Google’s OKR Approach to Setting Goals

In 1999, Google started using OKRs with just 40 employees. The framework was introduced to Google by John Doerr. Today, with more than 135 000 employees, Google still uses the OKRs approach to setting goals.

But why does such an innovative company as Google still use the same old approach from more than 20 years ago? Why didn’t they switch their approach to setting goals with something more innovative and fancy-sounding?

The answer is simple. When you foster a culture that cares about reaching ambitious goals and gives them a simple approach to reaching them, such as OKRs, they lead to success. Adding complexity to such a smooth and easy-to-follow process may have killed Google’s success.

This article looks at Google’s OKR approach to setting goals. Let’s learn from their success.

How Does Google Define OKRs?

The OKR concept, introduced by John Doer, is based on setting goals quarterly and yearly. So let’s take a look at how Google defines OKRs.

• They use a maximum of five objectives per quarter, each having no more than four key results.
• The key results should be measurable and serve to achieve the goal.
• More than 50% of the objectives have to come from the individuals (bottom-up approach). If there are too many top-down dictations, employees won’t be inspired to work on those objectives.
• OKRs should not be considered as an individual or team performance evaluation tool.

Google Noticed the Following Benefits of Using OKRs

Why your organization should use OKR according to Google’s findings.

1. Setting OKRs is an excellent way to impose disciplined thinking across the entire organization. As primary goals surface, it helps the individual understand why they are working on a given initiative or a work assignment.
2. OKRs communicate accurately what’s important for the individual, team, and organization and what isn’t important. Google made its OKRs public so everyone what is the highest objective on a company level.
3. OKRs establish indicators for measuring progress, as they clearly show how far you are from reaching a specific set of goals.

How Google Embraces the Process of Creating OKRs?

Company objectives are generally set from top to bottom. For example, during a quarterly board meeting, the CEO and the board members define what will be the most important goal for the next quarter.

Here is the top to bottom approach to setting goals.

• Corporate Objectives
• Department Objectives
• Team Objectives
• Individual Objectives

Corporate objectives are communicated down the chart, and each level aligns its objectives with the corporate objective.

Individual objectives usually derive from collaborative discussions between team members and leaders to determine how to align what each individual wants to work on with the actual team or corporate-level goals. However, instead of this being all top-down discussion, it often becomes a positive cycle of ideas exchange. For example, when the employee sets their objectives, she communicates them with the team leader. They can mutually agree on these goals that are personally aspired to the individual and, at the same time, are aligned with the corporate objective.

This is exactly how Gmail was created by one of Google’s employees. He was frustrated with the state of email clients, so he decided to make email searchable. He communicated this goal with his team leader, and eventually, Gmail became one of Google’s core products.

This is an excellent example of how OKRs drive innovation.

Keys to Good OKRs according to Google

These are the keys to good OKRs, according to Google’s approach to setting goals. Your approach might be different, which doesn’t mean it’s wrong.

• OKRs are set annually and quarterly (for example, our Marketing team at Businessmap uses monthly OKRs instead of quarterly).
• OKRs are measurable.
• OKRs are set at personal, team, and company levels.
• OKRs are transparent to the entire company.
• OKRs must be graded each quarter (in our case, we grade them monthly).

Differentiating between Objective and Key Results

The Objective (the “whats”) must be ambitious, having a grand scale. The Key Results (the “hows”) must make the Objective achievable, quantifiable, and they should help grade the Objective.

Personal, Team, and Company OKRs

This is how OKRs are defined on each level.

• Personal OKRs define what a team member is working on.
• Team OKRs define what the priorities for the team are. They are not a collection of the team’s individuals OKRs.
• Company OKRs are the top-level focus of the company.

How Does Google Grade OKRs?

Since OKRs are big, ambitious goals, at Google, they don’t expect to reach them all, as this will mean that the goals haven’t been ambitious enough.

Google grades them with a color scale to measure how well they did.

• 0.0–0.3 is red
• 0.4–0.6 is yellow
• 0.7–1.0 is green

A grade of 0.6 to 0.7 is considered the best target. Google says that a grade of 0.0-0.4 is not a failure. It is simply the data that makes them question what they didn’t know when they committed to that OKRs that prevented us from delivering a better result.

Google Grades Publicly the Company's OKRs

Google holds company-wide quarterly meetings to discuss how they did the past quarter. The owner of a given OKR, usually the team leader, the VP of product, etc., explains the grade for each OKR. It is important to discuss why the OKR received that grade in front of the entire organization and what they plan to do differently in the quarter ahead.

This is the ultimate process of keeping the company informed, transparent, and more knowledgeable because of the newly shared information.

How Did Google Implement the Process of Grading?

You may think that Google used some complex, specifically made for their needs tool; however, this is not the case.

They used Google Sites or Google Sheets, where each team member had to list their OKRs, to track their progress, and at the end of the quarter, they would grade their OKRs.

But the most important factor for Google wasn’t the tools used to implement the grading process but the commitment from the entire organization to keep track of their OKRs and update them before the end of the quarter.

As everyone’s OKRs were transparent, it was made clear that tracking and grading OKRs was really important for Google.

In Summary

OKRs play a central role in Google's strategic organization, based on corporate values such as transparency and self-organization. Google’s OKR approach to setting goals was simple which kept the buy-in barrier from the entire organization low. The most important learnings from Google’s OKRs are:

• More than 50% of the objectives have to come from the individuals so they can be inspired to work on them.
• Everyone’s OKRs must be transparent. This will send a strong message to the entire organization about the shared ownership of the company’s success and how everyone is contributing to that success.
• Grade publicly the company's OKRs in company-wide quarterly meetings. This is the best way to collectively learn from mistakes and successes and continuously improve.