In his book Measure What Matters, John Doerr talks at length about how Intel was the most efficiently run company he’d ever seen. During the time he was there, Andy Grove was in charge and heavily influenced his thinking. When Doerr ultimately left for venture capital firm Kleiner Perkins, he took Grove’s principles with him – most successfully applying them to (then) little known startups like Amazon and Google.
To understand how we can apply their philosophies to our own businesses, it helps to look at the progression of their acronyms.
MBO (Management by Objective): Everything we have to do must be tied to some greater goal. Example: If the objective is to get to grandma’s house, the strategy can be to travel over the river and through the woods. We never want to just say “go to grandma’s” or “go travel over the river and through the woods”’ in isolation. State the objective.
AMB (As Measured By): Always assign the metric to gauge results by in advance. This helps us set structured expectations in advance, course correct in real time, and reflect after the fact. Grove would put AMB and a metric after every objective at Intel. Example: Over the river and through the woods for a late afternoon arrival would be a success, early evening would be OK, and if it seems to be taking longer, we are failing and need to reconsider. State the key metrics and how they’ll be measured.
OKR (Objectives and Key Results): Doerr summed MBOs and AMBs up into OKRs, giving full credit to Grove’s approach. Doerr explains that Objectives are “the what’s” and Key Results are “the how’s” for everything a company is trying to accomplish. At first, it may seem too obvious to have to say out loud, but in practice, the brilliance of the OKR is how they stack up within a system.
OKRs really help scale an objective across roles and responsibilities by creating accountability. For example, let’s say our management objective is “to get to Grandma’s house” with the strategy of “over the river and through the woods” and the key result of “before dark.” We then give our horses the objective of “providing for transportation” with a strategy of “knowing the way to carry the sleigh” and a key result of “executing the task before dark.” OKRs make for organized organizations.
Within our own practices and with clients, we can use OKRs to set goals and measure progress. Client acquisition cascades from the top-line results of “total new clients” down to a series of smaller, related jobs from on-boarding to pipeline building. We want to think about how one level’s Key Results feed into the next level’s Objectives. Client goal structuring cascades in the same way. Once we name a goal, we can back into the steps, assumptions, and responsibilities for achieving it. In any process where we want to plan, measure progress, and review our results, the OKR framework is a natural fit.
Doerr says, “Ideas are easy. Execution is everything.” Maybe creativity for good ideas deserves a bit more credit, but without execution, he’s right – we’d have no work to show. Embracing OKRs is a fast way to understand how all of our ideas actually fit together into a cohesive plan. Organize the organization. It works.