Book Review : Measure What Matters

In a technology driven world, having skilled and aligned people play the most important role for organizations. Qualification and skills can be acquired or groomed via various learning frameworks. However, aligning people to organization’s goals plays a vital role, which eventually  becomes a differentiator in the marketplace. To achieve alignment, the Performance Management System (PMS) was introduced. This is also known as Management By Objectives (MBO) where the top management sets the goals and enables people to execute and produce results. In their famous book The HP Way, founders of HP, Bill Hewlett and Dave Packard details the importance of MBO and how it has become an integral part of HP. In fact in my book review about coaching also I called out the importance of people development.

In the traditional PMS / MBO, people were ranked and graded based on their performance. It eventually leads into a Bell Curve Model by classifying people into various buckets, depending on their performance. Salary revisions and promotions were tightly coupled with where an individual stands in the curve. The PMS / MBO went mainstream when industry leaders like General Electric (GE) adopted and implemented in scale. Jack Welch, who was at the helm of GE for decades, implemented PMS diversified lines of GE and demonstrated transformational business results. The folks who fell in the top band of performance curve folks were rewarded handsomely, bottom ones were let go. Average or medium performers were were constantly coached for higher performance by their reporting managers with support from the HR system.

While this worked very well for GE and many other organizations, it had few limitations: 

1. Goals were considered static, reviewed once in 6 months or one year 
2. Performance results were tied up with compensation and promotion system 
3. Goal setting and evaluation became a carrot and stick approach. Inspiring and aligning individuals for the organizational goal was missing

As time goes by, the traditional PMS / MBO framework required changes. This is mainly to accommodate rapid changes that businesses go through due to factors like Digitization. In the digital world, organizations need to work on shorter intervals to review, reset and improve their organizational goals. Intel and Andy Grove started implementing a modified metrics based framework for a while. John Doerr, one of the employees of Intel then, learnt this framework and formally introduced them as OKR (Objectives and Key Results) framework. In his book Measure What Matters, author John Doerr goes in detailed account of OKRs, starting with its connections with PMS / MBO. In this blog post let us do book review measure what matters by John Doerr.

Similar to the traditional PMS system, OKR also sets objectives. However, the difference being these OKRs are broken into finer details, eventually cascading down in the organization, mapping to an individual goal. Leaders at every layer openly declares their OKRs and re-iterating how individual alignment can lead into better organizational performance. Also, these objectives are set for relatively shorter duration (say a quarter) unlike the yearly goal setting process in PMS / MBO. In contrast with the PMS, OKRs are driven with a closed loop manner with continuous monitoring. One of the simple yet effective process for continuous monitoring is to do weekly check-ins by individuals. These check-ins will describe actions taken by an individual for the Objectives (O) in order to achieve Key Results (KRs). In this book review measure what matters, author deep dives into how OKRs are deeply connected with organizational performance.

Typically, the entire information is logged in a centralized system transparently. By looking into the overall progress of individuals, further actions can be triggered which is called CFR (Conversations, Feedback and Recognition). 

1. Conversations – Multiple level 1:1 meetings, coaching, building transparency and trust
2. Feedback – Giving and taking open feedback, objectively
3. Recognition – Acknowledging result oriented contributions by individuals and  providing them with increased responsibilities

Please note, OKRs or CFRs are not linked with salary revision and promotions, which was the case with PMS / MBO. They are driven as a separate thread, so that entire organization gets goal focussed rather than thinking about What’s In It For Me (WIIFM). In summary, OKRs are all about building an organization culture of high performance by inspiring individuals towards goals. As you can see, it is a continuous process, takes a lot of time and effort, starting with cultural transformation. Post Intel, author John Doerr has become a Venture Capitalist and formally introduced OKRs to many of his portfolio companies, starting with Google. Throughout the book, he cites multiple successful OKR examples as case studies which give a practical exposure to OKRs. 

While PMS / MBO is still an existing framework in many organizations, it requires a positive changes as time passes by. OKR is definitely a framework that organizationals need to adapt in order to keep the high performance trajectory. If you are a people manager managing a team in a big organization or an entrepreneur trying to achieve higher growth by building people, OKRs will definitely come in handy. By reading this book, one can get a very good perspective as you transition your team from PMS / MBO to OKR. I would strongly recommend this book for people managers and senior leaders of any sized organizations. 

I hope you liked this post book review measure what matters. Hopefully some of these learnings you will be able to implement on your team.