John Doerr was an early backer of some of the world’s most successful firms, including Google. In exclusive extracts from his new book, he explains how a focus on objectives and key results can supercharge the performance of any venture
In 1999 John Doerr placed his “biggest bet in 19 years as a venture capitalist”, investing £11.8m for a 12 per cent stake in a start-up called Google. He was impressed by the drive of its co-founders – Sergey Brin and Larry Page – but knew that they lacked management experience. Two months later, Google’s then 30-strong workforce gathered around a ping-pong table for a PowerPoint presentation from Doerr on the importance of objectives and key results (OKRs).
The story of how his principles, combined with Page’s hugely ambitious “10x” expansion plan – aim for tenfold growth, not 10 per cent growth – transformed the business is told in Doerr’s new book, Measure What Matters. A stellar cast of contributors, including Page, YouTube CEO Susan Wojcicki, Bill Gates and Bono, offer their perspectives on how OKRs have improved the performance of their businesses and charities. In exclusive extracts from the book for Director, Doerr explains how OKRs can be applied in an organisation of any size to help move it up to the next level.
Eradicate fuzzy thinking
“OKRs are a collaborative goal-setting protocol for companies, teams and individuals,” Doerr writes. “Now, OKRs are not a silver bullet. They cannot substitute sound judgement, strong leadership or a creative workplace culture. But, if those fundamentals are in place, OKRs can guide you to the mountaintop.
“My first PowerPoint slide at Google defined OKRs: ‘A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organisation.’ An 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. When properly designed and deployed, they’re a vaccine against fuzzy thinking and fuzzy execution. Key results benchmark and monitor how we get to the objective.
“Effective key results are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. As [Yahoo CEO] Marissa Mayer would say: ‘It’s not a key result unless it has a number.’ You either meet a key result’s requirements or you don’t. There is no grey area, no room for doubt.”
Survive, scale and stretch
“At smaller start-ups, where people absolutely need to be pulling in the same direction, OKRs are a survival tool. In the tech sector in particular, young companies must grow quickly to get funding before their capital runs dry. Structured goals give backers a yardstick for success: ‘We’re going to build this product and we’ve certified the market by talking to 25 customers – and here’s how much they’re willing to pay.’
“At medium-size, rapidly scaling organisations, OKRs are a shared language for execution. They clarify expectations: ‘What do we need to get done (and fast) and who’s working on it?’ They keep employees aligned, vertically and horizontally.
“In larger enterprises, OKRs are neon-lit road signs. They demolish silos and cultivate connections among far-flung contributors. By igniting front-line autonomy, they give rise to fresh solutions. And they keep even the most successful organisations stretching for more.”
Put quality over quantity
“As Steve Jobs understood, innovation means saying ‘no’ to 1,000 things. 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.
“At MyFitnessPal, the health and fitness app, ‘we were putting too much down’, says CEO Mike Lee. ‘There were too many things we were trying to get done and then the prioritisation wasn’t clear enough. So we decided to try to set fewer OKRs and make sure that the ones that really matter are the ones that we set.’
“Or, as Larry Page would say, winning organisations need to ‘put more wood behind fewer arrows’.”
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The simple act of writing down a goal increases your chances of reaching it. Your odds are better still if you monitor progress while sharing the goal with colleagues. In one California study, people who recorded their goals and sent weekly progress reports to a friend attained 43 per cent more of their objectives than those who merely thought about goals without sharing them.
Merit trumps seniority
“I first used OKRs in the 1970s as an engineer at Intel, where Andy Grove, the greatest manager of his or any era, drove the best-run company I had ever seen. Since joining Kleiner Perkins, I had proselytised Grove’s gospel far and wide: to 50 companies or more.
“Acute focus, open sharing, exacting measurement, a licence to shoot for the Moon – these are the hallmarks of modern goal science. Wherever OKRs take root, merit trumps seniority. Managers become coaches, mentors, architects. Actions –and data – speak louder than words. In sum, objectives and key results are a potent, proven force for operating excellence for Google, so why not for you?”
Flatten the organisational chart
“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 20). The higher the ratio of reports, the flatter the org chart, which means less top-down oversight, greater front-line autonomy and more fertile soil for the next breakthrough.”
Set big, hairy, audacious goals
“If Andy Grove is the patron saint of aspirational OKRs, Larry Page is their latter-day high priest. In technology, Google stands for boundless innovation and relentless growth.
“Consider Gmail: the main problem with earlier web-based email systems was meagre storage: typically, 2Mb to 4Mb. Users were forced to delete old emails to make room for new ones. Archives were a pipe dream. During Gmail’s development, Google’s leaders considered offering 100Mb of storage – an enormous upgrade. But, by 2004, when the product was released to the public, the 100Mb goal was dead and forgotten. Instead, Gmail provided a full 1Gb of storage – up to five hundred times more than the competition. Users could keep emails in perpetuity. Digital communication changed forever. That, my friends, is a big, hairy, audacious goal.”
JOHN DOERR studied electrical engineering, joining microchip giant Intel in 1974. He moved to venture capital firm Kleiner Perkins Caufield & Byers and made a fortune through his investments in Intuit, Symantec, Amazon and Google, where he retains a board seat. President Obama appointed him to the Economic Recovery Advisory Board after the global financial crisis of 2007-08.
Measure What Matters – OKRs: the simple idea that drives 10x growth, by John Doerr, is out on 26 April penguin.co.uk