Leadership
measure what matters

Measure What Matters – How to Set Goals Like They do in Silicon Valley

Posted on June 15th, 2018

 

When Bill Gates gives a book review, you know that the book is probably worth a read.

 

measure what matters book coverWell, the second wealthiest man alive recently posted a review of venture capitalist John Doerr’s new book on his Gates Notes blog. Titled Measure What Matters Doerr’s book is about an approach to setting goals and achieving operating excellence called ‘Objectives and Key Results’ (OKRs).

 

“I’d recommend John’s book for anyone interested in becoming a better manager” writes Gates in his review, “and I’d say that even if I hadn’t been interviewed for a super-nice chapter about the Gates Foundation”.

 

Unlike other books which Gates has recently reviewed and recommended, including Eddie Izzard’s autobiography and a global history of energy and civilization, Measure What Matters contains insights which are directly applicable to managers and individuals at all levels in organisations today.

 

The inspiration behind the book – Andy Grove

 

The story Gates tells in his review is a personal one, about the ways in which he himself learned to be a better manager. “In the early days of Microsoft” writes Gates, “I felt pretty confident about my coding skills, but I had a lot to learn about project management.”

 

To illustrate what he had still to learn, Gates tells the story of an incident in 1978 when he told Intel, a key customer at the time, that his team would deliver a version of Microsoft BASIC in four weeks. Intel thought Gates was crazy to promise it so fast, and as it happened his team didn’t manage to meet the deadline – they were two weeks late.

 

However, one person who would help Gates develop and improve his management skills was working at Intel at the time: Andy Grove. Described by Gates as “one of the great business leaders of the 20th century”, Andy was a “precise, hard-driving guy” who oversaw strategy and operations at Intel, and pioneered the idea of OKRs.

 

Andy Grove and OKRs

 

The two key phrases here are Objectives and Key Results.

 

As Andy Grove explains in an excerpt from the book, the objective is the direction. In the case of Intel for example it was: “We want to dominate the mid-range microcomputer component business.”

 

The key results on the other hand are the measurable, clearly defined outcomes that correspond with the objective. As Grove says: “at the end you can look, and without any arguments [ask]: Did I do that or did I not do it? Yes? No? Simple. No judgments in it.” One key result at Intel for example was: “Win ten new designs for the 8085 over the next quarter”.

 

As Grove says, while staff at Intel might argue for years about whether they had been able to dominate the mid-range microcomputer business, they would know for certain over the next quarter whether they had managed to secure ten new designs for the 8085 or not.

 

Andy Grove Intel

Andy Grove (left) with colleagues at Intel in 1978 via Wikimedia Commons

 

Measure What Matters – The new book by John Doerr

 

The new book reviewed by Bill Gates is actually written by John Doerr, a very successful venture capitalist in his own right, and who was actually a key investor in Google back in 1999 when Larry Page and Sergey Brin had sky-high ambitions, but no real business plan.

 

Doerr was an intern at Intel while Andy Grove was developing and promoting OKRs, and his new book is based on the simple goal setting system developed by Grove. Following the title of the new book (Measure What Matters) this goal-setting system involves identifying what matters – your objectives – and then finding ways of measuring progress towards those objectives through specific, measurable key results.

 

As Doerr has said in a recent interview with the Silicon Valley Business Journal:

An objective might be to build the world’s best browser. And then the key results would be ship 20 million of them by the third quarter, with 10 times higher speed and four major distribution deals. The objectives are the “whats.” The key results are the “hows.” Really good objectives are significant, concrete, they’re action-oriented and inspiring. Key results are specific and time bound. They’re aggressive, but realistic. They’re measurable and verifiable.

It is important to note that OKRs for Doerr are not ways for managers to monitor achievement and award appropriate bonuses; rather they should be used by managers primarily for broader questions of focus, alignment, commitment and tracking, and each team and individual should be involved in formulating, setting and sharing their own OKRs.

 

Indeed transparency and collaboration are important aspects of this system for Doerr. As he says in the interview: “You write down and share with everybody, transparently, your objectives… Then you do the same with your key results.” Even Andy Grove apparently posted his personal OKRs on his cubicle!

 

The point of OKRs is not to give you a set of tick-boxes, but to structure and stretch your ongoing efforts to achieve your objectives. As Doerr comments: “If you’re getting 100 percent of your OKRs done, that’s not good. You probably weren’t aggressive enough. A good grade at Intel or Google would be 70 percent.” Regularly reviewing OKRs gives managers and leaders the chance to assess priorities and shift in new directions.

 

John Doerr

John Doerr in 2013 via Wikimedia Commons

 

Could you use this goal-setting system?

 

So, could you use OKRs in your workplace? Perhaps you already have a general approach to setting broad company or departmental or even individual goals, which you might even break down into targets.

 

But whether you are an individual, a manager, or a CEO, the system of OKRs described by Doerr has the advantage of really forcing you to think hard about your goals and targets and so on, while also helping to embed collaborative systems of goal-setting and goal-monitoring within the company culture more generally.

 

Doerr emphasies that OKRs are not a ‘silver bullet’ for performance improvement, but his book is full of case studies and examples of companies that do it well and derive a great benefit from the system. “They’re not easy to do” admits Doerr, “But when they’re implemented faithfully, and they do get adopted, the system always works. I’ve never seen it fail.”

 

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