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The Water Cooler

A blog of fresh ideas and findings from organizational leaders and researchers on how they’re making work better, shared regularly.

Superpowers at work: OKRs

Filed under: Goal Setting
Objectives and Key Results — the process by which leaders and their teams set ambitious, measurable goals each quarter — are a critical component of how Google’s leaders managed Google’s growth from day one.

By focusing on a few priorities, identifying the metrics that measure progress towards those goals, and quantifying the impact of that progress, OKRs equipped teams at Google with what they needed to think big, get alignment across the organization, and execute on their ambitious plans.

In the years since my video about OKRs became popular, I’ve spoken with hundreds of founders at startups about how they use goals to grow their businesses. I’ve seen the positive impact OKRs can have for startups of all sizes. While there are many advantages to the OKR approach, in my opinion the real reason OKRs work is because they give your company superpowers.

Yes, superpowers.

When OKRs are working well in your company, it’s as if everyone has acquired fluency in a new language. Every employee is familiar with a common vocabulary, and understands how this vocabulary describes what’s most important to the company (and what’s not). After just a couple quarters of relying on OKRs to set and manage goals, people inside a company develop three distinct superpowers: the ability to predict the future, the ability for the company’s founders or CEO to be a part of every important discussion, even (especially) when they’re not there, and the ability to say no.

These superpowers are actually quantifiable. After Sears Holding Company CEO Eddie Lampert saw my OKR video a couple years ago, he started an OKR pilot within the company; less than a year later, revenues increased 8.5% for employees who were participating in the pilot vs. those that were not. More interestingly, employees who were consistently using OKRs were 11.5% more likely to move into a higher performance bracket than their non-participating colleagues.

A founder who is everywhere, always

As a company grows, it’s impossible for the founder or CEO to be a part of every discussion. Simple decisions often don’t get made until she weighs in. When OKRs are well-defined and communicated broadly, they help everyone in the company understand what matters to the CEO and why. What are the company’s priorities? What aren’t the company’s priorities? How are they measured? What did we learn last quarter that led the founder to commit to one set of priorities over another?

Because OKRs are shared publicly throughout the company, everyone knows where the company is headed, and how their team’s work connects to the company’s overall objectives. Through the course of a quarter, there will be any number of important decisions that need to get made. With the benefit of clear priorities and an appreciation of how progress will be measured, everyone can channel your founder into the room and use that understanding to inform how she would contribute to the conversation if she were there. Once the CEO knows that her teams understand where she’s heading and why — their decisions are naturally more consistent with that focus and don’t require her to be a part of every single discussion. The end result? Faster execution, less confusion, and a founder who’s freed up to focus on growing her business. Instead of slowing her team down by imposing process, she’s giving them the tools to speed up and achieve more.

Predicting the future

After a couple quarters of setting and grading OKRs, you’ll see your team start to predict the future. Nothing is more energizing to a team than committing to a goal that seems unattainable at the beginning of a quarter, then sitting down to score themselves 90 days later, and remembering their disbelief at the possibility of pulling off the impossible. When you hit that goal (or even if you come close), the collective sense of accomplishment is palpable. Along with it is certainty that the achievement was the team’s — it wasn’t luck, it wasn’t just being in the right place at the right time — it happened because the team declared it would happen, then set out to move mountains to pull it off.

Failure = data

Even when your predictions are wrong — you come up short, you missed the target entirely — OKRs let you turn that failure into data. You get the benefit of knowing something new — new information about why a goal is hard or impossible to achieve — and the next prediction will require you to adjust your approach so that you don’t repeat the same mistake. Don’t celebrate the failure — embrace it, learn from it, and move on.

Just say “No”

Without the consensus that comes with agreed-upon OKRs, it is exceedingly difficult for any one team in a company to say no to a good idea, a worthwhile project, or a needed improvement. All good ideas get equal attention — leading to a lot of wasted time and effort, as not all good ideas are equally good. OKRs make it far easier to say no to the less important ideas — maybe you’ll get to them in a future quarter, maybe you won’t — and saying no isn’t a political or emotional debate, it’s a rational response to a commitment that the entire company has already made.

Get started with OKRs

My friends in Google’s People Operations re:Work team have built a fantastic guide to getting started with OKRs. The background on where OKRs came from, tips on writing your first OKRs, sample scorecards, timelines — everything you need to start developing your team’s superpowers. Good luck!