Case Study: Why Google Invented OKRs

Let’s start with a little history lesson. 

Andy Grove invented OKRs at Intel and taught it to John Doerr before he left Intel and moved to Google.

When Doerr presented the concept of OKRs to Google’s leadership in 1999, the company was less than a year old. 

While its founders, Sergey and Larry, had great entrepreneurial energy and an ambitious vision, they didn’t have the management techniques to get there. 

It was OKRs that allowed Google to reach their ambitious goal of 10 billion dollars in revenue. 

Doerr explained to Google that OKRs were a management methodology that helped the entire company stay focused. 

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Doerr noted that when team members could tie their own goals to company goals, they felt like more than just a cog in the machine. 

Being able to see how they fit into the larger picture would motivate team members to produce their best work. 

Understanding OKRs

OKRs stands for objectives and key results.

An objective is as simple as it sounds and what is to be achieved. Objectives are meant to be significant, concrete, action-orientated, and motivational. 

Key results act as a benchmark and measure how to achieve the objective. The best OKRs are specific, timely, and measurable. 

Key results are designed to be black and white, you either meet them or you don’t, and they’re set with a number from zero to one. 

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To help you clarify your understanding of what an OKR is, let’s walk through an example of the process of creating an OKR.

Let’s say your company wants to reinvent the bicycle industry. Your company’s objective to reach this lofty goal is to invent a luxury electric bicycle. 

The objective is then used to come up with various key results. 

For example, your team may be tasked with building the light carbon frame for the bike. 

From here you will have to set your own team OKRs such as designing the frame, obtaining materials for the frame, building the frame, and testing it. 

Every member on the team must collaborate to develop the overall team goal of building the frame through specific metrics. Then individuals will work to align their individual goals with the team objective. 

You will then set quarterly team goals for everyone to meet on a specific time frame to deliver the bike frame. 

These time frames help you track and review the progress of your team. 

This is the art of setting OKRs.

Steps to Setting OKRs

Now that you have a firm understanding of what an OKR is, let me walk you through how to create successful OKRs for your team. 

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1. Preparation 

Once you have your company’s objective in mind, you’ll want to start by creating team OKRs in a collaborative environment.

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As a team, decide what period you’re setting OKRs for, i.e.) quarterly, yearly, etc.

Remember to share the information your team will need to set OKRs so that team members can come ready to participate in the discussions of goals. 

You can also prepare your team for a collaborative goal setting meeting with primers such as: 

• What value do you want to achieve for our customers? 
• What does that value look like in action? 
• How do you measure success towards achieving that value? 

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2. Choose Objectives 

As a team, brainstorm objectives by adding them to the collaboration document you created. 

Group similar objectives together, then summarize your ideas into 1-3 objectives. 

Remember to follow the SMART goal philosophy when making objectives as they must be specific, measurable, achievable, relevant and time-bound. 

Remember that less is more when it comes to objectives. Choosing no more than three objectives allows the team to focus on progress on the areas of highest customer value areas. 

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3. Set Key Results 

Once you have your set team objectives, you need to set key results for your chosen objectives. These key results must clearly indicate whether an objective was achieved.  

You must understand that key results are a measure of the work, not the work itself. 

For example, ‘create a new webpage’ is work. Increasing the web page views by 5% is a key result. 

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4. Assign Ownership 

Once you have your results, it’s now time to assign those key results to an owner. 

While an OKR belongs to the whole team, the owner is responsible for tracking its progress. 

5. Review

Once you’ve set your objectives and key results, go back and make sure they’re ambitious enough. 

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The key to successful OKRs is finding the balance between setting high expectations that are still attainable and motivating. 

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Once your OKRs are reviewed and set, add a scoreboard on a sliding scale from 0 to 1.

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Here’s an example of an effective scale: 

• 0.3 = we missed the mark
• 0.7 = we came very close 
• 1 = we knocked it out of the ballpark, but we should be setting harder goals in the future. 

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The tricky thing about OKRs is that you don’t want to reach the highest levels, as it’s a sign that your goal setting wasn’t ambitious enough. The sweet spot lies at around 0.7 marks. This way, you’re still achieving, which is motivating, but you are still working towards improvement. 

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Want more help understanding OKRs and their process? Check out our free comprehensive guide. This guide will walks you through every step of the OKR goal-setting process from preparation to review.

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Takeaways

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Objectives and key results drive clarity, accountability, and team motivation. 

They are more than just achieving goals. They’re about creating a high-achieving team culture.

Review your OKRs regularly so that you can adjust them and the strategy towards achieving them before each quarter. 

With this article, you have everything you need to set your team up for success.