don’t push toward a goal just because the boss gave you an order. You do it because every OKR is transparently important to the company, and to the colleagues who count on you. Nobody wants to be seen as the one holding back the team. Everybody takes pride in moving progress forward. It’s a social contract, but a self-governed one.

As continuous performance management rises to the fore, once-a-year employee surveys are giving way to real-time feedback. One frontier is pulsing, an online snapshot of your workplace culture. These signal-capturing questionnaires may be scheduled weekly or monthly by HR or made part of an ongoing “drip” campaign. Either way, 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”?

Dov’s big idea is that companies that “out-behave” their competition will also outperform them. He identified a value-driven model, the “self-governing organization,” a place where long-term legacy trumps the next quarter’s ROI. These organizations don’t merely engage their workers. They inspire them. They replace rules with shared principles; carrots and sticks are supplanted by a common sense of purpose. They are built around trust, which enables risk taking, which spurs innovation, which drives performance and productivity.

“In the past,” Dov told me, “when employees just needed to do the next thing right—to follow orders to the letter—culture didn’t matter so much. But now we’re living in a world where we’re asking people to do the next right thing. A rulebook can tell me what I can or can’t do. I need culture to tell me what I should do.”

Vision-based leadership beats command-and-control.

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.

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.”

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.

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.

It takes intellectual rigor to effect change; it requires very serious strategies, indeed. If the heart doesn’t find a perfect rhyme with the head, then your passion means nothing. The OKR framework cultivates the madness, the chemistry contained inside it.

People are the most important thing that we do. We have to try to make them better.”

Our actions determine Google’s future. As we’ve seen repeatedly—in Search, in Chrome, in Android—a team composed of a few percent of the company’s workforce, acting in concert toward an ambitious common goal, can change an entire mature industry in less than two years. Thus it is crucial that as Google employees and managers we make conscious, careful, and informed choices about how we allocate our time and energy—as individuals and as members of teams. OKRs are the manifestation of those careful choices, and the means by which we coordinate the actions of individuals to achieve great collective goals.

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

Poorly done/managed OKRs are a waste of time, an empty management gesture. Well done OKRs are a motivational management tool that helps make it clear to teams what’s important, what to optimize, and what tradeoffs to make during their day-to-day work. 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. Key Results are the “Hows.” They: express measurable milestones which, if achieved, will advance objective(s) in a useful manner to their constituents; must describe outcomes, not activities. If your KRs include words like “consult,” “help,” “analyze,” or “participate,” they describe activities. Instead, describe the end-user impact of these activities: “publish average and tail latency measurements from six Colossus cells by March 7,” rather than “assess Colossus latency”; must include evidence of completion. This evidence must be available, credible, and easily discoverable. Examples of evidence include change lists, links to docs, notes, and published metrics reports.

OKRs have two variants, and it is important to differentiate between them: Commitments are OKRs that we agree will be achieved, and we will be willing to adjust schedules and resources to ensure that they are delivered. The expected score for a committed OKR is 1.0; a score of less than 1.0 requires explanation for the miss, as it shows errors in planning and/or execution. By contrast, aspirational OKRs express how we’d like the world to look, even though we have no clear idea how to get there and/or the resources necessary to deliver the OKR. Aspirational OKRs have an expected average score of 0.7, with high variance.

TRAP #1: Failing to differentiate between committed and aspirational OKRs. Marking a committed OKR as aspirational increases the chance of failure. Teams may not take it seriously and may not change their other priorities to focus on delivering the OKR. On the other hand, marking an aspirational OKR as committed creates defensiveness in teams who cannot find a way to deliver the OKR, and it invites priority inversion as committed OKRs are de-staffed to focus on the aspirational OKR.

TRAP #2: Business-as-usual OKRs. OKRs are often written principally based on what the team believes it can achieve without changing anything they’re currently doing, as opposed…

TRAP #3: Timid aspirational OKRs. Aspirational OKRs very often start from the current state and effectively ask, “What could we do if we had extra staff and got a bit lucky?” An alternative and better approach is to start with, “What could my [or my customers’] world look like in several years if we were freed from most constraints?” By definition, you’re not going to know how to achieve this state when the OKR is first formulated—that is why it is an aspirational OKR. But without understanding and articulating the desired end state, you guarantee that you are not going to be…

TRAP #4: Sandbagging. A team’s committed OKRs should credibly consume most but not all of their available resources. Their committed + aspirational OKRs should credibly consume somewhat more than their available resources. (Otherwise they’re effectively commits.) Teams who can meet all of their OKRs without needing all of their team’s headcount/capital … are assumed to either be hoarding resources or not pushing their teams, or both. This is a cue…

TRAP #5: Low Value Objectives (aka the “Who cares?” OKR). OKRs must promise clear business value—otherwise, there’s no reason to expend resources doing them. Low Value Objectives (LVOs) are those for which, even if the Objective is completed with a 1.0, no one will notice or care. A classic (and seductive) LVO example: “Increase task CPU utilization by 3 percent.” This objective by itself does not help users or Google directly. However, the (presumably related) goal, “Decrease quantity of cores required to serve peak queries by 3 percent with no change to quality/latency/ … and return resulting excess cores to the free pool” has clear economic value. That’s a superior objective. Here is a litmus test: Could the OKR get a 1.0 under reasonable circumstances without providing direct end-user or economic…

TRAP #6: Insufficient KRs for committed Os. OKRs are divided into the desired outcome (the objective) and the measurable steps required to achieve that outcome (the key results). It is critical that KRs are written such that scoring 1.0 on all key results generates a 1.0 score for the objective. A common error is writing key results that are necessary but not sufficient to collectively complete the objective. The error is tempting because it…

This trap is particularly pernicious because it delays both the discovery of the resource requirements for the objective, and the discovery that the objective will not be completed on schedule. The litmus test: Is it reasonably possible to score 1.0 on all the key results but still not achieve the intent of the objective? If so, add or rework the key results…

Reading, Interpreting, and Acting on OKRs For committed OKRs Teams are expected to rearrange their other priorities to ensure an on-schedule 1.0 delivery. Teams who cannot credibly promise to deliver a 1.0 on a committed OKR must escalate promptly. This is a key point: Escalating in this (common) situation is not only OK, it is required. Whether the issue arose because of disagreement about the OKR, disagreement about its priority, or inability to allocate enough time/people/resources, escalation is good. It allows the team’s management to develop options and resolve conflicts. 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. A committed OKR that fails to achieve a 1.0 by its due date requires a postmortem. This is not intended to punish teams. It is intended to understand what occurred in the planning and/or execution of the OKR, so that teams may improve their ability to reliably hit 1.0 on committed OKRs. Examples of classes of committed OKRs are ensuring that a service meets its SLA (service level agreement) for the quarter; or delivering a defined feature or improvement to an infrastructure system by a set date; or manufacturing and delivering a quantity of servers at a cost point. 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. Aspirational OKRs and their associated priorities should remain on a team’s OKR list…

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…

More Litmus Tests Some simple tests to see if your OKRs are good: If you wrote them down in five minutes, they probably aren’t good. Think. If your objective doesn’t fit on one line, it probably isn’t crisp enough. If your KRs are expressed in team-internal terms (“Launch Foo 4.1”), they probably aren’t good. What matters isn’t the launch, but its impact. Why is Foo 4.1 important? Better: “Launch Foo 4.1 to improve sign-ups by 25 percent.” Or simply: “Improve sign-ups by 25 percent.” Use real dates. If every key result happens on the last day of the quarter, you likely don’t have a real plan. Make sure your key results are measurable: It must be possible to objectively assign a grade at the end of the quarter. “Improve sign-ups” isn’t a good key result. Better: “Improve daily sign-ups by 25 percent by May 1.” Make sure the metrics are unambiguous. If you say “1 million users,” is that all-time users or seven-day actives? If there are important activities on your team (or a significant fraction of its effort) that aren’t covered by…

What OKRs do you plan to focus on to drive the greatest value for your role, your team, and/or the company? Which of these OKRs aligns to key initiatives in the organization?

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 enlisting individual contributors to join in.

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

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 broad theme chosen by leadership.

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 results equates to the attainment of the objective.

For balance and quality control, pair qualitative and quantitative key results.

When a key result requires extra attention, elevate it into an objective for one or more cycles.

The single most important element for OKR success is conviction and buy-in by the organization’s leaders.

Incentivize employees by showing how their objectives relate to the leader’s vision and the company’s top priorities. The express route to operating excellence is lined with transparent, public goals, on up to the CEO.

Use all-hands meetings to explain why an OKR is important to the organization. Then keep repeating the message until you’re tired of hearing it yourself.

Encourage a healthy proportion of bottom-up OKRs—roughly half.

Smash departmental silos by connecting teams with horizontally shared OKRs. Cross-functional operations enable quick and coordinated decisions, the basis for seizing a competitive advantage.

Make all lateral, cross-functional…

When an OKR is revised or dropped, see to it that all…

To build a culture of accountability, install continuous reassessment and honest and objective grading—and start at the top. When leaders openly admit their missteps,…

Motivate contributors less with extrinsic rewards and more with open, tangible…

To keep OKRs timely and relevant, have the designated shepherd ride herd over regular check-ins and progress updates. Frequent check-ins enable teams and individuals to…

To sustain high performance, encourage weekly one-on-one OKR meetings between contributors and managers, plus…

As conditions change, feel free to revise, add, or delete OKRs as appropriate—even in mid-cycle. Goals are not written in stone. It’s counterproductive to hold stubbornly to…

At the cycle’s end, use OKR grades plus subjective self-assessments to evaluate past performance, celebrate achievements, and plan and improve for the future. Before pushing into the next cycle, take a moment to reflect…

To keep OKRs up-to-date and on point, invest in a dedicated, automated, cloud-based platform. Public, collaborative,…

At the beginning of each cycle, distinguish between goals that must be attained 100 percent (committed OKRs) and those that are stretching for a Big Hairy…

Establish an environment where individuals are free to fail…

To stimulate problem solving and spur people to greater achievement, set ambitious goals—even if it means some quarterly targets will be missed. But don’t set the bar so high that an OKR is obviously…

To get leaps in productivity or innovation, follow Google’s “Gospel of 10x” and replace incremental OKRs with exponential ones. That’s how industries…

When a team fails to attain a stretch OKR, consider rolling the objective over to the next cycle—assuming…

To address issues before they become problems and give struggling contributors the support they need, move from annual performance management…

Unleash ambitious goal setting by divorcing forward-looking OKRs from backward-looking annual reviews. Equating goal attainment to bonus checks will…

Replace competitive ratings and stack rankings with transparent, strength-based, multidimensional criteria for performance evaluations. Beyond the numbers, consider a contributor’s team…

Rely on intrinsic motivations—purposeful work and opportunities for growth—over financial incentives.…

To power positive business results, implement ongoing CFRs (conversations, feedback, and recognition) in concert with structured goal setting. Transparent OKRs make coaching more concrete and useful. Continuous CFRs…

In performance-driving conversations between managers and contributors, allow the contributor to set the agenda. The…

Make performance feedback two-way, ad hoc, and multidirectional,…

Use anonymous “pulse” surveys for real-time feedback on particular…

Strengthen connections between teams and departments with peer-to-peer feedback, in conjunction…

Employ peer recognition to enhance employee engagement and performance. For maximum impact, recognition should be frequent, specific, highly…

Align top-line OKRs with an organization’s mission, vision, and…

Convey cultural values by word, but most of…

Promote peak performance with collaboration and accountability. When OKRs are collective, assign key results to…

To develop a high-motivation culture, balance OKR “catalysts,” actions that support the work, with CFR “nourishers,” acts of interpersonal…

Use OKRs to promote transparency, clarity, purpose, and big-picture orientation. Deploy CFRs to build positivity, enthusiasm,…

Be alert to the need to address cultural barriers, especially issues of accountability and trust,…

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