Ep. 57 | Measure What Matters by John Doerr
This week in the Accelerator I review and summarize the book, Measure What Matters by John Doerr. Doerr is one of Silicon Valley’s legendary investors and part of the firm Kleiner Perkins. Before starting his career as a VC, Doerr worked for Intel under Andy Grove. The root of Measure What Matters is actually the codification of Intel’s management strategy. Over the years, Doerr applied it successfully to the young start-ups he mentored, including Google. Now in Measure What Matters, he shares how any business can understand and apply the same techniques for focused, high-performance growth.
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Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs
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Allison Hartsoe: [00:01] This is the Customer Equity Accelerator. If you are a marketing executive who wants to deliver bottom-line impact by identifying and connecting with revenue generating customers, then this is the show for you. I’m your host, Allison Hartsoe, CEO of Ambition Data. Each week I bring you the leaders behind the customer-centric revolution who share their expert advice. Are you ready to accelerate? Then let’s go!
Allison Hartsoe: [00:32] Welcome everybody to today’s show is something unique because it is a book review and not an interview. I am an avid reader, and in the past, I’ve interviewed several authors on the show, and the notes I will link to these interviews with Bryan Eisenberg, who wrote be like Amazon, Michael Schrage, who wrote, who do you want your customers to become? Gary Angel, who wrote measuring the digital world, and Pete Fader, who wrote, of course, customer centricity. So today in a few minutes I’m going to review John Doerr, measure what matters, but first I’m going to share a secret with you about getting through some of these books in a very time efficient manner.
Allison Hartsoe: [01:18] Now, as I said, I love to read, but I’m also a bit impatient, and I’m usually short on time, and maybe that’s you too. So here’s my secret to reading in the 21st century. First, get the audiobook. I tend to listen to books on one and a half to two x speed, which even though it makes it sound like a cartoon character means that assuming you have an average commute, you can process about one book in the space of a week. Second, if I have a hard copy, then I use a slightly different strategy. I tend to read the last chapters first, which I think is an advantage of the left-handed and then I go to the front where it outlines the structure of the book, and then I jump around and pick out the parts that I think are interesting, or if it’s really good, I just read the whole thing, but I do give myself permission to quit,
Allison Hartsoe: [02:12] if the author takes a weird turn or generally I just feel like I’ve gotten the point. So I think for most people today, we’re all pressed on time, and having an efficient way to process interesting information is benefit. So this week I’m going to summarize John Doors, measure what matters, which I listened to as an audiobook. I was naturally attracted to this book for a bunch of different reasons. One, in the late 19 nineties, I was an entrepreneur who raised a bunch of venture capital in Silicon Valley, and so I know who John Doerr is, and I seriously admire him. John Doerr is an engineer of venture capitalists. Uh, he is, I think still the chairman of Kleiner Perkins, which is just legendary venture capital firm if you’re not familiar with the space. He was also an original investor and a board member on both Google and Amazon. And that meant that he got to participate in the growth of those companies and how they built just millions of jobs.
Allison Hartsoe: [03:19] Well, maybe not millions, maybe more like half a million jobs, uh, for these very valuable companies. He introduced this technique at Google, and some of the stories in the book talk about how they were applied at Google, which is fascinating, those stories alone make the book very valuable to read. Then second, I have actually quite a few connections to Intel where door began his career, and I’ve even been to the Intel Museum in San Jose, which is really cool. I was the nerd who was standing alone their taking notes, so I find this place very interesting, just fascinating when it comes to growing companies, and third, working in data analytics and of course on this show, we constantly strive to connect measurement to meaning, so what’s not to like with a book titled Measure What Matters. Let’s dive in. The key concept behind this book is, if you set clear, ambitious goals called okay hours, align execution around these goals, and measure the results, then you too can be like Google, Intel or others who have achieved tremendous success.
Allison Hartsoe: [04:38] Now, what CEO doesn’t want that. This is a great promise. However, if you catch some of John doors videos online like his lecture at Berkeley, you’ll hear him reference five things that make a startup star its technical excellence, number one, which attracts a level talent. Number two, outstanding management with a clear, compelling vision, while that, of course, aligns to this book, strategic focus in a large, new or underserved market is number three, ability to operate at speed is number four, and reasonable financings, of course, that being a venture capitalist is number five. So you should not take away that if you set goals like this, you will become Google. But, the alignment of focus and execution tied to a timeline for results is powerful for any business. Now, this book has two parts. The first part is really focused on what is an OKR, an OKR stand for objectives and key results, and what is it like when you use them in action, and then the second part actually takes a left turn into what he calls the new world of work by measuring CFRS, which stands for continuous feedback reviews, and I’ll talk more about that later.
Allison Hartsoe: [06:08] In part one, OKRs inaction, the first three chapters, in my opinion, or some of the best stuff in the book. Doerr recounts his personal experiences at Intel and Google the origination and roll out of OKRs, and a wonderful story about operation crush from the early days of Intel. Then he digs into the what he calls the four superpowers of OKR. They are in order, number one, focus and commit to priorities. OKRs help us choose what matters most. Number two, aligning connect for teamwork, transparency in OKRs is what sparks and strengthens collaboration. Number three, track for accountability. And number four, stretch for amazing. So now the stories in chapter 13 and 14, 13 is about Google’s browser, 14 is about youtube is content consumption. Those really bring home the concepts that kind of pull it all together as well as the way that fast startups think and operate.
Allison Hartsoe: [07:22] The other supporting stories along the way are nice, but they’re, you know, they’re kind of illustrating a concept that if you got it the first time when he explained it, then you, the story is a little bit of gravy or maybe icing on the cake. So if you buy into the concept, go ahead and skip the stories, and except for the ones that are in 13 and 14, which are really very good. Also in the audiobook, each story was told by the person whose story it was, and I found that change of voice a bit jarring and frankly a bit annoying because it was delaying getting back to the meat of the OKR process. So that can be a good hit the chapter button and switch ahead. Now, the first superpower focus and commit are all about what are the company’s main priorities?
Allison Hartsoe: [08:15] How should you invest your time and efforts? And we often talk about that as opportunity cost. Whenever you choose to spend your time on one thing, you’re naturally saying no to others. If you don’t do that, then you’re focusing on everything, and that is not the definition of focus. OKRs in Doerr’s opinion are the compass that teams use to decide what is vital to the company. They express the problem and why it’s important to the rest of the company. They help enable cross-functional support and eventually roll into tactics so that people can go get it. The first part of the OKR is the, O, the objective. The objective expresses the problem directionally. It answers what and it’s designed to inspire for any given objective. There might be three to five KRs or key results, which is the second part. The key results are the how.
Allison Hartsoe: [09:17] They’re typically short term, often quarterly, but they don’t have to be. They’re deadline driven goals that drive results. Objectives contain the key phrase as measured by and that connects to the key results which one they’re well written will automatically achieve the objective, so that’s the interlock between the two. Now, Doerr provides some very nice cautionary tales of key results where the output was really quantity focused, and we see this all the time. In fact, I saw this at one company that was talking about surround sound, and we’ve got to constantly send more and more email, and they were testing frequencies and all kinds of stuff, but what they weren’t doing was pairing that with quality. So the end result was lots and lots and lots of output, but not enough attention to quality. So, Doerr, I think hits the nail on the head here where he insists on pairing quality and quantity with any given Okr.
Allison Hartsoe: [10:31] And then he also emphasizes that OKRs are not like some tablet chiseled in stone, that they’re really designed to be works in progress. And then he goes on to build on that and the other superpowers. So that’s the first superpower, which is focus and commit. The second superpower is align and connect for teamwork. So, in this section, he talks heavily about the need to make OKRs transparent. He says that making progress visible actually improves the ability to get progress. It seeds collaboration, it creates a clear line of sight so that people which often happen in large companies, people are working on identical projects from different directions, and instead, they stop and work together to support the same goal across departments. Not so difficult thing to do because org charts naturally silo us, but to be really effective in an organization, you have to reach across those silos.
Allison Hartsoe: [11:42] And then he goes on to say it’s really not about 100 percent cascading the goals, so you know like the tablet comment, it’s not goals coming down from on high because that would be impossible to make them dynamic. You want vertical alignment, but you also want people to adapt their individual goals to what the organization is after. So there’s this kind of marriage of bottom-up as well as top-down, and in Doerrs opinion transparency solves this because the typical process for goals is you roll it out in a waterfall process from one team to another and you know if you have to roll down seven layers, it can be halfway through the quarter before you even get your goals and everybody agrees to it. And that’s obviously a very clunky process when you make the goals transparent all at once. Everybody sees those goals, and then they can converge upon it and say, okay, well here’s what I’m going to do to help contribute to that goal.
Allison Hartsoe: [12:43] And then he said, one interesting comment. I didn’t actually catch this the first time through the book, but he said that it’s okay if your goal does not 100 percent connect to your manager’s goal, and I think that’s really kind of a hidden brilliant insight in the book because it acknowledges the fact that people have lots of different talent and skills to bring to bear, and we don’t want to force people into shoe boxes. We want to bring the wealth of the organization, the people skills and knowledge to fully be present at the organization to be fully engaged, and by not having to connect 100 percent to the manager’s goal, it almost blesses that person’s ability to bring in whatever they can bring to bear to solve the problem. So I really loved that little nugget. It was kind of hidden in the second superpower.
Allison Hartsoe: [13:39] So it talks about a healthy balance between alignment and autonomy. We want individuals to take on problem-solving, and further, if somebody else is defining how you’re going to go about it, that’s kind of creating drag. It’s not very inspiring. You know, nobody likes to be told what to do. People like to bring in and define how they’re going to solve that problem. So what he advocates for is about half top down and half bottom up goals create a really nice freewheeling collaboration. So if the first superpower was more or less science than this superpower starts to get into the art section. So that’s the second superpower, align and connect for teamwork. The third superpower is track for accountability. On this section, he talks about software that can make things visible and accountable, and I guess if you have a really large organization that makes sense, but today there are so many simple software tools that can keep you aligned with various people’s goals.
Allison Hartsoe: [14:48] Even Google sheets or excel can be very powerful in this respect. So I don’t think he’s advocating that you have to go out and buy some expensive software, but what he is advocating is a sense of accountability, and that accountability isn’t just in, I write it down, I make it transparent. No, it’s actually more than that. So he said, in order to demand universal adoption, with no exceptions, you almost need a compliance shepherd to come in and say, we’re going to get these done, and we’re going to commit to them, and it’s not administrative busy work. So that I think in the larger organizations that’s clearly critical, I’m not sure what the amount would be, but let’s say you had at least 50 people. That might be the point where you really need to start having somebody crack the whip and say, okay, we’re going to have weekly check-ins to stay the course and maintain progress.
Allison Hartsoe: [15:45] And he talks about, OKRs is being guard rails, uh, not horses with blinders. I almost think about that as, uh, remember the Pirates of the Caribbean movie where she says, Oh, parlay, parlay, and then later on in the movie they say, well, it’s not really rules. It’s more like guidelines. I think it’s the same thing. OKRs are more like guidelines. So he talks about these dashboards that can be used to understand and adjust what you’re working on because remember, OKRs are dynamic, and it’s okay to end something when it becomes outdated or obsolete, but in the spirit of accountability, you have to digest what you’ve learned. He cites three phases for evaluation. I think one and two are so tightly aligned. I don’t even really see them as two separate things, but the first one he says is to score objectively, and he says, you know, maybe you take a scale of one to 10 for Google, the goal is number seven.
Allison Hartsoe: [16:44] Uh, and that means that if everyone is hitting perfect tens on their goals, then the goal is set too low, and you’re not trying enough. So perfect tens are actually not good. You want those to be very rare. You want people to be working pretty hard to achieve an ambitious goal. And the second part of that is the self-assessment, which is how well did we achieve that goal? And that’s why I think One and Two just go so perfectly together. It’s almost like one item. You need to reflect on the additional dimensions and clarify or enhance what might make a goal more precise. So let’s say for example, that my goal is to bring in 10 new customers. Well, the precision element of goal setting when you’re evaluating it could be, okay, we don’t just want 10 new customers of any type. We want 10 new customers who are in this industry with this size, and then maybe the next quarter we discover it’s not just that industry and size, but it’s with certain behavioral components are people who answer this certain question in a certain way or people who matched to a specific product that we think would be very compelling.
Allison Hartsoe: [17:58] So this a refinement of the precision of goal setting. I think it’s very natural for folks who work in data and analysis because that dimensionality is common as we’re twisting and turning the data in different ways. Now the third part is to pause for reflection. And if you’re evaluating how accountable you’ve been for a goal, then the last part is to say, well, what contributed to my success or failure? What would you do next time? And kind of if you’ve been successful, savor your progress. That’s a pretty strong management exercise, and I can see where that would get glossed over, and then I have a little bit more to say on that as we get to the end of the show. Now, the fourth superpower is to stretch for amazing, and this is the final superpower. When he’s talking about stretching, he’s really thinking about the realm of innovation, which makes sense because if you’ve aligned on all your other dimensions, and the organization is working in lockstep, then you should naturally be headed for innovation, and if you’re not, then you’re definitely not setting your goals high enough. So he calls out to Jim Collins is be hags, which are big hairy audacious goals, and mentioned that when goals are harder, you oftentimes get higher performance and engagement from your team.
Allison Hartsoe: [19:17] He also talks about entrepreneurs being really good at doing more than anyone thinks is possible with less than anyone thinks is possible. To that end, he cites two categories of, OKRs, one he calls committed, which are your kind of blocking and tackling goals that you expect to hit 100 percent. These might be sales and revenue goals, and especially if you’re a public company, those are incredibly important to hit accurately. And the second group he calls aspirational goals, and those are the challenging moonshot goals that consider what does our business require right now, and then this part, he cites Larry Page from Google and his gospel of 10 x, which I believe appeared in a wired interview years ago, and he quotes this, the way page sees it, a 10 percent improvement means that you’re basically doing the same thing as everybody else. You probably won’t fail spectacularly, but you are guaranteed not to succeed wildly.
Allison Hartsoe: [20:28] And that means he isn’t satisfied with discovering a couple hidden efficiencies or tweaking code to achieve modest gains. Thousand Percent Improvement requires rethinking problems entirely, exploring the edges of what’s technically possible and having a lot more fun in the process, that’s the end of that quote from the interview. That is a fantastic way to couch the idea of stretching for innovation, stretching for what’s amazing. I think it’s very easy to find, um, a small nugget of innovation and think that that’s enough, and we do need to push ourselves more to think bigger, to go after those moonshots which are risky, but when you hit them, that really has a big path. Now he sites a little bit about employee commitment here being very essential. People have to believe that it’s obtainable because you might be risking your job, you might be working night and day for something that eventually gets shelved.
Allison Hartsoe: [21:33] Um, this is something that is designed to be difficult but attainable, and it’s also something that management has to coach the team through to keep them focused, keep them energized. So he cites Andy Grove at this point saying, in management, we set uncomfortably tough objectives, and then we try to meet them. The reward for this is you get to play again, that’s definitely a founder’s perspective. So those four superpowers, which again, our focus and commit, align and connect for teamwork, track for accountability and stretch for amazing, are the heart of the first part, which is the OKR section. As I said before, there is a second part, and in this part he kind of takes a left turn and goes into continuous feedback reviews, which is the concept that people waste a lot of time doing an annual review cycle, so just give people continuous feedback along the way and that also keeps your OKRs,
Allison Hartsoe: [22:50] uh, dynamic and fluid, and I do think he’s right that there’s a cultural change that comes alongside the OKRs and that needs to be formalized in the HR functions of the organization. How do you support a team that is resisting an OKR driven culture change? How do you help a group of people who have just come through a very difficult project that didn’t succeed, and how do you reward a group of people who did succeed, and so that second part really goes into continuous feedback reviews. I’m not going to talk too much more about that section because I have another comment about it here in just a minute. So what should you take away from this review? Well, a lot of the feedback about this book has been that the concepts are straightforward. You can basically just get it from Wikipedia, but I think that neglects the challenges of rolling out an OKR program, which is somewhat addressed in the illustrative stories, so three takeaways here.
Allison Hartsoe: [23:57] Yes. It really is powerful to run by OKRs especially, as we talk about on this show, when they acknowledge the power of customers, and they drive to internal focus and execution. It is so much harder to do than to just say, hey, we’re going to have OKRs, but door outlines numerous benefits of aligning your organization and teams around clear goals and then going after them. I don’t think anybody disputes that, but the challenge I believe comes in the management of the OKR process. When exactly is it mission accomplished, and why would you sign up for another challenge if you gave it you’re all on the first two, but they were not deemed successful? How many more dinners are you going to miss with your family? How much more are you willing to give before you really wonder, is there ever something that could be deemed successful?
Allison Hartsoe: [24:56] So that’s a risk. While we don’t always need a written for every participant in an OKR program, we should be wary of how much the structure is sending the message to the team that they didn’t do enough, especially for high performers who are frequently competitive and critical of themselves. I think maybe that’s why Doerr included the CFR section to start to smooth out that demanding culture that’s brought on by OKRs. Second, while I’m a fan of continuous feedback, I’m not necessarily convinced that Doerr has fully baked a solution in that part of the book. He is absolutely right that OKRs need a nourishing culture to thrive, but my favorite book on feedback and culture is Patty McCord’s book, powerful, which does a ton of HR myth-busting. Based on her experience leading Netflix is HR team. I recommend combining her healthy high-performance people insights with Doerrs
Allison Hartsoe: [26:02] OKR process. And third, I think there’s one weakness in the OKR process that there is really no formal crosscheck when setting goals that asks, should you do this? It’s really about focus and go, go, go. It’s like Chris Pines version of James t Kirk standing on the bridge of the enterprise saying, no, now, now do it now, but if you couple this with Michael Schrage is question of who do you want your customers to become, then you could have a governor on this performance engine, and you can hear his numerous examples on our podcast or just read his book. So my conclusion is, if you are not familiar with OKRs as a business management technique or they’re just a bit rusty for you, then you will be well served to buy this book and come up to speed. John Doerr shares a seriously powerful strategy. If you are an experienced OKR goal setter, then I would only buy this book if you want to hear the engaging history or the recent application stories, particularly for Silicon Valley companies.
Allison Hartsoe: [27:21] Now that’s it for this book review. Let me know what you think. It’s the first one that I’ve done, and I’d like to know if there are other books that you think would benefit from this kind of review or what your impression was at the book. Also, if you want to talk more about measurement, my favorite topic, or just find a better way to use data in your organization, then you can always reach me at Allison at ambition data or at a Hartsoe on twitter or Allison Hartsoe on Linkedin, I’m pretty keen on helping companies drive by the right customer-centric data. As always, links to everything we discussed, our ambition data.com/podcast. I’ll include a direct link in our show notes about the many podcasts and books that I mentioned earlier. Thank you for joining me today. Remember, when you use your data effectively, you can build customer equity. It’s not magic. It’s just a very specific journey that you can follow to get results.
Allison Hartsoe: [28:21] Thank you for joining today’s show. This is your host, Allison Hartsoe, and I have two gifts for you. First, I’ve written a guide for the customer centric Cmo, which contains some of the best ideas from this podcast, and you can receive it right now. Simply text, ambitiondata, one word to, three, one, nine, nine, six, (31996) and after you get that white paper, you’ll have the option for the second gift, which is to receive The Signal. Once a month. I put together a list of three to five things I’ve seen that represent customer equity signal not noise, and believe me, there’s a lot of noise out there. Things I include could be smart tools. I’ve run across, articles I’ve shared cool statistics, or people and companies I think are making amazing progress as they build customer equity. I hope you enjoy the CMO guide and The Signal. See you next week on the Customer Equity Accelerator.