PDF Summary:Measure What Matters, by John Doerr

Is your company focused on the right things? Do you really understand what goals will move your company forward, and how to measure them? OKRs can help. Measure What Matters shows you how to use the OKR management system to identify your priorities, set ambitious goals, clearly measure and track them, and motivate and align everyone on your team.

This is the system that helped Larry Page and Sergey Brin turn a small startup called Google into one of the most ambitious and innovative companies in the world. Whether your business is large or small, OKRs are invaluable tools. Learn to implement the same management system used by Google, Intel, LinkedIn, Disney, Twitter, and Spotify.

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The so-so key results are more measurable: "Key result #1: achieve a lap speed that's 2% faster. Key result #2: decrease time during pit stops by an average of 1 second per stop." However, these don't specify how to decrease pit-stop time.

In contrast, the best key results include specific tactics on how to decrease the pit-stop time. They add, "Key result #3: decrease pit stop errors by half. Key result #4: spend 1 hour per day practicing pit stops."

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In the example above, the weak key results aren’t specific enough. The so-so key results are better because they’re measurable and specific, but they don’t specify how to decrease pit-stop time the way the strongest key results do.

Superpower #2: Align

OKRs are good at aligning companies because OKRs are always public. CEOs can look at the goals of their executives, managers, and junior staff, and junior staff can (and should) look at the goals of their bosses and the CEO. This allows people to coordinate their goals with those of the company and their peers.

Use Both Top-Down and Bottom-Up Alignment

Generally, there are two approaches to alignment: top-down and bottom-up. In the top-down approach, directives start with the CEO and cascade down through the ranks to the junior employees. In the bottom-up approach, junior employees working on the frontlines, the people who have the most access to customers and product issues, identify pressing needs and relay them up the chain of command to the CEO.

The most effective companies are aligned in both directions, with half of an employee’s objectives coming from the top and half set by the employee herself. If you’re assigning an objective to one of your employees, make sure you clearly demonstrate how the objective connects to the company’s top priorities.

Employees should set most of their key results themselves. People who choose their goals take more responsibility for reaching them.

Superpower #3: Track

OKRs are always measurable, and at the end of each OKR cycle you score them. These scores help you track your progress, and they indicate when you need to double down on a particular goal or when you should revise or abandon it.

During the OKR cycle, check-in with your manager weekly or monthly to discuss your OKR progress and decide among four options for each goal:

Option #1: Continue the objective or key result—If everything’s going well and you’re making progress, keep going.

Option #2: Revise the objective or key result—If changes in your environment or workflow have caused the goal to get off track, update it.

Option #3: Start a new objective or key result—As conditions change, you may need to add new goals. If you already have five objectives, put one or two on the backburner to make room for the new goal.

Option #4: Stop an objective or key result—Some goals become irrelevant or impractical. Don’t stubbornly cling to a goal just because you set it. If it no longer serves your larger purpose or the company’s, toss it.

Scoring OKRs

At the end of the OKR cycle, you score and reflect on your OKRs. The wrap-up phase consists of three parts: objective scoring, subjective self-assessment, and reflection.

Objective Scoring

The employee and manager assign a score to the objectives. The simplest way to score an objective is to average the completion rates of its key results. One way to score is to use a scale of 0.0 to 1.0, based on how much of the key result was completed.

• 0.7-1.0 is a “green” score, meaning the individual or team achieved the goal.
• 0.4-0.6 is a “yellow” score, meaning the individual or team made progress but didn’t complete the goal.
• 0.0-0.3 is a “red” score, meaning the individual or team failed to make progress toward the goal.

Subjective Self-Assessment

Objective data are important, but they don’t always tell the whole story. Low numbers could conceal a strong effort, and strong numbers could be inflated.

For example, let’s say your objective is to recruit more customers, and one of your key results is to make 50 phone calls to potential customers. You end up making 35 phone calls, for an objective score of 0.7. On paper, this looks like a success. But if you waited until the last minute and rushed through your calls, signing only 1 new customer, the objective score of 0.7 isn’t really indicative of your performance.

For this reason, it’s important to balance objective scores with subjective self-assessments. Work with your manager to compare objective scores with the circumstances that led to them.

Reflection

To learn from your experiences and scores, use these questions as a jumping-off point for group discussion and self-reflection:

• Did you meet your objectives? If you did, what factors helped you be successful? If you didn’t, what roadblocks did you face?
• What have you learned that you want to keep in mind during the next OKR cycle?

Superpower #4: Stretch

Some of your OKRs should be especially challenging. Expect “stretch OKRs” to score between 0.4 and 0.6. Setting challenging goals allows your company to continue innovating.

This is how Google distinguishes between regular objectives (“committed objectives”) and stretch objectives (“aspirational objectives”):

• Committed objectives are the goals that need to be met within a set period of time for the company to prosper. Additionally, these goals need to be 100% or near-100% complete (or receive a score of 1.0) by the deadline. Committed objectives include sales and revenue goals around product releases, customer satisfaction, and hiring.
• Aspirational objectives are goals that reflect the bigger picture, outside of day-to-day needs, and focus on big, ambitious ideas.

Google doesn’t expect everyone to achieve their aspirational objectives, and failure is built into the process—in fact, the average rate of failure at Google is about 40%.

Your company’s balance of committed and aspirational objectives will depend on your answers to the following questions:

• Do we want to break into a new market next year? Do we have some extra cash to play around with? Can we afford to make a risky bet? (If yes, favor aspirational objectives, or stretch goals.)
• Do we want to further establish our current position in the market? Are we in survival mode, just trying to stay afloat? (If yes, favor committed goals.)

Regardless of your answers, every company should have at least one or two aspirational objectives. To determine yours, ask, “What would incredible look like for our company?”

What Are CFRs?

Measure What Matters also explores the system of continuous performance management, an alternative to annual performance reviews. This system allows managers to give feedback regularly, help employees improve throughout the year, and address issues as they arise.

CFRs are your tools for implementing a continuous performance management system.

• C: Conversations between employees and managers
• F: Feedback both from and to managers and among peers
• R: Recognition from peers and managers for small and large contributions toward goals

C: Conversations

Conversations happen weekly or monthly, in both formal and informal environments.

As a manager, your conversations with employees cover 5 main topic areas (but you don’t need to cover all of them in one conversation):

1. Reflecting on past goals and setting new ones.
2. Updates on OKR progress, problem-solving if necessary.
3. Coaching: Guide the employee in his or her thinking about the OKR approach, and encourage the employee to offer feedback to help you, the manager, do your job better.
4. Professional development: Work with the employee to develop the necessary skills, knowledge, and mindset to succeed at the company.
5. “Lightweight” performance reviews: Discuss what the employee has accomplished since your last meeting, and view this progress within the context of the company’s priorities and needs.

F: Feedback

In order to improve, employees need to know how they’re doing—often, they don’t have enough distance from their work and performance to make this call themselves.

You can elicit and guide feedback in one-on-one meetings with these questions:

• Employee: Do you have any feedback on how I could improve my performance, make more progress toward my goals, or set more ambitious OKRs?
• Manager: What do you need from me to succeed?

R: Recognition

Recognition should be both private and public and focused on actions. There are many ways to establish a “high-recognition” culture:

• Introduce a peer-to-peer recognition system. For example, you could end Friday meetings with the opportunity for employees to give a shout out to the work of their peers.
• Focus on actions and results. Instead of honoring an Employee of the Month, honor an Achievement of the Month. Celebrate people for what they do, particularly when they complete OKRs that contribute to company goals or they demonstrate company values.
• Link recognition to the company’s goals. When you have a particular, company-wide OKR you’re trying to push, focus recognition on the people who are helping the company make progress toward it.

Together, OKRs and CFRs Build a Positive Culture

In one study, researchers found that “high-motivation cultures” depend on two elements: catalysts and nourishers.

Catalysts are elements of a company that support the work being done. These elements include goal setting, learning from failure, transparency, engaging in meaningful work, and freely sharing ideas. All of these elements are built into the OKR system.

Nourishers are elements of a company that support the interpersonal needs of employees. These elements include positive feedback, professional development, emotional support, psychological safety, and recognition. All of these elements are built into the CFR system.

In other words, OKRs are the catalysts of a positive workplace culture; CFRs are the nourishment that sustains it.