After the early years at Google, as Google’s management system became more formalised, a management system called Objectives and Key Results (OKRs) was introduced.
It had been used at Intel, where Andy Grove referred to it as Management by Objectives.
It was considered to be really important for Google as in the rapidly growing company it would allow them to be super-clear about what the priorities were.
Google embraced Intels Management by Objectives model and OKRs became an essential component of Google culture.
Every employee had to set, and then get approval for quarterly OKRs and annual OKRs.
There were OKRs at the team level, the department level and the company level.
4 times a year, everything stopped at Google for division-wide meetings to assess OKR progress.
According to Steven Levy in “In The Plex”, it was essential that all OKRs were measurable.
Thus, “I will launch Gmail” becomes “I will launch Gmail in September and have a million users by November”.
Google had an interesting approach to failure or success on OKRs.
“Exceeding an OKR by a large measure implied that the employee had sandbagged it, played safe and thought small!”
“The sweet spot was making 0.7 or 0.8 on your OKR.”
At the end of each quarter, employees set their OKRs for the next quarter, and 6 weeks later, they saw their managers and gave a progress report, using a traffic-light system for grading.
According to Levy, toward the end of each quarter, all the OKRs were graded, and if an employee was hitting 100%, he or she needed something else to do!
OKRs were not private to the individual and their manager. They were shared company-wide. The OKRs appeared on every employees biog on Google’s internal website.
You could even see Larry Page’s and Sergey Brin’s OKRs.
Brin said “We really like transparency and like the idea that we communicate to everybody on roughly 1 or 2 pages of paper every quarter what we want to accomplish”.