In a May 27 webinar, Doug Dennerline, Betterworks CEO, hosted John Doerr, pioneering VC (Amazon, Google, and many more) and OKR evangelist author of “Measure What Matters,” to explore using OKRs/CFRs “To Survive a Downturn & Thrive in a Recovery.” Joining them were Ryan Panchdsaram, a co-founder of What Matters and former Deputy US CTO in the Obama Administration, and Lisa Shufro, chief story-teller at What Matters. The following is a transcript of the discussion’s highlights, edited for length and clarity.
THE F.A.C.T.S. ABOUT OKRs
JOHN DOERR: Let’s start with the F.A.C.T.S. There are five main benefits to adopting OKRs’ transparent goal system:
- Focus: Choose the few things that really matter
- Alignment: Get everyone on your team pulling together as opposed to going in different directions.
- Commitment: Raising a team’s belief that a goal is important from just being told it’s important by a manager to creating a true social contract to make achieving goals a team’s social norms.
- Tracking progress in a steady cadence: quarter by quarter, month by month, sometimes weekly, in staff meetings against the few focused things that matter.
- Stretching: Reaching for more than you can probably achieve, but in an environment where it’s OK to fail. Larry Page (co-founder of Google) used to say, “I’d rather have the objective be to go to Mars, and if we fall short, we’ll get to the moon. This is how you make moonshots.” But be careful: if you constantly achieve 100 percent of your goals, you could be “sandbagging” – not stretching enough. But if you only achieve 30 percent or 40 percent, that’s a sign there might be another kind of problem.
OKRs represent a very simple system. The “O” is what you want to accomplish. “KRs” are how we’re going to get it done. Now, really good objectives are significant, concrete, action oriented, and inspirational.
Objectives are not one immutable thing. Some objectives live for years as people work toward them, but realism provides flexibility. The pandemic and its aftermath will obviously create change in organizations’ objectives, which in turn means the key results must be rethought and readjusted. Just remember to make the key results specific, time-bound, and aggressive but realistic.
To this day, every Google employee – 100,000 of them – writes down their OKRs, publishes them for everyone to see, grades those from the last quarter, and then sets them aside, because they’re not used for bonuses at Google, they’re not used for promotions. They’re used for a higher purpose, which is to get collective alignment on the things that matter the most.
Let me tell you an OKR story about Sundar Pichai, who’s now CEO of Google and Alphabet, when he was a product manager in charge of a new browser, Chrome. Back in 2007, 2008, the internet was slow and the dominant browser – Internet Explorer – was slow. Larry (Page) and Sergey (Brin) gave Sundar the assignment to make the world’s best browser, to make one that was very rapid starting with literally nothing and a pretty well established competitor.
Sundar got very clear about what the objective should be and how he would measure the objectives and the key results. His objective was, “I’m going to make the world’s best browser.” How am I going to measure my progress against that objective? He said, “Well, I could do it by revenues or click-throughs or any one of a number of metrics.” But instead he chose his key results would be simply by number of users.
And then for the next three years, he stayed with that goal. In fact, in the first year, he set a goal to have 20 million users, and he missed it by a mile, he only got 10 million users. In 2009, he upped the ante to 15 million users. Same objective, build the best browser. But as measured by the key results – the magic words – the number of users. They got to 38 million, almost 70 percent. In 2010, he raised the bar again, to 100 million users. This time, with greater speed, enhanced distribution, doubling the marketing, he blew the number away. He got to 110 million users.
Now, I love that story. Not so much because it has a happy ending, but because it shows the power of choosing the right objectives and key results, having them be nearly timeless, and staying the course quarter after quarter, year after year.
DO OKRs STIFLE CREATIVITY AND REDUCE RISK-TAKING?
DOUG DENNERLINE: John, let me ask you: especially in this uncertain climate, don’t OKRs stifle creativity and diminish a team’s willingness to take risks?
JOHN: I get asked that a lot. And the short answer is no. But I think an even better answer comes from someone who might seem an unlikely adopter of OKRs, Bono of U2, who uses OKRs in his nonprofit ONE, to focus everyone in the organization on eliminating global poverty.
Bono has said, “You’re passionate. I’m passionate. What action does your passion lead you to do? If the heart doesn’t find a perfect rhyme with the head, then your passion means nothing. [OKRs] give us an environment for risk, for trust, when failing is not a federal offense. When you have the right structure, environment, and the right people, magic is ‘round the corner.”
DO OKRs PLAY A SPECIAL ROLE IN THE NEW WFH ERA?
I think the biggest question that’s on people’s minds is in this current environment, where people are home, by themselves in some cases, with their families, their managers are distant from them. It’s a new form of leadership in terms of manager/employee interaction. How do you think OKRs should happen in this current environment?
For the foreseeable future, employers are going to give employees a lot more choice about where they work and how they work. There has been, up until now, a lot of theoretical and academic happy talk about agile organizations and leading and managing remote workforces in a real-time manner. But until now it was more talk than substance, and now we’re all faced with it.
There’s really no choice. To be effective, you’ve got to meet – virtually, because physically isn’t happening – and you’ve got to communicate about a clearly shared set of goals and methods, you’ve got to have transparency about where you’re going. An OKR/CFR system like Betterworks truly creates transparency at a level never possible before, as well as the best alternative to meaningful meetings face-to-face.
Transparency really is key. I just published a blog today explaining how an OKR/CFR system gives everyone in an organization – from the CEO to the most junior employee – total transparent visibility to see everybody’s goals and everybody’s progress on those goals. Which becomes even more important for alignment and motivation when so many people are working remotely.
I think another important thing you could talk about is one of the benefits of the cadence of OKRs – quarterly or even more frequent – vs. the traditional annual planning process and annual reviews. When I worked at Cisco, at the beginning of the year we put a tremendous amount of work into the annual plans, and then we put them in a drawer. But with OKRs, the ability to adjust along the way as circumstances change is pretty powerful, is it not?
I think OKRs become the lifeblood of operating in this new world. It’s powerful. It’s essential. Whether you’re a millennial worker or a seasoned leader, providing real time feedback and real time tracking against the ever-changing world is essential.
I think it’s important for every organization to choose the cadence with which they adopt these. What I’ve observed over time, whether organizations go quarterly, or monthly, the places that really use these to advantage don’t check them every day, but they become part of the weekly rhythm and the language of an organization. They’re used in staff meetings, they’re used in one-on-one meetings.
For companies that are on the annual track and want to speed up the cadence, there’s a lesson from a company I know where the CEO had each of the team leaders get up and say, “We all know the company’s objectives for the year. Now here are my personal objectives on top of that.”
So a company can put in place a dual timing track where you have annual OKRs as well as quarterly ones. The annual ones are reminders of where you want to be at the end of the year. The quarterly ones tend to govern more of the immediate behavior.
USING CFRs WITH OKRs
Can you please talk about how people are using CFRs along with OKRs?
I’d love to talk about that. I like to describe them as a sibling, a twin sister or a brother for OKRs because OKRs set the goals. Let me use a football analogy: OKRs are the goal line, the objective, and you can think of the key results as being the 10 yards teams have to advance to get first downs, keep the ball, and keep moving toward the goal line.
But the objective and key results are by no means everything that’s going on in the game. CFRs are everything else. They’re the conversations, the feedback, and the recognition that’s creating the strategy, calling the plays in the huddle. CFRs are the preparation you do before the game in reviewing game tapes to learn about it. So, feedback in the moment that you as a leader give to your team or you get for yourself, is crucial. I mean, you can’t imagine winning a football game or a Super Bowl without those added elements.
Especially with a new generation of workers – Millennials, Gen Z – they really want to see the big picture. They don’t want to be micromanaged, but they do want constant feedback on the spot, quick and rapid feedback. So, the CFR component of the Betterworks system is one of the really remarkable things that allows people in Operations or HR leadership to set up a regular rhythm for feedback and user surveys and connects those to the OKRs in a very coherent way.
We find it very important that if it’s just an employee going into the Betterworks application and providing updates to their goals without a conversation around it, it feels off-putting and weighty to the employee or the individual contributor. It’s a tax on them that we don’t want to ask them to pay, because we want to give something, not just require something.
The benefit of CFRs is sitting down with their manager on a regular ongoing basis and getting feedback about, how’s it going, what roadblocks did you hit trying to achieve your OKRs? How can I help you as a leader to remove those roadblocks so you can accomplish what you’re trying to accomplish?
Something else I’ve observed about distributed teams is that to make the teams the most effective, the most important element is trust. So the transparency in OKRs together with the investment in frequent feedback and CFRs creates a much more trusting environment.
CAN OKRs WORK WITHOUT INVOLVING THE WHOLE ORGANIZATION?
Let’s talk about a question I often get from organizational leaders who want to move to an OKR methodology, but are leery of the major change management process that requires. So they ask, “Why don’t I just do it with my top leaders and try that for a while and see how that goes?” Is there a benefit of trying it that way – managers first – or is the ability to generate transparency and connecting people at all levels in your organization important?
My view is that getting everyone involved is super-important. I recently wrote a piece for TLNT Magazine about how crazy it is that 78% of employees at large organizations have no idea how their work helped achieve company goals, a statistic unearthed by our mutual friend Josh Bersin. It just makes sense to me that, especially with remote workforces, the more people involved with an OKR/CFR program, the more the workforce will understand how their work achieves company goals.
Yeah. In Measure What Matters I quote Aaron Levie from Box, who says, “30 percent of the people at Box are working on the wrong thing. The challenge is to figure out which 30 percent.” A company gets so much clarity from writing down and declaring publicly and honoring it, which means the more people involved with OKRs and CFRs, the more transparency and alignment.
Don’t get me wrong: especially in the early days of adopting OKRs, it’s going to be work, it’s going to take time to build up your goal muscle. I mean, 100,000 people at Google are doing this four times a year. Maybe it takes them half a day. Would you take a half day each quarter to get your team aligned, focused in stretching for the right goals, and accountable? Sure you would, but it doesn’t happen without some rough going at first. That’s why I think in the beginning for leaders or individuals, you’ve got to consistently make sure that the organization understands why we’re putting so much effort and energy into it. It’s so we can empower our people to be operationally excellent.
THE CRUCIAL IMPORTANCE OF HAVING TOP LEADERS SUPPORT OKRs
Ryan, how important is it that leaders support the implementation of an OKR culture?
Without buy-in from the very top leaders, you are doing OKRs in a vacuum and it really sets us up for an unsuccessful rollout of OKRs. So we like to say for an executive leadership team, the CEO needs to own them, or if you’re on a smaller team, the team lead or the department head, someone’s got to really own the goal-setting process.
Doug, as you asked that question, I was looking through the Q&A [coming in during the live webinar] and I’d like to ask you: Here is a question from a team leader whose team has bought into OKRs, but they’re having trouble selling it to their executive team. What’s the best way to communicate this to the top and to get them to buy into using OKRs? There’s belief in the ranks, now what’s the best way to get leadership on board?
The best way we’ve seen to get buy-in is to find an OKR champion in the organization at the highest level possible and implement OKR throughout that organization all the way down to the individual contributor. And then other people in the company can see the accelerating progress in that organization, and that definitely gets the interest of leadership – “Wow. This seems to be a thing that works.”
Once we have access to those leaders, we can show them some solid reasons why it’s important they’re involved in the process and show them the benefits. Every company is trying to do some level of planning or goal-setting practice. Many of them just don’t do it very effectively, but OKRs and CFRs give them tools to do it right.
That’s exactly what happened at Intuit. One team leader adopted Betterworks for an 1,800-person organization in three different time zones around the world. And he proved the value with better results. He was incredibly committed, other teams saw the benefit, and now Betterworks has spread to the more than 8,500 employees inside Intuit, which is an exceptionally well-run company. They can’t imagine running Intuit without Betterworks. Eric Schmidt couldn’t imagine running Google without this goal setting system, either.
Having said that, let me add some blunt advice: if the leader of your business unit or the CEO of the overall organization is not really committed to this, don’t bother, don’t try. But if they’re smart, they’ll find a way to work OKRs into how they achieve excellence, how they make their people better, how they run their staff meetings. If you’re in a meeting at Google and somebody says, “We’re going to do this new thing,” somebody on the team will always say, “Well, that’s a great objective. Now what key result are we going to drop in order to achieve it?”
Just adding to that question of how you get buy-in for OKRs. There’s a great story we have about a banking team that is used to being run in a very hierarchical way because there’s always a lot of risk aversion in banking. What they did was, they took a strategic team and went to the leadership and said, “We know you don’t have time to meet with us. This is what we’re going to do.”
They didn’t call it OKRs, but they used OKR thinking. They were like, “If you’d like to discuss this with us, now is your chance. Otherwise, this is what we’re going to do.” It turned out they ended up delivering the results. Now an entire team of 12,000 is in the process of rolling it out. What’s most valued about OKRs, I’d say, is the clear thinking and clear articulation, particularly when things are chaotic.
CAN OKRs HELP SMALL COMPANIES TOO?
What about companies that aren’t Google? Small companies. Can OKRs work for a smaller company, too?
Yes. It matters even more when you’re small. Case in point: A company I backed called Visby Medical, formerly known as Click Diagnostics, deeply committed to OKRs because OKRs worked for them. I went down and gave them my usual Johnny Appleseed OKR talk. They said, “You know John, once our company got to be more than 24 people, more than we could fit around two lunch tables in the cafeteria, people needed a way to know what’s going on.” They’re up to hundreds of people right now making some really innovative tests, including for the coronavirus. They would not have been able to achieve what they’ve already done without using the OKRs.
Go to What Matters, and there are a lot of similar stories of OKRs and CFRs making a huge difference for large companies, small companies, non-profits, for-profits, even families.
I’m on this mission, and I’d love for everybody on this webinar to join us and take OKRs thoroughly into our institutions that matter the most. I’m seeing them used now by governments. I felt the last place in the world that would be wanting to take a public risk would be an agency of the U.S. Federal government. But the Centers for Medicare & Medicaid Services, 7,000 people, a trillion dollars of taxpayers’ expenditures, has thoroughly embraced OKRs. We talked about large hospital systems, also the last place you’d expect to tolerate risk. The CEO of the Cleveland Clinic told me, “The most important thing we’re going to do this year is adopt OKRs.”
HOW CAN COMPANIES THAT TRIED OKRs & FAILED SUCCEED THE NEXT TIME?
Someone listening to this webinar sent in this question: “Do you have any examples of companies which have attempted several times to implement OKRs, but failed then approached it differently and succeeded?” We certainly do. What we’ve tried to do as a provider of a platform that enables OKRs to be rolled out is we’ve fine-tuned the way we help customers by telling them what problems and roadblocks to watch out for as they implement and start slowly.
You don’t go to the gym and try to bench press 400 pounds the first time you walk in the gym, you need to build the muscle to support the ability to bench press 400 pounds. It’s very true of OKRs too. Sometimes people use it more as an operational platform, and it’s not for that. It’s for the most important, big things that you want to make sure people are aligned to, and start slowly and build up over time.
So sometimes people have gone all-out to implement OKRs and it failed because it was just too much for people to adopt to. We can help you through best practices and try to make sure we build a program that your culture can actually adapt to.
IN UNCERTAIN TIMES, SHOULD OKRs BE REFRESHED MORE OFTEN?
Another question: “In these uncertain times, should we refresh our OKRs more frequently or still wait for the quarter to end, even though everything is changing so fast? Interesting: The first batch of questions the What Matters Team got back in March when this crisis was hitting were from folks saying, “Hey, my company is using OKRs. and my manager is saying we’re still sticking to the goals that we set for this year, which sounds kind of crazy None of us have lived through a crisis like this before.”
And so the encouragement we give from the What Matters team is really around, absolutely you should be reassessing your situation and environment to refresh your OKRs based on the reality that’s on the ground today. That means refreshing your OKRs more frequently, looking at shorter time horizons and timescales. I mean, now more than ever, your company needs to be adapting. Your organization needs to be really nimble in the days and weeks ahead, where every week either it gives us an indication, things are going to be better or we’ve got to hunker down and find ways to get through the summer and into the fall.
OKRs AND RISK TOLERANCE: HOW AUDACIOUS SHOULD A COMPANY BE?
John, can you please talk about goal attainment, about audacious goals? I know you’re passionate about that.
It’s up to every team to pick its culture, its risk tolerance. Some places, successful places, have said, I want to set goals and make them 100 percent achievable. Others like Google say, no, I want it to be okay for people to have 10X kinds of goals and shoot for Mars to know that if they miss Mars, at least they’ll get to the moon.
Google actually has two flavors of key results. They have the committed ones, which you must achieve. For example, sales revenue targets might be a committed, must-achieve goal. And then they have stretch goals, which are aspirational.
And so, every organization that successfully adopted these, I like to say, adapts them to their own culture in some way or another.
HOW CAN OKRs HELP WORKERS’ WELL-BEING IN TRYING TIMES?
Lisa, here’s a good question for you. It says, “A lot of managers and most members of their teams might be suffering in silence while working from home during these difficult times. How do you go about setting OKRs related to the wellbeing of employees?”
One thing we’ve all been committed to is really having leaders and managers set an OKR to check in with each of their employees and do active listening and embracing the truth that there needs to be time and space to be human first, and honor each employee’s mindset. Most of the teams we’re talking to are finding themselves with a lot of time at home. So many of them are setting goals – personal OKRs – of how much time can I set aside to do some meditation, to do some yoga, how many times a week? As a way of recognizing that the line between professional and personal is thinner than it has ever been. So, part of doing the work is admitting that your productivity is related to how kind you are to yourself and recognizing that as part of the work.
We encourage people when they’re doing their one-on-ones, when they’re doing their team meetings, to set five minutes aside of every meeting dedicated to checking in. These are the kinds of things we think can restore some of the ritual everyone is missing from seeing your favorite person in the office.
At Betterworks, we take it one step further. I think that the best practice we share with most companies is, it’s important that most people identify three to five goals. You don’t want 20, it’s three to five important goals. And maybe three of them are what you’re trying to accomplish for the company, what you’re driving forward for the company. But then pick one or two that are for you and have the manager see them when you’re building a developmental goal for each employee.
So you’re achieving what you want to achieve organizationally for the company you’re working for. But then we also encourage everybody to build one or two that’s personal. I’ve encouraged people that have OKRs to take an hour a day to be with the kids, go for a walk. That’s an OKR, too.
You can have private goals as well that are part of the system that are tracked. When my two daughters were growing up, a top objective my wife and I shared was to have a healthy family. We believed having a healthy family had to do with having dinners together. So, I set a stretch goal to be home for dinner 20 nights a month by 6:30 and be fully present.
SHOULD COMPENSATION BE TIED TO OKR SUCCESS?
Another question: “Should your compensation structure be tied to successful OKRs, and if so, how do you handle and attain stretch goals that might be interpreted that you did not meet expectations?”
I strongly recommend not connecting OKRs with your compensation system because it will inevitably lead to sandbagging. If you want to be risk-taking and entrepreneurial, make that your overall culture, and the culture plus the peer- and social pressure will be more than enough to get people to perform. Having said that, something like revenue for sales can and should be part of a commission plan, and that can be in the OKR system. Remember, this is a tool, there’s no hard and fast rules and you can have some common measures that are in both.
An organization certainly doesn’t want to use a hard line for, did you achieve a goal that’s tied to comp? But there’s a lot of other things that make up somebody’s body of work and who they are as a human being and their brand in an organization. It’s all of those things combined together that can potentially inform compensation. But it’s wrong to make the compensation call all about goal attainment.
THE DIFFERENCE BETWEEN CASCADING & ALIGNING OKRs
DOUG: Another question has come in that’s something I find important to explain to people. “Can you please expand on the difference between cascading and aligning OKRs?”
Sure. Cascading goals are those that are handed top down, whereas bottom-up – from the workforce to the managers – is preferable to achieve the best mix of OKRs. A healthy OKR system finds the majority of goals are set bottom-up, as long as the result maintains an accurate big picture of where the whole organization is going.
Here’s a good story about the importance of bottom-up: We have a portfolio company that’s trying to reinvent dental service and dental healthcare. This company had two teams that just kept quibbling and quibbling and it felt almost personal. To its credit, the executive team took a step back and said, “What’s going on? These are all good people, It’s not their fault.”
By talking to the teams – by getting bottom-up feedback – the executive team recognized that the OKRs were actually misaligned and directly opposing each other. This bottom up feedback caused the executive team to completely rewrite their objectives. Specifically, backing off a specific metric and going back to aspirational qualities, so it would give more power to the individual teams and allow them to find alignment.
Let me add some nuance to the discussion of alignment vs. cascading. When we work with larger organizations with multiple layers, a lot of times what is a Key Result for a top company Objective might be promoted to an Objective for several layers below that, and then of course the new Objective requires new Key Results, and the Betterworks solution is designed to help with that.
HOW MANAGERS CAN HAVE GOOD CONVERSATIONS AROUND OKRs
Here’s a good question: “How can you help managers have high-quality conversations with direct reports, not just run them and check the box?”
We have a saying internally, we can make managers better managers by forcing them, through the Betterworks solution, to have four face-to-face conversations with employees each year. What we can’t do is make them good conversations. There still needs to be an effort internally at a company to teach people how to have high quality conversations.
We can help. One thing we’re excited about is that the solution will provide video vignettes that say, “We know you have a conversation coming up.” We can send you an email with a small training-style video clip that actually takes into account how the manager feels about the employee’s potential, how the manager is feeling about that person in general. The video suggests ways to have a good conversation around an OKR, whether it’s going to be a difficult one or full of praise.
Especially these days, we advise customers that conversations should be more about listening than talking. It’s how you’re doing, it’s about listening to the points they want to make, encouraging them to share how they’re feeling about being at home and being isolated from work and the issues working remotely can bring up.
OKRs ARE NOT SILVER BULLETS; THEY REFLECT THE VALUES THAT MATTER
Let me close by saying OKRs are not a silver bullet, not some collection of magic. I like to think of OKRs as transparent vessels into which we pour the values that matter to us because it’s not the sum of all tasks. It’s the few things that you, at whatever level you’re in at the organization, writing them for yourself, writing them for your team, writing them for the whole company, what you believe matters the most.
They don’t all have to line up in a hierarchical way. The executive team sets out broad goals and directions that are measurable, people are aware of that, and then they write and publish their own. It actually ends up being fun to do, to see everybody align.