Bill Gates, Larry Page and Bono walk into a bar...you might think this is the start of a joke that would collectively roll your colleagues’ eyes. Jokes aside, if these three did walk into a bar they’d probably discuss the one thing common in their success, using OKRs – a simple goal setting technique which swept across Silicon Valley.
With companies such as Netflix, Amazon, and Facebook all using this method to drive performance and results, what is it and why is it so popular?
OKRs are quite simply, Objectives and Key Results. The idea first surfaced in the late 60s by Andy Grove who was the CEO of Intel at the time. John Doerr learnt this methodology during his time working for Andy before leaving to work at a venture capitalist firm that had invested heavily into Google. The OKR approach, became the defining characteristic in Google’s culture.
Doerr, since introducing OKRs to the tech world, has become one of the most successful venture capitalists of the modern era. He is known for backing some of the world’s most successful entrepreneurs, from the co-founders of Google to Jeff Bezos and has seen what it takes to push the boundaries of what’s considered possible.
In his recent TED Talk, he says that “Truly inspirational teams combine their ambitions to their passion and to their purpose.” This is the origin story for OKRs – we must have a “clear and compelling sense of why” we do what we do and this must be at the heart of all the objectives that we define.
Bono’s ONE Foundation has a very ambitious and inspiring reason why they do what they do, which is to “change the world”. This ethos has led the foundation to set two objectives, or the “O” in OKR. These two objectives are debt relief for the poorest countries in the world, and universal access to anti-HIV drugs.
Hearing these objectives for the first time is what inspired me to start using OKRs for my own goals. While some personal OKRs might not lead to saving the world, Bono’s example highlights what makes a great objective.
First, they must be inspirational. It’s important to remember objectives are being driven from our passion and we are rarely passionate about something that is easily within our grasp. Second, objectives should be concrete. Breaking down the ONE Foundation’s objective, it’s clear all humans either have access to anti-HIV drugs or they don’t, completing the objective requires action and there is no room to manipulate the facts to convince yourself otherwise.
Once the objectives are defined and it’s clear why you are doing something and what that something is, the next step is deciding how to achieve it, or, the KR.
When Sundar Pichai’s team was building Chrome, his objective was to change the internet by building the world’s best browser. He decided that users would ultimately decide what browser was the world’s best and set the key result for Chrome to have 20 million active users.
There are three things I find critical about this key result. Number one, it is quantitative, Marissa Mayer (former CEO at Yahoo!) famously said that “If it does not have a number it is not a key result.” Evaluating a key result should be fast and simple, by defining these results quantitatively it allows you to assess your result with a score from 0 to 100 (others often provide a score from 0 to 1.0).
Two, it defines the result of tasks, not the tasks themselves. Before I started using OKRs, too often my goals were a series of tasks and the actual perceived outcome of me completing these tasks would be more abstract.
Lastly, 20 million active users in the first year of a platform is ambitious even for a monolith like Google, key results should be stretch goals which push the limits of what you think you can achieve.
It is this last point in particular that has changed my own approach to goal setting. I’ve noticed when grander targets are set, I am more motivated to reach the target. And, this rings true for all aspects of my life whether it be professional or personal. If I tell myself I am going to run for 20 minutes I will be exhausted at the 15 minute mark, however, if I tell myself I am going to run for 40 minutes I will be exhausted after 30 minutes (these numbers are inflated as you don’t need to know how unfit I really am).
This idea was proposed by Edwin Locke a professor at the University of Maryland in 1968 when he said that hard goals “drive performance better than easy goals.” When evaluating the outcome of your key results, many people or organisations, will consider a score of 70 out of 100 a success, if you found you ended up with a score of above 90, it is likely your key results were actually not grand enough and you may need to reevaluate your key results.
This is a concept I found liberating as it removed the fear of failure. Instead of considering it a loss when you fall short of your goal, you are encouraged to target something that exceeds anyone's expectations. Without this fear, I was motivated to work as hard as possible and see what happens. This is the beauty of a moonshot goal and one of the key factors of OKRs.
Before I ventured into the software industry, I spent some time at a company where at the start of each financial year, staff you would sit down with their manager and define KPIs (Key Performance Indicators). These KPIs were linked to each employees bonuses and because of this, everyone attempted to make their KPIs as simple as possible. Looking back at this time now, it seems like a pointless exercise.
OKRs flip this idea on its head, as they are completely decoupled from any salary review or promotion. Bono highlights this when he says that OKRs give an “environment for risk, for trust, where failing is not a fireable offense.” This might not make sense to everyone at first, but OKRs are not an employee evaluation tool, when used at a company level they are more important than that, they work to get collective buy in to a higher purpose, a “compelling sense of why.”
Even Doerr admits that “OKRs are not a silver bullet. They’re not a substitute for a strong culture or for stronger leadership”. However, I have found the technique to be extremely valuable, it provides a simple lightweight structure, allows for failure and encourages you to be more ambitious than you are willing to admit. Whether at a company, team or personal level give OKRs a try, you never know what you might achieve.
Oh, I forgot, what did Bill Gates, Larry Page and Bono talk about after walking into that bar, their failures.