Measure What Matters Book Summary and Notes

Learn the approach that Intel, Google, and other top companies have been using for years to set audacious goals and achieve stellar results

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Summary

The book Measure What Matters by John Doerr describes a comprehensive method for setting and measuring goals that has been used with stellar results for decades at companies such as Intel, Google, and Coursera using Objectives and Key Results (OKRs). It lays out a process for defining and cascading a transparent set of collaboratively defined objectives and clear measures of how success will be measured, a process that is iterated down through each layer of the organization to drive commitment and alignment.

The book is a mix of describing how the process works and lengthy examples from companies that have done it. The examples were interesting, especially the real OKRs they included from those companies, but the primary information is in the other sections and that is the focus of these notes.

Outline

The four superpowers of OKRs:

1. Focus and Commit to Priorities. OKRs are a precision communication tool that allows organizations to home in on work that’s most important, and be equally clear on what doesn’t matter.

2. Align and Connect for Teamwork. Openly shared OKRs link individual goals to the company’s game plan and identify cross-team dependencies that require collaboration.

3. Track for Accountability. OKRs are driven by data and animated by periodic check-ins with objective grading, done in a spirit of no-judgment accountability.

4. Stretch for Amazing. OKRs motivate us to do more than we thought possible by testing our limits and affording the freedom to fail.

CFRs (Conversation, Feedback, Recognition). The application of OKRs has implications for performance management. This is addressed by OKR’s “younger cousin” CFRs, a framework for Continuous Performance Management.

Part One: OKRs in Action

• Can set up tiered OKRs, where the Key Results from organizational OKRs become Objectives for a department, and so on.
• OKRs should not be used for business-as-usual responsibilities. They’re for things that need special emphasis.

Superpower #1: Focus and Commit to Priorities

Measure what is most important for next three, six, or 12 months.

OKRs require a public leadership commitment in word and deed.

Communicate with clarity. Senior execs and managers often don’t know company’s top priorities. They should know the priorities and the “why” behind them.

Objectives should be inspirational. Key Results should be grounded in hard numbers.

3–5 KRs should be sufficient to demonstrate if you’ve hit a well-framed objective.

OKRs can be done on any cadence, but most common is annual or quarterly, or hybrid with OKRs for the full year and quarterly KRs or full OKRs to support them.

One-dimensional OKRs can be hazardous and create unintended behaviors. Consider pairing Key Results to provide counter-balancing measurements or create two-dimensional KRs (e.g. one measure for quantity and one for quality).

OKRs are always works-in-progress, never set in stone. Don’t try to make them perfect.

Goal-setting ground rules:

• Key results should be specific, succinct, and measurable
• A mix of outputs and inputs is preferred
• If all KRs are met, it must result in the Objective being met

The ideal number of OKRs to have at any given time is three to five. Say “yes” to a small number of things and “no” to many other things.

Superpower #2: Align and Connect for Teamwork

Public goals are more likely to be attained and can eliminate unintentional duplication of efforts

Cascading all goals top-down is laborious, time-consuming, and will not drive engagement

Some goals should emerge in a bottom-up fashion

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

A 50/50 mix of aligned and unaligned OKRs is probably right for most groups and employees

Bottom-up goals also allow for more innovation from the edges of the organization where employees are often more in touch with the market and customer than senior leaders

Cross-functional Coordination

• Unacknowledged dependencies are the #1 cause of project slippage (Note: this is a pretty big assertion with no source or backup)
• Transparent OKRs promote horizontal coordination and have zero management tax

Intuit created visible OKRs and counts the number of views, which serves as a strong indicator of frontline employee engagement

Superpower #3: Track for Accountability

OKRs are living, breathing organisms, with 3-phase life cycles

1 — The Setup

Old tools are not good for company-wide OKRs

Without frequent updates, they will become zombie OKRs

Dedicated OKR management software provides constant visibility to OKRs and connects them across the company and make it easy to do regular status updates

For OKRs to function effectively, team adopting it must all commit, no opt-outs

A best practice is to have one or more people who are dedicated to following up on OKR compliance and hygiene (Shepherds)

2 — Midlife Tracking

Making progress in one’s work is the single greatest employee motivator

Regular updates to openly visible OKRs provides great incentive to employees

Weekly check-ins are the preference

OKRs are adaptable guard rails, not chains or blinders

Four options at any point in an OKR’s life cycle

1. Continue (if green)
2. Update (if yellow) — Change approach, get more resources, etc.
3. Start — Launch a new OKR mid-cycle when needed
4. Stop (if red) — Can happen when a goal has outlived its usefulness; usually done with KRs, less often with well-crafted objectives

Late surprises are less likely when OKRs are visible and regularly tracked and updated

Okay to drop KRs or even Objectives when needed, but be sure to notify everyone depending on it and reflect to learn for future OKR setup

Do check-ins more frequently with more dispersed team members

3 — Wrap-up: Rinse and Repeat

At completion of work, there is a three-part wrap-up — objective scoring, subjective self-assessment, and reflection

Scoring

• Objectively score completion of each KR, then Objective
• In some platforms the Objective can be scored automatically once KRs are scored
• Easiest way to score is to take average score of each KR, assuming a good set of KRs was done
• Google scores on 0 to 1.0 system: 0.7 to 1.0 is green, 0.4 to 0.6 is yellow, 0.0 to 0.3 is red

Self-Assessment

• Add a qualitative, thoughtful aspect to OKR scores
• Consider extenuating circumstances and quality of results beyond just KRs measured
• List of completed OKRs is an accounting of what was delivered beyond business as usual and connected to the overall goals of the company
• Good team leaders or facilitators will help calibrate the inevitable variance in scoring approaches
• OKR scores measure what went right or wrong in the work, self-assessments improve the goal-setting process

Reflection

• OKR-driven work life can be exhausting
• Reflection before repeating the cycle is key
• “We do not learn from experience… we learn from reflecting on experience.” — John Dewey

Wrap-ups are reflective and forward-looking at the same time

Be sure and savor progress and celebrate with your team

Superpower #4: Stretch for Amazing

For companies to last, stretching to new heights is required

Stretch goals are forces for operating excellence

Studies have clearly shown that harder goals bring higher performance and more motivated and engaged employees

Google divides OKRs into two categories: Committed and Aspirational

• Committed goals are to be achieved 100 percent and tied to key company metrics
• Aspirational goals are higher-risk, bigger-picture goals; 40 percent fail, and success is considered 70 percent complete

Stretch goals cannot be imposed top-down without regard to realities on the ground

To gain employee commitment, which is essential, leaders must convey both the importance of the outcome and the belief that it is attainable

No set formula for how much to stretch

• Google is famous for striving for 10x improvements; they consider 10 percent improvement as basically doing the same thing
• MyFitnessPal prefers goals that are demanding but fully attainable
• Some company cultures and situations are less risk-tolerant than others
• Leaders should push employees to stretch as much as possible without making goals seem impossible

Part Two: The New World of Work

Continuous Performance Management: OKRs and CFRs

Annual performance reviews take managers 7.5 hours per direct report on average, but are largely considered ineffective

CFRs are an instrument for Continuous Performance Management (CPM)

• Conversations — frequent, richly textured exchanges between employees and managers
• Feedback — evaluate progress and guide future performance
• Recognition — expressions of appreciation to deserving individuals

CFRs and OKRs are mutually reinforcing

• Objectives set the context for CFRs
• CFRs give OKRs their human voice

Reinventing HR

• Annual performance reviews have been dropped by 10 percent of Fortunate 500
• Many larger companies are using hybrid models, with continuous performance management augmented by annual reviews
• The vision of full CPM is ratings and rankings replaced by more transparent, collaboratively developed, multidimensional review criteria

An Amicable Divorce

• Separate OKRs from compensation
• Data-driven summary of achievements can be inputs to CFR discussions / annual reviews
• But they shouldn’t be directly tied to compensation, or people will sandbag Objectives to maximize income
• Even if OKR results are used in reviews, they must be augmented by context and judgment from the leader — no direct connection to salary or bonuses

Conversations

• Regular 1–1 meetings with managers should be mandatory
• According to Gallup study: more frequent 1–1s increase employee engagement by a factor of three (this was pre-pandemic, could be more now)
• Subordinate should drive most of the agenda and discussion, with leader focusing on coaching and how they can help the subordinate
• Five critical areas of manager and contributor conversations

1. Goal setting and reflection — Employee’s OKR plan is set for next cycle
2. Ongoing progress updates — Data-driven check-ins on progress and issues
3. Two-way coaching — Improve performance for managers and employees
4. Career growth — Identify growth opportunities, develop skills, and plan for the future
5. Lightweight performance reviews — Summarize employee accomplishments since last review, separate from compensation discussions

Feedback

• Feedback is an opinion, grounded in observations and experiences, which allows us to know what impression we make on others
• To be constructive, feedback must be specific
• More mature model for feedback is to do it ad hoc, real-time, and multidirectionally between people anywhere in the organization
• Peer feedback is especially valuable for cross-functional initiatives
• OKRs combined with 360-degree feedback break down silos in an organization

Recognition

• Peer-to-peer recognition is a way to crowdsource meritocracy
• High-recognition companies have 31 percent lower voluntary attrition
• Ways to implement continuous recognition

1. Peer-to-peer recognition systems
2. Establish clear criteria for awards like “Achievement of the Month”
3. Share recognition stores in newsletters, blogs, etc.
4. Make recognition frequent and attainable by acknowledging smaller achievements
5. Tie recognition to company goals and strategies / priorities

Culture

Culture is the living expression of a company’s most cherished values and beliefs

Healthy culture and structured goal setting are interdependent

A positive corporate culture also allows for quicker, more reliable decisions

OKRs can bring collaboration and accountability to the culture

Pulsing, quick snap-shot surveys, are becoming a more common continuous feedback mechanism to gauge the company’s real-time health

The Goals to Come

A robust set of resources and a community around OKRs is available at www.whatmatters.com.

Other Resources

The OKR Q&A Podcast is an independent podcast by an OKR consulting firm that has invited guests discuss different aspects of putting OKRs into practice. Very worthwhile to see how other companies have done it and what’s worked well for them.

To see what other content I’m reading (and sometimes writing) on leadership, careers, empathy, and well-being, follow me on LinkedIn or Twitter.

Originally published at https://www.linkedin.com.