A Goal-Setting System I Learned From Google (And Still Use At My Current Venture)

During Google’s first year, investor John Doerr pitched the idea of using an organizational system called Objectives and Key Results (OKRs) for goal setting. He presented it as an effective way to both set high level goals and also measure progress toward these goals in a quantifiable way. I’m sure he made a pretty persuasive pitch, because they were quickly adopted across the entire company and, during my first week at Google, I found myself outlining my very first set of OKRs.

The OKR system is an effective way of setting and communicating goals within an organization by connecting company, team, and personal objectives to measurable results. It pushes your company and employees to stretch and grow while staying focused on a defined and collective goal.

My Google OKRs were just the first of many. Fast forward 15 years — today, every new hire at Lucid Software spends a portion of his or her first week watching Google Ventures partner Rick Klau present John’s original slides in a YouTube video (which you can view here).

When I left Google to start Lucid Software, I didn’t take OKRs with me because it was what I was used to—I did so because the system had been so successful at Google. I firmly believed it could produce the same benefits at Lucid—and the system hasn’t let me down yet.

Benefits of OKRs

Setting stretch goals: OKRs establish a clear and simple pattern for setting goals within your company at the individual, team, and organization levels. When you write an OKR, you solidify a goal and draw a line in the sand. At the end of the day, you can measure yourself against this line to define your success. In contrast, without setting objectives in advance, you are stuck trying to justify your accomplishments.

At Google, we were constantly reminded that OKRs are specifically designed to push you, not to make you look good. In other words:  Goals should be hard—not slam dunks. Write them aggressively.

Promoting accountability: At Google, we made all our OKRs public. We are doing the same at Lucid by having every employee upload their personal OKRs to our internal wiki. Doing so promotes accountability and transparency and makes that line in the sand even more pronounced. It’s easy to forget about goals that only you know about—it’s a game-changer when there are others (sometimes hundreds to thousands of others) also holding you accountable.

In addition to their public nature, OKRs promote accountability because they are graded each quarter. Google uses a scale from 0 to 1. You’re not supposed to crush it with consistently perfect scores—once again, these are stretch goals, so if you hit between 0.6 and 0.7, you are making good progress. In fact, if you are easily hitting all of your OKRs, you have either reached superhero status or are sandbagging.

However, it’s important to always go back and account for why you fell short on an OKR, especially if you score below a 0.4. Life happens, and priorities change—but you need to be honest with yourself about the root cause.

Aligning the organization: Establishing OKRs helps everyone in the company align their goals. It enables you to determine where to focus your efforts in order to assist the company as a whole. OKRs are a simple way to ensure everyone is working towards the same result, and you can check that all operations have linked objectives supporting the company.
This year, I’ve set a goal to review each employee’s personal OKRs. It will be around 150 total, and while I realize that’s a lot of objectives and key results to wade through, I also realize the value of understanding where each person’s focus lies. As the company continues to grow, there are limited ways for me to keep in touch with the entire organization and understand what everyone is working on. Reviewing OKRs is a good way to see what initiatives everyone else finds important and evaluate how those match up with the initiatives I find important.

Getting started with OKRs
Setting up OKRs is pretty simple and straightforward—that’s the beauty of it.
First, some general instruction:
Set annual company OKRs that serve as big umbrella ideas for the year, but also set OKRs each quarter. Annual OKRs may evolve as the year progresses, but quarterly OKRs do not change.

Set these overall company OKRs first. Then have departments use those to set team OKRs. Personal OKRs are then set by each employee based on the company and team OKRs.
Now here’s how to actually write an OKR:

1. Set an objective. An objective is a goal, and it tells you where to go. Aim for a maximum of five objectives each quarter so you don’t spread yourself too thin.
2. Set key results for each objective. Key results indicate how you will meet your objective. Key results must be measurable—in other words, they should be quantifiable and specific targets should be stated up front. Try to have a maximum of four key results for each objective.
3. Store your OKRs in a public space. For example, Google puts each employee’s OKRs in the employee directory.
4. Hold 1:1 meetings to review OKR progress as the quarter progresses. Hold a quarterly company-wide meeting to review company and team OKRs.
5. At the start of each quarter, grade the previous quarter’s OKRs. Use a scale from 0 to 1. Key results are graded individually, and an objective’s grade is the average of its key results. Don’t use OKR grading for employee evaluation. Remember that if you consistently score a 1, your OKRs are not aggressive enough.

From one CEO to another...
Remember that the only way things happen is if you reach high. Setting the bar low may make your employees feel good for the time being, but it doesn’t move the organization forward. I have come to realize that for a startup of our size, we all need to feel a little uncomfortable about what we’re doing in order to succeed at the pace we need to.
I would also emphasize the importance of writing your own personal OKRs. Even though you might feel your OKRs are simply the company OKRs, clearly defining your own can act as a north star. As CEO, it’s so easy to just be busy and meander through a bottomless pit of tasks, but writing OKRs has helped me stay focused on what I should be doing. Doing so also helps demonstrate your commitment to the OKR system.
Finally, you may set OKRs for yourself or the company and realize those areas are not as important as you originally thought. You’re not locked into your OKRs, and it’s alright if you need to change direction. Just be honest about why you don’t accomplish an OKR.

Thanks, Google
Here at Lucid, we don’t plan on giving OKRs back to Google anytime soon. Not when they have played such a key role in keeping us on track to succeed at such a rapid rate. So maybe it’s just better to come clean—thanks, Google, for yet another really good idea.