Google CEO Sundar Pichai has broken the rules for OKRs. Why it worked

Over the past decades, Objectives and Key Results (OKRs) have become an important part of startups. OKRs are the goal setting framework that has propelled companies like Intel, Uber, Amazon, LinkedIn and many more to success. Think of a tech startup, and chances are they use OKRs.

And in the world of OKRs, there is one name that reigns supreme: John Doerr. The author of Measure What Matters, Doerr learned this framework from Intel’s original creator and CEO, Andy Grove. He is now regarded by many, myself included, as the foremost expert in this field. When it comes to OKRs, Doerr’s word is law.

But when Sundar Pichai took the helm of Google in 2019, he made a crucial change that went against conventional OKR wisdom and even Doerr’s own personal advice.

The result? Under Pichai’s tenure, Google has now doubled its workforce and its parent company, Alphabet, has tripled in value. And I’d say that’s no coincidence.

Long term thinking

I am convinced that Pichai has not only taken the right step, but has been a very real factor in Google’s growth over the past three years. This is why.

OKRs are popular in the startup world because they are extremely suitable for fast-moving companies. Traditionally, a company sets both annual and quarterly objectives (goals), with three to five key results for each. Objectives are qualitative, while the main results are measurable – the combination is powerful because it allows teams to get extremely clear what needs to be done to achieve even the most subjective of goals.

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Doerr is outspoken when he says that short-term (quarterly) goals are the greatest strength of OKRs. This is especially logical for startups. Quarterly OKRs give teams the opportunity to shift their focus every three months, rather than just focusing on annual goals that can be irrelevant four months out of the year.

When Larry Page, the previous CEO of Google, who was personally trained in OKRs by Doerr himself, first implemented this system at Google, he only used quarterly OKRs. He later added annual OKRs to the mix. Then in 2019 Pichai scrapped all OKRs on a quarterly basis and chose to focus solely on annual OKRs with quarterly progress reports.

Pichai’s move may have conflicted with conventional OKR wisdom, but it made sense because Google was no longer in boot mode.

Fifteen years ago, quarterly OKRs were practically a requirement at Google because the business was changing so quickly. But in 2019 everything was arranged. The company was much more stable than ten years ago. They had their sights set far into the future, meaning that the chances of priorities changing from quarter to quarter were virtually nil.

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As I see it, Pichai’s decision had three advantages:

Fewer goals means fewer decisions to make and less time spent planning. Google employees now have one set of goals to track, saving them time and improving focus. As a company, Google is now focusing on more long-term initiatives that will have more impact.

A lesson in business growth

Pichai’s decision may have conflicted with Doerr’s original OKR advice, but in reality it was a natural development that many companies have gone through. It nurtures a simple principle I’ve talked about for years, and one that applies to more than just goal setting.

I call it ‘operational debt’. When you first start a business, it can be like designing a parachute as you fall – you don’t have time to make it perfect, you just need it to work. You do what needs to be done in the short term to keep the lights on without considering the long term consequences.

At this stage, you are accruing operational debt. And just like a bank loan, that debt will eventually have to be repaid.

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As the situation stabilizes, you can step back and start thinking long term. Essentially your first parachute worked and you landed. You now have the chance to improve your parachute design, fix past mistakes and think about the next version.

You can start repaying your operational debt by optimizing your systems, tools, processes and people. And you can shift your thinking into the future by looking beyond the next month or quarter to the years ahead.

The lesson for entrepreneurs? Don’t get caught up in plans way ahead if you’re still in the early stages of your business. Even as the owner of an operational efficiency consultancy, 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 stay afloat.

As you grow and decisions need to be made, consider what stage your business is in and whether it makes sense to focus on the best solution of the moment or turn your eyes to a more distant target.

The opinions expressed here by Inc.com columnists are their own, not Inc.com’s.

This post Google CEO Sundar Pichai has broken the rules for OKRs. Why it worked

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