Over the last few decades, Objectives and Key Results (OKRs) have become something of a staple for startups. OKRs are the goal-setting framework that has propelled companies like Intel, Uber, Amazon, LinkedIn, and many more to success. Think of a tech startup, and chances are they use OKRs.
And in the world of OKRs, there’s one name that reigns supreme: John Doerr. The author of Measure What Matters, Doerr was taught this framework by its original creator and CEO of Intel, Andy Grove. He’s now considered by many, including myself, to be the preeminent expert on the topic. When it comes to OKRs, Doerr’s word is law.
Yet when Sundar Pichai took over as Google’s CEO in 2019, he made a pivotal change that went against conventional OKR wisdom and even the personal advice of Doerr himself.
The result? Under Pichai’s tenure, Google has now doubled its workforce and its parent company, Alphabet, has tripled in value. And I’d say that’s no coincidence.
Thinking long term
I’m convinced that Pichai not only made the right move, but that it was a very real factor in Google’s growth over the past three years. Here’s why.
OKRs are popular in the startup world because they’re extremely applicable to fast-changing companies. Traditionally, a company will set both annual and quarterly objectives (goals), with three to five key results for each. Objectives are qualitative, while key results are measurable–the combination is powerful as it enables teams to get extremely clear on what needs to happen to achieve even the most subjective goals.
Doerr is outspoken in saying that short-term (quarterly) goals are the greatest strength of OKRs. Especially for startups, this makes sense. Quarterly OKRs give teams the opportunity to redirect their focus every three months, instead of focusing solely on annual goals that may be irrelevant four months into the year.
When Larry Page–Google’s previous CEO who was personally trained on OKRs by Doerr himself–first implemented this system at Google, he used only quarterly OKRs. Later, he added annual OKRs to the mix. Then, in 2019, Pichai cut out quarterly OKRs altogether, choosing to focus solely on annual OKRs with quarterly progress reports.
Pichai’s move might have gone against conventional OKR wisdom, but it made sense because Google was no longer in startup mode.
Fifteen years ago, quarterly OKRs were practically a requirement at Google because the company was changing so rapidly. But by 2019, things had settled down. The company was far more stable than it was a decade ago. They had their eyes set far into the future, which meant the chance of priorities changing from quarter to quarter was practically nil.
The way I see it, there were three benefits to Pichai’s decision:
- Less goals means less decisions to make and less time spent planning.
- Google employees now have one set of goals to track, saving them time and improving their focus.
- As a company, Google is now focused on more long-term initiatives that will create greater impact.
A lesson in business growth
Pichai’s decision may have gone against Doerr’s initial OKR advice, but really, it was a natural progression that many companies have gone through. It instills a simple principle that I’ve spoken about for years, and one that applies to more than just goal-setting.
I call it “operational debt.” When you’re first starting a business, it can be like designing a parachute as you fall–you don’t have time to make it perfect, you just need it to work. You’re doing whatever needs to happen in the short-term to keep the lights on without paying attention to the long-term consequences.
At this stage, you’re accumulating operational debt. And just like a bank loan, that debt will eventually need to be paid back.
As things stabilize, you can take a step back and start thinking more long term. Essentially, your initial parachute worked and you’ve landed. You now have an opportunity to improve your parachute design, fix past mistakes, and think about the next version.
You can begin paying back your operational debt by optimizing your systems, tools, processes, and people. And you can shift your thinking into the future by looking past the next month or quarter to the years ahead.
The lesson for entrepreneurs? Don’t get bogged down in planning far ahead if you’re still in the early stages of your company. Even as the owner of an operational efficiency consultancy, I can tell you the most efficient and perfect solution isn’t always the best. Take shortcuts and do what you need to do to keep things afloat.
As you grow and decisions need to be made, consider what stage your company is at and whether it makes sense to focus on the best solution in the moment or set your eyes on a more distant target.
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