Oct 15, 2018
This Is My Favorite Hack.
It’s being used by the likes of Intel, Google, Linkedin and small startups everywhere. It’s even used by individuals — freelancers, teachers and even by people in their personal lives. It is being used to set goals and make progress in day to day life as well as business.
The tool is OKR. Objective and Key Results, speculated to be created by former Intel chief Andy Grove and made famous by John Doerr. Doerr is an investor and a former Intel executive who sold Larry and Sergey on the idea.
Doerr's best selling book measure what matters is a must read on the subject. Doerr explains how the idea of OKR once perfected at Intel spread like wildfire around the Valley and how companies like intel and Google owes a good part of their progress to OKRs.
OKR in a nutshell is a goal setting tool that leaves little to ambiguity. It doesn’t assume, guess or speculate. Once you hit your OKR you will know you hit it. Period.
An OKR has, to begin with, an objective.
An objective is a single statement about what you want to achieve in a given time frame. Objectives can be big and bold, full of hope and optimism. Inspiring to the team and able to excite action.
One objective per OKR, ensures a singular focus — cutting down on distractions and helping to stay put on what matters. Objective of an OKR needs to be well thought out, single mindedly deciding on a single goal one needs to achieve to make the work during the time-period a success. Be it a week, a month, quarter or even an year.
Key results to put as simple as one should is — ‘as measured by’ or in other words objectives as measured by key results.
Doerr’s Goal Formula
I will [objective]___________ as measured by[key-results] ____________.
Usually a great OKR has 3–5 Key results. Fewer the better. Great OKRs have five great traits that makes them great.
Key results should be SMART. An acronym for:
Specific: Key results should be specific. If you hit it, you should know that you’ve hit it. They leave no space for ambiguity or doubt. A bad key result would say improve revenue. A good key result might go improve revenue by increasing retention rate in female apparel category.
Measurable: Key results unlike objectives should be measurable. You need to be able to say to what decimal point was your goal setting a success in the given period. All Great key results come with numbers. This would further reduce ambiguity and inspire data-drive goal setting.
It’s not a Key Result unless it has a numbers — Marissa Mayer
Attainable: If the goal end of the day is simply not attainable, it could have a reverse effect on the motivation. A great OKR is neither too easy that it inspires inaction neither too hard that it causes anxiety. A great OKR is possible by a person/team/company if they utilize the resources at disposal wisely. Period.
Relevant: The goal if attained should fit in with the overall corporate goal. There is no point in individuals and company goals going in the opposite direction no matter how successful. The individual OKRs should align with the team OKRs which in turn should fit like perfect jigsaw puzzles in the overall corporate goals. This is crucial.
At every quarterly all-hands meeting, Larry Page gets up there and reviews the OKRs of the organization. For the longest time, he read, individually, all the OKRs of all the engineers. — John Doerr
Time-based: The ideal time size for an OKR would depend on the team, kind of task at hand and the industry. While it’s always better to break up big goals into smaller OKRs ideal time would vary within the same company. A good OKR might be a few weeks to a 2 or 3 months long. But exceptions can occur depending on the context one is dealing with.
The beauty of OKRs are that they are simple.
Here are some added benefits of establishing an OKR system in your company.
- Collaborative goal setting. No more shoving down goals down the hierarchy. Setting OKRs are (ideally) done by the individual employees with their managers and even bosses higher up in the hierarchy. Doerr in his book elegantly puts it — “high-functioning teams thrive on a creative tension between top-down and bottom-up goal setting.”
- Data-Driven. Less space for politics and emotions as OKRs are number/data driven. You don’t decide whether a goal was attained with gut instincts and based on intentions but with pre-set numbers and hard data.
- Unidirectional movement: Have you ever watched a pack of wild animals or a groups of ants move, when all them are determined to stay their course the pack moves straight like an arrow, without any added overall supervision. A company is a collection of individuals, if all their goals are aligned with the company goal — there is less energy wasted elsewhere.
- Transparent: OKRs in great companies are usually made public, for everyone from the top to the bottom. This brings in lots accountability and transparency that no single tool outside of OKRs can claim. Seeing what your CEO is racing for this quarter will not only give you an idea of the overall companies resource allocation but also put your teams goal in perspective.
Here is an example.
Objective: Improve retention rate.
- KR. Increase email click rates for existing customers by 20%
- KR. Invest 10 thousand dollars in marketing app downloads.
- KR. Reduce wait time for customers at help-line by 30 seconds.
- KR. Attain 15% Month-over-Month increase in retention
Objectives are qualitative themes that give purpose and meaning to that set of Key Results.
To once again quote Doerr’s book:
“You’re not going to get the system just right the first time around. It’s not going to be perfect the second or third time, either. But don’t get discouraged. Persevere. You need to adapt it and make it your own.”
