Twitter: @1abmish, LinkedIn: abmish

Notes: MEASURE WHAT MATTERS

By John Doerr
VC @ Kleiner Perkins, Former Intel executive, early investor to Google
700+ investments, 190+ IPOs, 375k+ jobs
www.whatmatters.com

OKR (short for Objectives and Key Results) is a simple process that helps drive varied organizations forward. It is a collaborative goal
setting protocol for groups and individuals.

Assessing the market – “How big do you think THIS could be”?

People: Andy Grove, Bill Campbell, Peter Drucker

Books: (1) “In the Plex” by Steven Levy, (2) “How Google Works” by Jonathan Rosenberg & Eric Schmidt, (3) “The Practice of
Management” by Peter Drucker, (4) “Higher Output Management” by Andy Grove.

Pull the plug on losers – Fail Fast, Try Again >> This year’s failure is next year’s opportunity to try again.
Ideas are easy (and fragile too) – execution is everything.

For an organization to be successful –> {OKRs + Sound judgement + Strong Leadership + Creative workspace culture}
OKRs ensure that company focuses efforts on same important issues throughout the organization.

Objective: WHAT is to be achieved – crisp, significant,

concrete, action-oriented and inspirational

Key Results: benchmark and monitor HOW we get to the

objective – specific, time-bound, aggressive yet realistic,
measurable and verifiable

It’s not a KR unless it has a number and target-date. No

fuzzy thinking – no fuzzy execution.

2009 HBR, “Goals Gone Wild”, criticizes OKRs – in defense,

poor execution of anything whatsoever good, will turn
bad.

Per Edwin Locke, Psychology Professor at University of

Maryland (an early influencer to Andy Grove)
a. “Hard Goals” drive performance (compared to easy
ones)
b. “Specific Hard Goals” produce higher level of output
(compared to vaguely worded ones)

OKRs drive engagement – highly engaged group, less attrition, more profit.

Challenges for the top management of big orgs

a. Building global leadership b. Retention and engagement of workforce at all levels

Clearly defined goals –>> create alignment, clarity and job satisfaction

Google’s abstract goal

Be systematic innovator (new stuff) at scale (big, systematic ways of looking at things done in a way that’s reproducible)

Google’s 7 products with $1B+ revenue each – Search, Chrome, Android, Maps, YouTube, Google Play, Gmail

4-parts of OKR process – FATS – Focus, Align, Track, Stretch

1. Focus and commit to priorities 3. Track for accountability
2. Align and connect for teamwork 4. Stretch for amazing

OKRs (the execution process) are complimented by CFRs (Conversation, Feedback and Recognition – the human process)
 Twitter: @1abmish, LinkedIn: abmish
Affirmation of accomplishment over credentials ->> Knowledge is important but secondary. Execution is paramount.
“It almost does not matter what you know. It’s what you can do with whatever you know or can acquire and actually accomplish –
tends to be valued” – Andy Grove

A corporation should be a community “built on trust and respect for the workers not just a profit machine”.

Balance of short- and long-range planning informed by data and enriched by regular conversations among colleagues. Drucker’s
book proposed management by objectives or MBOs – adopted by HP and celebrated as the H-P-way, paid well in early days and
later declined by 1990s. This highlighted that “Activity and Output are separate ideas”.

Grove’s riddles Guidelines for OKRs

a. How can we define and measure output by Definition What and How
knowledge workers? Period Quarterly or Monthly
b. What can be done to increase it? Access Public and Transparent
Approach Bottom-up or Sideways (50%)
Goal is to solve problems – quickly, objectively, Reward Mostly divorced from compensation
systematically and permanently. Outlook Aggressive and Aspirational

Confront a problem without attacking the person.

Guiding Principles for OKRs

1. Less is more: a few extremely well-chosen objectives 5. Dare to fail: While certain operational objectives
impart a clear message about what is yes and no. A must be met in full, aspirational OKR should be
limit of 3 to 5 OKRs per cycle. uncomfortable and possibly an attainable or stretch
2. Set goals from the bottom up: teams and ICs should goal
be encouraged to create roughly half of their own 6. A tool, not a weapon: OKR System is meant to be a
OKRs in consultation with managers person-to put a stopwatch in his own hands so he
3. No dictating: collective agreement is essential to can gauge his own performance
maximize goal achievement 7. Be patient, be resolute: it takes time and practice to
4. Stay flexible: if situation changes to chaos, it can be build a mature goal muscle
modified or even discarded mid-cycle

Psychological safety
It is very important that people in the organization feel safe to speak their minds. In the absence of that psychological safety good
would get buried in the layers of management.
Bad companies are destroyed by crisis. Good companies survive them. But great companies improve during crisis.

FOCUS: What is most important for the next 3/ 6/ 12 months? Focus on handful of initiatives that can make a real difference coming
to those traces in word and deed.
Regardless of how leaders choose a company’s top-line goals they also need goals of their own.

Communicate with clarity – leaders must get across the WHY as well as WHAT. The people need more than milestones for
motivation.
“When you are tired of saying it, people are starting to hear it.” – Jeff Weiner

Key results (3 to 5 KRs per objective)

Vision is stuff of Objectives and Key results Execution is Earth bound and metric driven. Hard numbers to gauge
inspiration and far Principal and Practice one or more of- revenue, growth, active users, quality, safety,
horizons Vision and Execution market share, consumer engagement et cetera

A manager must be able to measure performance and results against the goal.

Each KR should be a challenge in itself. If you are certain you are going to nail it, you are probably not pushing hard enough.

Putting in practice
A parallel dual cadence KR process - with short horizon OKRs (here and now) supporting annual OKRs and longer-term strategies.
The best OKR cadence is the one that fits the context and culture of your business.

Nothing moves us forward like a deadline.

The more ambitious the KR, the greater the risk of overlooking a vital criterion. To safeguard against it, one solution is to pair KRs -
to measure both effect and counter effect.
 Twitter: @1abmish, LinkedIn: abmish
KRs paired for Quantity and Quality
Quantity goal Quality goal Result
3 New features <5 Bugs per feature in QA Dev will write cleaner code
$50M in Q1 sales $10M in Q1 maintenance contracts Sustained attention by sales professionals to all
Ten sales calls Two new orders Load quality will improve

Don’t allow the perfect to be the enemy of the good. Done is better than the perfect.

OKR are inherently ‘Work in progress’, which can be appropriated per need. OKRs should be succinct, specific and measurable.
LESS IS MORE: Innovation means saying no to 100 things. The one thing OKR system should provide par excellence is focus. This can
happen if we keep the number of objectives small. If you add something mid-way, then drop something too.
Top-line objectives must be significant. They are a set of stringently curated goals that merit special attention and will move people
forward in the here and now. Winning organizations need to put more wood behind fewer arrows.

When introducing OKRs to large org, start with your executive team and give it them few months to live and breathe in it.

ALIGN AND CONNECT FOR TEAMWORK: Transparency is in big demand at orgs. Based on research, public goals are more likely to
be attained than goals held in private. 92% US adults feel more motivated to reach their goals if colleagues could see their progress.

“We don’t hire smart people to tell them what to do. We hired a smart people so they can tell us what to do.” - Steve Jobs

An open org can publish everyone’s OKRs and even junior staff can take inspiration from senior staff’s OKRs. Meritocracy flourishes
in sunlight and organizational poisons – suspicion, sandbagging, politicking – lose their toxic power.

Transparency seeds collaboration and limits redundancies, saving time and money. Alignment takes place when managers and
contributors shift from planning to execution and tie their day-to-day activities to the organizational vision.

Alignment is rare. A “lack of alignment” is the number one obstacle between strategy and execution.

Cascaded goals: senior executives set topline objectives for their department heads, who passed them on to the next line of
management and so on down the line. That’s good it goals choral lower level employees and guarantee that they are working on
the company’s chief concerns. It forges unity.

Cascading makes an operation more coherent.

But if all objectives are cascaded, the process can degrade into a mechanical exercise – with 4 adverse effect
1. Lack of agility – all actions await seniors
2. A lack of flexibility – people are reluctant to revise midcycle
3. Marginalized contributors – rigid cascading shuts frontline input. Hesitation in sharing goal related concerns or new ideas.
4. One-dimensional linkage – forces vertical alignment, no horizontal/peer connectivity.

To avoid compulsive, soul-killing, over-alignment, healthy organizations encourage some goals to emerge from the bottom up – e.g.
Google’s 20% project

Innovation tends to develop less at the center of an org than at its edges. The most powerful OKRs typically stem from insights
outside the C-suite.
“people in the trenches are usually in touch with impending changes early. Salesperson understands shifting customer demands
before management does; financial analysts are the earliest to know when the fundamentals of the business change”. – Andy Grove

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

An optimal OKR system frees contributors to set at least some of their own objectives and most or all of their KRs.
Healthy OKR environment: balance between alignment and autonomy, common purpose and creatively attitude.
When our HOW is defined by others, the goal won’t engage us to the same degree.

In times of operational urgency, organization must choose to be more directive but when the organization is doing good already, a
lighter touch maybe just right.

Unacknowledged dependencies remain the number one cause of project slippage.

 Twitter: @1abmish, LinkedIn: abmish
For innovation and advanced problem-solving, isolated individuals cannot match a connected group. Connected companies are
quicker companies (respond better to market opportunities).

To grab a competitive advantage, both leaders and contributors need to link up horizontally, breaking through barriers. People
should be able to see across org who is doing what. When goals are public in visible to all, a “team of teams” can attack trouble
spots wherever they surface.

OKR are not islands. To the contrary, they create networks – vertical, horizontal, diagonal – to connect an organization’s most vital
work. When employer is aligned with the company’s top line goal, their impact is amplified.
It could be challenging to strike a balance between high-level, strategic thinking and more granular, directive communication.
Alignment is about helping people understand what you want them to do.
It is easy to miss dependencies on other teams or requests pouring-in from other teams, if OKRs are not aligned horizontally.

Alignment does not mean redundancy. Every OKR has ONE owner, with other teams linking up as needed. Co-ownership weaken
accountability. If an OKR fails, we don’t want two people blaming each other.

When not sure, pin KRs to deadlines instead of revenue or projected score/users (example: launch iOS app by 2019/08/15)

At scale, alignment grows exponentially more complex. Unacknowledged dependencies become greater risks. Make one North-star
goal. Align the rest of the OKRs with it.

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

Adoptable organizations tend to be more openly connected ones.

We don’t want bureaucratic compliance; we want enthusiastic compliance.

When a company has multiple offices in addition to headquarter, people wonder what gets done there. OKRs end that mystery.
These make the organization more cohesive.

At an old-style software company, leaders look at operations through traditional retail lens with sales and channel flow postmortem.
Their line of sight is largely limited to rearview mirror.
A new-age (say cloud-based) business wants to know what is happening – now; subscription activity, trials ongoing, conversion rate,
check for funnel daily.

Organization needs to invest in tools that enable global (not just geo) collaboration.
The best idea should win, not the biggest title.

There is an art of goalsetting, and more than a few judgment calls. If you choose to temporarily elevate a KR as top-level objective,
it helps to be candid about it. When it no longer needs the extra attention, drift it back down into KR. It is a dynamic system.

TRACK FOR ACCOUNTABILITY: Contributors are more engaged when they can actually see how their work contributes to the
company’s success. OKR tools should
1. Make everyone’s goal visible – seamless access to all 3. Promote internal networking – connect for shared
OKRs in the org – individual as well as team OKRs professional interests
2. Drive engagement – stay motivated 4. Save time, money and frustration.

The team deploying OKR system – must adopt it universally. Designate one or more OKR shepherd – to encourage people to join in.
[Jonathan Rosenberg’s shepherd mail at Google as an example]

Research suggests that making measured headway can be more incentivizing than public recognition, monetary inducement or
sometimes even achieving the goal itself. The single greatest motivator is making progress in one’s work. That days that people
make progress are the days they feel more motivated and engaged.

Weekly is a good cadence to check progress and prevent slippage us.

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

In a California study, people who recorded their goals and sent weekly progress report attained 43% more of their objective than
those who merely thought about goals and never shared.
 Twitter: @1abmish, LinkedIn: abmish
Four possible states of an OKR in a cycle
The point of a real time dashboard is to quantify progress against a target and flag what needs
attention.
If an OKR becomes obsolete/ impractical, feel free to end it midcycle. Goals are servants to the
purpose, not the other way around.

One Proviso – when an objective gets dropped before the end of the OKR interval, it’s important to
notify everyone linking to it.
Then comes reflection->> (1) what did I learn that I didn’t foresee at the beginning of the quarter?
And: (2) how will I apply this lesson in the future

For best results

1. OKR scrutinized several times per quarter by 3. Obstacles identified
contributors and their managers 4. KRs refined
2. Progress is reported 5. If a committed OKR is failing, plan rescue

WRAP UP: RINSE AND REPEAT

After completion of the OKR – perform wrap up (which is 3 parts)
1. Objective scoring 2. Subjective self-assessment 3. Reflection

Scoring: We mark that we have achieved and address how we might do it differently next time.
For example, Google uses this scale Google’s floor of 0.7 for successful attainment reflects the
0.7 to 1.0 (Green) Delivered high ambition of their stretch goals.
0.4 to 0.6 (Yellow) Progressed by fell short This threshold does not apply to the company’s committed
0.0 to 0.3 (Red) Failed to make real progress operational goals. For sales targets our product releases, any
score under 1.0 would be deemed failure.
Self-assessment: details, what actually happened. Details help refine the process & strategy for future. No judgments, only learnings.

Reflection: the key to satisfaction is to set aggressive goals, achieve most of them, pause to reflect on the achievement, and then
repeat the cycle. Some sample reflections
A. Did I accomplish all my objectives? B. If I venture to re-write a goal achieved in full, what
a. Yes – what contributed to my success should I change?
b. No – what obstacles did I encounter C. What have I learned that might alter my approach
to the next cycle’s OKRs?
“We do not learn from the experience; we learn from reflecting on the experience.” – John Dewey

OKR wrap-ups are both retrospective as well as forward-looking. An unfinished objective might be rolled over to the next quarter,
with a fresh set off the results – or if its moment is passed – drop it.

Comments from ‘The Gates Foundation’ (Vision: Everyone deserves a healthy and productive life.)
When a goal is too inspirational, it’s bad for credibility. “In philanthropy, I see people confusing objectives with
missions all the time. A mission is directional. An objective has
“What can you be the best at in the world?” – Jim Collins a set of concrete steps that you are intentionally engaged in
and actually trying to go far.” – Bill Gates

STRETCH FOR AMAZING: When stretch goals are chosen wisely, the payoff merits the risk and then some.
“The biggest risk of all is not taking one.” – Mellody Hobson
“If companies don’t continue to innovate, they are going to die – and I didn’t say it right, I said innovate”. – Bill Campbell
John Doerr’s definition of entrepreneurs: Those who do more than anyone thinks possible, with less than anyone thinks possible.

BHAG – big hairy audacious goals.

A BHAG serves a unifying focal point of effort, galvanizing people and creating team spirit as people strive towards finish line.
The “stretch workers” are not only more productive, but more motivated and engaged too.

By pushing people past older limits, they are forced for operating excellence.

Aspirational goals draw on every OKR superpower. Focus and commitment are a must for targeting goals that make a real difference.
Only a transparent, collaborative, aligned and connected organization can achieve so far Beyond the norm. And without quantifiable
tracking, how can you know when you have reached that amazing a stretch objective?
 Twitter: @1abmish, LinkedIn: abmish
Two OKR baskets

Committed objectives: Base metrics, product release, bookings, hiring, customers – to be

achieved in full (100% within a set period).

Aspirational objectives: Bigger picture, higher risk, more future building ideas. These
originate from any tier and aim to mobilize the entire organization. By definition, challenging
to achieve, higher failure rate (Google had 40% failure rate for stretch, measured in 2018).

That relative weighing of these two baskets is a cultural question for each org. It varies org to org and quarter to quarter.
Leaders must ask themselves – what kind of company do we need to be in the coming year?
o Agile and daring – to craft a new market o Is it in survival mode, or is there cash on hand to bet
o More conservative and operational – to firm up big for a big reward?
existing position? o What does our business require, right now?

[Maslow’s hierarchy of needs – basic needs early in the chain and sophisticated needs later]
Physiological needs -> Safety -> Love/ Belonging -> Esteem -> Self-actualization

Some people with no-prompting are consistently driven to “try to test the outer limits of their abilities” and achieve their “personal
best”. They are never self-satisfied. Stretch goals are natural for such people. Encourage them to take calculated risks.

Also do not push just everyone towards the stretch goals.

The gospel of 10 X – moonshots

10x thinking is rare in any sector, on any stage. Thousand percent improvement requires re-thinking problems, exploring what is
technically possible and having fun in the process.

At Google if you fall short on aspirational goal by 30% or so – it is it still considered a success.

Stretch variables: Stretching your team too fast and too far might snap it. Implied commitment is essential to pursue high – effort,
high – risk goals.
Leaders must convey two things: (1) the importance of the outcome and (2) the belief that it’s attainable.
There is no magic number for the ‘right’ stretch. Consider – how can your team create maximum value? What would amazing look
like?

“In business, we have to set uncomfortably tough objectives and then we have to meet them. Then after 10ms of celebration, we
have to set ourselves another set of highly difficult-to-reach objectives and we have to meet them. And the reward for meeting one
of these challenges is that you get to play again.” – Andy Grove

Engineers struggle with goal setting in two big ways. (1) They hate crossing off anything they think is a good idea, and (2) They
habitually underestimate how long it takes to get things done.

Stephen Covey – Big rocks Theory

Say you have few rocks, pebbles & some sand. Your goal is to fill as much of everything as possible in a 1-gallon jar. If you start with
sand and pebble, the jar will run out of room, for all the rocks. But when you start with rocks -> pebbles -> sand, the sand fills the
spaces between rocks, and everything fits. So, the most important things need to get done first or they won’t get done at all.

“In a world where computing power is limitless, the true scarce commodity is human attention.” – Satya Nadella

Maybe the best thing about OKRs is how they track your progress to target, especially when you are behind schedule.
When behind schedule, gather the team & say - “each of you should name 5 projects you can implement to bring us closer to goal.”

Extend the OKRs to promote positive behavior. Stretch OKRs tend to set powerful forces into motion, and you can never be sure
where they’ll lead. Support across the levels makes a huge difference.

Aspirational goals can prompt a reset for the entire group. Re-architecting technical solutions to improve performance, re-design
for better UX, re-visit marketing for increased reach. Everyone starts to think bigger and better.

CONTINUOUS PERFORMANCE MANAGEMENT (because Annual performance reviews are costly, exhausting and mostly futile)
“A manager’s first role is the development of mutual confidence with the individuals in the team and the creation of a community
among the people.” – Peter Drucker
 Twitter: @1abmish, LinkedIn: abmish
To reach goals almost beyond imagination, people must be managed at a higher level. We need a new HR-model for the new world
of work. Continuous performance management is implemented with an instrument called CFRs.

Conversations: an authentic, richly textured exchange between manager and contributor, aimed at driving performance.
Feedback: Bi-directional or network communication among peers to elevate progress and guide future improvement.
Recognition: expressions of appreciation for deserving individuals for contributions of all sizes.

CONVERSATIONS
Champion transparency, accountability, empowerment and teamwork - across levels of organization
More orgs are broadening their performance evaluations with alternative criteria, like competencies and team play.

Continuous performance management at ‘Pact’

“It’s mutual teaching an exchange of

information. It should be regarded as
subordinate’s meeting, who owns its
agenda and tone. The supervisor is
there to learn and coach. Is the
employee satisfied with its own
performance? Is there any doubt about
direction?” – Andy Grove

Compensation is backward-looking assessment, OKR is an ongoing, forward-looking dialogue between leaders and contributors

Based on BetterWork’s experience with 100s of enterprises, 5 critical areas emerged for manager and contributor to discuss.
1. Goal setting and reflection: focus on how best to align individual objectives
2. Ongoing progress update: the brief and data driven check in on employee’s real-time progress.
3. Two-way coaching: to help contributors reach their potential and managers to do a better job.
4. Career-growth: To develop skills, identify growth opportunities and expand employee’s vision of the future at the company.
5. Light weight performance review: A feedback mechanism to gather inputs and summarize what the employee has
accomplished since the last meeting.

As workplace conversations become integral, managers are evolving from taskmasters to teachers, coaches and mentors. Help
employees with leading questions e.g.
o Can you think about how to be more decisive in this setting?
o What if you laid out the two best options but made your own preference clear to everyone?

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

Public, transparent OKRs will trigger good questions from all directions.

Feedback can be highly constructive – but only if it is specific.

In developing organizations – feedback is generally led by HR and often scheduled. In more mature organizations – feedback is ad-
hoc, real time and multi directional, an open dialogue between people anywhere in the organization.

Progressive companies have replaced the suggestion box with always-on anonymous feedback tools, from quick-hitting employee
survey to anonymous social networks and even rating apps for meetings and it’s organizers.

Anonymous or public, peer to peer (or 360°) feedback is an added lens for continuous performance management.
o Is the feedback designed to help employees move forward in their careers (channeled privately to the individuals)
o Is it meant to reveal an organizational problem (goes straight to a HR)

RECOGNITION
Most underestimated and least well understood component of CFRs

Modern recognition is performance-based and horizontal [read JetBlue recognition mechanism]

1. Institute peer to peer recognition. When employee achievements are consistently recognized by peers, a culture of
gratitude is born.
2. Establish clear criteria – recognize people for actions and results
3. Share recognition stories - newsletters or blogs
4. Make recognition frequent and attainable – hail smaller accomplishments too.
 Twitter: @1abmish, LinkedIn: abmish
5. Tie recognition to company goals and strategies Dash customer service, innovation, teamwork, cost-cutting etc.

Leaders need to roll model accepting feedback from others.

Better conversations (Expectations – Always tell the truth and always do the right thing)
o What makes you very happy?
o What saps your energy?
o How would you describe your dream job?

Most important thing employees want to know in the morning – for me, what is the most important thing to do today?

CULTURE:
“You need a culture that high-fives small and innovative ideas” – Jeff Bezos

As the saying goes - “culture eats strategy for breakfast”

How do companies define and build a positive culture? – No simple answer

“Put simply, culture is a set of values and believes as well as familiarity with the way things are done and should be done in a
company. A strong and positive culture is absolutely essential.” – Andy grove

Collective accountability, fearless risk-taking, measurable achievements – good cultural traits

Cultural tidbits form Google

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

“The companies that out-behave their competition will outperform them too.” – Dov Seidman

Inspiring workers is the goal and just engaging is not enough for building a value driven model.

A rulebook can tell me what ‘I can’ or ‘cannot’ do for a limited set of tasks. The need is for a culture which tells me what I should do
– almost about everything.

There is no more powerful cultural force than ‘active transparency’, where human beings are opening up, sharing the truth, bringing
others in, being vulnerable.

People watch ‘what you do’ more than ‘what you say’ about - Ownerships, accountability, passion for the job, loyalty to the team.
Culture-change can be very personal. It takes one conversation at a time to convince employees that collaboration, shared
accountability and transparency would be rewarded.

Time is the enemy of transformation.

Selling your Reds – interesting concept in teamwork

Lumeris management reviews OKRs, as either green (on track) or red (at risk). Very little discussion takes place for greens and people
discuss and try to sell their reds (emphasize – why company must invest more on this OKR). The team votes on the most important
at-risk OKRs, for the company as a whole, then brainstorms together as it plans to get the objective back on track.
‘Buy’ means you would help the other person with his or her red objective.

Poorly done OKRs are waste of time, an empty management gesture.

Well done OKRs are motivational management tool that helps make it clear to teams - what is important, what to optimize and
what trade-offs to make during their day-to-day work.