The secret to Google’s strategy execution: OKRs

In the year 1999, John Doerr, the New York Times best-selling author of the book ‘Measure what Matters’ knocked on the doors of a two-story building that served as Google’s second headquarters in Silicon Valley. Doerr was young, bright-minded, aspirational, and carried something special in his mind that would change the course of Google’s destiny.

Google needed a management system that enabled successful strategy execution and leveraged the full potential of all “Googlers” – this is how Google employees are called.

“Ideas are easy – execution is everything” John Doerr

In the execution of strategies, OKRs can play a key role. Therefore, we will explore what OKRs are, and how could they be so powerful to make Google one of the world’s leading tech companies?

OKRs in a nutshell

Be it Google or dozens of other organizations that have walked the path of enormous success, one thing that they have managed to differentiate from others is steering away from a conventional top-down, project-management driven strategy execution system. OKRs help to successfully execute strategies by:

1. Setting ambitious goals
2. Providing exceptional focus
3. Leveraging motivation
4. Getting transparency on results

Setting ambitious goals changes the mindset of people and creates a culture of “Yes we can do that. Let’s go for it”. According to Doerr if your team sets a goal to reach Mars, it’s all right if they fall short and they only make it to the Moon. It is still an exceptional achievement that many might have never thought was possible. If goals are achieved every time, they were just not ambitious enough. You want to have people that set stretch targets for themselves with the risk of falling short of achieving them fully. To achieve that, OKRs are intentionally not directly linked to variable pay, bonus schemes or other extrinsic motivation methods. The reason for that is clear. Employees tend to set less ambitious goals for themselves as they want to hit their targets to secure their annual performance pay.

OKRs help organisations to focus on goals and priorities that matter most. There are numerous opportunities for distractions and resources such as time or budget will always be limited. So it is better to spend it on objectives and results that matter most to achieve the overall mission. Typically, companies define annual and quarterly OKRs that force them to make these difficult choices. Selecting what should be the five objectives that matter most for the next year and quarter is hard – but also extremely effective.

Conventional goal-setting systems tend to be hierarchical telling employees what they need to deliver – often referred to as cascading top-down strategy. But ask yourself: How motived are you if you are told exactly what you need to do? In addition, frontline-mangers often have a clear idea of how they can best contribute. OKRs leverage intrinsic motivation by allowing employees to determine their own targets. At Google, every employee writes their OKRs that are typically a combination of top-down and self-set objectives and key results. The majority of OKRs should be set by employees themselves. This approach rests on the knowledge of the overall purpose, full transparency of OKRs throughout the organization and requires alignment across the company. The key difference to traditional top-down approaches is that each employee can basically start with their OKRs without waiting for cascades of goals that can take too much time.

Often strategy execution overly focuses on the completion of programs, initiatives and tasks. While this is definitely important, the key question should be always: Does it deliver the results that are needed? If your goal is to achieve higher E-commerce sales, it is not enough to look solely at the degree of completion of a Sales Activation Initiative. Even if you completed the project, it is still a failure if it did not generate additional E-commerce visitors, better conversion rates or higher channel sales figures. Key results have therefore always clear metrics to measure if the desired outcomes are achieved. OKRs are providing transparency on where you stand with your strategy execution. Typically, you would regularly check-in on the progress (e.g. weekly for your quarterly OKRs) that enables you to see if you are on track.

Example of an OKR

So far, we have talked about how OKRs are different from the conventional goal-setting and the benefits they might bring when implemented well. We know that Objectives stand for what you want to achieve, and Key Results stand for how you plan to measure if you are on a path to achieve these objectives.

Let’s look at an example of a company that aims to grow its business. One objective could be to launch a major new product over the next 12 months. The question is
what should they focus on the next 3 months?

Objective:

• Achieve great market launch of new product X in Europe

Key Results:

• Gain 500 product trial customers
• Get 30% of existing customers to buy the new product
• Achieve 25m EUR revenue from the new product
• Get 12 product reviews in industry publications

From the above example, we see that objectives are inspirational and keep the employees’ motivation high. Key Results are measurable and quantitative.

“If it does not have a number, it is not a Key Result.”
Marissa Mayer, former Google VP

The big advantage of measurable OKRs is that there is no room for discussion on how well you achieve results. It is all in the numbers.

Getting started with OKRs is not rocket science

Recently, I had a conversation with a Chief Strategy Officer where we discussed how OKRs can contribute to making their strategy execution more focused, responsive and boost future growth. She was surprised by the simplicity of the idea behind OKRs and said that they are actually not rocket science. She is definitely right. OKRs require openness to more agile strategy execution approaches, new ways of working and the determination to see it through. The case of Google shows that it can be extremely successful.

“OKRs have helped lead us to 10x growth, many times over.”
Larry Page, Google Founder

In 2020, Google-parent Alphabet Inc. became one of the four tech company to surpass 1 trillion USD in market capitalization. Surely, not every company will reach that, but already a fraction of that would bring many companies a long way.

The best way of seizing the potential of OKRs for you is to just start working with them. Especially now, during the time of the Corona pandemic, OKRs can be extremely helpful with remote work settings as only results matter, not the time spent on tasks or being present in the office during working hours. Now, more than ever, you need to trust people that they will make the right choices to best contribute to reaching the overall company objectives. From my experience, it is not necessary to radically change towards OKRs all at once. There are many aspects that can be applied step-by-step.

Try to build OKR capabilities in your teams, experiment, run pilots and adjust as necessary to make it as successful as possible for your organization.