OKRs: Fad or a Foundation?

John Doerr, a renowned venture capitalist at Kleiner Perkins, gained insights to the concept of OKRs early in his career from Andy Gove at Intel in the 1970s. After John left Intel and later joined Kleiner Perkins, he utilized the 30 slides that Andy had built to introduce the OKR concept to his portfolio companies.  

The concept of OKRs is relatively simple in design and powerful in its impact.  The Objective is what we want to have accomplished. The Key Results are how we going to get it done. The objectives are typically longer lived. They’re bold and aspirational. The key results are aggressive, but always measurable, time-bound, and limited in number.

One of Doerr’s portfolio companies was Google and the founders quickly implemented the management tool with great success. Eric Schmidt in this book “How Google Works” claimed that the introduction of OKR’s in 1999 “changed the course of the company forever.”

There are only three to five objectives for the organization. For each objective, there are three to five key results. The discipline of the system is determining what are the most important things for the business.  Each employee should then create their own OKRs tied to the same “True North” objective for the company. The system also should be transparent to the entire organization. Even today, Google employees can look online at any of the OKRs for each employee in the organization.

We believe that OKRs can be implemented with great success from small startups to large organizations.  John Doerr has recently written a book “Measure What Matters” which should be a must read for startup CEOs.  In the book, John identifies the five key benefits of the OKR system.

  1. Focus –formalizes the most critical objectives for the organization.
  2. Alignment – the entire organization is aligned around common objectives
  3. Commitment – transparency creates accountability
  4. Tracking – measuring progress is critical
  5. Stretching – set 10x’s goals, if you shoot for Mars and fall short you make it to the moon!

The above spells out FACTS which makes it easy to remember.

During the December annual planning summit for AngelMD, we went through a process of determining the OKRs for our company. The objectives centered around membership growth, member online engagement, and growing assets under management. Each team created a series of key results that aligned to these true north objectives. In the next month, we will bring up an online platform for making the OKRs transparent across the organization.

We believe so strongly in the power of OKRs that we will begin encouraging our own startups to use the system. We believe that the best ingredient to a great idea is great execution. In our view, this is not a fad but rather the foundation to a successful startup.

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