The OKR (Objectives & Key Results) bible. Worth reading in full for those responsible for implementing OKRs at their company.
Rating is a bit lower because of the filler chapters (often stories from companies). Feels like the most actionable points (and most useful) are in the resources at the end.
- Objective = what is to be achieved.
- Key Results = benchmarks that will ensure we reach the objective (measurable & verifiable).
- Hard goals drive performance more effectively than easy goals.
- Objectives should be limited to 3-5 at most, with less than 5 key results each.
- Heuristic: if you're certain you're going to nail it, you're probably not pushing hard enough.
- Ensure you have clear-cut time frames (ie. deadlines).
- Pair KRs to ensure quality is maintained.
- Key results should be succinct, specific, and measurable. A mix of outputs and inputs is helpful. Completion of all KRs must result in attainment of the objective.
- OKRs should be set by a combination of top-down and bottom-up personnel.
- Have committed objectives, which need to be nailed in full, and aspirational objectives, which are expected to be stretch goals which will fail with regularity.
- Disconnect feedback and OKRs from compensation as much as possible. Otherwise, people will sandbag.
- Regular conversations should be held between leaders and contributors to review OKR progress and give feedback.
- As much as I hate process, good ideas with great execution are how you make magic.
Part One: OKRs in Action
1: Google, Meet OKRs
- 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.
- 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.
- First, said Edwin Locke, "hard goals" drive performance more effectively than easy goals. Second, specific hard goals "produce a higher level of output" than vaguely worded ones.
- 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.
2: The Father of OKRs
- 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."
- 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. (See chapter 15, “Continuous Performance Management: OKRs and CFRs.”)
- 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.
4: Superpower #1: Focus and Commit to Priorities
Communicate with Clarity
- For sound decision making, esprit de corps, and superior performance, top-line goals must be clearly understood throughout the organization.
Key Results: Care and Feeding
- Objectives and key results are the yin and yang of goal setting—principle and practice, vision and execution. Objectives are the stuff of inspiration and far horizons. Key results are more earthbound and metric-driven.
- 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.
What, How, When
- The best practice may be a parallel, dual cadence, with short-horizon OKRs (for the here and now) supporting annual OKRs and longer-term strategies. Keep in mind, though, that it’s the shorter-term goals that drive the actual work. They keep annual plans honest—and executed.
- Clear-cut time frames intensify our focus and commitment; nothing moves us forward like a deadline.
In High Output Management, his leadership bible, Andy Grove notes:
- "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."
Pairing Key Results
- 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."
The Perfect and the Good
- 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.
Less Is More
- 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.
5: Focus: The Remind Story
- Brett Kopf: "The system helped my personal focus, too. I tried to limit myself to three or four individual objectives, tops. I printed them out and kept them close on my notepad and next to my computer, everywhere I went."
7: Superpower #2: Align and Connect for Teamwork
The Grand Cascade
- In moderation, cascading makes an operation more coherent. But when all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with four adverse effects:
10: Superpower #3: Track for Accountability
- 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.
- For best results, OKRs are scrutinized several times per quarter by contributors and their managers.
- 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.)
- In evaluating OKR performance, objective data is enhanced by the goal setter’s thoughtful, subjective judgment.
- OKRs are inherently action oriented. But when action is relentless and unceasing, it can be a hamster wheel of grim striving. 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.
- 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?
12: Superpower #4: Stretch for Amazing
- Bill Campbell liked to say: "If companies don’t continue to innovate, they’re going to die—and I didn’t say iterate , I said innovate."
- Sometimes stretch goals represent “ordinary” work at an extraordinary level. But regardless of scope of scale, they fit my favorite definition of entrepreneurs:
- Those who do more than anyone thinks possible . . . with less than anyone thinks possible.
- (By contrast with bureaucrats, who do less than anyone thinks possible with more than anyone thinks possible)
Two OKR Baskets
- Google divides its OKRs into two categories, committed goals and aspirational (or "stretch") goals. It’s a distinction with a real difference.
- Committed objectives are tied to Google’s metrics: product releases, bookings, hiring, customers. Management sets them at the company level, employees at the departmental level. In general, these committed objectives—such as sales and revenue goals—are to be achieved in full (100 percent) within a set time frame.
- Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. They originate from any tier and aim to mobilize the entire organization. By definition, they are challenging to achieve. Failures—at an average rate of 40 percent—are part of Google’s territory.
- At MyFitnessPal, Mike Lee considers all OKRs to be committed goals: difficult and demanding, yes, but attainable in full. "I am trying to set the bar right at where I think it should be," he says. "If we get them all done, I’ll feel good about our progress." That’s a reasonable approach, but not without pitfalls. Will Mike’s people shy away from objectives where they might top out at 90 percent? In my view, it’s better for leaders to set at least a modest stretch.
- There is no one magic number for the "right" stretch. But consider this: How can your team create maximum value? What would amazing look like? If you seek to achieve greatness, stretching for amazing is a great place to start. But by no means, as Andy Grove made clear, is it the place to stop:
- 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.
14: Stretch: The YouTube Story
- Cristos Goodrow: 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.
- As Microsoft CEO Satya Nadella has pointed out: In a world where computing power is nearly limitless, "the true scarce commodity is increasingly human attention."
Part Two: The New World of Work
15: Continuous Performance Management: OKRs and CFRs
- We need a new HR model for the new world of work. 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.
An Amicable Divorce
- 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?
- Based on BetterWorks’ experience with hundreds of enterprises, five critical areas have emerged of conversation between manager and contributor:
- 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.)
- Feedback can be highly constructive—but only if it is specific.
- Negative feedback: "You started the meeting late last week, and it came off as disorganized."
- Positive feedback: "You did a great job with the presentation. You really grabbed their attention with your opening anecdote, and I loved how you closed with next action steps."
- 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." Here are some ways to implement it:
- 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.
17: Baking Better Every Day: The Zume Pizza Story
- Early on in your career, when you’re an individual contributor, you’re graded on the volume and quality of your work. Then one day, all of a sudden, you’re a manager. Let’s assume you do well and move up to manage more and more people. Now you’re no longer paid for the amount of work you do; you’re paid for the quality of decisions you make. But no one tells you the rules have changed. When you hit a wall, you think, I’ll just work harder—that’s what got me here.
- Alex Garden: Every two weeks, each person at Zume has a one-hour, one-on-one conversation with whomever they report to. (Julia and I converse with each other.) It’s a sacred time. You cannot be late; you cannot cancel. There’s only one other rule: You don’t talk about work. The agenda is you, the individual, and what you are trying to accomplish personally over the next two to three years, and how you’re breaking that into a two-week plan. I like to start with three questions:
- What makes you very happy?
- What saps your energy?
- How would you describe your dream job?
- In Project Aristotle, an internal Google study of 180 teams, standout performance correlated to affirmative responses to these five questions:
- 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?
- In The Progress Principle, Teresa Amabile and Steven Kramer analyzed 26 project teams, 238 individuals, and 12,000 employee diary entries. High-motivation cultures, they concluded, rely on a mix of two elements.
- Catalysts, defined as "actions that support work," sound much like OKRs: "They include setting clear goals, allowing autonomy, providing sufficient resources and time, helping with the work, openly learning from problems and successes, and allowing a free exchange of ideas."
- Nourishers —"acts of interpersonal support"—bear a striking resemblance to CFRs: "respect and recognition, encouragement, emotional comfort, and opportunities for affiliation."
Resource 1: Google’s OKR Playbook
Writing Effective OKRs
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.
Committed vs. Aspirational OKRs
- 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.
Classic OKR-Writing Mistakes and Traps
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 to what the team or its customers really want.
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 able to achieve it.
- The litmus test: If you ask your customers what they really want, does your aspirational objective meet or exceed their request?
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 for senior management to reassign headcount and other resources to groups who will make more effective use of them.
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 benefit? If so, then reword the OKR to focus on the tangible benefit. A classic example: "Launch X," with no criteria for success. Better: "Double fleet-wide Y by launching X to 90+ percent of borg cells."
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 allows a team to avoid the difficult (resource/priority/risk) commitments needed to deliver “hard” key results.
- 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 until their successful completion guarantees that the objective is also successfully completed.
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.
- 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.
- 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 until they are completed, carrying them forward from quarter to quarter as necessary. Dropping them from the OKR list because of lack of progress is a mistake, as it disguises persistent problems of prioritization, resource availability, or a lack of understanding of the problem/solution.
- Corollary: It is good to move an aspirational OKR to a different team’s list if that team has both the expertise and bandwidth to accomplish the OKR more effectively than the current OKR owner.
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 OKRs, add more.
- For larger groups, make OKRs hierarchical—have high-level ones for the entire team, more detailed ones for sub-teams. Make sure that the “horizontal" OKRs (projects that need multiple teams to contribute) have supporting key results in each sub-team.
RESOURCE 2: A Typical OKR Cycle
RESOURCE 3: All Talk: Performance Conversations
RESOURCE 4: In Sum
- Four Superpowers of OKRs
- Focus and Commit to Priorities
- Align and Connect for Teamwork
- Track for Accountability
- Stretch for Amazing
Align and Connect for Teamwork
- When deploying cascaded OKRs, with objectives driven from the top, welcome give-and-take on key results from frontline contributors. Innovation dwells less at a company’s center than at its edges.
- 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.
Stretch for Amazing
- 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 unrealistic. Morale suffers when people know they can’t succeed.
Continuous Performance Management
- Unleash ambitious goal setting by divorcing forward-looking OKRs from backward-looking annual reviews. Equating goal attainment to bonus checks will invite sandbagging and risk-averse behavior.