Book Club at Codurance - Measure what matters

OKRs came to improve on the gap that traditional approaches to business measurement tackled, as an example given in the book Management by objectives.

Measure What Matters is divided into two parts.  The first introduces and describes OKRs in four different sections, and the second focuses on culture. 

PART 1 - The foundation of OKRs

This section describes the four SuperPowers that form the foundation of OKRs

SuperPower 1: Focus and commit to priorities

As organisations grow, getting people focused and committed to a single objective is difficult. Measure what matters offers research which showed that senior executives often couldn't name their priorities.

To illustrate that this was not the case with Intel, John Doer, the author used an example of when Motorola launched a faster CPU, and Intel was losing market share.

To respond to this scenario Intel (led by Andy Grove) launched a strategy where they shifted the priorities and the focus of the whole company, in just weeks.

Key takeaways:

• For OKRs to be successful, individuals and leaders must commit publicly.
• These objectives should be minimal in number (in Google's case, at most 5, preferably 3).
• This aim is to provide transparency and a clear message of priority, allowing the rest of the organization to focus on delivering the outcomes that matter most to the organization.

SuperPower 2: Align and connect for teamwork

Aligning people and connecting with them so that they can build something together is challenging.

The first step is communication.  When you have clear communication and understanding between both parties, it is possible to achieve a common goal.

A Harvard study found that aligned employees have the chance to be more than twice to be top performers.

ORKs, on the other hand, can be used to help with communication for a vertical alignment in the company.

The next step is motivation. Each person has different reasons and perceptions about work, life, and what motivates people to do a great job.

A US survey found that 92% of people feel more motivated to react to goals when they are publicly available, and as they are public, they are more likely to be attained.

Key takeaways:

• Create alignment by ensuring that OKRs are transparent and readily available for everyone across the organization.
• Encourage team members to link their OKRs to top-level OKRs by making the KRs (Key Results) their Objectives.
• Encourage bottom-up OKRs, where teams can set their OKRs without formal cascading. This can only be effective if OKRs are transparent, as this allows individuals to see the priorities of others in the organization.
• Balance the blend of top-down and bottom-up OKRs depending on the circumstance of the organization and business.

SuperPower 3: Track for accountability

Accountability is the superpower that aims to share the responsibility of achieving a given objective with the team. To do this, everyone involved needs to remember that OKRs are adaptable and not set in stone.

As such, it prevents OKRs from becoming stale and irrelevant for the company, and this is a scenario in which startups can run efficiently as they are known for moving fast. Nevertheless, in the book, the big company AOL also went through this issue and saw that the OKRs were disconnected from the company goals.

This also happened at Google, where the Vice President frequently reminded workers that they needed to build their OKRs and move them forward.

The attributes of OKRs that are accountable and also might avoid those scenarios of dis-connectivity of the company is to make them with the following qualities:

• Make them visible (Dashboards with metrics and progress), and share them in the company's internal network.
• Get everyone working on the right thing (answer the question: what did we learn?).
• Save time and money.

SuperPower 4: Stretch for amazing

Stretch goals are the ones that focus on the next level of performance; in the book, John Doer explains that the more complex the goal, the higher the performance (which seems controversial).  He uses the argument that stretch goals help when the focus is to innovate and not iterate.

Workers are more motivated and engaged with the company's purpose when they work on stretched goals. As an example, John Doer used the Intel example and calls that the rally point and Google Gmail space.

So, because these goals are challenging, you have to keep in mind the following:

• Your stretch goals need to produce output in order to keep people motivated.  No long march to nowhere.
• They have to be achievable (Google chrome history, YouTube history).

The key is to keep the chance of failure to less than 40% as more than this will discourage people and change the goal from achievable to high risk.

Key takeaways:

• Google aims for a 70% success rate in their (aspirational) OKRs. This makes it visible when teams are not stretching themselves, as a degree of failure is to be expected when pushing for big goals.
• Applying the 10x rule to goals (whereby anything to be improved must be improved tenfold) is a good way of creating vital stretch goals that push teams to reinvent and innovate in the industry to achieve the goal.
• Ensure that for your stretch goal that you are focused on the right core metric/metrics to achieve the growth.  Otherwise, you will need to change you are aiming for.

PART 2 - Continuous Performance Management and Culture changes

Radically changing how a company thinks and works will also require a change in culture.  To achieve this culture change, John Doer suggests a move to continuous performance management. 

Continuous Performance Management

Continuous Performance Management replaces traditional annual performance reviews and is critical to the success of OKRs. Traditional annual performance reviews are ineffective, with only 12 percent of HR leaders deeming the process "Highly effective."

An alternative approach is implementing Continuous Performance Management with a tool called CFRs, which complements and reinforces OKRs. CFRs stand for;

• Conversations: authentic, richly textured exchange between the manager and the contributor aimed at driving performance.
• Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvements
• Recognition: expression of appreciation to deserving individuals for contributions of all sizes.

This was implemented through 1-2-1 sessions between managers and colleagues and ongoing interactions between colleagues within an organization.

Key takeaways:

• Divorce compensation from performance management (this would be managed separately as part of the compensation & evaluation cycle)
• Build a culture of high-quality conversations between managers and contributors, with managers taking on a coaching role over a more directive one.
• Use tools to facilitate frequent discussions and feedback
• Feedback should be as real-time as possible and bidirectional.
• Institute recognition to maintain high levels of engagement in the organization and with the objectives of the organization

Culture

For OKRs to be effective, the right culture must be present with solid values. Once OKRs have taken root, OKRs can be used to deepen that culture and perpetuate success.

In the case of Intel, these values were:

People-oriented

• We value solid mutual commitment
• Respect for all work
• Challenge and opportunity

Openness

• Highlighting of problems or issues expected

Issue resolution

• Clean and crisp
• Confrontation must be constructive

Results

• Output orientation in all work
• Superficiality not respect
• Reward success with positive feedback

Discipline

• Excellence in a highly competitive, complex environment demands it

Risk-taking

• High technology orientation necessitates it
• Low fear of failing, self-exposure
• Champion

Trust and integrity

To get the initial culture, you need to start OKRs; you may need to initiate a culture change. Beyond ensuring the correct values are set, it will be critical to ensure the right people becomes on board and that those not suited to the difference be respectfully allowed to move on from the organization.

Resources 1-4

The book also includes a set of resources, including a summary.  In particular, the Google OKR playbook that details Google's approach to OKRs, and is well worth a read to understand OKRs in action.

How to find out more?

Measure What Matters is available from all normal book outlets and is also available as an audio book.

• ISBN-10: ‎ 0525536221

• ISBN-13‏: ‎ 978-0525536222 

What Matters website, founded by John Doer has further resources.