Why Did Google’s Performance Skyrocket by 10x After Nailing OKRs, But Yours Didn’t?

How can the revolutionary OKRs help you finally achieve your dreams?

Photo by Zoltan Tasi on Unsplash

Dear friends, good afternoon! I am Tom Niklas, a seasoned writer and book reviewer. Welcome everyone to the Tom’s ReadVault, please subscribe to me and join us in reading 100 books a year together.

We’ve all had this experience: at the end of each year, we take stock of the past year’s work and life, and make various plans or set goals for the next year — to get a certification, learn a new skill, exercise 3 times a week, and so on. Full of hope entering the new year, we try our best to find time to achieve these goals.

However, when next Christmas rolls around and we review the past year, how many of those wonderful plans actually got done? I imagine most people’s answer is: barely satisfactory or none at all.

Why is this pattern of “setting goals this year that get pushed to next year’s goal list” so common? We seem to always overestimate our willpower while underestimating the temptation to procrastinate. Though we hate to admit it, there’s a little demon inside each of us that whispers at critical moments: “No rush, listen to this new song first before you get to work” or “Play some games and relax first, eh?” With just a little carelessness, our goals imperceptibly get shelved and forgotten about. By the time we come to our senses, it’s too late.

So how can we truly effectively accomplish our goals? The answer lies in the book I want to recommend today: Radical Focus: Achieving Your Most Important Goals with Objectives and Key Results. It introduces us to a whole goal management framework — OKR. Through her firsthand experience founding startups in Silicon Valley, author Christina Wodtke discovered that a company’s most precious and scarce resource is actually “attention.” We face so many choices every day that it’s easy to get distracted or flustered. OKR is like a beacon lighting the way, helping us focus our attention on what matters most. Companies need to focus, and so do individuals.

Some say attention is like a spotlight. We need to adjust the angle, lock onto our target, then shine with full strength. Otherwise the light darts around haphazardly, briefly catching on this tree then that patch of grass, with no rhyme or reason. OKR helps us establish boundaries between light and shadow, concentrating the brilliance of our attention onto what is most crucial.

So what exactly are OKRs? The acronym stands for Objectives and Key Results. It contains two components: the objectives are aspirational, motivational vision statements. The key results are quantifiable metrics to track progress against. For example, an objective could be to “Become the fastest growing consumer product in our industry.” The key result would then be “30% user growth this quarter.” In this way, OKRs set clear direction as well as definite benchmarks. They prevent teams from losing their way amid rapid growth.

Now, going forward, let’s explore one-by-one how OKRs, as a goal setting framework, are uniquely effective in real world business practice. I believe that through vivid, real life case studies, the concepts and methodology of OKRs will give all of us more scientific and pragmatic mindsets when setting our year-end goals.

Before sharing the OKR methodology, it is important we first understand a key traditional performance management tool — KPIs. This helps highlight OKRs’ unique value by contrast.

• KPI stands for Key Performance Indicator. It is a quantitative metric used to measure whether a business meets preset targets. For example, if a retail company’s annual goal is to increase revenue by 20%, the corresponding KPI would be “total annual sales growth of 20% year-over-year.” We can see KPIs focus more on results measurement and evaluation.
• On the other hand, OKRs emphasize defining and tracking towards new goals. OKRs contain Objectives and Key Results — aspirational vision statements and measurable evaluation benchmarks. Using the same example as above, if framed with OKRs, the objective might be “Become the fastest growing retail business in our region,” with a key result of “20% sales growth versus prior year.”

Compared to KPI’s emphasis on benchmarking, OKRs place more weight on infecting teams with aspirational goals and directional guidance. This suits the high uncertainty and rapid change of today’s business landscape, requiring flexible strategic goal adjustment.

So what are some of OKRs’ unique advantages over KPIs? Why are more and more renowned companies adopting OKRs for business goal management?

I see three primary areas of strength:

• Firstly, OKRs better facilitate team collaboration. KPIs tend to stress departmental metrics, risking interdepartmental finger-pointing that hinders coordinated action. OKR objectives on the other hand focus on shared visions, with key results emphasizing collaboration to build team synergy.
• Secondly, OKRs nimbly adapt to environmental shifts. The winding roads and unexpected turns of today’s volatile business world mean rigid KPI benchmarks often require adjustment, whereas OKR objectives can be redefined to redirect teams.
• Lastly, OKRs continually drive innovation. Solitary KPI goals easily lead to complacency, while OKRs require constantly raising the bar to maintain upward momentum, challenging teams to innovate beyond their limits.

In summary, compared to KPIs’ emphasis on performance assessments, OKRs form a more complete goal management framework with advantages in guiding strategy, aligning teams, and driving business. They warrant our deeper study and application.

What makes this book so great is it draws us into the founding story of a startup called TeaBee right from the start. TeaBee’s founders, Hannah and Jack, met as tea enthusiasts who really clicked. They noticed most restaurants had terrible tea and dreamed of helping tea farmers by buying quality leaves directly, thereby improving tea quality while increasing farmer income. A simple, beautiful idea gave birth to TeaBee.

But soon Hannah and Jack found entrepreneurship far rockier than imagined. Rapid business growth brought organizational and management troubles. Endless disputes arose over company strategy and operations as factions formed within the team, tanking cohesion and morale. CEO and supply chain head Hannah was overwhelmed.

That’s when angel investor Jim extended a helping hand, introducing Objectives and Key Results (OKRs) — a system to cascade top-level visions into quarterly goals, clarifying priorities, focus, and efficiency.

It sounded promising. They began by defining five OKRs, hoping to make progress on multiple fronts. But for a young startup, this proved too broad and scattered. After a quarter, no goal was met. Hannah and Jack had to admit they were applying OKRs incorrectly.

Just then, a savior arrived. Jim referred Ralph, an engineer experienced at implementing OKRs successfully. Ralph immediately pinpointed Hannah and Jack’s issue — too many goals. Effective OKRs focus on one or two make-or-break objectives, as Clinton demonstrated with his famous 1992 war room sticky note: “It’s the economy, stupid.”

Under Ralph’s guidance, Hannah and Jack finally identified the key objective for TeaBee’s growth — establishing stable vendor partnerships with restaurants. They set a single company-level OKR about this, with other departmental OKRs supporting the vendor relationship goal.

Additionally, Ralph introduced a weekly OKR progress check template he had used. This simple but effective meeting enabled teams to collaboratively track OKR advancement and provide mutual assistance. Specifically, it contained four quadrants:

• Top right held the OKR objective itself plus a 0–10 confidence score in achieving it, usually starting at 5.
• Top left listed 3–5 key OKR-related tasks and priorities to finish that week.
• Bottom left captured important things coming up in future weeks so departments could align plans.
• Bottom right tracked key health indicators, like customer satisfaction and morale, that required persistent vigilance, color coding them red, yellow, green.

Hannah and Jack loved the idea of using weekly OKR check-ins to monitor progress and support each other. They implemented it at TeaBee right away.

Hanna and TeaBee’s transformation after properly implementing OKRs vividly demonstrates their immense impact unifying teams and executing priorities.

Firstly, forced progress updates drive staff proactivity. Raphael mandated Friday 4pm group check-ins for everyone to share weekly advancements. This broke Hanna’s existing norm of people silently working in silos with activity dying down by the weekend. Formalizing progress reporting as a collective ritual was jarring initially.

Hanna grumbled at the disruption to her own workflow. But as teammates took turns highlighting inch-by-inch movement towards OKRs, her attitude shifted. She was thrilled realizing every employee was pushing hard for TeaBee’s success — the sales manager Frank even landed major new client Tasteco. UI designer Anya shared fresh interface sketches. By exposing works in progress, Hanna gained clearer, more three-dimensional insight into team efforts, softening her doubts about certain members.

Compelling weekly transparency broke down interdepartmental barriers, enabling intuitive sensing of company pulse. The organic motivation to voluntarily share achievements and earn recognition/praise for successes was ignited.

Secondly, rallying around a common goal boosted accountability. Jack decided to terminate Anya’s contract early since her work wasn’t essential for meeting priority OKRs. Hanna understood — if they couldn’t make headway in critical areas, everyone’s job would be at risk. The decision starkly communicated real-world constraints, heightening staff dedication towards shared objectives.

As HR, Hanna had pondered broader discussion before letting Anya go. But she swiftly realized that with corporate survival on the line, no employee welfare could be protected anyway. Though seemingly ruthless, Jack’s call ensured relentless collective progress towards targets. Hanna thus grasped “greater good before self-interest.”

Thirdly, OKRs persistently propel growth. Executing them led TeaBee to improve across multiple dimensions:

1. Team bonding via mutual understanding and respect built through weekly check-ins and a positive sharing culture cultivated trust for future cooperation.
2. Accountability rocketed as public reporting requirements motivated voluntary goal ownership rather than awaiting assignments. Eagerness to actively seek opportunities for value-add led to huge efficiency gains.
3. Business results leapt as OKR-alignment unlocked midwestern markets and Latin American supplier deals, massively boosting orders and revenue. Investor confidence in growth trajectories eased next fundraising.
4. Intrinsic motivation kept staff progressing through continual opportunities to share achievements and earn recognition during weekly reviews. Ever-rising OKR bars also maintained forward momentum.
5. Sustainable momentum was created as iterative OKRs enabled TeaBee’s evolution from fledgling to growth-stage player. The virtuous cycle of cohesive teamwork, clear directives, and outcomes compounds the foundations. Hanna sees an extremely promising future.

They completely smashed quarterly OKRs in three months. But Raphael cautioned against complacency. He and Jack promptly defined tougher goals to avoid comfort zones. Though only two key results were met in six months, they were game changing. A Series-A landed in a year. Overhearing Jack and Raphael strategize new capabilities, Hanna smiled approvingly- they continue full steam ahead.

So in large companies like Intel or Google, department heads run OKR meetings in silos that cascade down to subteam and even individual OKRs. The framework flows top-down from corporate directive to personalized line-of-sight. But individual OKR mandates aren’t always necessary — just awareness of team goals. So through Hannah and Jack’s journey, we’ve glimpsed how OKRs enable execution.

So how does OKR work exactly? What elements make up the OKR framework? And how is it applied? Stay tuned as we analyze the principles and steps behind OKR.

OKR stands for Objectives and Key Results. It contains two components: objectives and key results. Objectives describe the strategic direction for the next phase of work. They should be inspirational to motivate teams and outline an attractive, challenging goal. Key results are quantifiable metrics to evaluate objective achievement.

For example, the objective could be “Build the most convenient shared taxi service for urban transportation.” The key result would be “Increase user ride requests by 50% from last year.” This shows how OKRs provide direction through descriptive objectives while setting quantified results to assess tactical success.

So how does the OKR framework operate? The mechanism can be summarized as a “set-execute-evaluate-adjust” cycle:

First are OKR cycles. OKRs are not one-time tools but require a recurring system of setting, evaluating, and adjusting. A typical quarterly OKR cycle goes like this:

At the start of each quarter, the CEO sets company-level OKR objectives based on development strategies and conditions, usually after discussions with management to reach consensus. After the company OKRs are decided, each department defines its own departmental OKRs according to realities on the ground. This forms a hierarchical structure with cascading objectives from top to bottom.

Next, each department and employee works towards these OKRs throughout the quarter. To track progress, regular result reviews should be established, usually through weekly OKR meetings. Team members report on progress, discuss problems, and help each other.

At the end of the quarter, overall OKR achievement is evaluated, both to assess team/employee performance and identify areas for improvement to inform the next round of OKR objective setting. The results influence objectives for the following cycle.

Through this recurring process of setting, executing, evaluating and adjusting OKRs, the framework drives continual inspection, improvement and development within an organization. Like a machine that never stops, with every part constantly optimizing to power overall momentum.

Additionally, OKRs play different roles at different managerial levels:

At the company level, OKRs focus on strategic positioning and core competencies. There is typically only one company-level OKR, spanning 6 months to a year. The company OKR encapsulates the corporate vision to align all employees.

At department levels, OKRs emphasize tactical objectives and business operations. Departments normally have around 3 OKRs at a time, with a similar timescale to company OKRs. Department OKRs inherit and break down high-level company OKRs into actionable plans for achieving the vision.

Finally, individual employee OKRs center on job responsibilities and skill development. Employees can have more personal OKRs, usually per quarter. These align individual growth with organizational objectives for high congruence.

Conversely, the OKR process should also absorb ideas and feedback from the bottom-up. Frontline staff closest to markets and customers are well-positioned to seize opportunities and propose innovations. Combining both flows allows the OKR framework to permeate the organizational lifeblood and maximize impact, as one management expert put it: “Environmental change is now too rapid for traditional annual planning. OKRs provide a new working model.” I believe this agile, effective approach will gain traction among progressively more modern companies.

In summary, the OKR framework connects and promotes alignment across individual employees, department teams, and overarching company goals. This greatly empowers organizational execution. Through the above analysis of OKR components and steps, we can now understand this robust goal management system more comprehensively. It instills strategic discipline while providing quantified results constraints. Guided by this framework, a company can progress resolutely like a supertanker, undeflected by wind and waves. We also learned it is a dynamic, adaptive tool.

Similarly, we can apply the OKR methodology in daily life. For example, when playing basketball, teammates need to collaborate towards the common goal of scoring. If everyone plays individually, victory is unlikely. OKRs are an effective tool for enterprise teams to unify around shared objectives.

Additionally, when driving towards a destination, we monitor the navigation’s directions and estimated arrival time. If we deviate from the planned route, OKRs are like the navigator prompt to “recalculate” and get us back on the right path forward.

Finally, I’ll share a case study applying OKRs. A certain internet company recently faced sluggish growth with declines in user numbers and revenue metrics. Originally they planned a product redesign to attract users, but Finance head Scott objected, arguing they should first address existing user loss.

So the CEO set an OKR goal: Increase core product metrics 10% within two months. The first key result was raising weekly active users. The second was lowering user complaints. R&D and Marketing jointly optimized current products and services to achieve this while maintaining user experience and reducing operating costs, significantly benefiting corporate efficiency. This case shows how OKRs helped the company correctly identify development priorities and mobilized resources towards common direction to overcome obstacles.

Through these vivid examples, I hope everyone has gained more intuitive and multidimensional understanding of OKRs. Like a beacon guiding awareness of direction before proceeding, continually adjusting, and eventually arriving successfully at journey’s end.

We now fully understand OKRs, an excellent goal management tool providing new perspectives for team objective-setting to enable continual rapid iteration and growth.

Allow me to briefly summarize some key OKR advantages:

• Firstly, OKRs can strengthen organizational strategic execution. Top-down planning from the leadership perspective cascades down departments to create unified momentum. This uniquely distinguishes OKRs from other methodologies.
• Secondly, OKRs have tremendous inspirational appeal. Well-designed stretch objectives excite employee drive and potential like an organizational shot of adrenaline.
• Additionally, OKRs make performance reviews more transparent. Quantifiable key results systemize work evaluation and incentive mechanisms.
• Finally, OKRs far exceed other management modes in easy implementation. They only require leadership to provide regular updates for staff to spontaneously re-prioritize efforts accordingly.

However, OKRs also have limitations. They excel for organizations focused on rapid iteration versus standardized processes. So leaders should objectively assess organizational fit when adopting them.

As my presentation concludes, I have one question for you all:

Have you ever enthusiastically made plans and resolutions at the start of a year, only to find most unfinished by the end? If so, please share those goals and the difficulties faced; open discussion is most welcome!

Finally, a preview of my next speech topic — the bestselling book “Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked”, revealing how tech giants exploit human weaknesses to foster user dependency and addiction. I hope it will provide fresh, enlightening perspectives too!

For now, happy holidays to you all! Thank you for listening, until next time!

Photo by Free Walking Tour Salzburg on Unsplash

The last but not least, I share book reviews centered on family, personal development, mental health, and business finance — aiming to aid busy urban readers who wish to benefit from books but struggle to find the time.

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