How does Google set goals and achieve them with OKRs?
An Obejective and Key Results (OKRs) framework is an effective goal-setting tool for communicating what you want to accomplish and how you will accomplish it. It is well known as an big contributor to Google's success. OKRs have recently gained popularity among tech companies from Silicon Valley. One to five objectives per quarter with three to four key results per objective help to achieve the collective goal within the given period. OKRs run on a shorter cadence that makes the framework more agile and iterative, compared to other goal-setting methods.
- Objectives: "what" you want to accomplish
They are set in such a way that they are agressive and inspirational but yet realistic. Example: Find a product-market fit for our self-care app
- Key Results: "how" you will accomplish it
They are measureable milestones towards the objective. They must be focused on outcomes, not activities. Example: Get score 4/5 on usability testing from 20+ target customers
OKRs were first introduced in Intel by Andy Grove, the co-founder of Intel and former CEO. John Doerr who is an ex-Intel and venture capitalist introduced OKRs to Google. Larry Page and Sergey Brin, the founders of Google, introduced the concept of OKRs to almost 40 employees at the time Google was still less then one year old. OKRs today become a part of their work culture at Google and used extensively across 150,000+ employees.
Moonshots
Google believes “stretch goals” stimulate innovation beyond what seems impossible to make, as they set their scoring standards from zero to one, 100% accomplishment by the set target would mean that the goal set by the employee is not ambitious enough. Scoring 0.7 is considered ideal. OKRs grading is visualized by color at Google as follows: 0.7 to 1.0 = Green (Delivered), 0.4 to 0.6 = Yellow (Made progress but fell short of completion), 0.0 to 0.3 = Red (Failed to make real progress).
Unlike other goal-setting methods, OKRs grading should not be used for performance evaluation; otherwise setting lower targets, getting higher performance evaluation. That would be great if you set ambitious objectives and try big challenges since OKRs would not be linked to your compensation and benefits, which brings psychological safety to set stretch goals for everyone.
As case studies from Google, they did not aim to 10 percent improvement from the current status or the competitors but 10 times better called "10x thinking". In 2008, Chrome had JavaScript running 10 times as fast as it ran on Firefox, which was attributed by a beautiful Objective: We should make the web as fast as flipping through a magazine. In 2012, YouTube set a big stretch goal: One billion hours in daily user watch time. A billion hours represented a 10x increase. Larry Page sees it, a 10 percent improvement means that you are doing the same thing as everybody else. You probably will not fail spectacularly, but you are guaranteed not to succeed wildly. 10x thinking makes us to rethink problems and try completely different approaches.
Transparency
Transparency is the foundation that brings in psychological safety to motivate the team to set aspirational objectives. Aligning the individual contribution to the organizational goal creates value and making it publicly viewed and discussed invokes positive discussion and brings in synergy. Google’s core values, transparency is also part of the foundation on which OKRs are built.
Creating an organizational goal and then following department and individual objectives align with the organizational goal brings clarity and empowerment. OKRs also allow you to align cross-functionally or create ladder OKRs. At Google, the top-level objectives are set by the CEO and then get aligned top-down and bottom-up. Google ensures that the bottom-up goals are 60% and they create vertical alignment and eliminate ambiguity.
OKRs also allow you to align cross-functionally or create ladder OKRs to accomplish the common goals so different groups and teams can contribute to the same project. The autonomy of the framework makes it more unique and also increases focus and engagement. These commitments appear clearly in all the group’s OKRs involved in accomplishing the goals.