OKRs – measure what matters
The simple tool that András István Gróf – or better known as Andy Grove – transformed Intel with in the 1970s
The early-twentieth-century forefathers of management theory, notably Frederik Taylor and Henry Ford, were the first to measure output systematically and analyze how to get more of it.
Half a century later, Peter Drucker added some more humanism to the Taylorism. With his landmark book “The Practice of Management”, Peter Drucker codified his beliefs around management by objectives and self-control. On the back of this, management by objectives (MBOs) evolved through the 1960s.
However, the MBOs showed some limitations being centrally planned and sluggishly trickled down the hierarchy – or being reduced to key performance indicators with little meaning.
Objectives and Key Results (OKRs) on the other hand, is based on the former ideas, but very different from the classical Taylorism and MBO thinking.
It is a collaborative goal-setting methodology used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals.
OKRs are typically written with an Objective at the top and 3 to 5 supporting Key Results below it.
An Objective is what you want to accomplish - A good Objective is significant, concrete, action-oriented and inspirational. Can be set annually or over an even longer-term.
Key Results are how you will accomplish it - Good KRs are specific, time-bound, and aggressive yet realistic. Most of all, they are measurable and verifiable. You either meet a key result’s requirements or you don’t.
So who is András Gróf.
András, who grew up in Budapest, Hungary, was born in 1936. He was a toddler when World War II started. When he was eight, the Nazis occupied Hungary and deported nearly 500,000 Jews to concentration camps. His family survived.
Later the Soviets occupied his native country, and, in 1956, the Hungarian Revolution broke out. András was 20 years old when he decided to flee across the Iron Curtain to Austria.
In 1957, he made his way to the United States, and he changed his name to Andrew S. Grove. He had USD20 in his pocket.
But the real story began in 1963, when András, now Andy was hired as researcher at Fairchild Semiconductor by a guy called Gordon Moore. Moore and a coworker Noyce later left Fairchild to found Intel in 1968, Grove was their first hire.
Andy Grove was later to become CEO of Intel. During his regime, one of the most noticeable things was his dedication and ability to steer a relatively large and global organization in the same direction. Especially in times of turbulence. His secret sauce was OKR, or as they were known within Intel “iMBO”, Intel Management By Objectives.
Operation Crush
Back in the late 1970s, Intel was the undisputed king of microprocessors acceleration the personal computer evolution.
However, a district sales manager shot off a desperate eight-page telex about how Motorola’s 68000s were crushing Intel. The telex eventually reached the ears of Andy Grove, then President and CEO of Intel. That became the rallying cry for Operation Crush.
Two months later, Intel’s response was ready, and Crush teams were dispatched to field offices around the globe armed with Andy Grove videos and a clear memo – structured along the OKR principles – was sent out to all field sales engineers.
In essence, the response was drafted within two weeks based on clear OKRs – “we will achieve a certain Objective as measured by the following Key Results”. The OKRs for Operation Crush were classic of the genre: time bound and unambiguous, with every what and how in place.
The Intel corporate objective:
Establish the 8086 as the highest performance 16-bit microprocessor family, as measured by
Key results (Q2, 1980):
Develop and publish five benchmarks showing superior 8086 family performance (Applications)
Repackage the entire 8086 family of products (Marketing)
Get the 8MHz part into production (Engineering, Manufacturing)
Sample the arithmetic coprocessor no later than June 15 (Engineering)
Operation Crush was a thoroughly cascaded set of OKRs, heavily driven from the top, but with input from below.
It worked, and Andy Grove – with the help of OKRs – redirected the focus on what mattered most. Motorola was taken by surprise and speed and didn’t manage to react properly.
The essence of a healthy OKR culture
John Doerr, legendary venture capitalist, meets Andy Grove, with whom he worked closely in the early days of his career as a 24-year-old intern. This is also, when he learned about OKRs, which he sooner introduced to Google.
As he explains in his book Measure what matters, it was the engineer mentality of Andy Grove that made it work;
Less is more – Be clear about what you say yes to – and what you say no to. Carefully chose the right Objectives and limit the number of Key Results.
Set goals from the bottom – Be sure to develop clear corporate goals from the top but encourage teams and individuals to create roughly half of their own OKRs.
Stay flexible – Things change, and so should the OKRs. At least they need to be revisited on a recurrent basis.
Dare to fail – OKRs should be uncomfortable and possibly unattainable “stretched goals”.
A tool, not a weapon - The OKRs are meant to pace a person, but it is not a legal document, and should not be tied to performance reviews and/or bonuses.
So, are OKRs still relevant in 2022?
Through my work as management consultant, I am working with several different organizations on their strategic development and planning.
Still, being able to make explicit choices as a company on Where to Play and How to Win is extremely important.
However, this needs to be translated into very concrete and clear strategic Objectives and desired Key Results to enable the wider organization not only to understand the strategy, but also to act on it.
So yes, 50 years after OKRs were introduced at Intel, I am still a huge fan.