Since John Doerr introduced goal setting to Google and its staff of 40 in 1999, the company has publicly shared its views on the value of setting Objectives and Key Results (OKRs). As I watched last spring’s Google Ventures StartUp Lab workshop again about “How Google sets goals: OKRs,” I was reminded how far we’ve come, yet how much we still have to do to move businesses forward into goal science.
The OKR acronym stands for Objective – Key Result. Don Dodge, a developer advocate at Google, described the OKR process this way. “Every quarter every group at Google sets goals, called OKRs, for the next 90 days. Most big companies set annual goals like improving or growing something by x%, and then measure performance once a year. At Google a year is like a decade. Annual goals aren’t good enough. Set quarterly goals, set them at impossible levels, and then figure out how to achieve them. Measure progress every quarter and reward outstanding achievement.”
In the video, Google Ventures partner Rick Klau highlights the reasons Doerr presented to Google for embracing OKRs, which effectively include the following:
- They impose disciplined thinking so major goals will surface.
- They let everyone in the organization know what’s important and enable more accurate communication because everyone can see everyone else’s priorities.
- They help establish indicators for measuring progress.
- They help focus effort and ensure alignment.
It’s important to remember that at the time OKRs were being introduced to Google, Management by Objectives (MBOs) and Management by Results (MBRs) were still the de facto standards for companies with goal-setting processes. Both top-down methodologies, MBOs and MBRs were established annually by executives and then often forgotten. They were definitely not visible in any day-to-day context. In contrast, OKRs would involve everyone and be transparent, replacing broken and fractured processes to deliver promised benefits.
The video illustrates a typical process for how and when communication takes place as goals are being developed and once they are set. That discussion is followed by a “basic hygiene” slide of best practices including:
Setting five or fewer objectives and four or fewer key results for each objective
Getting more than half of all objectives from individuals (up through the organization)
Gaining mutual agreement on OKRs
Setting a scoring target between 60-70%
Continuing incomplete KRs only if they are still important
Klau states that OKRs are not considered part of performance evaluations and explains the rationale behind that decision. He concludes the Doerr presentation and best practices discussion by reiterating how OKRs bring alignment, focus, better coordination, and sometimes even fun, to companies.
Klau then transitions into the keys to creating good OKRs. He talks about setting measurable goals—quarterly and annually—at personal, team, and company levels, and making them publicly available to the entire company. He differentiates between the elements of OKRs:
Objective – should feel uncomfortable, ambitious
Key Results – should clearly make the objective achievable, quantifiable, and lead to objective grading
And he explains the distinction between personal (what are you working on), team (priorities for the team, not the bucket of all of the personal OKRs), and company (big-picture, top-level focus) goals. Things that help clarify for each individual what is important to the entire company. Then Klau offers a detailed look at some of his own OKRs during his time as a product manager on Blogger, a popular Google-owned property.
As Klau explains grading, he emphasizes the grading process over the grades themselves, asserting that grading recalibrates and helps individuals/teams/companies decide if something should be done differently to achieve an objective. Klau ends his formal presentation with a slide showing an approximate timeline for Google quarterly OKR setting.
The OKR model was a giant leap forward from MBOs and MBRs, yet the future of goals continues to evolve. In this emerging area, we must incorporate all that we’ve learned so far with new elements of goal science. In addition to creating S.M.A.R.T (specific, measurable, actionable, relevant/reasonable and time-related) goals, we should embrace Quantified Work strategies that feature data-driven approaches (input, feedback, and visualization) to drive employee engagement and business performance.
In a previous post, we noted research shows that individuals are 33% more successful in accomplishing their stated goals, when they write them down, share them, and update another person than those who merely formulate them. So imagine what very public, completely visible, highly adaptable, and highly automated goals and performance metrics not only negotiated and input by every employee, but also managed day-to-day by each employee, could do to improve business.
Like a personal activity tracker measuring health, goal science and Quantified Work could have profound effects on individual productivity and more importantly corporate results. We agree with Klau, a commitment to measurement, transparency, and doing the actual work are critical to success—and we’ll examine how Google accomplishes these goals in our next few posts, as well as how new solutions are evolving to drive changing behaviors and operational excellence.