Francisco S. Homem de Mello - Qulture - Rocks - OKRs, From Mission To Metrics - How Objectives and Key Results Can Help Your Company Achieve Great Things

OKRs, From Mission to Metrics
How Objectives and Key Results Can Help

Your Company Achieve Great Things
Francisco Souza Homem de Mello
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CONTENTS
Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . i
1. Introduction . . . . . . . . . . . . . . . . . . . . . . 1
What are OKRs? . . . . . . . . . . . . . . . . . . . . 3
Why use OKRs in managing your company? . . . . 6
Why are OKRs different? . . . . . . . . . . . . . . . 10
The Qulture.Rocks approach to OKRs . . . . . . . . 11
2. A brief history of OKRs . . . . . . . . . . . . . . . . 13

Mace and goal setting . . . . . . . . . . . . . . . . . 15
Peter Drucker, George Odiorne and MBO . . . . . . 18
Hoshin Kanri, or Policy Deployment, in Japan . . . 21
Andy Grove and Intel: iMBOs . . . . . . . . . . . . . 23
John Doerr, Google, and OKRs . . . . . . . . . . . . 25
3. A bit of goal-setting science . . . . . . . . . . . . 27

Goal-setting theory, or GST . . . . . . . . . . . . . 28
Getting goals right . . . . . . . . . . . . . . . . . . . 30
4. The current state of goal management . . . . . . 33
OKRs, From Mission to Metrics | Qulture.Rocks

CONTENTS
5. What’s different in OKRs . . . . . . . . . . . . . . 38

Compensation . . . . . . . . . . . . . . . . . . . . . 39
Short cycles and nested cadences . . . . . . . . . . 42
Transparency . . . . . . . . . . . . . . . . . . . . . . 43
Bottom-up and top-down . . . . . . . . . . . . . . 44
Moonshots . . . . . . . . . . . . . . . . . . . . . . . 45
6. Where do OKRs come from? . . . . . . . . . . . . . 46

The starting point: your mission . . . . . . . . . . . 49
The next step: strategy . . . . . . . . . . . . . . . . 58
The final component: visions or milestones . . . . 62
A case study: Amazon in 1995 . . . . . . . . . . . . 64
7. The OKR short cycle . . . . . . . . . . . . . . . . . . 72

Nested cadences, or cycles . . . . . . . . . . . . . . 73
The short cycle . . . . . . . . . . . . . . . . . . . . . 75
8. Planning . . . . . . . . . . . . . . . . . . . . . . . . 77
To cascade or not to cascade? That is the question . 79
What happens after OKRs are set? . . . . . . . . . . 86
Unfolding and aligning OKRs . . . . . . . . . . . . . 98
9. Monitoring . . . . . . . . . . . . . . . . . . . . . . . 110
Results meetings . . . . . . . . . . . . . . . . . . . . 111
10.Debriefing . . . . . . . . . . . . . . . . . . . . . . . 118
Grading OKRs . . . . . . . . . . . . . . . . . . . . . . 119
Running the debriefing . . . . . . . . . . . . . . . . 122

CONTENTS
11. Most common mistakes . . . . . . . . . . . . . . . 123
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . 130
Acknowledgements . . . . . . . . . . . . . . . . . . . 134
Final note . . . . . . . . . . . . . . . . . . . . . . . . . 135
Appendix I: Using OKRs in software product teams . 136
Appendix II: The Tensions of Getting OKRs Right . . 150

Tension 1: Stretch x commit . . . . . . . . . . . . . 152
Tension 2: Accountability x learning . . . . . . . . 154
Tension 3: Rigor x flexibility . . . . . . . . . . . . . 155
Tension 4: Input metrics x output metrics . . . . . 157

Preface
This is a great time to write about OKRs. I say that because

we’re at a point of maximum opportunity: there’s never
been more interest in OKRs, on the one hand, and there’s
very little understanding of the methodology, on the other
hand.
I wrote this book to fill that opportunity gap.
There’s no shortage of content around the internet and the

bookshelves about the wonders OKRs can do for a company.
John Doerr, famed venture capitalist and investor in the
likes of Google, has done a terrific job, with his Measure
What Matters, at selling us how amazing companies can
become if they incorporate OKRs in their management
routines.
However, managers and entrepreneurs who read these books

and, taken by a rush of excitement, decide to implement
OKRs in their companies, get very frustrated soon there-
after. That’s because reading this stuff makes one con-
clude OKRs seem simple to implement. That couldn’t be
further from the truth. OKRs are tricky to implement once
Preface ii
you peel its first layer off. And this book aims at solving
that.
Our journey
I know how frustrating this journey can be firsthand. When

I founded Qulture.Rocks, I had a hunch, which would later
be confirmed, that goals must be an integral part of a com-
pany’s people management toolkit. So we built our prod-
uct, which goes by the same name, to include goals along-
side performance reviews, ongoing feedback and recogni-
tion, and one-on-one meetings.
My conviction of the importance of goals logically led to

implementing them at Qulture.Rocks - one of our core
working principles is to eat our own cooking, sometimes
called “dogfooding.” Therefore, from the very early days
we’ve intended to use goals to manage the company.
Around the same time, I learned about OKRs and how

they were the answer to all the problems with traditional
goal setting, perceived as too complex, bureaucratic, and
inefective. So I decided to focus on the OKR “flavour” of
goals.
Soon thereafter I became very frustrated: on the one side,

questions were mounting on how to unfold OKRs, how to

Preface iii
monitor them, how to link them to each other, etc. On the

other side, there was very little content online - or offline,
for that matter - with which we could answer them. That
was in early 2016.
A wave of new content about the subject would infuse

us with hope. During the remainder of 2016, then 2017
and 2018, many books and blog posts were written about
OKRs. With each announcement, our hopes went up. With
each release, they came crashing down. These books and
articles were great, but their substance either didn’t apply
to our reality (because they were written for very small pre-
product/market fit startups or agile product teams) or they
just lacked sufficient details on the tactics of implement-
ing OKRs throughout an entire organization.
Then came John Doerr’s Measure What Matters, which I

expected would be the definitive guide to OKRs. The book
drove an explosion of interest in the subject. I had many
fellow entrepreneurs come to me during our Y Combinator
batch, book in hand, to tell how great OKRs had to be, since,
in Doerr’s words, they were the secret behind Google’s
growth. They also came with many many questions, know-
ing I was the OKR “expert.” The book had made an amazing
job at drawing their interest, but left many gaps wide open
that would jeopardize an attempt to implement OKRs.
That’s about when I decided to write this book. I realized we

Preface iv
had to fill that gap and help empower organizations around

the world to implement OKRs for real.
In order to write the book, I had to read, basically, every-

thing ever written about OKRs, and then look for the ori-
gins of the methodology, that were rooted in Management
by Objectives, Hoshin Kanri, and goal-setting theory, or
GST.
I read authors like Cristina Wodtke, Ben Lamorte, Paul

Niven, John Doerr, Dan Montgomery, Laszlo Bock, and so
on and so forth. The list is big. And the feeling of emptiness
persisted. There was a lot of cheering OKRs, and very little
explaining how a company can run by them on the day
to day. But then, I also read the stuff these authors were
referencing on their books, like books written by Peter
Drucker and Andy Grove. And what I found out was that
these sources were still pretty perfunctory - they barely
scratched the surface. It wasn’t enough.
So I dug deeper, and then, finally, struck gold. I found a

missing link in authors such as Michelle Bechtell, George
Odiorne, Yoki Akao, Vicente Falconi, Thomas Jackson, Randy
Kesterson, and Pete Babich. And by looking at these often
uncited authors and their works, I found answers to many
of the questions that were lingering in my head.
Closing those gaps made all the difference. The symptom

Preface v
was clear: Using OKRs at Qulture.Rocks became much more

fun and effective, and I started to finally feel we were doing
a good job at figuring out our strategy and then executing
it with excellence.
Why another book about OKRs?
After seeing firsthand how amazing OKRs could be at our

own company, I decided to take that knowledge to other
companies, and what better way to do that than write a
book about the subject?
I had one major goal in writing the book: helping compa-

nies implement OKRs. I also knew that our book would
probably not be the first contact our readers would have
with OKRs. They’d probably get to John Doerr or some
other author much faster. So I decided to tackle some of
what I understood where conflicting definitions and con-
tradictions found in those authors’ works.
These contradictions basically arose from either the poor

quality of examples used by authors and sources, such as
Google’s re:Work website, or by lack of depth in explaining
how to actually do it in a company, with various teams, lay-
ers of management, etc. Deeper, more relevant examples.
I trully hope you enjoy this book and that it helps your

Preface vi
organization achieve great things.
- Francisco S. Homem de Mello

Founder and CEO, Qulture.Rocks
San Francisco, January 18th, 2019

1. Introduction
“OKRs have helped us on the road to growth many, many

times”
-Larry Page
“If you do not know where you’re going, you probably will
not get there”
-Yogi Berra
“Vision without execution is just hallucination”

-Thomas Edison
OKRs are a powerful management tool that has been gain-

ing ground among innovative companies in the technol-
ogy, retail, and even non-profit sectors. Some of the world’s
best-known organizations that use it in some shape or
form are Google, Dropbox, Twitter, the Gates Foundation,
AB Inbev, and Disney.
This book works as a practical guide to understand what

OKRs are, how they fit into an organization’s strategy for-
mulation and execution frameworks, and how to apply
Introduction 2
them in practice.

Introduction 3
What are OKRs?
“OKRs” stands for Objectives and Key Results. OKRs are a tool
for guiding and executing the strategy of the organization.
They happen through the deployment of business Objec-
tives throughout business units, functional organizations,
teams, and in some cases even individuals.
In some respects, they follow the same logic as other strat-

egy execution methodologies, such as the Balanced Score-
card, Hoshin Kanri, or Management by Objectives, but they
have their own flavor which makes them more useful to
the business challenges of modern companies and pro-
fessionals. This specific kind of flavor is a product of the
interaction, in Silicon Valley, of these methodologies in
a technology-heavy fast paced set of industries, such as
semiconductors, software, and the broader internet we
know today.
An OKR is a set of one Objective and n Key Results.
Example of an OKR
The Objective is the business result that needs to be

achieved, and should be written in qualitative terms.

Introduction 4
The Key Results are kinda like S.M.A.R.T. (an acronym

for specific, measurable, attainable, relevant and time-
bound) goals based on specific key performance indicators.
More precisely, A Key Result is the sum of a KPI, a base
level, and a target level.
Key Results exist to prove if the Objective was achieved.
A good OKR should be built in such a way that if the Key Re-
sults are all achieved, you should feel comfortable that the
Objective has been reached. KRs must serve as “proof” of
the attainment of the Objective. Therefore, if you feel that
your Objective hasn’t quite been achieved even though all
Key Results were achieved, there was a problem with your
Key Results to start with.
You can use a very simple statement to help form an OKR:
“We need to [Objective], and we will know if we

were successful if we reach [Key Result], [Key
Result], and [Key Result].”
Let’s use an example to illustrate our definition:
• Objective: Increase the profitability of the company

• Key Results: i) Net income from $50 million to $100
million, and ii) Net profit margin of more than 7%.

Introduction 5
Since OKRs belong to (or are wrapped by) cycles, they don’t
need to have an explicit end date; you can just automatically
assume that they must be completed before the end of
the cycle. Cycles of OKRs generally last 3 months, a period
within which the OKRs are defined, tracked, and debriefed,
and from which a new cycle begins, ad eternum.
Back to our example. If we fill in the gaps above, we will

have:
“We need to increase the profitability of the com-

pany, and we will know if we were successful
if we reach Net income from $50 million to $100
million and Net profit margin of more than 7%.

Introduction 6
Why use OKRs in managing your

company?
OKRs are a management tool that brings many great bene-

fits to any company that uses them the right way. Let’s see
what some of these benefits are:
Focus and prioritization
OKRs force organizations (and teams and individuals) to

prioritize the most important business results in a given
period (for example, next quarter), and ripple that focus
and prioritization throughout the organization.
The focusing effect of OKRs is well documented and re-

searched, especially through the work of American aca-
demic Edwin Locke.
Alignment
OKRs come from the company’s mission and vision in a

process of alignment that has the ultimate goal of getting
everyone to know in which direction they should row, here
and now.

Introduction 7
This alignment process happens in two dimensions: through

time and through the organization.
The company creates its strategic OKRs aligned to the mis-

sion and the vision. It then creates its annual OKRs aligned
to its strategic OKRs. That’s aligning them through time.
Within the same cycle, different people and teams within

the organization also align their OKRs to each other. VPs
create their OKRs in alignment with the company’s. Di-
rectors create their OKRs in alignment with VPs’. Squads
create their OKRs in alignment with the OKRs of business
units, and with each other’s. That’s aligning them through
the organization.
The alignment superpower is enhanced by the fact that

OKRs are public by default. Dependencies and conflicting
OKRs can be promptly identified, discussed, and resolved.
Motivation
It’s scientifically proven (again by Locke, long before the

term “OKR” existed), that difficult but achievable goals
increase task-related motivation.
Because OKRs are less directly linked to employee com-

pensation (i.e., they’re a management tool rather than a

Introduction 8
compensation management tool, which we’ll talk more

about this later), supporting aggressive goals is encour-
aged. These goals are called roof-shots, or even moon-
shots, depending on how bold they are.
Vicente Falconi, a Brazilian management guru, relates dif-

ficult goals to employee engagement when he says that
“from the point of view of the people involved, the value of
the goal must be above their capacity to reach it, in a way
that they need to learn and grow in the process of working
towards it.”
Culture
OKRs are a very powerful tool for solidifying a culture of

execution and results orientation.
Perhaps 9 out of 10 companies have, among their corpo-

rate competencies, values, or strategic guidelines, some
variation of “results orientation.” But what does “results
orientation” mean?
In our view, a results-oriented professional clearly knows

the difference between an effort and a result. Let’s look at
some efforts and results that are often confused:
• Attending a sales meeting (or 50, for that matter) is

Introduction 9
an effort. Closing sales is a result.

• Implementing an ERP system is an effort. Reducing
accounting errors is a result.
• Building a new feature for the e-commerce shopping
cart is an effort. Increasing the conversion rate is a
result.
The relationship between efforts and results is always rela-

tive. To illustrate this, let’s think about football. “Running
faster” is a result of the “workout” effort, but “running
faster” is also an effort to “score more goals.” And “scor-
ing more goals” is an effort to “win the game.”
An OKRs should track results relative to the person or

team that owns them. So, if a product team works exclu-
sively with the shopping cart feature, its Objective will be
something like “improve shopping cart conversion rates,”
and the Key Result will be “improve the conversion rate
between adding items to the shopping cart and making a
purchase from 3% to 5%.”
As people better understand what the results of their ef-

forts are, they create a culture of fewer politics, less sub-
jectivity, and more, voilá, results orientation!

Introduction 10
Why are OKRs different?
OKRs, in their current application in Silicon Valley, are

different than regular goals in the following ways:
• They aren’t defined solely top-down: OKRs should be

set from both the bottom-up and from the top-down.
In practice, employees take a more active role in the
process.
• They’re less directly linked to variable compensation
plans, like pay-for-performance bonuses (we’ll talk
more about this soon).
• They’re run in shorter cycles of 3, 4 or 6 months.
• They’re public by default. That means that confiden-
tial OKRs are the exception, and not the rule (goals
related to mergers and acquisitions or downsizing
plans are some examples of private OKRs).

Introduction 11
The Qulture.Rocks approach to OKRs
This book is based on our views of what OKRs are, where

they fit into the broader strategy formulation and execu-
tion spaces, and how they should be implemented.
As we’ve discussed, our methodology, so to speak, grew

to fill gaps that were left by the other authors who have
written about the subject. The biggest gap is that every-
body talks at lenght about how great OKRs are (in essence
painting it as a magic wand), but nobody actually explains
how they should be implemented in practice, especially in
relation to where the methodology ends and where other
tools and frameworks start.
The biggest difference in our view of the “OKRs world”

is that we think OKRs-the-methodology should be a mix
between the efforts an organization needs to make, which
we’ll call “Projects” or “Initiatives,” for short, and OKRs-
the-sum-of-Objectives-and-their-Key-Results the results
an organization needs to achieve, which we’ll call just
“OKRs”.
We think raising people’s awareness of what results and

efforts are and their differences is one of the key benefits
of OKRs as a methodology, and sadly most companies we
interact with and that implement OKRs without our help,

Introduction 12
be it in the form of software, consulting, or content like

this book have OKRs with Key Results that are more like
efforts, and therefore this whole results x efforts benefit
gets watered out of the equation.

2. A brief history of OKRs
OKRs are goals: old pals from the business world, renamed
and tailored to the needs of modern professionals and
companies.
It all started with the fathers of management, Taylor and

Fayol, who began to face management as a science. They
pioneered measuring the times and motions of production
line jobs, correlating that to productivity (basically out-
put per unit of input), and then formulating hypotheses
about how to improve these results. That’s how these guys
found out interesting things like the ideal resting time
for workers of a given factory, where equipment should
be placed around the worker for optimum reach and even
better lighting schemes over the production line that min-
imized the amount of mistakes and waste. In 1916 Fayol
was already proposing the use of goals in the management
planning process, according to William LaFollette, in his
The Historial Antecedents of Management by Objectives,
saying that “… in 1916 Henri Fayol identified five functions
of management: planning, organizing, command, coordi-
nation, and control. Fayol considered the planning func-
A brief history of OKRs 14
tion to consist of visualizing the desired end (i.e., the

objective or goal), the line of action to be followed, the
stages to be followed in sequence, and the methods that
would be used. Unfortunately, Fayol’s work was unknown
in America for some years.”

Mace and goal setting
Around 1935, a guy named Cecil Alec Mace conducted the

first experiments that would prove that goals improve the
performance of workers performing a job.
Mace was born on July 22, 1894, in Norwich, Great Britain.

Mace’s early passion was theology, and he actually went to
Cambridge to enter the holy orders but ended taking up the
Moral Sciences. While at Cambridge, Mace took many psy-
chology courses (with mentors and tutors like G.E. Moore,
C.S. Meyers, and G.F. Stout), and delved into experimental
psychology, a field that would define his career.
In 1935, Mace conducted the first experimental study of

goal-setting and in the following years discovered many
of the basic principles that are taught today. His findings
are absolutely aligned with further discoveries, from Garry
Latham and Edwin Locke: first, performance is dependent
on the existence of goals. Second, goals can be assigned to
individuals, and unless they are too hard to achieve (un-
realistic), they will be accepted by said individuals. Third,
goals can be assigned for a variety of outcomes: for any
performance criterium that can be measured, a goal can
be set. Fourth, a tough, specific goal will lead to greater
increments in performance than a nonspecific, “do your

best” instruction. Fifth, goals increase performance less

through intensifying effort than through prolonged effort.
And last, despite a worker’s internal motivation, with-
out external goal assignment, workers will perform below
their abilities.
Mace also found out that in order for goals to be effective,

individuals need to have constant feedback about their per-
formance in comparison to the goal at hand, and eventual
discrepancies.
Since a lot is spoken these days about what motivates

individuals at work (the subject of extremely popular books
such as Drive, by Daniel Pink, and Payoff, by Dan Ariely), it
is very interesting to note that Mace was already reaching
very similar conclusions around that time. According to
Mace,
“Traditional doctrine has been oversimple. The mis-

take of the worldly-wise, who like to say that ‘the only
effective incentive is the pay-packet’, is not so much
that they overlook other sources of motivation as that
they fail to observe the complexity of this motive itself.
We all love money, but we love it most for what it
enables us to do. To some, it may mean chiefly beer and
circuses, to others it means greater security, or a better
chance for one’s children, or greater opportunity for

promoting a project for reforming the world. The pay-

packet theory is not a bad one to start from, but it is apt
to stifle thought precisely at the point where thought
should begin.”
After Mace’s came many studies about the effectiveness

of goal-setting in task performance. The subject would be
later developed definitively by Locke and Latham, who’d
go on to write the bible on the subject.

Peter Drucker, George Odiorne and MBO
In the 1950s, Peter Drucker, who is believed to be the

greatest management guru of all time, articulated, in one
of his books, that goals could be a great way to measure
the performance of managers, a new breed of workers that
were popping up left and right on the US economy.
Drucker concluded that managers should set goals around

productivity improvements and other measurable outcomes,
check performance against those goals from time to time
and get on a process of continuous improvement.
He called it “management by objectives and Self-Control”,

or “MBO”, a concept introduced in The Practice of Manage-
ment (Nobody knows who first used the term “MBOs”, but
it’s widely said that it was Drucker. Drucker, on the other
hand, actually claims he first heard the term from General
Motors’s Alfred Sloan).
At the time, one of the most prominent companies to

adopt the methodology was HP. Other practitioners in-
cluded General Mills, DuPont, and General Electric.
Drucker viewed MBO as a management philosophy. Ac-

cording to him, in The Practice of Management, “… What the
business enterprise needs is a principle of management

that will give full scope to individual strength and respon-

sibility, and at the same time give a common direction of
vision and effort, establish teamwork and harmonize the
goals of the individual with the common weal. The only
principle that can do this is management by objectives and
self-control.”
Contrary to what’s currently widely believed, MBO wasn’t

meant to be top-down nor about controlling people in
a mechanistic way. Again according to Drucker, and the
emphasis here is mine, “[MBO] requires each manager
to develop and set the objectives of his unit himself.
Higher management must, of course, reserve the power
to approve or disapprove these objectives. But their devel-
opment is part of a manager’s responsibility; indeed, it is
his first responsibility. It means, too, that every manager
should responsibly participate in the development of the
objectives of the higher unit of which he is a part. To
“give him a sense of participation” (to use a pet phrase
of the “human relations” jargon) is not enough,” and
“The greatest advantage of management by objectives is
perhaps that it makes it possible for a manager to control
his own performance. Self-control means stronger moti-
vation: a desire to do the best rather than just enough to
get by. It means higher performance goals and broader vi-
sion. Even if management by objectives were not necessary
to give the enterprise the unity of direction and effort of a

management team, it would be necessary to make possible

management by self-control.
Drucker’s work didn’t delve into the specifics of how to

apply MBO to an organization. That work was done, in part,
by his student pupils, like George Odiorne, who went on to
write books about the subject and consult with many large
companies in the USA.

Hoshin Kanri, or Policy Deployment, in

Japan
Around the 50s, in post-war Japan, W. Edwards Demming

and the Japanese manufacturers were developing ways to
increase the quality of Japanese products by enhancing
their manufacturing processes. Demming had been sent to
Japan by the US Government to help rebuild the country’s
economy, which had been devastated by World War II.
That’s where methodologies like Six Sigma, TQC - Total
Quality Control, and the “Toyota Way” were born.
In Japan, something similar to MBO was developed. It was

called Hoshin Kanri, or “policy deployment,” a methodol-
ogy that was part of larger Total Quality Management, and
through its process, the goals, or hoshins, were unfolded
annually throughout the organization. By the way, we be-
lieve that the Hoshin Kanri literature is critical for any com-
pany that wants to become an excellent OKR practitioner.
Since the introduction of MBOs and the TQC, practically ev-

ery modern company is managed using some form of goals.
Some companies set annual goals; others do it twice a year.
Some tie pay-for-performance bonuses to the achieve-
ment of goals; others run some sort of performance review
based on goal attainment. But most of the Fortune 500 use

goals and have them as a key part of their compensation

management stack.

Andy Grove and Intel: iMBOs
The term “OKRs” was coined, as far as is known, by Andy

Grove, the western name of András István Gróf, a Hungar-
ian immigrant. Grove was the CEO of Intel for more than
10 years, wrote best-selling business books like High Output
Management and Only The Paranoid Survive, and later taught
strategy for high-technology companies at Stanford.
At Intel, goal-management was called “iMBO,” or “Intel

Management by Objectives” (referring to the term MBO,
from Drucker.) Everybody in the office staff took part in
it, establishing annual and quarterly Objectives (which
resembled SMART goals) and time-bound milestones to
achieve those Objectives, which Grove dubbed Key Results.
The methodology was taught in an onboarding course though
which all those employees went called Intel’s Organization,
Philosophy, and Economics.
Grove didn’t bring any transformational insight into the

MBO framework but instead suggested that its employees
describe their goals (which were basically SMART goals) in
conjunction with what they called Key Results, which were
steps or action plans that guided the collaborator towards
the goal.
In Grove’s view, key results were primarily milestones that

would lead someone to achieve their objectives: a goal

to “Dominate the mid-range microcomputer component
business” would be followed by a key result to “win new
designs for the 8085.” Even though Grove stressed that
key results should be measurable, his examples all closely
resemble efforts, or deliverables, as part of an action plan,
and don’t look like actual results.
Grove’s other contribution to OKRs was his belief that

Objectives and Key Results should be defined in a two-
way process: from top to bottom, in the case of Strategic
Objectives that should be deployed to different executives
and business units, but also from the bottom up, from
the individual contributor herself, so as to bring commit-
ment and empowerment to the process. It was far from
a novel concept, but one that had been partially lost in
big American companies, which pushed goals “down the
line” throughout the organization, from the Board to the
CEO, from the CEO to the VPs, and so on. Grove encour-
aged Intel employees to define their goals according to the
goals of the company, and then calibrate them with their
managers.
Last but not least, Grove insisted that OKRs were aggres-
sive, meaning difficult to achieve, and what he called “stretch
goals.”

John Doerr, Google, and OKRs
In the late 1990s, OKRs spread to other Silicon Valley com-

panies through the hands of Jon Doerr, a partner at Kleiner
Perkins (now KPCB), one of the world’s most respected
venture capital firms. Doerr had worked at Intel indirectly
under Grove and used iMBOs. He later spread the method-
ology to some of his portfolio companies at Kleiner Perkins,
the most important of which was a startup founded by two
Stanford Ph.D. students who had created an excellent web
search engine. The startup was Google.
At Google, OKRs took many different forms and gained

worldwide fame. Larry Page, a cofounder of Google, claims
that “OKRs… helped lead [Google] to 10x growth, many
times over. They’ve helped make [Google’s] crazily bold
mission of ‘organizing the world’s information’ perhaps
even achievable… [OKRs] kept me and the rest of the
company on time and on track when it mattered the most.”
Google operates under a very loosely standardized flavor of

OKRs. Aside from salespeople, who have goals that are set
in a more top-down fashion and according to budget, most
other teams, like product and engineering, are free to use
OKRs or not and use OKRs with varying degrees of homo-
geneity and effectiveness. In common between all of these

flavors, OKRs are treated as more of an HR performance

management tool than a management philosophy. They
are graded at the end of every performance management
cycle in a five-point rating scale (0.0, 0.3, 0.5, 0.7, and
1.0). Laszlo Bock’s take on how OKRs should be planned
at Google offers a glimpse at why Google uses OKRs so
loosely:
“Having goals improves performance. Spending hours cascading

goals up and down the organization, however, does not. It takes
way too much time and it’s too hard to make sure all the goals
line up. We have a market-based approach, where over time our
goals converge because the top OKRs are known and everyone
else’s OKRs are visible. Teams that are grossly out of alignment
stand out and the few major initiatives that touch everyone are
easy enough to manage directly.”
OKRs have been widely adopted in the Silicon Valley, a

phenomenon that can be attributed to Google’s fame and
success as a company. But there is very little consensus
on how OKRs should actually be implemented, or even on
what a proper OKR should look like. That’s the part of the
history of OKRs we’d like to change.

3. A bit of goal-setting
science
Goal-setting has historically been used in the corporate

world for two main purposes:
• To motivate employees (efficiency)

• To assess their performance
Let me explain this: HR common sense has always said that

goals motivate employees towards achieving better results.
Goal achievement, on the other hand, has historically been
used as a proxy for performance: if I’ve hit 100% of my
goals, it must mean I’m a good performer. However, we
thought it made sense to briefly review goal-setting theory
or GST. We think HR professionals deserve to have this
widespread practice correctly understood from a theoreti-
cal basis because there’s more to it than just these two axes
of purpose.
A bit of goal-setting science 28
Goal-setting theory, or GST
According to GST, goals serve three main purposes:
Focus
Presuming that goals have been established according to

the company’s long, medium, and short-term strategies,
based on myriad methodologies like BSC, Hoshin Kanri,
etc., goals help the company focus effort, attention, and
energy on what’s relevant, relative to what’s irrelevant.
According to Johnson, Chang, and Lord (2006), “goals di-
rect individuals’ attention to goal-relevant activities and
away from goal-irrelevant activities.” It’s proven that “in-
dividuals cognitively and behaviorally pay more attention
to a task that is associated with a goal than to a task that is
not.”
Effort
Another very important purpose of goals is to increase the

level of effort that people exert at work. It’s also proven
that “goals energize and generate effort toward goal ac-
complishment. The higher the goal, the more the effort
exerted.” This is a tricky equation: too hard a goal and, as

you’ll see in a bit, employees get demotivated; too easy

a goal and employees will also get demotivated. In sum,
there’s a right amount of hard, which pushes people to
challenge themselves, but within a reasonable chance of
achievement, that optimizes performance. This links us to
persistence.
Persistence
Persistence is probably the trickiest thing to get right when

setting goals. The right ones produce high effort input
for longer periods of time, but the wrong ones can really
wreak havoc: “large negative discrepancies may lead to
a withdrawal of effort when individuals are discouraged
and perceive the low likelihood of future goal attainment”
(Carver & Scheier, 1998). As we’ll see, there are derivative
factors that influence persistence towards goals.

Getting goals right
When GST researches goal efficacy, a lot of attention is

given to how individuals relate to their goals, and espe-
cially with regard to hitting and not hitting their goals.
When there are negative gaps, or when individuals perform
below their goals, they seek to attribute the reasons as
to why goals haven’t been met: “When individuals face
negative goal-performance discrepancies, they will likely
consider the reasons why they are behind, which system-
atically determines their subsequent behaviors.” Different
reasons mean different impacts on how these same in-
dividuals take on their future goals: “Attributions, there-
fore, are an important motivational mechanism that may
explain under what circumstances individuals persist in
goal pursuit or adjust their goal levels.” (By “adjusting
their goal levels,” you should understand “lowering their
goals,” or “sandbagging”.)
Here’s a list of the main attribution mechanisms, and how

these may affect future goal-setting:
Internal (self) and external (locus of causality)
If I think I’ve hit my goals because of my own competence,

I’ll set harder goals in the future; if I think I’ve missed my

goals because of my own incompetence, I’ll try to set easier

goals in the future.
Stable and unstable
If I think the reason I’ve missed my goals isn’t going to

change (i.e., the reason, or condition, is stable), I’ll try to
set easier goals, whereas if I think the reason I’ve missed
my goals was a one-off (i.e., not stable,) I’ll set higher
goals. So, if I think it was due to my lack of effort, it’ll be
better than if I think it was my lack of competence, which
is more stable: “When individuals perceive the cause of
the failure or negative goal-performance to be stable and
this likely to remain the same in the future, they will likely
expect the outcome (i.e., failure to reach their goal) to
recur.”
Controllable (under the person’s control) and

uncontrollable
“If people believe that causes for failure are controllable,

they will probably continue or renew their effort and com-
mitment to their original goal, but be less likely to do so if
the cause of a negative discrepancy or failure is perceived
to be due to uncontrollable causes.”

Linked to higher goals/purpose
“When making an internal attribution for goal failure, an

individual may be more likely to continue goal pursuit
when the goal contributes significantly to a highly valued
superordinate goal. The individual may be more likely to
revise the goal downward when the goal is tangential to the
superordinate goal’s accomplishment”
Brief bibliographical note
New Developments in Goal Setting and Task Performance, edited

by Edwin Locke and Gary Latham, is the most comprehen-
sive piece of science on the effects of goal setting on the
performance of people doing jobs. It’s a meta-study of
more than 500 academic papers and theses on the subject,
and it’s where we drank most of what’s in this chapter.
So we won’t, for time’s sake, be using formal scientific
citation formats, because it’s 2018 and frankly we don’t
have time for it. Just remember it all came from them.

4. The current state of goal
management
In order to know what proper OKRs look like, we’ll first

look at how Fortune 500 companies usually do their goals.
We’ll call that approach to OKRs “Fortune 500 goal man-
agement.”
First of all, most of these companies manage their goals in

an annual cycle, starting and ending in tandem with their
fiscal years. At the start of each fiscal year, the company’s
board sets company-wide goals usually based on financial
metrics like revenue growth and profitability.
After company goals have been set, the company starts cas-
cading goals to some of the VPs and business-unit leaders.
In most companies (let’s say 90% of them), the cascading

process is very limited. These VP and BU goals tend to be
further cascaded to those employees and teams who have
more measurable results, such as salespeople, and the rest
of the company (i.e., whoever’s not a salesperson), sets
goals for HR purposes, and which feed into performance
The current state of goal management 34
management, and therefore, compensation. These are the

back-office people, like marketing, finance, HR, legal, etc.
These HR goals are shallow, of poor quality, and usually
mix elements of activities, job descriptions, and projects
- stuff like “deliver reports on time,” “take excellent care
of customers,” and “implement the new applicant track-
ing system.” There’s usually no KPI behind goals and no
distinction between efforts and business results.
Within a second group, which is tiny (let’s say 2% of com-

panies) the cascading process is stricter and more central-
ized. Some companies have a business intelligence team
that monitors all corporate KPIs and tends to “own” the
goal-setting process, defining target levels for goals and
centralizing the planning process. In any case, employees
don’t know why they have the goals they have. A goal is
just something that got pushed onto their lap.
In both types of companies, goal-setting might take from

2 to 4 months of a fiscal year, which leaves less than 20%
of the year, at most, for actual work.
Bear in mind that in some companies, goals aren’t even

touched at the start of the fiscal year. Some of these, due
to software rules, will encourage employees to just fill
out something on the space reserved for goals. Employees
might even just fill everything just with dots and gibberish.

We’ll get back to these special companies in a minute. For

now, let’s focus on the “normal” ones.
By the middle of the fiscal year, HR sets in motion a process

of “mid-year goal review,” where some employees are
allowed to change their goals if external on external factors.
It must be noted, though, that revising a goal down, even if
that’s not going to make it easier because of external, non-
controllable factors like the economy, is generally frowned
upon. Therefore, most goals are untouched. Also, since
goals will lead to compensation down the road, there are
usually strict rules around changing goals mid-year.
When the end of the fiscal year starts to roll in, some
companies set in motion their performance management
ordeal.
As I promised you, we need to make an appendix and go

back to those companies where employees filled dot dot
dot on their goals. Now is the time when these people
will log into the system and fill in their goals for the year,
just in time for performance reviews. Obviously, quality is
terrible, and goals are treated as mandatory pain.
So performance reviews may start with a self-review, where

the employee rates the attainment of each of her goals on
a scale of 1 to 5 or something. There’s maybe a 360-degree
component that follows, where employees will get “feed-

back” from peers and direct reports. Finally, managers log

in and review those goals, using the same 1 to 5 rating
system, overwriting employee’s self-reviews.
After these manager ratings are set, companies may en-

gage in calibration sessions where employees are stack-
ranked against each other and have their ratings changed
to fit an ideal statistical distribution. At GE, until the early
2010s, for example, ratings had to be massaged so that only
20% of the employees got the highest ratings, 70% got the
middle ratings (like 2, 3, and 4), and 10% necessarily got
the lowest grades (and ended up fired.)
Another complication is when companies create rules where

goal attainment is directly fed into compensation deci-
sions. At these organizations, for example, if an employee
reaches 65% of his goals (a weighted average may be used),
she earns a bonus equivalent to 3 monthly salaries, whereas
an employee who reaches 90% of her goals may earn 6
monthly salaries as pay-for-performance. These systems
front-load significant pressure and tension, driving em-
ployees and managers to politically negotiate easy goals
so as to maximize their chances of good bonuses down the
line.
For further complication, goals aren’t the only “axis” un-

der which employees are rated. Some companies also rate

people on behaviors, which might be dubbed “competen-

cies,” “values” or even “culture fit.” If an employee has
fared badly on her goals but put in the effort, is in man-
agers’ good graces, or if she’s regarded as a high-potential
employee, the behavior part of the review might be bumped
up to compensate for poor goal attainment.
At some point, which can happen after the end of the

fiscal year, managers and their direct reports sit down to
go over ratings and possible compensation changes and
promotions, and a new cycle is born.
Now let’s talk about how OKRs are different from Fortune
500 goal management.

5. What’s different in OKRs
OKRs are goals. So why all the fuzz? Great point. OKRs are
an adaptation of the traditional practice of MBOs suited to
the more unstable and competitive reality of today’s com-
panies. The purpose of this chapter is to explain the main
differences between what you see Fortune 500 companies
doing and what we know as OKRs.
In many respects, a well-done practice of OKRs closely

resembles what one reads in Total Quality books from the
80s and 90s, like those from Michele Bechtell and Pete
Babich. However, most big companies have disfigured the
practice and hijacked it for compensation purposes. We
believe that’s the root of all of what’s wrong with goals.
What’s different in OKRs 39
Compensation
The main difference between OKRs and Fortune 500 goal

management is the degree of linkage between goal at-
tainment and employee compensation. When this link is
broken, a number of possibilities open up that make goal
management much more effective and engaging.
In these organizations, how much of a goal is achieved is

the basis for employee variable compensation, known as
“pay-for-performance.” If she reaches 100% of her goals,
she makes Y times her monthly/yearly salary.
Some companies may even mingle this formula with corporate-

level goal triggers, which can increase or decrease distri-
bution. In these cases, nobody may earn bonuses if the
company doesn’t reach, for example, 70% of the EBITDA
goal. Other companies may also factor in team-level com-
pensation so that the employee is encouraged to cooperate
with her teammates while reaching her goals.
One of the problems with that is that it can lead to an effect

called sandbagging: employees tend to whine to managers
and schmooze up to them to negotiate easier goals, so they
can have a better chance of reaching them.
It also leads to ethical problems like what happened to

Wells Fargo and its executives, who were opening fake

accounts in the name of customers and “selling” these
customers products they had goals on.
With OKRs, the percentage of achievement of an Objective

or its Key Results doesn’t matter that much. The actual
results achieved are what’s important, or the numerator.
In Fortune 500 goals, the quotient (percentage of comple-
tion of a goal) is what matters, as a proxy for the results
achieved.
All the following differences, which can be counted as OKR

advantages, derive from this partial detangling of OKRs
and compensation.
What about meritocracy?
It must be noted that the fact that goal-attainment

isn’t directly used as a proxy for performance, and thus
pay-for-performance schemes, doesn’t mean compa-
nies that use OKRs are less meritocratic. Quite the
contrary can be possible.
Employee’s careers should still be advanced based on

merit. Great performers should still be directed to the
bulk of the companies’ scarce resources, like money,
opportunities, and challenges. But the process of allo-
cating these resources won’t be derived from a simple

mathematical formula (like if you reach x% of your

goal you make y% of salary as a bonus,) which encour-
ages sandbagging, unethical behavior, and excessive
complexity. Bonuses and other forms of incentives
will be derived from manager discretion based on a
lot of deep, meaningful discussions, and on the actual
results achieved.

Short cycles and nested cadences
At its most fundamental level, OKRs are set and reset in

shorter cycles, ranging from 1 to 6 months, while the tradi-
tional goals tend to be run on annual cycles. OKRs also work
on nested cadences: As you’ll see, the short cycle, which is
the fundamental unit of OKR management, ranges from 1
to 6 months, depending on the maturity of the business
and the practice. These short cycles are nested into an
annual cycle, which is nestled into a strategic cycle (from 3
to 10 years), which is nestled into the company’s mission
and vision. Just like Russian dolls.

Transparency
OKRs are public by default. That means the great majority

of individual and team OKRs will be open for consultation
by anyone in the company. Exceptions apply to confiden-
tial stuff like mergers, cost reduction plans that may imply
layoffs, etc.
Transparency leads to more alignment and commitment

towards the goals. Alignment because people can resolve
conflicts and dependencies faster. Commitment because
people know how their work impacts the bigger picture.

Bottom-up and top-down
OKRs are set in a more decentralized way, giving more

voice and participation to teams and their members.
In Fortune 500 goal management, goals can be deployed

from the top-down in a formal and rigid way, by strategic
planning or business intelligence team. People have no say
in the process and therefore may feel much less committed
to goals that were set for them.
OKRs, on the other hand, are more engaging: employ-

ees are encouraged to set their OKRs themselves in line
with other, higher goals (such as their team’s or the com-
pany’s), and then discuss them with managers for cohe-
sion and alignment.
But beware: That doesn’t mean the process should be chaotic

or unsynchronized. Alignment is of the utmost importance
and should be a primary goal of the process. People need
to row in the same direction, so having a more bottom-
up process doesn’t mean that people can set their goals
however they want or pick projects without reasoning.

Moonshots
This is a polemic topic.
Google defends that OKRs be set very aggressively so that

hitting 70% of them takes a lot of effort. They say that if
you’re reaching all 100% on your goals (or 1s - we’ll see
more about Google’s OKR grading system shortly,) they’re
too easy. They also say some of your goals have to be even
more aggressive, what they call “moonshots.”
We think the “70% x 100%” discussion is about semantics.

If 70% means “achieved with effort,” it basically becomes
the new 100%, and people will just adjust to that.
Anyway, what matters is that when OKRs are set with

less of a link to compensation, they can also be set more
aggressively, which, as proven by Locke and Lathan (we
saw that earlier), leads to better performance under other
conditions (like these goals being achievable and the “own-
ers” feeling committed to them). The idea is that if the
company as a whole aims a bit higher, it will achieve better
results.

6. Where do OKRs come
from?
“One day Alice came to a fork in the road and saw

a Cheshire cat in a tree. ‘Which road do I take?’ she
asked. ‘Where do you want to go?’ was his response.
‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it
doesn’t matter!’”
-Lewis Carroll, Alice in Wonderland
As we’ve seen above, OKRs are a strategy execution tool,

that falls in a greater discipline in management that en-
compasses strategy formulation and strategy execution.
Ideally, one shouldn’t exist without the other.
Strategy formulation always starts with the company’s

mission statement. It should explain why the company ex-
ists, which is itself an interesting limiting factor that helps
an organization figure out the boundaries of its footprint
in the world. As we’ll see below, mission and vision are
two sides of the same coin: whereas the mission describes
Where do OKRs come from? 47
why the organization exists (in a nutshell, a problem the

organization wants to solve,) the vision describes a future
world where the mission has been accomplished.
After the mission is considered, the next step is actually

formulating the strategy of the company. Strategy is a very
tricky term to define - we haven’t found a definitive an-
swer we’re happy with - but a great way to think about it is
as a series of decisions and tradeoffs that will maximize the
chances of the company fullfiling its mission and acheving
its vision.
As we formulate the strategy, we can articulate a series of

visions - future states of success - that are to be achieved
along the journey. You may have heard, during the last
decade, of companies’ 2020 Visions. These look different
from a mission statement - it’s not so qualitative and in-
spirational, but more detailed and even quantitative where
possible. An organization can have a 10-year vision, but
also a 5-year vision, an 1-year vision, and even a vision
for every quarter (we’ll talk about short cycles in a bit.)
The important thing to consider about vision statements
is that they articulate end states.
The visions and strategy go hand in hand: think about the

strategy as the why behind the visions. For example, a
Mexican company may have a 5-year vision of dominating
its national market, a 10-year vision of dominating the

?North American market. In this context, strategy is an

explanation of why the company chose to focus on the
continent, and not expand to other emerging markets.
Finally there are OKRs, which help an organization artic-

ulate the gaps between its current state (let’s say, today)
and its vision(s). OKRs are all about the critical few gaps
that the company must close to get there, articulated as
groupings of Objectives and their Key Results.
So to answer the question posed at the title of this chapter,

an organization’s OKRs come from its mission, its strategy,
and its visions/milestones.
Anyway, this is not a book about strategy formulation,

nor about the broader discipline of strategy execution. It’s
about OKRs, which are one of the tools a company has at
its disposal to help it execute on its strategy. So in this
chapter we’ll just glance over the bigger picture of strategy
formulation, to give you some context, and then we’ll plow
back into OKRs.

The starting point: your mission
mis·sion (/�miSH�n/) noun: a specific task with which

a person or a group is charged. A preestablished and
often self-imposed objective or purpose
-Merriam-Webster Dictionary
“If people do not internalize the organization’s mis-

sion and vision, they will not use them to make day-
to-day decisions, and if they do not use them in their
daily lives, all the effort will have been in vain.”
-Pete Babich
As the title of this book implies, OKRs ultimately come

from an organization’s mission statement. Therefore, we
thought it would be important to spend some time prop-
erly defining the concept of a mission (and a mission state-
ment) and clarifying a very common mistake which is to
confuse mission and vision, which is another important
part of our OKR framework but that serves a different
purpose.
As you’ve probably noted at the start of this chapter, we

think a mission has to do with why the organization or
company exists. In the next lines, you’ll understand how
we got there.

Towards a definition of organizational mission
At Qulture.Rocks we read many Silicon Valley pundits talk-

ing about mission statements and are amazed by how little
clarity and how much confusion there is around what the
term really means, why it exists, and how companies can
leverage it the most.
Pundits (a general term for whoever thinks they know

enough to try to define these terms) rarely agree on what
mission is or what great specimens look like.
As an example of how confusing it is, let’s look at what

Jim Collins, the revered business author, says about the
subject.
One of his most referred-to articles on the subject is “Build-

ing Your Company’s Vision,” which was published in the
Harvard Business Review in 1996 and went on to become
the core idea behind Good to Great, Collins’ very famous
best-seller. In the first line of the article Collins and his
co-author Jerry Porras write that “Companies that enjoy
enduring success have a core purpose and core values that
remain fixed while their strategies and practices endlessly
adapt to a changing world.” I hope you can see why I’m
citing this as an example of why it’s so hard to understand
what mission and vision actually mean: in an article that’s

about vision, Collins has a first-line talking about core

purpose, which is something very close to the concept of a
mission, and core values. Of course they then try to clarify
it a bit, and go on to say “[vision] has two principal parts:
core ideology and envisioned future.” But hey, can we be a
bit clearer?
To look a bit further, we Googled “how to build company

vision.” On the first results page, we stumble upon an arti-
cle at the Openview Venture Partners - a respected venture
capital firm - website, written by portfolio CEO Firas Raouf.
In the article, Raouf defines mission as “what a company
is striving to be in the long term” and vision as “how it
can get there,” asking “what things need to be executed
to accomplish the mission?” This second excerpt is way
worse, of course, and confuses more than only mission and
vision, but also strategy and planning, but serves as a great
example to further our point.
Let’s move from pundits to the websites of large tech

companies: Google and Amazon.
Google’s mission statement, for example, is “… to orga-

nize the world’s information and make it universally ac-
cessible and useful.” If we unpack it, there’s a first part
that talks about how Google makes an impact on the world
(organizing the world’s information and making it easier
to retrieve), and a second part that talks about how Google

wants the world to look (a world where information is or-

ganized and universally accessible and useful). By the way,
the website (and the first results page for Google search for
“Google vision”) has no mention of there being a vision.
So it seems that what they call “mission” is actually a mix
between a mission and a vision.
In talking about its mission, Amazon says “we aim to be

Earth’s most customer centric company. Our mission is
to continually raise the bar of the customer experience
by using the internet and technology to help consumers
find, discover and buy anything, and empower businesses
and content creators to maximise their success.” Amazon
doesn’t clearly define what is its actual mission statement,
but when talking about it it mixes what the company wants
to become (“Earth’s most customer-centric company”)
and why it exists (“to continually raise the bar of the
customer experience…”).
It seems like these two giants don’t speak - at least to the

outside - about their visions. They only talk about their
missions. Now, if we read their missions, it’s still very hard
to abstract a consistent pattern on what a mission should
look like.
Now we go from the tech giants to the “old economy” for

reference, and we get even more confused. Koch Industries,
for example, defines its vision as: “Koch Industries is a

trading, investment, and operating company that aggres-

sively identifies and acquires companies in which it can
leverage our strengths to generate superior earnings or
market value.” Their mission is “Koch Industries seeks to
maximize the present value of future profits. Doing so pro-
vides security and opportunity for stockholders and pro-
ductive employees, while also benefiting customers and
society….”
Now, unpacking Koch’s mission and vision is a trip. Their

mission basically describes what business the company is
in (buying out other companies for cheap, but companies
where they have an edge). Their vision, on the other hand,
describes what benefit the company wants to bring to its
stakeholders (security and opportunity for stockholders
and employees, and less explicit benefits to customers and
society).
As you have probably infered, after reading about how pun-

dits, big tech, and the “old economy” talk about mission
and vision, it’s impossible to deduce what these terms
actually mean, and how a company should use them.
Our definition
If you’re feeling more confused than when you started

reading this article, that’s exactly how we felt when we

tried to understand what an organization’s mission (and

vision) statement looks like.
After this long journey, which included countless other

references, we’ve settled upon the following definition:
The mission is the company’s purpose. It’s why it exists.
It helps to think “how would the world be negatively im-

pacted if our company ceased to exist?” At Qulture.Rocks,
for example, our mission is to “help people and organiza-
tions unlock their potential.” Google’s mission statement
is almost there.
The vision, on the other hand, is how the world will look like
if the company fulfills its purpose. A mission and a vision
statements are two sides of the same coin, and we think
that this is a core reason why definitions are so confusing.
Anyway, broad vision statements are pretty useless, so we
recommend you stick with the vision for the purposes of
defining what the organization is and what its boundaries
are. More specific, time-bound visions, on the other hand,
are very useful as a way to articulate what future end-
states look like for the organization, and we’ll get into
them in a bit.

Company-centric x customer-centric
Using broad strokes, the company’s mission can be company-

centric or customer-centric. Google’s mission (or the part
of it that looks like a mission by our definition) is customer-
centric. If a customer reads it, she immediately relates the
company’s impact on her own life. Koch’s mission, on the
other hand, is company-centric. It basically talks about
how the company makes money in very practical terms.
We believe missions should be as customer-centric as pos-

sible, and more abstract in nature. At Qulture.Rocks, for
example, we’re not talking about anything other than the
impact we were created to have on the world.
Another good guideline is to not mention your line of

business in your mission statement. Paraphrasing Simon
Sinek, it should be more about the why, and less about
the how of your company’s impact. The how is more about
strategy and tactics: how the company chooses, today, to
bring that impact to the world. However, that can change
if it ceases to be the most efficient way to do it.
For example, we don’t cite software or technology in our

mission statement. That’s because we’re about cultures
that rock, and not about software. Software is how we
choose to pursue our mission, but it can change to another

thing (content, consulting, wearables) if we think that

would cause more impact.
Back to Google and Amazon
Now that we’ve – hopefully – agreed on the definition of a

mission and vision statements, let’s go back to Amazon’s
and Google’s mission statements and see how they pass
our test.
Again, Google’s mission statement is “to organize the world’s

information and make it universally accessible and use-
ful.” It’s kind of a blend between a mission and a vision.
The first part looks like a mission: Google exists to organize
the world’s information and make it easy to access. How-
ever, it gradually blends into a vision, because it gives us a
vivid description of what the world will look like if they’re
successful: a world where all information is easy to access
and useful. We’d give it a 7.
Amazon, on the other hand, has a worse mission state-

ment. As we saw earlier, it reads “to be Earth’s most
customer-centric company, where customers can find and
discover anything they might want to buy online, and en-
deavors to offer its customers the lowest possible prices.”
That looks much more like a vision statement to us, and
quite a company-centric one, for that matter. It describes

a future, but in terms of what the company will look like in

the future, and not how the world will look.

The next step: strategy
From the mission of the company, which is quite generic in

terms of how it can be achieved, the next step is to define
your strategy, which is the journey from today to mission
accomplished.
If you’re not a startup (in Steve Blank’s sense, which is ‘an

organization in search of a repeatable and scalable busi-
ness model’) the starting point of your strategy is already
defined as your organization’s present state.
The journey, then, will describe a series of choices the com-

pany has to make around its business that will hopefully
maximize its chances of fulfilling its mission, as well as a
series of visions or milestones that will allow the company
to see if it’s in the right direction and course-correct.
A good strategy is usually painful to produce because it

forces the company to make difficult choices (or trade-
offs). It’s impossible to compete for price and quality at
the same time. It’s difficult to open up many markets at
once. Resources are scarce and certain choices make other
choices unfeasible.
A great resource on the nature of these choices is A.G.

Lafley’s Playing to Win methodology, that describes two

main choices a company must make in its strategy formu-

lation: where we will play, and how we will win.
Where we will play is about the boundaries where the com-

pany will operate at a given point in time: geographies,
product categories, customer segments, go-to-market tac-
tics, and so on.
How will we win is about defining the company’s value

proposition and positioning, and its competitive strategy.
These choices are not static. Strategy is precisely about

how the company will sequence and time changes in them
from today until the far future. For example, if we look at
Amazon, we’ll see that it first built its proprietary ecom-
merce business and then, only after it was big, became
a marketplace. Ebay, on the other hand, has always been
a marketplace play, with no inventory. That’s strategy. If
we look at Google, we’ll look that it first sold its products
online, without the help of a sales force. But it quickly hired
a bunch of salespeople to cover major customers in offices
spread around the US - and then the world -, whereas Slack
took a lot more time to build out a salesforce, sticking to
self-service online sales for a big part of its pre-IPO years.
Strategy is also iterative: even tough it’s good for the com-
pany to have an idea of what its future will look like in
terms of choices and milestones, it will be necessary to

adjust course in response to competitors, customers, tech-

nological shifts, regulation, and geopolitics.
Some of the variables that make up a company’s strategy

are:
• Competition for cost/price or differentiation: The most

basic aspect of a company’s strategy is to choose one
of two major paths identified by Michael Porter, a
Harvard professor (or, in his own words, to pick a
competitive strategy). In most markets, the same prod-
uct can’t, in a sustainable way, compete for price and
quality at the same time. Bear in mind that some
offerings may provide both for some time in order
to quickly rob market share - but it is usually unsus-
tainable in the long run. Tiffany is the example of a
differentiation strategy: it sells high-quality products
at posh stores that serve french champaign, and in-
vests heavily in its brand so as to charge a premium
price - and thus command premium margins - over
its competitors. Walmart is the example of a cost
strategy: it has always oriented its efforts towards
being the lowest cost retailer in its markets, so as to
be able to command lower prices than its competitors
and still make a healthy profit.
• Geography: The organization has to choose where it
will operate. Certain businesses are easier to expand

nationally or internationally. A company may want to

dominate one market before expanding into another,
while another company may want to “plant its flag”
in a large number of markets, albeit without attaining
dominance of any of them.
• Portfolio of products and services: The company has
to choose what products and services to offer. One
option is to focus on one or a few products, making
them very complete (a vertical approach). Another
is to expand its offerings horizontally, having many
shallower products.
• Customers: The company has to choose how it will
serve its customers. This is necessary whether focus-
ing on a specific customer niche, addressing its needs
in a very deep way, or focusing on a broad group of
customers and serving its needs in a shallower way.
• Organic growth or acquisitions: The company has to
choose which will be its main growth generator: whether
it will grow organically - that is, by investing in its
own operations (as most startups grow) - or through
acquisitions and possible incorporation of other prod-
ucts and businesses (as most large high-growth com-
panies grow).

The final component: visions or

milestones
vi·sion (/viZH�n/) noun: The ability to think or plan the

future with imagination or wisdom; a mental picture of
what the future will or could be.
-Google Dictionary
Last, but not least, OKRs come from an organization’s vi-

sions or milestones: the intermediary end-states it wants
to reach in its journey towards fullfilling its mission. As
you’ve probably noted, mission, strategy, and visions (or
milestones) are deeply intertwined.
The mission is why the organization exists. The strategy is

the rationale behind the series of choices and tradeoffs it’s
going to make to maximize its chances of fullfilling its mis-
sion. And the visions or milestones are flagpoles that mark
where the organization will be at different points in the
future, between now and when its mission is ultimatelly
fulfilled.
It’s important to define vision because OKRs’ Objectives

are frequently mistaken for vision statements, but they
shouldn’t be.

As we’ve seen before, a vision is a description of a future

end-state. For example, my health vision for this year is
to weight 200 pounds, be able to run a half-marathon in
less than 2 hours, be able to lift 200 pounds in a deadlift,
and have a body-mass index of less than 20. That’s a three-
part vision.
An organization - or myself, for that matter - can have a

sequence of visions for the future. Extending the example
above, I may have a two-year vision of weighting 220
pounds, be able to run a half-marathon in less than 1 hour
and 55 minutes, be able to lift 250 pounds in a deadlift, and
have a body-mass index of less than 15.

A case study: Amazon in 1995
In order to better illustrate the concepts of mission, strat-

egy, and visions, we’ll go back in time to 1995 and put
ourselves in the shoes of Amazon executives such as its
founder, Jeff Bezos, back when the company started oper-
ating, in 1995.
But why Amazon? And why 1995?
The company is well known enough so that most of you

will be able to relate to the case study. Chances are you use
it quite frequently for buying stuff (Amazon.com), hosting
your apps (AWS), or shopping for groceries (Whole Foods,
Amazon Fresh, etc.). Also because 1995 is so far in the
past that most people who talk about the company talk
openly about what these people were thinking and doing
back then. And in 1995, the business was simple enough
that talking about its ecommerce operation was essentially
the same thing as talking about the whole company (Kindle
was the only big initiative in the works). Finally, I’ve read
all Jeff Bezos shareholder letters and can safely say I’ve
read most books about the company in order to produce
a case study that’s useful and reasonably faithful to the
company’s actual inner workings (or so I think).

Amazon’s mission
As we’ve seen a while ago, Amazon’s mission is “… to

continually raise the bar of the customer experience by
using the internet and technology to help consumers find,
discover and buy anything, and empower businesses and
content creators to maximize their success.”
It’s a peculiar mission in the sense that even though mis-

sions should focus on the “why”, they usually hint at
where the organization is going to play. Google’s mission,
for example, talks about organizing and making informa-
tion accessible to everyone. But Amazon’s mission state-
ment is much broader: it essentially says that the company
will do whatever it thinks will make customers happy, in
the sense of offering them a superior experience. There’s
nothing in its mission statement that gives you a clue that
the company will never operate a car wash or a yoga studio
- it will, if it thinks it can offer customers a much superior
experience with the use of the internet and technology
(which are almost all-encompassing terms nowadays).
Amazon’s strategy
There’s been plenty of writing about Amazon’s strategy

back in its first decade of operation. It’s widely known
that Bezos deliberately started with books and then moved

to CDs. In a video that went viral, Bezos says “I picked

books as the first best product to sell online, making a
list of like 20 different products that you might be able to
sell. Books were great as the first best because books are
incredibly unusual in one respect, that is that there are
more items in the book category than there are items in
any other category by far. Music is number two — there
are about 200,000 active music CDs at any given time,
but in the book space there are over 3 million different
books worldwide active in print at any given time across
all languages, more than 1.5 million in English alone. So
when you have that many items you can literally build a
store online that couldn’t exist any other way.”
It’s pretty easy to derive the bulk of Amazon’s early strat-

egy from this quote, now that you know that strategy is the
rationale behind the decisions. The rationale behind start-
ing with books, moving to music, and then other things
is based on the fact that books were the best wedge into
ecommerce, which was something Bezos wanted to attack.
Books were very numerous in terms of SKUs, reasonably
uniform in terms of shape, were mapped by book distrib-
utors in electronic catalogs that were accessible, and very
importantly, could be sold in a manner online that had no
parallel offline. Only on the web could you “go” to a store
where you could find almost all the physical books in sale
in the United States, whereas in the largest of the largest

physical stores such as Barnes & Noble and Borders, you

could only find a small fraction of them (by the way, he
doesn’t metion some of these strategic elements in this
interview, but does so in plenty of others).
Another important aspect of Amazon strategy is known as

its “flywheel.” According to Colin Bryar and Bill Carr, to
ex-Amazonians who went on to write Working Backwards:
Insights, Stories, and Secrets from Inside Amazon, Jeff came up
with Amazon’s “flywheel” in 2001, inspired after reading
about the concept in Jim Collins’ Good to Great. The Amazon
flywheel is essentially a sketch that shows that the bigger
Amazon gets, the bigger it will tend to get, and the further
in front of competitors it is going to get. It goes like this:
1. As the company grows, it’s able to get better purchas-

ing conditions from its suppliers
2. As it gets better conditions from its suppliers, it can
offer better conditions to its customers, in the form
of lower prices and faster shipping
3. Better price and shipping attracts more customers,
which bring in more growth, which leads to better
purchasing conditions
4. More customers allow Amazon to offer a larger se-
lection of products. With better selection, customers
have a better experience (along with better price and
shipping), which makes the company grow faster

Even though I don’t agree with the use of the term “fly-
wheel” to describe the virtuous cycle of growth, customer
experience, and distancing from competitors, I think the
mental model it articulates is a prime reason for why Ama-
zon chose to get big very fast as part of its strategy. The
bigger it gets, the bigger it gets. Quite simple. As the com-
pany accelerates both the customer experience it offers
and its advantages over competitors, it gets into a very
strong position (or, in value investing parlance, it gets a
big, deep, wide moat full of gnarly crocodiles around it).
The flywheel, in sum, is the strategy behind the decision

to get big as fast as possible, which alongside the decision
to start with books, then move to music, and only then to
other categories, explain the bulk of what Amazon did back
in its first years of operation.
Amazon’s visions
After we’ve discussed strategy and mission, we get to the

more speculative part of our case study, where we try to
come up with visions that the company might have held
back in 1995. I’m not going to spend a lot of time on this,
but we may infer some plausible sounding vision elements
from what we’ve discussed.

2020 Vision:
• Be the largest bookseller in the US (revenue)

• Have a 33% gross margin in the book sales business
• Be the most beloved bookseller in the US (highest
NPS)
2023 Vision:
• Remain the largest bookseller in the US (revenue)

• Remain the most beloved bookseller in the US (high-
est NPS)
• Be the largest music seller in the US (revenue) by 2002
You may be asking yourself don’t these look awfully like

OKRs? They do, but because people rarely get the difference
between a vision statement and an Objective right. Vision
statements, on the one hand, are visions of end-states in
the future. We’re leaders. We’re operating in 100 countries.
Objectives, on the other hand, are what we need to improve
in order for these same vision statements to be true (rela-
tive to where we are today).

So if we’re in 1995, our second quarter OKR that deals with

gross margin on the book business might be something
like:
• Objective: Increase the gross margin in book sales

• Key Result(s): Gross margin, from 23% to 25%
As you can see, there is a difference. One - vision - articu-

lates an end-state. The other - Objective - articulates, with
a ver, what aspect of the business needs to be improved to
close the gap between the current state and the vision.
No need to panic
Don’t despair if you don’t know exactly what your or-

ganization’s mission or strategy are. You don’t need
precision in order to start setting OKRs.
All you need is a general direction.
And after you have a general direction and start exe-

cuting, you can alot some regular time every month or
quarter to think about strategy.
Something that should make your life easier: almost

all companies want to maximize their impact in the
world, and that means one of their main Objectives will
revolve around growing. That, along natural restric-

tions such as funding and talent are enough to rule out

many strategic choices in the short term.
Anyway, we believe that any successful organization

has to have growth as its major objective, and this
objective already works very well as a guideline for its
OKRs.
Growth is key to the success of any business.

7. The OKR short cycle
Great. Now that we’ve talked a lot about the more strategic
and long-term aspects of OKRs, let’s get down to business
and talk about how OKRs are run day-to-day. We’re talking
about the short OKR cycles: where OKRs happen.
The OKR short cycle 73
Nested cadences, or cycles
As we saw earlier, OKRs are run on nestled cadences or

cycles.
Any company operates simultaneously in at least four cy-

cles: the mission/vision, which have no expiration date;
the strategic OKRs, which can cover from 3 to 10 years;
the annual OKRs, which generally operate in parallel with
the company’s fiscal and budgeting cycles; and finally, the
short cycle OKRs, which have terms ranging from 1 to 6
months.
Over time, the company will be conducting its short cycles,

which in the quarterly example are four within the annual
cycle, and so on, as we can see in the image below:
OKR’s Nested Cycles

Of course, in the first cycle, the company can make an

extra effort if it doesn’t already have its mission/vision,
strategic, and annual OKRs set before it can set its quarterly
OKRs. However, as we saw earlier, don’t panic: you don’t
need to get them set all at once.
Figuring out the mission, vision, and strategy can take

time, so the company may choose to run a few short cycles
before determining that stuff. What’s important is that it
eventually gets discussed: If you don’t know where you’re
going, anywhere will do.
Fortune 500 goal management doesn’t have a short cycle.

Only an annual, fiscal-year cycle is done, possibly coupled
with a Pro-forma mid-year review.
One of the great advantages of OKRs is, as we’ve seen,

the increased speed with which the company and its em-
ployees course-correct and respond to the market and
innovation. Therefore, it makes sense that you implement
some short-cycle variation in your company, even if it is
semiannual.

The short cycle
The size of a short OKR cycle, which is contained within

the annual cycle, can vary based on various factors, such
as the stage and strategy of the company and its market.
Companies in more fast-paced, undefined markets (let’s
think ridesharing) can do monthly, bimonthly or quarterly
cycles. Companies in more stable markets, or with more
established businesses, can perform quarterly or semian-
nual cycles.
It’s important to note that short cycles are where the magic
of OKRs happens.
Short cycles have 3 phases:
• Planning
• Monitoring
• Debriefing
Planning is where OKRs are set throughout the company.
The first step is setting the company OKRs. The second

step is having teams and persons create their OKRs in
alignment with the company’s and with each other.

The third step is as important as the first two: OKR owners

have to plan how they’ll reach their OKRs by deciding on a
hypothesis, as well as planning actions that will be taken
to try that hypothesis out. The process is similar to what’s
done on a Lean Startup.
The company then goes into monitoring mode. Here, the

aim is to track metrics on which the Key Results were based
and action plans/initiatives that were planned. If the plan
is being executed and the Key Result is moving closer to
the target, that’s a best-case scenario. We’ll get into that
later.
Finally, the cycle ends with a debriefing of the results

achieved, which kicks off a new cycle and its planning
(often concomitantly).
In the next chapters, we’ll look at each step of the short

cycle in detail.

8. Planning
“Vicente Falconi gave us goal-setting, which is the most

important thing. It is useless having company goals that
don’t unfold to everybody - things that you can and need
to do better - and then deploy it to the whole enterprise. It
makes you unbeatable, a machine.”
• Marcel Telles, board member, Anheuser-Busch

Inbev, Kraft Heinz and Restaurant Brands Inter-
national
Unfolding or deploying OKRs is the first pillar of the plan-

ning phase. It’s the process of transforming the organi-
zation’s Objectives - which are, by definition, the CEO’s
Objectives - into Objectives, Key Results, Projects, and
Action Plans for the entire company.
One of the great benefits of OKRs and goals, in general, is

ther effectiveness as a means of translating organizational
strategy down to everybody’s reality, so that the whole or-
ganization becomes aligned and focused on what matters
Planning 78
most. They become true north for the whole organization

to guide and prioritize its efforts.
Imagine there’s no such alignment: The CEO and the board

define that the priority of the year is to grow market share
in an organic way to defend the company’s position against
potential Chinese competitors. However, this priority isn’t
well-communicated to the organization, so after six months,
operations are focusing on margins, to the detriment of
growth (trade-offs, again); others are looking at new dis-
ruptive technologies; corporate development is trying to
map M&A opportunities. All the power of the organization
is lost over a lack of clarity regarding what are the real
priorities.
With OKRs, the company strategy is reduced very simply

to one or more pairs of Objectives and Key Results. As
everyone in the organization knows the OKRs of the com-
pany, they can define their OKRs accordingly, so that - in
the words of Jorge Paulo Lemann, founder of the brewery
which has now become AB Inbev, the world’s largest - they
all “row in the same direction.”
A controversial point is how this unfolding process (that

is, the mechanics of transforming CEO OKRs into OKRs for
the company’s teams and individuals) must happen.

Planning 79
To cascade or not to cascade? That is

the question
“Having goals improves performance. We have a market-

based approach, where over time our goals converge be-
cause the top OKRs are known and everyone else’s OKRs are
visible. Teams that are grossly out of alignment stand out,
and the few major initiatives that touch are easy enough to
manage directly. “
-Laszlo Bock, former VP People Operations, Google
The vast majority of OKR experts argue that there should

be no formal, centralized goal-setting process across the
organization.
Google’s former VP of People Operations, Laszlo Bock, said

that 60% of targets must be set from the bottom up, that is,
by the employees in conjunction with their managers. In
this model, it’s up to the employees and their managers to
set aligned OKRs without any formal control of the process.
In more traditional organizations, such as AB InBev, which
derive their management by guidelines from the tradi-
tional Japanese, Hoshin Kanri model, the process tends to
be much more centralized and “top-down.” There is little

Planning 80
room for an employee to question the goals assigned to her,

performed by a centralized “management” function which
does a meticulous work of unfolding goals and tracking
KPIs, and that can last up to 4 months.
Ignore “Google”
As one of the best-known companies in the world and

because it’s often cited as a pioneer in adopting OKRs,
Google is always held as a benchmark in content and
methodology for OKRs.
Our suggestion is that you ignore any reference to

Google in implementing your OKRs. First of all, things
that work for Google might not necessarily work for
your company. Second, our empirical research with
more than 20 Google employees has shown that there’s
no homogeneous format for OKRs within the company,
or between departments (e.g., how sales or product
treats the subject) or across geographies (e.g., how
Brazil, the US, and Europe address the issue). We’ve
even found that four of those people that didn’t even
know what OKRs were, and many who used OKRs as a
high-level task list, which it’s NOT.
Some official Google resources on OKRs, such as their

human resources website, re:Work, explain the method-
ology simplistically and give out terrible OKR examples

Planning 81
(one suggested Objective is “Eat 5 Pies”).
Finally, don’t learn about management from compa-

nies that don’t really need to be well-managed. Google
is a money minting machine because of its Adwords
advertising business, and it really doesn’t matter if
it has a strategy or not, or how well it executes it:
Cash will keep pouring in. For execution lessons, look
at tougher businesses, like retail and manufacturing.
That’s where management really can make or break a
company.
Obviously, there are pros and cons inherent in both the

fully centralized and the fully decentralized deployment
models: On the one hand, the more decentralized the un-
folding process, the less precise it tends to be, so that
adding up people’s contributions may not result in achiev-
ing corporate goals and strategy. On the other hand, a more
decentralized process is faster and forces the organization
to internally communicate all the context necessary for the
setting of “bottom-up” OKRs (that’s why several compa-
nies share their results presentations from their Board of
Directors with all of their employees, in an “all-hands”
meeting).
A more centralized process can be quite precise but slow

Planning 82
and not very engaging to employees (so much so that tra-

ditional organizations attach large variable compensation
packages to goal attainment). For companies where the
workforce is composed mostly of creative professionals
- Google calls them smart creatives - a more decentral-
ized process may be better. For manufacturing companies
that produce very stable, low-tech products, and where
the workforce is composed, in large part, by blue-collar
professionals, centralized goal-setting and planning can
make more sense.
Meeting halfway
In our view, all OKRs have to be well-aligned. Everybody

has to row in the same direction. That’s the biggest advan-
tage of using OKRs.
How the alignment should happen is the million-dollar

question. We think doing it top-down, and not engaging
people in the process, is a waste of time and gray matter.
People should know why the company has the direction
it has, and actively think through the unfolding process.
That’s because a lot of the benefits of OKRs accrue from
having people burn neurons thinking about how they can
contribute to greater goals and to the company strategy.
The quality of the alignment must be an important prin-
ciple of the process.

Planning 83
Some OKRs will tend to be deployed in a more top-down

fashion. Sales quotas, for example, and financial metrics
have little room for negotiation. People just have to make
them. (Of course, it’s crucial to explain to people why these
targets are important for the company. Without a why,
people won’t feel motivated to hit them without heavy
external incentives, like cash.) In other areas, such as prod-
uct and marketing, there will be more leeway in defining
what Objectives will be achieved and how to measure their
completion through Key Results.
But the most engaging part of the planning process should

be having people figure out how they’ll achieve their OKRs.
OKRs have to be aggressive enough so that people don’t

quite know how to reach them at the start of the journey.
Even if they have an idea of what they should do, there
must be a chance of the OKR not being hit.
For example, let’s say your company needs to grow 25%

in revenues in a given quarter. How the company will hit
that goal is going to be a matter of great thinking and
creativity. The journey starts with analyzing the data to
understand pockets of opportunity. Where can the sales
process be improved? Where is there breakage in the sales
process? Where are the low hanging fruits? Let’s say this
analysis shows that salespeople have too few leads and
therefore need more leads to work on. You then calculate

Planning 84
that at your recent-past conversion rates, you’d need to

grow leads by 100% in order to grow sales by 25%. That’s
the first hypothesis. So you unfold a “grow the number of
leads” Objective to marketing and a Key Result of “gen-
erate 15,000 more inbound leads quarter-on-quarter.” Of
course, there’s a chance that growing leads won’t result in
more sales. Getting it right is good management and good
thinking.
But moving further, how to grow leads is also going to

be based on a hypothesis. We can plan to release three e-
books and 10 webinars during the quarter, and they can
close the 15,000 lead gap. Or not. Releasing three e-books
and 10 webinars become the action plan for the “grow
leads” OKR. That’s how the planning process should work,
and it needs to engage people’s brains in order to be suc-
cessful.
It really makes little sense that most companies stop to

centrally deploy goals to 100% of employees, a process that,
when very agile, can take more than two months of sweat.
This whole effort might even make sense in an annual
cycle, but it’s totally crazy to spend 50% of a three-month
short cycle on planning.
We also think that if the discussion process of unfolding

and aligning OKRs is well done, the alignment will be an in-
evitable consequence. VPs will align their goals with those

Planning 85
of the CEO; directors with those of their VPs, and so on.

If there’s no immediate linkage of goals to remuneration,
believe me, this conversation becomes productive and en-
riching for the whole company, rather than a political give-
and-take negotiation.

Planning 86
What happens after OKRs are set?
OKRs don’t achieve themselves by the mere fact that they

were articulated. And even though there’s a lot written, at
least by us, on how to set good OKRs, there is surprisingly
little written about what happens right after OKRs are set.
When we look at each other and ask ourselves, What should
we do now?
So we set out to examine this subject. What happens after

OKRs are set?
Or, in other - and better - words, how do OKRs get hit?
Enter Results Science
After studying more than 50 teams that regularly crush

their OKRs, we’ve concluded that they have a system with
which to attack their OKRs. They don’t just set and forget
them; they don’t just focus hard on hitting them, whatever
that means. With those learnings, we articulated a frame-
work that teams can use to improve their OKR achieve-
ment. We call this framework Results Science.
It turns out the framework looks a lot like the scientific

method, something that doesn’t surprise us: the method
has helped humanity achieve amazing feats like producing

Planning 87
vaccines, building skyscrapers, and going to the moon, to

help teams structure their work towards achieving great
results. It also borrows a lot from Silicon Valley product
development best practices such as Agile, Scrum, Shape
Up, and continuous experimentation, which has aided in
creating some of the world’s most impactful digital prod-
ucts. Finally, there’s a touch of The Toyota Way and Total
Quality Control, which are amazing yet underrated man-
agement schools that we think every founder or operator
should study.
And we’re really excited about what we’ve put together.
OKRs are hit the right way when things are done
differently
OKRs are results we want to achieve, and OKRs are hit -

i.e., better results are achieved - when we either a) expend
more effort, or b) change how things are done in a way that
produces said better results.
Hitting OKRs by increasing effort expenditure, e.g. work-

ing more hours, making more calls, etc., is suboptimal
because as soon as the effort reverts to the mean (and it
should if we presume people in your organization work
on average at a hard-but-sustainable pace), those higher
results will also revert to their mean.

Planning 88
As James Clear alludes to in his book Atomic Habits, we

need to change something fundamental about how we do
things if we want better results. He talks about habits, or
the stuff we do in our day-to-day life. This reasoning can
be ported to the reality of organizations.
In reasonably mature organizations, results are the prod-

uct of people following processes (could we say “orga-
nizational habits?”). These processes, or how things are
done, should reflect the best current interpretation of how
things should be done to produce the best results, said
results being, e.g., the number of deals closed by sales,
or the time it takes to onboard customers or even the
timeliness with which invoices are collected by finance. By
reflecting on how they work, people start converging to a
“proper” way of doing things, and this best way becomes
the process that’s taught to new people, and so on.
These processes are the “things” that have to be changed

if we want to produce breakthrough improvements in the
results we achieve. As the saying goes, “The definition of
insanity is doing the same thing over and over again, but
expecting different results”, right?
So in order to achieve our OKRs, we have to systemati-

cally change how things are done until we find the “right”
new way or the way that produces the results we want

Planning 89
to achieve. That’s the focus of the core part of Results

Science.
The Results Achievement Cycle, or RAC
The RAC works as a 3-step process at the core of Results

Science. The steps are as follows:
+ Analysis, hypothesis formation, and action-planning

+ Execution
+ Monitoring and reflection
The following flow chart can better illustrate it:

Planning 90
The RAC
In order to better illustrate how the RAC works, let’s dig

into a hypothetical example. Let’s imagine we’re working
for a B2B software company.
1. OKR setting
The first step in the cycle is to set OKRs. OKR setting starts
with organizational OKRs. The process of setting these top-
level OKRs is not the focus of this article, but in sum,
these top-level OKRs come from the organization’s mis-

Planning 91
sion, strategy, milestones (or visions), strengths, weak-

nesses, and so on. (Refer to this article for more on how
OKRs derive from the strategic planning process).
Let’s say for the sake of simplicity that this B2B company
decided one of its priorities for the next quarter must be
to improve how much individual account executives (AEs)
produce in sales on average. Said AEs have historically
produced $ 10k in new Monthly Recurring Revenue (MRR)
per month each. The company wants them to produce $ 12k
per month each because, which is deemed as possible by
the team after they learned via benchmarking that other
sales organizations in similar business are producing at
even higher levels.
So the CEO and her direct reports decide to set an objective

for the VP Sales that says “Improve MRR sales per AE” and
a key result around the “Average new MRR booked from
contracts signed (per AE)”. As we said, we want to take this
KPI from $ 10.000 to $ 12.000.
Ok. That’s the “easy” part - most companies do some form

or another of goal setting. But what happens next? Or,
better, what should happen next? What we don’t want is
just to set this OKR and forget it, praying that sales per AE
are going to improve by 20%.
Now that we’ve set our goal, we get into the actual RAC.

Planning 92
2. Analysis, working hypothesis formation, and

action-planning
The second step is to better understand the problem.

This usually starts with a thorough analysis: by digging
into and breaking down (which is the root meaning of the
word analysis, by the way) the results we want to improve
into a KPI tree.
The way we do this is by finding out the drivers, or up-

stream metrics, of our focus KPI. For example, in this case,
the average sales production per AE is the product of the
number of deals closed and the price per deal for each AE.
So number of deals closed and price per deal for each AE
are two significant upstream metrics for us.
But it doesn’t stop there.
The number of deals closed is a product of the number of

leads the AE got and the conversion rate between leads
and closed deals. The price per deal is a product of the list
price of the product’s individual licenses, the number of
licenses being sold, and the discount conceded by the AE.
You can structure this as a KPI tree where, counterintu-
itively, the upstream metrics are below the metric we want
to improve:

Planning 93
The KPI/Metrics Tree
After building a KPI tree, we can look at all the individual

drivers and investigate which offers the best opportunity
for improvement.
This investigation might present us with many possible

angles of attack if we want to improve sales per AE. Since
all organizations have limited resources, we need to pick
one or at most a few of them that seem most attractive,
meaning that they have higher probable returns on the
effort required to attack them.
So let’s say that after studying a bunch of options, we

decide that we will focus on two: that our conversion rate
between proposals sent and deals signed is extremely low

Planning 94
for our middle-market AEs, and that the midwest-based

SMB AEs are giving out steeper-than-average discounts on
their deals.
Next, we need to understand why things are the way they
are. We need to understand what’s wrong with the current
way we do things so that the results are coming in below
what we want them to be.
A straightforward way to do this is to gather people and

brainstorm causes, and ask “why” a bunch of times. After
that, we may get to one or two priority causes that we want
to attack. In this case, we might conclude that too many
discounts are being given because our AEs aren’t negotiat-
ing properly and that the proposals-to-deals conversion
rates are too low because the lead qualification process
followed by SDRs is not strict enough.
With that, we’ve formed our working hypothesis: in this
case, that the OKR will be achieved if the VP Sales manages
to:
+ reduce these discounts by training the AEs to better

negotiate with customers, and
+ increase these proposals-to-deals conversion rates by
improving the lead qualification process performed by the
sales development team

Planning 95
Planning a course of action
The final part of this second step is to set a course of action

for the next quarter. This course of action is what we call
an action plan.
The action plan is a series of changes in how things are
currently done in the organization that we believe will
improve results in alignment with the OKR.
For the sake of simplicity, we’re going to, for now, presume
that the VP is not going to unfold any part of this OKR nor
any of the efforts required to achieve it to direct reports.
We’ll circle back in a future post to discuss what the RAC
looks like when OKRs and projects are unfolded.
But back to action-planning: the VP Sales will have an

action plan based on two big things to execute during the
quarter that will hopefully allow her to hit her OKR.
The first is negotiation training. The VP’s action plan will

be to:
+ Shadow some of her AEs as they perform pricing negoti-

ations,
+ Develop the MVP of a negotiation training session to
address the most common problems she finds,
+ Execute the training and monitor the results achieved

Planning 96
The second is a joint task force between sales and market-

ing to review the sales development process to ensure that
the quality of SQLs being routed to her AEs is better.
The setting of action plans is the final part of the OKR

planning phase and kicks off the OKR monitoring phase of
the OKR cycle.
3 and 4. What happens next: execution and monitoring
With the action plan set, the VP sales kicks off the next
part of her OKR cycle, essentially executing the plan and
checking if the plan produces the desired results.
We will go deeper into this part of Results Science in a

future post, but let’s say, for now, that the VP sales will
execute her action steps according to plan and check the
key results to see if she makes the desired progress.
If the results are achieved, her job will then be to incor-
porate the changes into the processes her AEs are cur-
rently following. For example, she might include negotia-
tion training as a mandatory part of the AE onboarding day,
and institute annual refresher classes for all AEs.
If the results are not achieved, her job will then be to reflect
on why the results aren’t coming. Depending on what she
finds out, she may need to redo her action plan, or revise

Planning 97
her working hypotheses, or even go back to analyzing the

problem at hand.
Takeaways: OKRs are just the first step towards

better results
In sum, setting OKRs is just the start of getting better

results. A crucial - but frequently missing - part of the
process is to understand the problem at hand - the results
we want to achieve - and formulate a working hypothesis
and an action plan of what we will change in how we
do things to get better results. We call this framework
Results Science, and it’s based on learnings from our ob-
servations of OKR crushing teams, as well as on elements
from Descartes, agile methodologies, and even Total Qual-
ity Management.

Planning 98
Unfolding and aligning OKRs
The planning stage of OKRs is composed mainly by the

process of unfolding the Goals (and Projects) through the
organization, then assigning Key Results to each Objective,
and determining hypotheses and action plans to reach
them.
Now let’s talk a bit about the technique of unfolding and

aligning OKRs. Then we’ll give you a blueprint on how to
conduct this process in your company.
Unfolding Objectives
The first step in unfolding OKRs in your organization is to

unfold the Objectives. This process always begins with the
organization’s Objectives, which are usually the same as
the CEO’s. As we break down the company OKRs into other
OKRs, Projects and Action Plans, we understand what each
and everyone in the organization has to do (and how the
results of their efforts will be measured) for the company
to get where it needs to go.
Unfolding an Objective is the process of filling in the fol-

lowing gaps:

Planning 99
“In order to _ _ _ _ _ , we will have to_ _ _ _ _ _ ,

_ _ _ _ _ _, and _ _ _ _ _”
In the sentence above, the first space is filled by the Ob-

jective to be unfolded (remember, we always start with
the organization’s Objectives), and the following ones are
filled by the new Objectives and Projects that will enable us
to hit the original Objective.
Let’s use an example to illustrate our definition:
• Objective to be unfolded: reach cash flow break-even

• Objectives unfolded: Increase sales; Cut costs and
expenses; Implement Six Sigma
Therefore, if we fill in the gaps of the previous sentence,

we’ll have:
“In order to reach cash flow break-even, we will have to grow

our MRR, cut costs and expenses and implement Six Sigma.”
In this case, our original Objective (“reach cash flow break-

even”) gave rise to two other Objectives (“grow our MRR”
and “cut costs and expenses”) that, if realized, will con-
tribute to the fulfillment of the original Objective. The
Objective also gave rise to a Project based on a hypothesis

Planning 100
that “Implementing Six Sigma” will help increase the prof-

itability of the company. This process repeats itself until
Objectives can no longer be deployed, and become action
plans to be performed by someone (or a group). Remember:
All Objectives have to become Action Plans and Projects
to be executed. If they don’t, nothing is going to change.
Change happens through effort, that may - or may not -
lead to results. And OKRs must measure results.

Planning 101
Unfolding an Objective into different Objectives
Sometimes we don’t break an Objective into different con-

stituents. In these cases, we repeat the Objectives and
change only the measurement scope or the KPI on which
Key Results are based. Basically, the Objective remains
the same when it’s unfolded and only Key Results change
(we’ll see this later in more depth). This kind of unfolding

Planning 102
works very well, for example, for sales: Imagine that in

the example above, the CEO has unfolded the “increase
the profitability of the company” Objective to an “increase
sales” Objective for the VP Sales. The VP Sales is likely to
unfold this Objective equally to all members of his orga-
nization who sell or who manage salespeople, such as a
regional sales director, a sales supervisor, and ultimately
account executives. What will vary between their OKRs
is the Key Result attributed to each Objective, which will
vary depending on the products sold by the team, sales
territories, etc. The example below helps illustrate that:
Unfolding the same Objective with different Key-Results
Note that the VP’s Objective can be unfolded both as the

same Objective for one director and a different Objective
for another director. The VP can unfold sales quotas to
most of his organization under the same Objective - in-
crease sales -, but simultaneously unfold an “implement
Salesforce to all AEs” Project to the Director of Sales Ops
and an “expand to new geography XYZ” Project to another
director or team who will be in charge of executing it.

Planning 103
Assigning Key Results to Objectives
Once the Objective has been defined, as we illustrated

above, the next step is to determine Key Results that can
measure and prove if the Objective has been reached.
To facilitate the assignment of Key Results to Objectives,

let’s use the model we talked about at the beginning of the
book:
“We will _ _ _ _ _ _, and we will know if we were

successful if we can _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .”
The first space is filled by your Objective, and the second to

the fourth are filled by the Key Results.
Let’s use the example of profitability again to illustrate our
definition:
• Objective: Increase the profitability of the company

• Key-Result 1: Reach a net profit margin of 10%
• Key-Result 2: increase net profit to $12 million
If we fill in the gaps above, we get:
“We will increase the profitability of the company, and we will

know if we were successful if we reach a net profit margin of
10%, and increase net profit to $12 million.”

Planning 104
Now you have a clear Key Result that allows the entire
company to know, in an undisputed way, whether the
Objective of “increasing the company’s profitability” has
been reached.
Please note that I’ve also coupled two different Key Re-
sults to the same Objective. That’s one of the beauties of
having OKRs. These two Key Results balance each other
out, and we use them in this way to avoid weird behavior.
For example, the company could reach the profit dollar
amount Key Result by compromising margins (by handing
out excessive discounts,) or reach the margin Key Result by
compromising the dollar amount of revenues (by increas-
ing prices and thus reducing quantities).
Choosing the right KPIs for your Key Results
Good Key Results have some features that make the pro-
cess easier and more effective.
First, the Key Result needs to be based on a quantitative

indicator, or KPI. Good Key Results are based on “plottable”
indicators such as “sales of product X,” “Y to Z conversion
rate on the website,” “employee turnover at office W,” etc.
Several companies make the mistake of creating fuzzy Key

Results because there’s little clarity on which KPI is used.

Planning 105
“Sales,” for example, is a terrible KPI because it tells the

organization very little about the specifics of how the KPI
will actually be measured. It’s better to use “revenues from
new orders” or “net revenues for the company.”
Some companies go beyond and require people to use pre-

determined KPIs calculated by a central authority like a
Business Intelligence team. We think that’s too much. You’ll
be fine if people just clarify the right KPI to measure in the
Key Result, and maybe even write down the formula for
how to calculate the KPI in the Key Result description.
Second, ideally, this KPI is easy to measure. Monitoring,

which we’ll cover in a bit, can be harmed by Key Results
and their KPIs being too hard to measure, which causes
people not to track them enough, or at all. Therefore, easy-
to-measure KPIs are always better than hard-to-measure
ones.
Third, it’s important that the indicator be sensitive to the

efforts of the OKR’s “owner.” There’s little use in basing
an OKR on KPIs that are out of their owner’s control. People
have to have authority and autonomy to influence their
OKRs. In addition, KPIs need to be measurable in a cadence
that’s contained within the short cycle. There’s no point,
of course, in basing a quarterly OKR on yearly sales, or
usage of a product that’s not going to be released within
the cycle.

Planning 106
How far should you unfold OKRs?
According to Vicente Falconi, whom we’ve already quoted

much here, “unfolding will only be complete when all
goals result in plans of action that are, in fact, the most
important parts of planning.” Company OKRs have to be
unfolded until they’ve become action plans and projects to
be executed by someone or some team somewhere.
The “End of the Line”: All OKRs must “end” in Projects and Action
Plans
We briefly talked about Action Plans and Projects above.

The difference between the two lies in the complexity of
the initiative: An Action Plan tends to be simpler (a set of
tasks), and a Project tends to be more complex, including
longer deadlines and eventually more than one “owner.”
Action plans
Every Objective has to either be unfolded, in which case

it becomes another Objective or a Project, or generate an
Action Plan.
To create a good action plan, the OKR owner should start

by analyzing the situation at hand - that is, the reality

Planning 107
surrounding the OKR to be achieved. After the analysis is

done, possible areas of attack are listed and then priori-
tized according to their impact on the OKR and their cost,
which is gauged by complexity.
Solutions are then discovered with techniques such as five

whys, the fishbone diagram, design thinking, and brain-
storming. This is followed by developing possible correc-
tive and preventive solutions to the problem.
With those areas of attack prioritized, the OKR owner can

then establish an Action Plan that summarizes when, where,
why, by whom, and for how much these actions will be
executed.
Who should have individual OKRs?
This is a very controversial subject. Some OKR coaches,

such as Felipe Castro, founder of Lean Performance, argue
that multi-disciplinary teams should only have team-level
OKRs, and therefore members of the team shouldn’t have
individual OKRs. The reasoning goes, allocating responsi-
bility for results is virtually impossible in these cases. We
think that’s a fine example where individual OKRs make
no sense.
To illustrate that point, let’s think of an e-commerce com-

Planning 108
pany that has a team (for example, a Scrum or a squad

made up of designers, engineers, and product managers)
whose priority for a given cycle is to reduce the abandon-
ment rates of the shopping cart.
We can think of an obvious Objective for the squad: im-

prove the shopping cart conversion rate. We can also think
of some pretty obvious Key Results, like “reduce shopping
cart abandonment rate to 5% in this quarter.” Would it
be possible to further unfold this OKR to individual team
members?
Let’s fast forward a bit and say the team is successful in

reaching the OKR. How much of it can be attributed to the
front-end engineers, who have coded the improvements
in HTML and CSS? Or to the back-end engineers, who have
coded the improvements on the server? Or the designers,
who have drawn the screen changes, created mock-ups,
and tested them with users for ease of use? Or the prod-
uct managers, who have managed the entire process, and
interfaced with other teams within the company?
As I’ve implied, multi-disciplinary product teams are great

examples of when unfolding individual OKRs makes little
sense.
Sales, on the other hand, is an area of the company where

unfolding OKRs to the individuals is almost always a good

Planning 109
alternative. That’s because salespeople tend to be held ac-

countable for their individual results, which are very easy
to measure: an account executive’s results are her sales
numbers. Therefore, OKRs can be unfolded to them, and
Key Results will be based on their production levels.
Everything in between sales and product can be a bit fuzzy.
Generally, the higher up the person is in the organizational

chart, the bigger the chance she’ll have individual OKRs.
As we get farther down the chart, chances are that lower-
level employees will be more accountable for executing
Projects, which are efforts and must not be confused with
OKRs, which are results.
A manager in the accounts payable team, working under

the CFO’s organization, may have an OKR about reducing
the number of errors in both invoices paid and received,
and another OKR about reducing days-receivable or ex-
tending days-payable. She will then unfold to her team a
couple of Projects that she and her team believe will help
hit those goals, like implementing a major new piece of
software and reengineering the account payables approval
process.

9. Monitoring
More important than the definition of OKRs are the rituals

that form their cadence: what we’ll call monitoring. Mon-
itoring is where the rubber meets the road. It’s where the
benefits of OKRs (performance, excellence, alignment, and
learning) come to life and produce better results across the
enterprise.
Monitoring 111
Results meetings
The first and most important part of monitoring OKRs is

the Results Meetings.
Results meetings are cadenced gatherings where a leader

will meet with her direct reports to discuss their OKRs and
Projects.
The meeting agenda is incredibly simple: Every direct re-

port has an allotment of time where she presents which
OKRs and Projects on her panel are off-track, then explains
why these OKRs and Projects are off-track, and, finally,
enumerates the actions she’s already taken to get them
back on track. Summing it up, every participant states:
• Which OKRs/Projects are off-track

• Why these OKRs/Projects are off-track, and
• Which actions are already underway to get these OKRs/Pro-
jects back on track
Why focus only on what’s off-track? Because time is ex-

tremely limited, and meetings can quickly become long
and boring. Therefore the focus is exclusively on what’s
“red.”

Monitoring 112
Fostering the right culture
A big part of making monitoring, and OKRs in general,

work is to foster a constructive, positive environment around
these meetings.
It’s of the utmost importance that those employees who

present what’s off-track aren’t condemned or humiliated
in public. The idea isn’t to scold people in front of their
peers but to solve real problems and think.
The idea is that there’s nothing wrong with making mis-

takes - that is, forming hypotheses of how you’re going
to hit your OKRs that don’t work out. The only problem is
if people make commitments, like action plans, and don’t
follow through with them. That sort of problem should be
handled offline like any other behavioral issue.
We can attest to the fact that when people honor their

commitments, even not hitting OKRs feels constructive
and productive, because Results Meetings tend to be intel-
lectually challenging and interesting. People are honestly
trying to figure out what was wrong with their reasoning
and what they’ll do differently to get OKRs and Projects
back on-track.

Monitoring 113
A great framework for assessing progress
In order to create a culture of learning and problem solving

(as opposed to a culture of guilt and finger-pointing), we
seek inspiration in how Vicente Falconi (2012) suggests
goal attainment be analyzed.
He describes a two-by-two matrix that has, on the one
side, if the action plan was executed or not, and on the
other if the OKR was achieved or not.
With it, we are able to analyze whether an OKR has been
achieved “on purpose” or “by chance,” and the same for
OKRs that were not achieved (remember, on-track OKRs
won’t be discussed in Results Meetings unless there’s a lot
of time to be spared).

Monitoring 114
Matrix
• Quadrant 1 - actions were executed according to

plan, but the OKR is off-track: In this case, the hy-
pothesis, and thus the action plan, were wrong. The
team has to find out why the plan was wrong in the
first place and adjust it.
• Quadrant 2 - actions weren’t executed according
to plan, and the OKR is on-track: Here, the main
focus of the meeting should be on what caused the
OKR to be on-track even though the plan wasn’t ex-
ecuted. It’s great that the OKR is on-track, but the

Monitoring 115
team should understand exactly what factors weren’t

factored in in the first place. Of course, it’s also im-
portant to understand why the plan wasn’t executed.
If there were reasonable exogenous factors that pre-
vented the plan from being executed, the team must
understand why they were not neutralized with new
actions or alternative courses of action. Of course,
sometimes a lack of execution just means a behavioral
problem, which should be addressed one-on-one by
the manager.
• Quadrant 3 - actions were executed according to
plan, and the OKR is on-track: Even when OKRs
are on-track, teams must carefully reflect on their
achievements and assess whether they’re a conse-
quence of the action plan or of exogenous factors.
What factors were these? Why were they not fore-
seen? The team must understand the whys behind
each response.
• Quadrant 4 - actions were not executed according
to plan, and OKR is off-track: This one is the easiest.
The solution is just to get back to executing the plan
and to figure out why the plan was not carried out
in the first place. The manager should also figure
out, as discussed in Quadrant 2, why the plan wasn’t
executed and treat possible behavioral issues one-on-
one accordingly.

Monitoring 116
Now let’s talk a bit about some tools that can help you fig-
ure out why things are off-track prior to Results Meetings.
Five Whys
The “five whys” is a very simple method to get to the root

cause of a problem. When people get on the first layer of
a problem (the first “why”), they tend to only scratch the
surface of the problem. Therefore, the tool suggests asking
“why” to a problem as many times as necessary (five is just
a placeholder) until the ultimate root cause is encountered.
A simple example can illustrate how “five whys” works:
Question: Sales fell by 10%. Why?

Answer: Because of the demonstrations that took place
in the city.
Q: Why did the demonstrations affect sales?
A: Because some streets were closed, and our trucks
couldn’t reach the merchants.
Q: Why couldn’t our trucks reach merchants?
A: Because the only open streets were narrow, where
our trucks couldn’t pass.
Q: Why weren’t smaller trucks used to deliver goods on
that day?
A: Because we don’t own smaller trucks.

Monitoring 117
Boom! You’ve reached the root cause of the sales downturn,

which is far more subtle and specific than simply blaming
the demonstrations.
Great root-cause analysis makes planning easy. In this

case, the suggestion is to lease smaller trucks to be used
during the rallies planned for the next month. If sales keep
up after the experiment, the company then adopts a new
standard: to arrange for a fleet of smaller trucks to be on
call for such unforeseen events.

10. Debriefing
Debriefing is where the OKR cycle ends, and a new cycle

starts. Its main purpose is to wrap up the scoring of the
OKRs and to learn from what happened throughout the
cycle.
Debriefing 119
Grading OKRs
There’s a lot of discussion around how OKRs should be

graded (or scored, or rated - these should all be used as
synonyms) at the end of the cycle. Google’s approach is
to keep it incredibly simple, so there are only five possible
achievement scores for an OKR:
• 0.0: No progress made

• 0.3: Little progress made (something achievable with
minimal effort)
• 0.5: Reasonable progress (something achievable with
considerable effort)
• 0.7: Expected progress (which is achievable with the
expected effort; as we discussed earlier, 0.7, or 70%,
is “100%” at Google)
• 1.0: Extraordinary progress (more than expected)
Google encourages its employees to preset what these scores

represent (in terms of actual results) at the start of the
cycle. For example, a team that sets an OKR of “reduce
page load times on Google search by 10%” may agree up-
front with its leadership that a decrease lower than 2%
will mean 0.0, or no progress made; they may also agree
that a decrease from 2,01% to 5% will mean 0.3, or little

Debriefing 120
progress made, and so on, and so forth. The important part

of setting the grading “ruler” upfront is to minimize the
amount of energy dispended on grading the OKR at the end
of the cycle.
At other companies, other grading scales are used. They

can vary from simple 1-to-5 ratings, letters or even per-
centages that exceed 100% (a level comparable to Google’s
“extraordinary progress”). Let’s call these the subjective
rating way of grading Key Results.
Rating scales don’t have to be the only way to score OKRs.

Another way to score them is based on the actual progress
that’s been made on the underlying KPIs. If a Key Result
was to reduce customer turnover from 10% per month to
5% per month, and actual turnover was 5%, 100% of this
Key Result was achieved (of course, if the turnover at the
end of the cycle was 10%, 0% progress was achieved, and so
on). Let’s call this the linear mathematical way of grading
Key Results.
Some Key Results can have binary achievements, such as

an M&A deal: It was either completed or not completed. But
this type of Key Result should be the exception and not the
rule.
If you are investing in a high-performance, results-oriented

culture, tracking the KPIs on which Key Results are set is a

Debriefing 121
must. It will make everything easier and more objective.

Debriefing 122
Running the debriefing
During the debriefing part of the cycle, the company fi-

nalizes its OKRs by inputting the last data on KPIs and
getting final achievements. If the monitoring phase was
well-done, this will be very easy and fast.
The next phase is having people debrief on what went right

and wrong. For each OKR, we suggest everybody presents
a simple reflection:
• Where the results achieved (yes/no)? What went right

and what went wrong?
• Why did these things go right or wrong?
• What have I learned from this cycle that I’ll take with
me and the company?
This can be a simple form to be filled in a performance man-

agement application or a couple of slides to be presented
to the team (or both). What’s important is that those
presenting their debriefings are honest and self-reflective
about their performance and their learnings. That’s really
what the process is all about.
At Google, senior management presents a debriefing of

organizational OKRs every quarter in an all-hands meeting
that follows the company’s board of directors meeting.

11. Most common mistakes
Implementing OKRs can fail for a number of reasons. Here

we’ll detail the main ones:
Not doing it gradually
OKRs should be implemented gradually:
• From fewer OKRs towards more OKRs

• From company goals towards individual goals
• From shorter iteration cycles (and faster course-correction)
towards longer iteration cycles
If you try many things at once, such as unfolding five

company OKRs down to the individual level in an annual
cycle, your project will surely fail. People won’t know what
the hell is going on, they won’t remember their OKRs,
teams won’t monitor their OKRs, etc. It’s very important
that the company starts at the appropriate cadence, and
that means to warm the engines gradually, to do rituals like
results meetings right, so as to create healthy habits.
Most common mistakes 124
Baby steps: You can start with one company-wide Objec-

tive and three or four Key Results in a one-month cycle.
See how it goes, learn from the process, and repeat. After
three months, unfold the OKRs loosely to the teams. Three
more monthly cycles. And so on. If the company has incor-
porated the cadence - the habit - of monitoring its OKRs,
you’ve already made tremendous progress towards more
alignment and results-orientation
Setting too many OKRs
One of the great advantages of OKRs, especially for com-

panies that do nothing strategic planning or goal-setting,
is that they lead to greater focus. As the OKR cycles are
shorter, you can afford to have a narrower focus per cycle,
aligning the entire organization on the most pressing is-
sues.
The total number of Objectives of any single entity (be it

the company, a team, or a person) should not exceed the
fingers on one hand (three is best). More than that, and
they won’t be remembered.
Let’s look at a practical example of a product manager’s

OKRs for the first quarter of 2016:
Objective 1: Improve engagement on the SaaS

product
Key Results: Increase the number of monthly
active users by 15%; Increase the average time
spent on each page by 5%
Objective 2: Generate a high level of customer

satisfaction
Key Result: NPS> 8 with> 90% of customer re-
sponses
Objective 3: Launch new reconciliation feature

Key Result: Usage of at least four customers per
day; Ten (upsell) paying users.
As you can see, the PM has three things he has to focus on

this quarter:
• Engagement
• Customer satisfaction
• New reconciliation feature
These priorities are supported by four Key Results that

support them. This is highly manageable and easy to re-
member. As Marcel Telles, former CEO of AmBev (now SAB
Miller + Anheuser-Busch InBev), says: “Goals have to fit
on the fingers of one hand.”

“Setting and forgetting”
Goals lose their raison d’Ãªtre if they aren’t monitored.

Accountability is critical: Employees must own their OKRs,
and Key Results should be monitored on an ongoing basis.
There are a number of reasons for this:
• In discussing the whys of each goal, the organization

learns what works and what doesn’t work. What ad-
vantage is there in knowing that someone has achieved
their OKRs if he or she doesn’t know which specific
course of action has led to the results achieved?
• Constant monitoring shows that the organization cares
about OKRs. Many companies spend time and effort
deploying and discussing OKRs, only to forget them
until the end of the cycle. If the company isn’t mon-
itoring its OKRs, then individual contributors, teams,
and leaders won’t monitor their OKRs. It’s an exam-
ple that has to be set by the company from top to
bottom.
Company OKRs must be monitored at all-hands meetings;

team OKRs should be monitored at special Results team
meetings. Never skip a Results Meeting: just as zero-tolerance
helped end New York City violence, it will do wonders for
its high-performance culture.

OKRs that are too hard
There is scientific evidence (Locke, 2011) that difficult goals

create better performance. That’s why we talk so much
about stretch goals. Carlos Britto, CEO of AB InBev, says the
ideal goals should be those “you know 80% how to beat.
The other 20% will be learned along the way.” But science
also suggests that Goals must be attainable, meaning that
they’re realistic: Setting goals that are too difficult frus-
trates people (who have to believe they can achieve them
for the methodology to be effective).
Locke and Latham say, once again:
“Nothing generates success as success. On the other hand,

nothing generates feelings of despair like a constant fail-
ure. The main purpose of goal setting is to increase the
individual’s level of motivation, but goals can have exactly
the opposite effect. Consequently, the supervisor should
be looking for unrealistic goals, and be prepared to change
them when necessary.”
Starting with moonshots
One of the most common mistakes made by companies

that are adopting OKRs for the first time is to focus on
stretch goals in the beginning.

When companies start using OKRs, employees usually don’t

have a very good understanding of how its main KPI has
behaved in the past. Because of that ignorance, they usu-
ally set very aggressive Key Results, for fear that they will
not be too challenging. That fear can be compounded by
reading stuff about “roof shots,” “moonshots,” and other
Google fancy practices at Google (which, as we’ve seen,
aren’t that real).
Needless to say, if no one achieves their OKRs, the first

impression left by OKRs is terrible; the image of the OKRs
is tarnished, and people start to think that not achieving
their OKRs is the rule - or worse - they completely abandon
them.
The right way to do this is to set conservative OKRs to begin

with: levels that aren’t a big stretch. After a few cycles
of consistency and commitment, the company can slowly
start stretching its goals.
After more maturity is achieved (where the company as a

whole reaches 70-80% of targets, people can start having
the freedom to set one stretch OKR per cycle, but not more
than that.

Goals that are too easy
Alternatively, OKRs can’t be too easy. Research indicates

that very easy goals generate low levels of motivation and
energy due to their lack of challenge in the eyes of their
owners. According to Locke: “One of the most consistent
findings of the level of difficulty of the goals is that when
goals are very low, people often achieve them, but subse-
quent levels of motivation and energy typically fall precip-
itously, and goals are narrowly missed.” In other words,
people adjust their efforts to minimize their energy expen-
diture.

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Acknowledgements
I’d like to thank all the authors I’ve cited on the book:
I am standing on the shoulders of brilliant giants. My
family - Danielle, Lia, Eureka, and Eugenia - for all love
and support, as well as patience with my long working
hours and frequent travels. All the Q.Players that work
with me in realizing our mission of empowering companies
to achieve great things: we all served as lab rats in learning
more about OKRs at work. Working with you all honors
and humbles me on a daily basis. Ali Rowghani, whose
amazing article, The Second Job of a Startup CEO, opened
up my eyes about the importance of having all employees
aligned, from mission to metrics. Our investors at Qul-
ture.Rocks, who fuel our endeavors. Of course, this list is
not exhaustive, and I’ve certainly forgotten many worthy
mentions.
Final note
We’ve finally reached the end of this incredible OKRs jour-

ney! I hope you’ve enjoyed the content and now feel more
comfortable with implementing OKRs at your organiza-
tion.
This book is a constantly evolving piece of work, so there’s

a chance you don’t have the most up-to-date version at
your fingertips. Check-out http://qulture.rocks to down-
load the latest version.
To implement OKRs, you may need some even more tac-

tical tips on how to conduct the workshops, dynamics,
and meetings throughout the cycle, and whose workings
we describe only at at a high-level in this book. To learn
more about it all, please reach out to me and our team at
growth@qulturerocks.com.
Cheers,
Francisco
Appendix I: Using OKRs in
software product teams
Setting OKRs for product teams is a very tough challenge.

In 9 out of every 10 OKR implementations we take part in
product teams set their OKRs as if they were deliverables.
In this chapter, we’ll discuss how to use OKRs in software
product teams.
OKRs are not about features to be shipped
The big challenge is that OKRs are a tough discipline, and

most people get it wrong when trying to use it in product
teams. The OKR ecosystem also doesn’t help - a quick
search over the internet led me to a competitor’s website,
where I found the following example as inspiration for a
good OKR [1]:
“Objective: Implement new 360-degree product plan-

ning process
Appendix I: Using OKRs in software product teams 137
Key Results:
• Document clear role division between sales, mar-

keting, design and (sic) development
• Decide on and document the process of input
methods to and from sales, marketing, design
and (sic) development back into product manage-
ment
• Integrate user testing into all activities in prod-
uct planning and design phase
• Integrate user testing into pre-launch testing
phase”
Not to mention Google’s re:Work website (Google is, as

you might already know, the company that has basically
helped the OKR gospel spread throughout Silicon Valley)
that cites “eat 5 pies” as an example of a great objective,
but I’ll leave that for another post (if you want to learn
the basics of OKRs, read our book, OKRs, From Mission to
Metrics).
Anyway, most product OKRs look something like this:
Objective: Deliver new iOS app

Key results:

• Design first concept

• Code MVP
• Get beta testers
• Publish the app by November on the app
stores
What’s wrong?
OKRs are all about RESULTS
If you read Inspired, by Marty Kagan, founder of the Silicon

Valley Product Group and a big hotshot, you’ll get the idea
that we should ditch roadmaps as we know them (long lists
of features to be built) and replace them with OKRs.
What he’s saying is that roadmaps are bad for product

teams because they aren’t a direction teams can chase.
Roadmaps are usually built by a hodgepodge of intuition,
hunches, and highest-paid-people-in-the-room opinions.
Instead of a roadmap, leaders should set clear OKRs - or

results expected - and let their product teams figure out
what to do - or what to build - in order to reach them.
But setting proper OKRs is tough, and usually, teams veer
back to some sort of mishmash between OKRs and a roadmap.
And roadmaps are collections of efforts.

When we ship a new feature, there’s no guarantee it will

generate any impact on our business, good or bad. Users
may not even use them (and we know the hard way that’s
frequently the case).
So don’t confuse efforts and results, roadmaps and, im-

pact: OKRs should be about results and not efforts. Deliv-
ering features is an effort that will hopefully produce results
down the line. Let’s call features, or the effort product
teams put up, “output.”
Financials are not good results to aim at
Marvelous. Now we know that OKRs shouldn’t look like

roadmaps or features to be shipped.
We have to find results with which to work. So what results

can a shipped feature produce?
At the highest level, and being rather simplistic, features

should produce more revenues or fewer costs for the com-
pany that owns the product. That impact on the bottom
line can come sooner, such as more conversion for an
e-commerce website this quarter, or later, such as more
perceived quality on a social network’s timeline that will
reduce churn and thus produce more revenues in the fu-
ture.

But these sorts of business results, are really hard to relate

to or to optimize for. The impact of features is hard to
map to the top line or the bottom line of the company. (Of
course, some exceptions must exist: when a team works
on fixing terrible bugs on the check-out flow of a website,
they may impact sales quite directly, in the form of getting
customers to close rather than to go shop elsewhere. But
generally, things are a bit more nuanced.)
Another problem is that financials are impacted by too

many variables. We can’t attribute to the checkout squad
how much revenue customers are bringing into an e-commerce
operation. It’s also a function of the product mix, the
overall store usability, shipping costs, and speed, only to
name a few. It wouldn’t be fair nor helpful.
So we need to find other results to base our OKRs on.
Outcomes
Joshua Seiden has a great book called “Outcomes over

Output” that will help us make progress [2]. It’s honestly
a must-read for all product teams.
Seiden calls business results, like revenues, profits, and

costs, “Impacts” (we’ll capitalize the terms he uses when

using them to his specification). He also calls the stuff

product teams build, or features, “Output.”
But Seiden doesn’t stop there: he suggests there’s some-

thing in between Outputs and Impact that we should be
aware of: Outcomes. The definition of an Outcome is quite
simple: “the human behaviors that drive business results.”
He goes on saying that “ we want our customers to log
onto our site more often, or put an extra item in their
shopping cart, or share an interesting article with a friend,
or upload a picture, or complete a task in less time. What do
all of these things have in common? They’re all measures
of customer behavior. They might be small changes in
a big system, but they are specific, and they allow our
teams the flexibility to figure out the most efficient way
to solve the problem, to deliver the behavior change that
we seek, and to make a meaningful contribution to the
impacts (revenue, profitability) that our executive leaders
care about.”
In our business (software that helps teams implement 1:1s,

ongoing feedback, and peer-to-peer recognition), some
examples of Outcomes we build for are:
• Number of feedbacks given by users

• Number of 1:1s done on time by users

• Percentage of users from the “direct report” persona

who’ve gotten feedback in the last 30 days
You get the picture. Outcomes are user behaviors that we

believe will drive Impact (or business results). As a rule of
thumb, if your OKRs - more specifically, your key results
- don’t come out of Mixpanel, you’re probably doing it
wrong.
Outcomes, experiments, and MVPs
You read that right: we believe Outcomes will lead to Im-

pact.
What separates great product teams from mediocre ones
is how often they get those assumptions right, and/or how
quickly they iterate when wrong.
Tying back to Marty Kagan, the fact that Output doesn’t

always lead to Outcomes, nor Outcomes to Impact, by the
way, is why product teams should prefer OKRs over a roadmap:
roadmaps should be flexible, and not set in stone, since
they will frequently change in the journey of maximizing
for Impact.
Of course, product teams - or most product teams nowa-
days - will still have some sort of backlog of features to
build. But this backlog won’t be simply a refined material-
ization of the roadmap: it will hopefully be a list of features

that have been proven, to the extent possible, to generate

Outcomes.
The process of finding out if features will indeed produce
results is called discovery. Discovery happens via experi-
ments, or the smallest efforts (i.e., time from the team)
that can prove our hypotheses of what features will drive
Outcomes, and what Outcomes will drive Impact. Product
teams should always be running experiments that test
those hypotheses, with the least code possible.
By the way, a product team should work on its discovery

efforts in parallel to its delivery efforts. Discovery is find-
ing out which features will lead to Outcomes. Delivery is
building these features with production-level quality. The
good thing is that Outcomes, on which your OKRs should
be based, change with much less frequency. They tend to
be metrics we’ll optimize on the mid to long-run. It’s hard
to think of Facebook not maximizing the time users spend
scrolling on their News Feeds [3], or the number of posts a
user likes at a given active session.
Setting OKRs with Outcomes
Ok. Enough with the product-speak. So what does a proper

OKR look like for a product team?
Let’s say we have a product team at Qulture.Rocks [4]

composed of a product manager, a designer, and a few

front-and-back-end engineers. Let’s also say that Qul-
ture.Rocks’ OKRs this quarter revolve around growing MRR
from new customers, growing MRR from existing customers
(via net expansion), and burning less than a given amount
of cash each month, in order to preserve runway. Their
objective [5] could look like the following:
Increase the activation rate of technical leaders

with our product
Where did this objective come from?
Members of the executive team have found out that leaders

in tech teams are a great persona to optimize for: they
convert at a low cost (CAC,) and churn very little when
properly activated (the process that starts with a sign-up
and ends with a happy, active, and retained user). They’ve
also found that they aren’t very successful in activating
technical leaders: more than 50% of those who sign up end
up abandoning the product before experiencing its value.
Ok. Now, what key results [6] does the team have?
Key result: Net activation rate of users classified

as “tech leads” from 50% to 70%

What’s cool about this OKR is that our product team can
run a great number of experiments of things they could
do to improve our activation rate. They could create an
onboarding flow that’s specific to tech leads; they could
call each tech lead on the phone to explain the value of the
product to them; they could pre-load the application with
product team OKRs so that tech leads quickly see value; or
they could work on an email campaign to get these users
back on the product (resurrect them).
Since OKRs should be aligned up (or unfolded down, what-

ever you prefer,) this OKR can be aligned - or contribute -
to the following OKR:
Objective: Improve our customer retention

Key result: Gross monthly churn rate, from 2%
to 1.4%
And this “churn” OKR can be aligned to the following

company-wide OKR:
Objective: Improve our MRR in line with the best

in the business
Key result: MRR, from $ 240k to $ 330k

But what if we already have a roadmap?
Most probably, if you’re reading this article you already

have a roadmap. So I want to make clear you don’t have
to chop your roadmap into pieces right away, even though
that would be neat.
What you can do is look at what’s next in your roadmap.

Ask yourself what Outcomes do we want to create with
this Output (feature)? And then what Impact do we want
to create in the business with this Outcome? These ques-
tions will allow you to first set the right frame of mind
and, second, check if your roadmap makes business sense.
Then you should gradually stop updating your roadmap
and setting OKRs instead.
A big challenge: enterprise software
Last, let’s talk about some challenges enterprise product

teams may face in this journey of using OKRs to change
from Output to Outcomes to Impact.
Getting this right in enterprise software is the hardest for

two reasons: the connection of Outcomes and Impacts may
be weak or hard to prove, and/or Outcomes may be hard
to properly measure. This is true because, respectively, in

enterprise software, buyers rarely use the product (check

out this tweet), and usage is usually affected by extraneous
factors.
To explain the first case, let’s imagine Jane the CFO works
for Jalmart (fictional characters, please). She buys Oriple
ERP because she wants to have all her financial informa-
tion organized in one place (her employer is getting ready
for an IPO.) Now let’s move to a product team within
Oriple’s New Dehli offices, that takes care of a specific
feature that handles payable invoices. Let’s also say this
team wants to improve the rate of invoices properly input
on the system within the same active session. If they do
this, accounts payable analysts within the companies that
use Oriple will probably love how easy it has become to do
that workflow. But will that really affect Oriple’s revenues?
Or its churn rate? Jane the CFO will probably never even see
that feature. And it will take A LOT of kicking and scream-
ing from the whole company to get her to switch ERPs,
especially after the nightmarish implementation process
that Agzzenture ran for two years.
In these cases, the assumption around if an Outcome will

generate Impact is hard to test. Product teams will have to
rely on their intuition (and market trends that point to the
consumerization of enterprise IT) to get work done.
To explain the second case, let’s imagine Ned the Analyst.
He “uses” Facelook Wordplace because Jowen and Co’s

HR department implemented the corporate social network

company-wide. “Uses” is in quotes because Ned rarely
logs in. He thinks it is a nuisance. Come next month the
company’s CEO, Gretta, announces she’s resigning in a
weird Wordplace post, and everybody single employee in
the company logs in to read it and gossip about it.
Now let’s cut to a growth team within Facelook that han-

dles Wordplace, a young product with about 15 customers.
They have an OKR that revolves around resurrecting in-
active users and are running several experiments around
email campaigns and push notifications. The team thought
it had some promising A/B test results on the push front
and were about to scope a full-blown feature for the back-
log when they learned about the post at Jowen. They’ll
either have to scrap the OKR altogether and move forward
by sheer faith, or stop everything they’re doing and wait
for more test results.
There’s no right answer to this question.
You might think this is uncommon, but there are many

enterprise products that have usage metrics polluted by
“offline” behaviors, and it can be very hard to clean the
metrics and get something meaningful. HR software is
especially tricky, as we can attest.

Notes
[1] Maybe they should change their business to SEO con-

sulting ;)
[2] Like we frequently do at Qulture.Rocks, we’ve pur-
chased five copies of the book for our product team to
share.
[3] It takes a “time well spent” movement to change that.
[4] We do have one exactly like that.
[5] Let’s remember: an objective is a qualitative goal, usu-
ally starting with a verb and ending with a non-numerical
description of an aspect of the business to be improved.
Some examples: “increase adoption,” “reduce our cash
burn,” or “enhance our customer satisfaction.”
[6] Let’s also remember: a key result is the sum of a KPI
(e.g., “net profit of the company in 2020”), a base level
(“100.000”) and a target level (“200.000”.) We believe
objectives should be narrow enough in scope to carry one
or two key results at most. If your objective has more than
two key results, you’ve probably too big a scope.

Appendix II: The Tensions of
Getting OKRs Right
Getting OKRs right is really hard.
We follow many organizations that hire our software im-

plementing the toolkit every month and watch firsthand
how tough their journey is.
We’ve also felt our share of the pain: even though you could
say Qulture.Rocks is “an OKR company” (damn, we’ve
written the book on them,) we’ve taken a long time to get
to a point where I can honestly say we’re doing it “right.”
And it looks like we’re still far from done: our rituals and
practices are still improving steeply.
One of our learnings with OKRs is that in order to get the

most out of them, organizations have to perform a few
tricky but very important balancing acts. For example, they
have to balance how much commitment OKRs extract from
their “owners” and how much these same OKRs encourage
people to stretch what they believe are their capabilities.
The firmer a commitment people perceive their OKRs to be,
Appendix II: The Tensions of Getting OKRs Right 151
the less people will be incentivized to set stretch targets.

But up to a point: too much stretch and all commitment is
lost, and OKR targets cease to have any meaning.

Tension 1: Stretch x commit
As we’ve seen before, difficult but achievable goals maxi-

mize worker motivation.
Vicente Falconi, a Brazilian management guru, relates dif-

ficult goals to employee engagement when he says that
“from the point of view of the people involved, the value of
the goal must be above their capacity to reach it, in a way
that they need to learn and grow in the process of working
towards it.”
Therefore, we want people to set aggressiveish goals.
But, we also want people to take their goals seriously. It

must mean something to achieve them or to not achieve
them. But, if the implications of not achieving the goal are
negative for those involved, they will sandbag the process
and try to negotiate their OKR targets to be lower and
therefore easier to attain.
Organizations that try to optimize for commitment usually

attach bonuses and other compensation decisions such as
promotions to goal attainment: one will make X salaries
if she attains more than 120% of her goals, and so on and
so forth. But as soon as such consequences are defined,
you can bet people will try to set lower targets and thus
maximizing their chances of making more money.

The flip side of that is not tying goal attainment to direct

consequences, and encouraging people to set what pundits
call “roof shot” or “moon shot” targets. The risk of that
is that not attaining OKRs becomes the rule and not the
exception, and that, I think, defeats part of their purpose -
or, neutralize part of their very benefits.

Tension 2: Accountability x learning
An adjacent tension (relative to Tension 1) is that between

accountability and learning.
A great way to improve commitment towards OKRs is do-

ing things that increase people’s feelings of accountabil-
ity towards them. A great example of this is to have the
members of a management team (e.g., Amazon’s S-Team)
discuss the status of their OKRs with each other and with
their leader (e.g., the CEO) in monthly “results meetings.”
But if people feel too accountable towards their OKRs, to

the point where they feel ashamed of talking about the off-
track ones with each other and with their leaders, meet-
ings become fountains of excuses and a climate of fear is
installed. And the biggest problem with such an outcome
is that OKRs and the discussions around them - especially
the off-track ones - tend to be amazing culture building
and learning experiences, from which everybody comes
out better than they were when they entered. Again, pull
too much in the direction of accountability, and you lose
learning and harm your culture.

Tension 3: Rigor x flexibility
A great way to foster the right level of commitment and

accountability is to have people go through a rigorous pro-
cess of reflection and replanning (part of what we call the
monitoring phase of the OKR cycle) when any of their OKRs
are off-track and when they are not achieved by the end of
a cycle (part of what we call the debriefing phase of the OKR
cycle).
At Qulture.Rocks, our operating committee meetings are

structured around discussions of off-track OKRs and projects.
These OKRs are presented by their owners alongside a
written-down deep dive of why they think the status is as
it is, and thorough plans to get them back on track.
During debriefing sessions that happen at the end of our

three-month OKR cycles, people perform a similar process,
but that also includes OKRs that were hit (the focus then is
on why the OKRs were hit. Believe me, it’s very common
for people not to know the real reason why they hit their
targets).
Having people go through a due reflection process both

when their OKRs are off-track and when they hit their
OKRs lets them know that on the one hand OKRs are not
just some random thing nobody cares about, and on the

other hand that the focus is on the learning aspect of it,

and not solely on the attainment of the OKRs.

Tension 4: Input metrics x output

metrics
This fourth tension will be discussed in a form that’s a bit

different from the form I’ve used on the other three of
them. I’ll quote heavily from two books: the first is Invent
and Wander, a recent book that collects writings by Jeff
Bezos; the second is Working Backwards, by two of his
former aides, including one that was his technical advisor
(a chief-of-staff of sorts).
In his 2009 letter to shareholders, Amazon founder and

former CEO Jeff Bezos talks mostly about how goals are
a central part of its management system. Here are a few
quotes [2] for inspiration:
“Our annual goal setting process begins in the fall and

concludes early in the new year after we’ve completed
our peak holiday quarter. Our goal setting sessions are
lengthy, spirited, and detail oriented.
We’ve been using this same annual process for many
years. For 2010, we have 452 detailed goals with own-
ers, deliverables, and targeted completion dates. These
are not the only goals our teams set for themselves,
but they are the ones we feel are most important to
monitor.

None of these goals are easy and many will not be

achieved without invention[3]
We review the status of each of these goals several
times per year among our senior leadership team and
add, remove, and modify goals as we proceed.”
But the real point of Tension 4 comes a bit later:
“A review of our current goals reveals some interest-

ing statistics: 360 of the 452 goals will have a direct
impact on customer experience. The word revenue is
used eight times and free cash flow is used only four
times. In the 452 goals, the terms net income, gross
profit or margin, and operating profit are not used
once. Taken as a whole, the set of goals is indicative
of our fundamental approach. Start with customers
and work backward. Listen to customers, but don’t just
listen to customers—also invent on their behalf. We
can’t assure you that we’ll meet all of this year’s goals.
We haven’t in past years. However, we can assure you
that we’ll continue to obsess over customers. We have
a strong conviction that that approach—in the long
term—is every bit as good for owners as it is for cus-
tomers.”

As you can see, Jeff is essentially saying that most of Ama-

zon’s goals are based on input metrics that revolve around
customer experience, and not on output metrics that re-
volve around financials. The distinction between input met-
rics and output metrics is best drawn by the following
quote by Colin Bryar [4] (highlight mine):
Jeff and I (Colin) once visited a Fortune 500 company

to meet privately with the CEO in his office. During our
meeting, an assistant dashed in and handed the boss a
sheet of paper. The CEO glanced at it, waved it at us,
and proudly said, “Our stock is up 30 cents this morn-
ing!” His mood brightened, as if he had personally
caused the rise. As we drove to our next meeting, Jeff
said, “There’s nothing that CEO did to cause that 30-
cent blip in the stock price.” I agreed, and added that I
wouldn’t be surprised if the assistant had thrown mul-
tiple printouts in the recycle bin that morning when
the blip wasn’t so big. Would the same scene have
played out if the share price had dropped 30 cents? The
deeper lesson, one that we’ll explore in this chapter,
is this: share price is what Amazon calls an “output
metric.” The CEO, and companies in general, have very
little ability to directly control output metrics. What’s
really important is to focus on the “controllable input
metrics,” the activities you directly control, which ul-
timately affect output metrics such as share price.

Input metrics are closer to what is influenceable by man-

agement. Output metrics are too removed from that. There-
fore, Amazon tries to set Objectives around input aspects
of the business.
But this is not an easy tension to get right. Move too much
towards inputs, and people will lose sight of the results.
Input metrics therefore should be the earliest, most influ-
enceable results available, but still results.
That means OKRs around revenues (e.g., MRR), EBITDA,
gross margins, CAC/LTV, etc., should be used, but not too
much; OKRs around CSAT, NPS, conversion rates, WAUs,
DAUs, and the sort should make up the majority of all
OKRs.

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OKRs, From Mission to Metrics

How Objectives and Key Results Can Help

Francisco Souza Homem de Mello

This book is for sale at

This version was published on 2022-07-06

This is a Leanpub book. Leanpub empowers authors and

© 2016 - 2022 Qulture, Inc

2. A brief history of OKRs . . . . . . . . . . . . . . . . 13

3. A bit of goal-setting science . . . . . . . . . . . . 27

4. The current state of goal management . . . . . . 33

OKRs, From Mission to Metrics | Qulture.Rocks

5. What’s different in OKRs . . . . . . . . . . . . . . 38

6. Where do OKRs come from? . . . . . . . . . . . . . 46

7. The OKR short cycle . . . . . . . . . . . . . . . . . . 72

OKRs, From Mission to Metrics | Qulture.Rocks

11. Most common mistakes . . . . . . . . . . . . . . . 123

Final note . . . . . . . . . . . . . . . . . . . . . . . . . 135

Appendix I: Using OKRs in software product teams . 136

Appendix II: The Tensions of Getting OKRs Right . . 150

OKRs, From Mission to Metrics | Qulture.Rocks

This is a great time to write about OKRs. I say that because

I wrote this book to fill that opportunity gap.

There’s no shortage of content around the internet and the

However, managers and entrepreneurs who read these books

I know how frustrating this journey can be firsthand. When

My conviction of the importance of goals logically led to

Around the same time, I learned about OKRs and how

Soon thereafter I became very frustrated: on the one side,

OKRs, From Mission to Metrics | Qulture.Rocks

monitor them, how to link them to each other, etc. On the

A wave of new content about the subject would infuse

Then came John Doerr’s Measure What Matters, which I

That’s about when I decided to write this book. I realized we

OKRs, From Mission to Metrics | Qulture.Rocks

had to fill that gap and help empower organizations around

In order to write the book, I had to read, basically, every-

I read authors like Cristina Wodtke, Ben Lamorte, Paul

So I dug deeper, and then, finally, struck gold. I found a

Closing those gaps made all the difference. The symptom

OKRs, From Mission to Metrics | Qulture.Rocks

was clear: Using OKRs at Qulture.Rocks became much more

Why another book about OKRs?

After seeing firsthand how amazing OKRs could be at our

I had one major goal in writing the book: helping compa-

These contradictions basically arose from either the poor

OKRs, From Mission to Metrics | Qulture.Rocks

organization achieve great things.