What you will learn from reading Measure What Matters:
– The best practices for creating operational excellence in business.
– Tactics, strategies and ideas to help align your team and create a common understanding of what you’re trying to achieve.
– How to create OKR’s for your organisation and why it matters.
Measure What Matters Book Summary:
An amazing book on management, operations and setting and reaching goals. Written by one of Silicon Valleys most prominent investors.
If you’re looking to understand how groups of people can achieve huge goals, or how to align your company. This book won’t disappoint.
Key idea: When we choose to measure something we imply it matters. So, it’s important to make sure what we measure is picked wisely. When chasing specific key results make sure results can’t be fabricated and don’t incentivise lying about results.
The Definition of OKR’s
OKRs. Short for Objectives and Key Results. It is a collaborative goal-setting protocol for companies, teams, and individuals. Now, OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or a creative workplace culture. But if those fundamentals are in place, OKRs can guide you to the mountaintop.
OBJECTIVE, is simply WHAT is to be achieved, no more and no less. By definition, objectives are significant, concrete, action oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution.
KEY RESULTS benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. (As prize pupil Marissa Mayer would say, “It’s not a key result unless it has a number.”)
But exactly how do you build engagement? A two-year Deloitte study found that no single factor has more impact than “clearly defined goals that are written down and shared freely …. Goals create alignment, clarity, and job satisfaction.”
Goal setting isn’t bulletproof: “When people have conflicting priorities or unclear, meaningless, or arbitrarily shifting goals, they become frustrated, cynical, and demotivated.” An effective goal management system—an OKR system—links goals to a team’s broader mission.
OKRs are a shared language for execution. They clarify expectations: What do we need to get done (and fast), and who’s working on it? They keep employees aligned, vertically and horizontally.
Jes’s Note – Peter Theil in Zero to One discusses how each employee should be responsible for a particular part of a business (metric).
In Google’s early years, Larry Page set aside two days per quarter to personally scrutinise the OKRs for each and every software engineer.
Interesting Idea – It almost doesn’t matter what you know …. To claim that knowledge was secondary and execution all-important—well, you wouldn’t learn that at Harvard.
A basic truth of human nature: When people help choose a course of action, they are more likely to see it through.
Using Collective and Visible Goals to bring about accountability
Quote from John Doeer “I’d never worked at a place where you wrote down your goals, much less where you could see everybody else’s, on up to the CEO. I found it illuminating, a beacon of focus. And it was liberating, too. When people came to me mid-quarter with requests to draft new data sheets, I felt I could say no without fear of repercussion. My OKRs backed me. They spelt out my priorities for all to see.”
Everyone had clarity on what they were responsible. It also allows for people to understand what peoples priorities are.
When he saw a manager failing, he would try to find another role—perhaps at a lower level—where the person might succeed and regain some standing and respect.
Interesting way of looking at things. Instead of firing or removing, think where could this person be useful?
Andy Grove’s Philosophy:
Andy was a problem solver at heart. As one Intel historian observed, he “seemed to know exactly what he wanted and how he was going to achieve it.” He was sort of a walking OKR.
Grove was hard on everybody, most of all himself. A proudly self-made man, he could be arrogant. He did not suffer fools, or meandering meetings, or ill-formed proposals. (He kept a set of rubber stamps on his desk, including one engraved BULLSHIT.)
The best way to solve a management problem, he believed, was through “creative confrontation”—by facing people “bluntly, directly, and unapologetically.”
The way to get his respect was to disagree and stand your ground and, ideally, be shown to be right in the end.
The art of management,” Grove wrote, “lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.”
Andy Grove and OKR’s
Less is more. “A few extremely well-chosen objectives,” Grove wrote, “impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.” A limit of three to five OKRs per cycle leads companies, teams, and individuals to choose what matters most. In general, each objective should be tied to five or fewer key results.
Set goals from the bottom up. To promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs, in consultation with managers.
When all goals are set top-down, motivation is corroded. No dictating. OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Key results should always continue to be negotiated. Collective agreement is essential to maximum goal achievement.
Stay flexible. If the climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle.
Jes’s Note – Need to use context and environment to decide whether the result is still relevant.
Dare to fail. “Output will tend to be greater,” Grove wrote, “when everybody strives for a level of achievement beyond [their] immediate grasp …. Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.”
While certain operational objectives must be met in full, aspirational OKRs should be uncomfortable and possibly unattainable. “Stretched goals,” as Grove called them, push organizations to new heights.
The OKR system, Grove wrote, “is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review.” To encourage risk-taking and prevent sandbagging, OKRs and bonuses are best kept separate.
Jes’s Note – Amazon had similar issues with their two-pizza teams. Brad Stone mentions in The Everything Store, that when choosing their goals people chose based on the chance of success and decided on easy measures.
Grove on Stumbling and not giving up:
Be patient; be resolute. Every process requires trial and error. As Grove told his iOPEC students, Intel “stumbled a lot of times” after adopting OKRs: “We didn’t fully understand the principal purpose of it. And we are kind of doing better with it as time goes on.”
An organization may need up to four or five quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.
Jes’s Note – As always processes need time to be taken up properly. Like starting a gym habit, it can take weeks before you get into full swing of things. With multiple people involved, you can expect it to take even longer.
Groves “We have to crush the f—king bastards. We’re gonna roll over Motorola and make sure they don’t come back again.”
That became the rallying cry for Operation Crush. The teams responsible for this operation were called Crush teams.
Jes’s Note – Calling these teams crush teams is interesting as the name implies what their purpose is for.
They revamped their marketing to play to the company’s strengths. They steered their customers to see the value of long-term systems and services versus short-term ease of use. They stopped selling to programmers and started selling to CEOs.
I thought we could win by creating a new narrative. We needed to convince our customers that the microprocessor they chose today would be their most important decision for the next decade. – Bring attention to what something means
But they couldn’t match our broad product family or system-level performance. They couldn’t compete with our superb technical support or low cost of ownership. With Intel peripherals, we’d remind people, your products get to market faster and cheaper. With Intel design aids, your engineers work more efficiently.
This is interesting, they made decision to focus purely on communicating long term value not short term.
Key Insight – If the vectors point in different directions, they add up to zero.
The key result system was Andy Grove’s way to mould behaviour. Andy had a single-minded commitment to making Intel great. He discouraged people from serving on outside boards; Intel was supposed to be your life. Your objectives and key results consolidated that commitment.
Jes’s Note – Sales is just selling someone an interpretation and meaning.
When top management was saying “We’ve got to crush Motorola!” somebody at the bottom might have said “Our benchmarks are lousy; I think I’ll write some better benchmarks.” That was how we worked.
But good ideas aren’t bound by hierarchy. The most powerful and energizing OKRs often originate with frontline contributors.
Jes’s Note – I see this time and time again. Front line contributors have a better evaluation of the environment they operate in. So, they will have good ideas for measurements that will reflect good performance.
Without measurement and goals, how can you know you are progressing?
To make reliable progress, as Peter Drucker noted, a manager “must be able to measure … performance and results against the goal.”
Voltaire: “Don’t allow the perfect to be the enemy of the good.”
The one thing a [OKR] system should provide par excellence is focus. This can only happen if we keep the number of objectives small …. Each time you make a commitment, you forfeit your chance to commit to something else. This, of course, is an inevitable, inescapable consequence of allocating any finite resource.
Jes’s Note – Time is a finite resource, what can you do to be more effective with your time?
Entrepreneurship at it’s most simple:
The three watchwords for entrepreneurs:
• Solve a problem
• Build a simple product
• Talk to your users
To inspire true commitment, leaders must practice what they teach. They must model the behaviour they expect of others.
Jes’s Note – In Robert Kurzbans book ‘Why everyone else is a hypocrite’ he discusses that we are hypersensitive to contradictions in other people. Therefore, if leaders don’t walk the walk, it instils a lack of trust and encourages the behaviour.
The Problem of Company Alignment:
Alignment is rare. Studies suggest that only 7 percent of employees “fully understand their company’s business strategies and what’s expected of them in order to help achieve the common goals.”
A lack of alignment, according to a poll of global CEOs, is the number-one obstacle between strategy and execution.
The Impact of Layers on OKRS:
In moderation, cascading makes an operation more coherent. But when all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with a few adverse effects:
- A loss of agility. Even medium-size companies can have six or seven reporting levels. As everyone waits for the waterfall to trickle down from above, and meetings and reviews sprout like weeds, each goal cycle can take weeks or even months to administer. Tightly cascading organizations tend to resist fast and frequent goal setting. Implementation is so cumbersome that quarterly OKRs may prove impractical.
- A lack of flexibility. Since it takes so much effort to formulate cascaded goals, people are reluctant to revise them mid-cycle. Even minor updates can burden those downstream, who are scrambling to keep their goals aligned. Over time, the system grows onerous to maintain.
The Power and Use of Frontline workforce:
Marginalized contributors. Rigidly cascaded systems tend to shut out input from frontline employees. In a top-down ecosystem, contributors will hesitate to share goal-related concerns or promising ideas. • One-dimensional linkages. While cascading locks in vertical alignment, it’s less effective in connecting peers horizontally, across departmental lines
People in the trenches are usually in touch with impending changes early. Salespeople understand shifting customer demands before management does; financial analysts are the earliest to know when the fundamentals of a business change.” They see the signals first.
Jes’s Note – I still find it bizarre that big companies don’t use the frontline employees to their potential. Here you have a bunch of people who daily see the problems and issues that a company faces, yet never get asked what could be done to solve these issues. There is a buffet of good ideas and problems to be solved at this level.
When goals are public and visible to all, a “team of teams” can attack trouble spots wherever they surface. – Increased collaboration and different perspectives.
Jes’s Note – Transparency creates very clear signals for everyone. It also makes it very hard to hide if you’re not carrying your weight.
The problems of Scale:
Grove underestimated how much scaling slows you down. New engineers need extensive training before they can be as proficient as your holdovers. And with multiple engineers developing the same project, we had to build new processes to keep them from overriding one another.
Key Insight – At scale, alignment grows exponentially more complex.
Modern IT goes way beyond checking off boxes to process help tickets or change requests. It’s about adding value to the business—shedding redundant clone systems, creating new functionality, finding future-oriented solutions.
Jes’s Note – This is a redefinition of the value and purpose of IT. Clarity of purpose helps create alignment.
OKR’s and Motivation:
Contributors are most engaged when they can actually see how their work contributes to the company’s success. Quarter to quarter, day to day, they look for tangible measures of their achievement.
Extrinsic rewards—the year-end bonus check—merely validate what they already know. OKRs speak to something more powerful, the intrinsic value of the work itself.
“The single greatest motivator is ‘making progress in one’s work.’ The days that people make progress are the days they feel most motivated and engaged.”
As Peter Drucker observed, “Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.”
Stretch goals can sharpen an entrepreneurial culture. By pushing people past old limits, they are forces for operating excellence.
Page observes, “people tend to assume that things are impossible, rather than starting from real-world physics and figuring out what’s actually possible.”
Thousand percent improvement requires rethinking problems, exploring what’s technically possible and having fun in the process.
Jes’s Note – I love this, what if the problem we think we are solving isn’t actually the problem? What if it’s a symptom of a bigger problem? Redefining problems is where the biggest opportunities are.
Using analogies to create possibilities and problem solving:
“We should make the web as fast as flipping through a magazine.” It inspired the whole company to think harder about how we could make things better and faster.
— This analogy used to motivate and convey the idea in more concrete terms
Question: very basic problem: Why was it so difficult to get people to try a new browser?
Findings: we found that people were unclear about just what a browser did for them?
Potential solutions, find a way to convey value of what a browser does? Or even better show them? How could you demonstrate this value?
OKR’s help with Simplicity:
John Doerr Commentary:
“I’ve always been fascinated by simplicity. For all the complex things Google Search could do, the user experience was phenomenally uncomplicated.
None of this happened by accident, or by the grace of a single insight. It took years of rigorous execution, meticulous attention to detail, and the structure and discipline of OKRs.
And then there was the day Google Search went down and I couldn’t get my work done. Google, I realized, had become an indispensable tool.”
Good investing insight – If this service was to stop, would people be unable to solve this problem easily? Do they rely on this technology?
Challenge people to push for more:
He’d say, “Tell me your speed now.” And then: “Why can’t you cut that in half?”
It took discipline for people to narrow their lists to three or four objectives for their team, but it made a huge difference. Our OKRs became more rigorous. Everybody knew what counted most.
People need a benchmark to know how they’re performing against it. The catch is to find the right one.
Distorted recency bias, burdened by stack rankings and bell curves, these end-of-year evaluations can’t possibly be fair or well measured.
OKR’s and Performance Management:
Continuous performance management. It is implemented with an instrument called CFRs, for:
• Conversations: an authentic, richly textured exchange between manager and contributor, aimed at driving performance.
• Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvement.
• Recognition: expressions of appreciation to deserving individuals for contributions of all sizes.
Look for specific feedback:
“The fourth bit is ongoing, self-driven insight. We’re constantly surrounded by positive reinforcement and feedback, but many of us haven’t been trained to seek it out. Say you give a presentation to your team. After the fact, somebody comes up to you and says, ‘Hey, nice job.’ Most of us would say, ‘Oh great, thanks,’ and move on. But we want to probe a little deeper: ‘Thank you. What one thing did you like about it?’ The idea is to capture more specific feedback in real time.”
Sheryl Sandberg notes: “Feedback is an opinion, grounded in observations and experiences, which allows us to know what impression we make on others.”
Goals and Compensation – The double edged sword:
But when goals are used and abused to set compensation, employees can be counted on to sandbag. They start playing defense; they stop stretching for amazing. They get bored for lack of challenge. And the organization suffers most of all.
The purpose of Mentorship and Coaching within a Company:
Is mutual teaching and exchange of information. By talking about specific problems and situations, the supervisor teaches the subordinate his skills and know-how, and suggests ways to approach things. At the same time, the subordinate provides the supervisor with detailed information about what he is doing and what he is concerned about …. A key point about a one-on-one: It should be regarded as the subordinate’s meeting, with its agenda and tone set by him …. The supervisor is there to learn and coach.
Five critical areas have emerged of conversation between manager and contributor:
- Goal setting and reflection, where the employee’s OKR plan is set for the coming cycle.
- Ongoing progress updates, the brief and data-driven check-ins on the employee’s real-time progress, with problem solving as needed.
- Two-way coaching, to help contributors reach their potential and managers do a better job.
- Career growth, to develop skills, identify growth opportunities, and expand employees’ vision of their future at the company.
- Lightweight performance reviews, a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting, in the context of the organization’s needs.
Recognition and Validation – The key to Employee satisfaction?
Institute peer-to-peer recognition. When employee achievements are consistently recognized by peers, a culture of gratitude is born.
When JetBlue installed a value-driven, peer-to-peer recognition system, and leaders began noticing people who’d flown under their radar, metrics for employee satisfaction nearly doubled.
Establish clear criteria. Recognize people for actions and results: completion of special projects, achievement of company goals, demonstrations of company values. Replace “Employee of the Month” with “Achievement of the Month.”
Share recognition stories. Newsletters or company blogs can supply the narrative behind the accomplishment, giving recognition more meaning.
Make recognition frequent and attainable. Hail smaller accomplishments, too: that extra effort to meet a deadline, that special polish on a proposal, the little things a manager might take for granted.
Tie recognition to company goals and strategies. Customer service, innovation, teamwork, cost cutting—any organizational priority can be supported by a timely shout-out.
Transparent OKRs make it natural for coworkers to celebrate big wins and smaller triumphs alike. All deserve their share of the limelight.
Managers are trained to scale compensation based on employees’ performance, their impact on the business, the relative scarcity of their skills, and market conditions. There are no fixed guidelines.
Corrective feedback is naturally difficult for people. But when done well, it’s also the greatest gift you can give to someone—because it can change people’s mindset and modify their behavior in the most positive, valuable way.
On the long and demanding road to operating excellence, they help organizations improve each and every day. Leaders become better communicators and motivators. Contributors grow into more disciplined, rigorous thinkers. When imbued with meaningful conversations and feedback, structured goal setting teaches people how to work within constraints even as they push against them—an especially critical lesson for smaller, scaling operations.
When you’re David taking on Goliath, time and opportunity are of the essence. There’s no margin for unfocused operations or misaligned staff.
Key Insight – Everybody faces resource constraints: time, money, people. And the bigger an organisation, the more entropy—it’s like thermodynamics.
Old-school business models suggest that your role as an executive gets more abstract as you rise in the ranks. Your middle managers buffer you from the operational day-to-day, freeing you to focus on the big picture.
The better way is to train people to think like leaders from the start, when their departments have a staff of one.
When I did my biweekly check-ins, it gave me a couple minutes to think about what I was doing, and how my goals rolled up to what the company needed for the quarter.
“This goal seems very important to you, but you didn’t make a lot of progress on it the last two weeks. Why is that?” It may seem paradoxical, but these non-work, touchpoint one-on-ones are a forum for ongoing performance feedback. In talking about people’s pursuit of personal goals, you end up learning a lot about what moves them forward—or holds them back—in their careers.
Company Culture – The Pre-requisite for Success?
Culture, as the saying goes, eats strategy for breakfast. It’s our stake in the ground; it’s what makes meaning of work. Leaders are rightly obsessed with culture.
“Put simply,” he wrote in High Output Management, culture is “a set of values and beliefs, as well as familiarity with the way things are done and should be done in a company. The point is that a strong and positive corporate culture is absolutely essential.”
Management has to develop and nurture the common set of values, objectives, and methods essential to the existence of trust. How do we do that? One way is by articulation, by spelling [them] out …. The other even more important way is by example.
What does a healthy company culture look like?
1. Structure and clarity: Are goals, roles, and execution plans on our team clear?
2. Psychological safety: Can we take risks on this team without feeling insecure or embarrassed?
3. Meaning of work: Are we working on something that is personally important for each of us?
4. Dependability: Can we count on each other to do high-quality work on time?
5. Impact of work: Do we fundamentally believe that the work we’re doing matters?
The companies that treat their people as valued partners are the ones with the best customer service. They have the best products and strongest sales growth.
At Google, teams assume collective responsibility for goal achievement—or for failures. At the same time, individuals are held responsible for specific key results. Peak performance is the product of collaboration and accountability.
Key Insight – “Because if you measure something, you’re telling people that it matters.”
The flatter the org chart, the more agile the organization. When performance management is a networked, two-way street, individuals grow into greatness.