Measure What Matters

Ideas are easy. Execution is everything.

"Hard goals" drive performance more effectively than easy goals. Second, specific hard goals "produce higher level of output" than vaguely worded ones.

Goal setting isn't bulletproof: "When people have conflicting priorities or unclear, meaningless, or arbitrarily shifting goals, they become frustrated, cynical, and demotivated."

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.

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."

If the vectors point in different directions, they add up to zero. But if you get everybody pointing in the same direction, you maximize the results.

An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.

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.

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.

The three watchwords for entrepreneurs: 1) solve a problem, 2) build a simple product, 3) talk to your users.

As companies scale, people need to see the CEO's priorities and how they can align for maximum impact. And they need to see it's okay to make a mistake, to correct it and move on. You can't fear screwing up.

Alongside focus, commitment is a core element of our first superpower. In implementing OKRs, leaders must publicly commit to their objectives and stay steadfast.

Transparency seeds collaboration. Say Employee A is struggling to reach a quarterly objective. Because she has publicly tracked her progress, colleagues can see she needs help. They jump in, posting comments and offering support. The work improves. Equally important, work relationships are deepened, even transformed.

When all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with four adverse effects: 1) A loss of agility, 2) A lack of flexibility, 3) Marginalized contributions, and 4) One-dimensional linkages.

Rather than laddering down from the CEO to VP to a director to a manager (and then to the manager's reports), an objective might jump from the CEO straight to a manager, or from a director to an individual contributor. Or the company's leadership might present its OKRs to everyone at once and trust people to say, "Okay, now I see where we're going, and I'll adapt my goals to that."

When our how is defined by others, the goal won't engage us to the same degree.

For innovation and advanced problem solving, isolated individuals cannot match a connected group. Product relies on engineering, marketing on sales. As business becomes more intricate and initiatives more complex, interdependent divisions need a tool to help them reach the finish line together.

Without frequent status updates, goals slide into irrelevance; the gap between plan and reality widens by the day. At quarter's end (worse, year's end), we're left with zombie OKRs, on-paper whats and hows devoid of life or meaning.

As Peter Drucker observed, "Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise."

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.
• 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.

Entrepreneurs are those who do more than anyone thinks possible... with less than anyone thinks possible.

Google divides its ORKs 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 department 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.

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.

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: expression of appreciation to deserving individuals for contributions of all sizes

If a conversation is limited to whether you achieved the goal or not, you lose context. You need to continuous performance management to surface the critical questions: Was the goal harder to achieve than you'd thought when you set it? Was it the right goal in the first place? Is it motivating? Should we double down on the two or three things that really worked for us last quarter, or is it time to consider a pivot? You need to elicit those insights from all over the organization.

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.

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... 'High-recognition' companies have 31 percent lower voluntary turnover than companies with poor recognition cultures."

Corrective feedback is naturally difficult for people. But when done well, it's also the greatest gift you can give to someone—because it can change people's mindset and modify their behavior in the most positive, valuable way. We're creating an environment where people say, "You know what? It's okay to make a mistake, because that's how I'm going to grow the most."

Unsuccessful companies scale beyond the leadership team's capacity, and they die. Successful companies scale beyond the team's abilities and the team gets replaced. Those are both sad outcomes. The better way is to train people to think like leaders from the start, when their departments have a staff of one.

An OKR culture is an accountable culture. You don't push toward a goal just because the boss gave you an order. You do it because every OKR is transparently important to the company, and to the colleagues who count on you. Nobody wants to be seen as the one holding back the team. Everybody takes pride in moving progress forward. It's a social contract, but a self-governed one.