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

Review

Measure What Matters present the OKRs, the tool created at Intel by Andy Grove that enabled the company to thrive amidst the competition of the huge chip companies of the time. The idea is simple: by the means of a collaborative goal-setting protocol, OKRs will guide an organization to stellar performance. OKRs enable that because of its superpowers: focus and commit to priorities, align and connect for teamwork, track for accountability, and stretch for amazing.

The way the book does that is by telling stories, most of the time written by people coached by the author. The majority of the stories are interesting, like Intel’s Operation Crush story, the Remind story, and the MyFitnessPal story. The downside of these stories is that they make the book less cohesive, as the mix of writing styles and the different language used to describe the OKRs muddies the understanding. Some stories seem clueless on how they reached success, despite the effort to correlate that with the OKRs.

However, the book finishes greatly in its last part, by showing how OKRs helps with performance management. Instead of doing an annual or bi-annual performance review, Doerr introduces the CFRs, short for Conversations, Feedback, and Recognition. And then it finishes with more stories, that at this point of the book do not augments the performance management subject. The last story, by Bono Vox, seems to be there only to fill some pages more.

So, I expect any reader to really understand the benefits of OKRs by the end of the book. The tool is simple but it could have a more cohesive treatment on the book, with more examples on how to set objectives and key results. But an experienced manager will be capable to add OKRs to its toolset and explore it inside a managed and defined workflow.

Measure What Matters could be a shorter and more cohesive book. Nonetheless, it contains interesting stories, which prevents the book to be a boring read.

Some quotes

The practice that molded me at Intel and saved me at Sun—that still inspires me today—is called OKRs. Short for Objectives and Key Results. It is a collaborative goal-setting protocol for companies, teams, and individuals. Now, OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or a creative workplace culture. But if those fundamentals are in place, OKRs can guide you to the mountaintop.

“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.

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.

Drucker aimed to map out “a principle of management that will give full scope to individual strength and responsibility and at the same time give common direction of vision and effort, establish team work and harmonize the goals of the individual with the common weal.” 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.

Andy Grove’s quantum leap was to apply manufacturing production principles to the “soft professions,” the administrative, professional, and managerial ranks. He sought to “create an environment that values and emphasizes output” and to avoid what Drucker termed the “activity trap”: “[S]tressing output is the key to increasing productivity, while looking to increase activity can result in just the opposite.” On an assembly line, it’s easy enough to distinguish output from activity. It gets trickier when employees are paid to think. Grove wrestled with two riddles: How can we define and measure output by knowledge workers? And what can be done to increase it?

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.

What are our main priorities for the coming period? Where should people concentrate their efforts? An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.

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.”

In other words: Key results are the levers you pull, the marks you hit to achieve the goal. 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. If you’re certain you’re going to nail it, you’re probably not pushing hard enough.

A few goal-setting ground rules: 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.

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.

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.

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

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. According to the Harvard Business Review, companies with highly aligned employees are more than twice as likely to be top performers.

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.”

Micromanagement is mismanagement.

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.

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.

Annual performance reviews are costly, exhausting, and mostly futile. On average, they swallow 7.5 hours of manager time for each direct report. Yet only 12 percent of HR leaders deem the process “highly effective” in driving business value. Only 6 percent think it’s worth the time it takes. Distorted recency bias, burdened by stack rankings and bell curves, these end-of-year evaluations can’t possibly be fair or well measured.

What business leaders have learned, very painfully, is that individuals cannot be reduced to numbers. Even Peter Drucker, the champion of well-measured goals, understood the limits of calibration. A manager’s “first role,” Drucker said, “is the personal one. It’s the relationship with people, the development of mutual confidence… the creation of a community.” Or as Albert Einstein observed, “Not everything that can be counted counts, and not everything that counts can be counted.”

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

It might sound almost too easy, but continuous performance management will lift every individual’s achievement. It elevates performance, bottom to top. It works wonders for morale and personal development, for leaders and contributors alike. And when leveraged with the quarterly goals and built-in tracking of OKRs, it can be even more powerful.

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.

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.

Continuous recognition is a powerful driver of engagement: “As soft as it seems, saying ‘thank you’ is an extraordinary tool to building an engaged team… ‘[H]igh-recognition’ companies have 31 percent lower voluntary turnover than companies with poor recognition cultures.”