Google’s OKR success story

When John Doerr introduced the goal and performance management method Objectives and Key Results (OKR) to Google in 1999, the company was not yet one year old and had just 40 employees. John Doerr came to Google through the investment of the venture capital firm Kleiner Perkins and had previously been employed by Intel. It was there he learned about the OKR method, having met Intel CEO Andy Grove, the founder of the OKR model. You can read more about Andy Groves’ book “High Output Management” and other exciting OKR books for beginners in this article.

Today, Google belongs to its parent company Alphabet, employs almost 140,000 people (as of 2021), and still uses the OKR method. This demonstrates the sustainability of the management philosophy—guiding the company from a small organization to an admired pioneer of digitization.

After Rick Klau, then partner at Google Ventures, explained how Google works with OKRs at a Google Ventures Start-Up Lab Workshop and it was published in the video “How Google sets goals: OKRs,” the OKR method experienced an enormous surge in popularity. These days, start-ups to medium-sized and large companies, such as LinkedIn, Zalando and Spotify, successfully work with OKRs. A look at Google’s OKR philosophy shows what is important when applying the goal management method.

John Doerr’s OKR concept is based on setting quarterly and annual goals. A maximum of five Objectives with approximately three to five corresponding Key Results are assigned. Most importantly, the Key Results should be measurable and serve to achieve the qualitatively formulated Objective, which contains a value proposition. For the presentation in which he introduced OKRs to Google, he used the example goal of creating a sustainable model for the introduction. Timely completion of the presentation, a sample set of OKRs, and approval from management for the establishment of an OKR process for three months were the measurable Key Results defined. These Key Results were intended to serve in the achievement of the Objective.

Objective Key Results
We have developed a sustainable model for the introduction of OKRs
  1. The presentation on introducing OKRs is 100 percent complete
  2. A sample set of OKRs have been completely developed
  3. Approval from management was obtained.

How Google successfully uses OKR for management control

Ambitious goals promote intrinsic motivation

Inspiring and ambitiously drafted Objectives are a key component of Google’s OKR philosophy. Google says they should drive employees and somewhat bring them out of their comfort zones. Just as with stretch goals, it is not about achieving goals 100 percent of the time. Instead, it is about developing independent teams committed to the Objective and with an ability to self-motivate. If OKRs are achieved 100 percent of the time, the goals are not ambitious enough. That is why, at Google, an achievement level of 70 percent is already considered outstanding. More information on the simple tools Google uses to measure its OKRs and how your organization can also apply them can be found here. These days, companies such as Bosch or Metro also use third-party software, such as that from Workpath, to develop and measure their OKRs.

Sharper focus through quantifiable Key Results

Compared to more traditional goal management methods, such as MBO, OKRs are set in shorter cycles. They extend over two to four months (usually a quarter) and are divided into measurable Key Results. Not only should the method help to develop main goals and review the value of one’s own work on achieving them, but it should also be possible to consistently track one’s own goals and team goals in the context of the overarching company goals. In particular, goals that can be measured by quantifiable Key Results harmonize well with Google’s approach of data-driven attribution and are a reason for the long-term success of the company.

Visual of Google OKR philosophy

Transparency at all organizational levels

As one of Google’s core corporate values, transparency is also part of the foundation on which OKRs are built. That is why each OKR is publicly visible to every employee. This way, each individual’s contribution to the company’s success can be consistently tracked. The aim here is not to draw attention to mistakes made within the OKRs, but rather to make the company’s strategic issues at all organizational levels visible.

Bottom-up goal development as the key to company success

For participation in company success from both a personal and organizational standpoint, OKRs are defined on individual, team and company levels. At Google, each OKR set is initially defined by the CEO and then synchronized downwards. For this, teams develop approximately 60 percent of their goals from the bottom up. These are then adjusted to the company goals. In addition to vertical alignment, coordinated and transparent work can identify synergies and conflicts at team interfaces.

Mistakes when drafting OKRs: Google’s tips

Google provides five tips on how to avoid mistakes when writing Objectives and Key Results and how the organization can determine the most important strategic priorities:

  1. Avoid miscommunicating stretch goals

As mentioned above, when drafting ambitious goals, the aim is not to reach them 100 percent of the time. Instead, the aim is to develop independent teams that are committed to the Objective and are able to motivate themselves. However, if other teams are dependent on their own goals, it is important to communicate that a maximum of 70 percent goal achievement is expected.

  1. Omit “business-as-usual” OKRs

OKRs should not simply visualize a team’s workload. Instead, they should enable teams to work more innovatively and efficiently. That means OKRs that describe repetitive workflows should be avoided and, instead, goals that advance a team’s development should be formulated.

  1. Max out your resources

Achieving OKRs should always use all of your team’s resources. If they are not being used, your team is likely lacking motivation.

  1. Focus goals on outcome instead of output

Output describes the result of an activity. If a music streaming service, such as Spotify, launches a new feature, that is an output. However, this output does not tell us what the added value is for the user or customer. OKRs should focus on and measure the added value that is created by the output—the outcome.

  1. Avoid insufficient Key Results

The Key Results assigned to a specific Objective should always contain all metrics needed to indicate if the Objective has been achieved. Otherwise, unexpected delays or lack of resources can lead to the Objective not being achieved within the given time frame.

Summary

Google made OKRs “socially acceptable.” Nowadays, plenty of companies benefit from the approach. But despite Google’s clear philosophy behind OKRs and other exciting approaches we can learn from, there are no mandatory, set procedures and practices for implementing the goal management process into a company. Even Google uses various OKR tools, such as Google Sites, Wikis and Google Spreadsheets. And other companies use other tools, such as Workpath. The exact time horizon or number of Objectives and Key Results should be considered based on each individual company context.

OKRs und Google: FAQ

Does Google still use OKRs?

When John Doerr introduced the goal and performance management method OKR to Google in 1999, the company was not yet one year old and had just 40 employees. Today, Google belongs to its parent company Alphabet, employs almost 140,000 people and still uses the OKR method. This demonstrates the sustainability of the management philosophy—guiding the company from a small organization to an admired pioneer of digitization.

What OKR tools does Google use?

Google itself uses various tools for working with OKRs. While the formulation and measurement of goals for many teams take place in Google Docs and Sheets, Google has  also developed its own methods, such as this customizable tool, for evaluating OKRs. It is important that OKRs are regularly updated and that teams get together for regular Check-ins.

What is the difference between OKRs and KPIs?

OKR stands for Objectives and Key Results and refers to a method for the definition and management of goals. KPI stands for key performance indicator. KPIs have been used for years to measure company performance. OKRs measure the process, KPIs the result.