Objectives and Key Results (OKRs) have become a staple of startups over the past few decades. OKR is a goal-setting framework that drives the success of companies like Intel, Uber, Amazon, LinkedIn, and more. Think of a tech startup, and they’re likely to use OKRs.
In the world of OKRs, one name reigns supreme: John Doerr. Doerr, author of Measure What Matters, was taught by its original creator and Intel CEO Andy Grove. He is now considered by many, myself included, to be a preeminent expert on the subject. When it comes to OKRs, Doerr’s word is law.
However, when Sundar Pichai took over as CEO of Google in 2019, he made a crucial change that went against conventional OKR wisdom and even against Doerr’s personal advice himself.
result? Under Pichai’s tenure, Google now doubles its workforce and triples the value of its parent company Alphabet. I would say it’s no coincidence.
Long-term thinking
I’m sure Pichai not only made the right move , and a very real factor in Google’s growth over the past three years. The reason is as follows.
OKRs are popular in the startup world because they are great for rapidly changing companies. Traditionally, companies will set annual and quarterly goals (targets), each with three to five Key Results. Objectives are qualitative, while Key Results are measurable—a combination that is powerful because it gives the team a very clear idea of what needs to be done to achieve the most subjective goals.
Doerr bluntly says that short-term (quarterly) goals are OKR’s greatest strength. Especially for startups, this makes sense. Quarterly OKRs give teams the opportunity to refocus their attention every three months, rather than just focusing on annual goals that may not be relevant four months from now.
When Larry Page — Google’s former CEO Doerr personally trained on OKRs — first implemented the system at Google, he only used quarterly OKRs. Later, he added annual OKRs to it. Then, in 2019, Pichai eliminated quarterly OKRs entirely, choosing to focus only on annual OKRs and quarterly progress reports.
Pichai’s move may be against conventional OKR wisdom, but it makes sense since Google is no longer in startup mode.
15 years ago, Google’s quarterly OKRs were actually a requirement because the company changed so quickly. But by 2019, the dust had settled. The company is much more stable than it was a decade ago. They take a long-term view, which means that the chances of prioritizing each quarter are virtually nil.
In my opinion, Pichai’s decision has three benefits:
- More Fewer goals means fewer decisions and less planning time.
- Googlers now have a set of goals to track, saving them time and improving their focus.
As a company, Google is now focused on longer-term plans that can have a bigger impact.
Lessons for business growth
Pichai’s decision may run counter to Doerr’s original OKR recommendations, but in reality, it’s a natural process that many companies go through. It instills a simple principle I’ve been talking about for years, and it doesn’t just apply to goal setting.
I call this “operating debt.” When you first start a business, it’s like designing a parachute, you don’t have time to make it perfect, you just need it to work. You are doing whatever needs to happen in the short term to keep the lights on without noticing the long term consequences.
At this stage, you are accumulating operational debt. Like a bank loan, this debt eventually needs to be repaid.
As things settle down, you can take a step back and start thinking about the longer term. Essentially, your initial parachute works and you’ve landed. You now have the opportunity to improve your parachute design, fix past bugs and consider the next version.
You can start paying off your operational debt by optimizing your systems, tools, processes, and people. You can move your thinking to the next month or quarter into the next few years by looking back future.
Lessons for entrepreneurs? If you’re still in the early stages of your company, don’t get caught up in forward planning. Even as the owner of an operational efficiency consulting firm, I can tell you that the most efficient and perfect solution is not always the best. Take shortcuts and do what you need to do to make ends meet.
As you grow and need to make decisions, consider what stage your company is at and whether it makes sense to focus on the best solutions immediately or look further afield.
