To be clear, I have the utmost reverence for entrepreneurs. I’m an inveterate techie who worships at the altar of innovation. But I’d also watched too many start-ups struggle with growth and scale and getting the right things done. So I’d come to a philosophy, my mantra: Ideas are easy. Execution is everything.

The practice that molded me at Intel and saved me at Sun—that still inspires me today—is called OKRs. Short for Objectives and Key Results. It is a collaborative goal-setting protocol for companies, teams, and individuals. Now, OKRs are not a silver bullet. They cannot substitute for sound judgment, strong leadership, or a creative workplace culture. But if those fundamentals are in place, OKRs can guide you to the mountaintop.

My first PowerPoint slide defined OKRs: “A management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.” An OBJECTIVE, I explained, is simply WHAT is to be achieved, no more and no less. By definition, objectives are significant, concrete, action oriented, and (ideally) inspirational. When properly designed and deployed, they’re a vaccine against fuzzy thinking—and fuzzy execution. KEY RESULTS benchmark and monitor HOW we get to the objective. Effective KRs are specific and time-bound, aggressive yet realistic. Most of all, they are measurable and verifiable. (As prize pupil Marissa Mayer would say, “It’s not a key result unless it has a number.”) You either meet a key result’s requirements or you don’t; there is no gray area, no room for doubt. At the end of the designated period, typically a quarter, we declare the key result fulfilled or not. Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses. Once they are all completed, the objective is necessarily achieved. (And if it isn’t, the OKR was poorly designed in the first place.)

In 2009, the Harvard Business School published a paper titled “Goals Gone Wild.” It led with a catalog of examples of “destructive goal pursuit”: exploding Ford Pinto fuel tanks, wholesale gouging by Sears auto repair centers, Enron’s recklessly inflated sales targets, the 1996 Mount Everest disaster that left eight climbers dead. Goals, the authors cautioned, were “a prescription-strength medication that requires careful dosing . . . and close supervision.” They even posted a warning label: “Goals may cause systematic problems in organizations due to narrowed focus, unethical behavior, increased risk taking, decreased cooperation, and decreased motivation.” The dark side of goal setting could swamp any benefits, or so their argument went. WARNING! Goals may cause systematic problems in organizations due to narrowed focus, unethical behavior, increased risk taking, decreased cooperation, and decreased motivation. Use care when applying goals in your organization.

First, said Edwin Locke, “hard goals” drive performance more effectively than easy goals. Second, specific hard goals “produce a higher level of output” than vaguely worded ones.

He summarized Intel’s core pursuits: a profit margin twice the industry norm, market leadership in any product line it entered, the creation of “challenging jobs” and “growth opportunities” for employees.*

At Intel, Andy recruited “aggressive introverts” in his own image, people who solved problems quickly, objectively, systematically, and permanently. Following his lead, they were skilled at confronting a problem without attacking the person. They set politics aside to make faster, sounder, more collective decisions.

Grove was hard on everybody, most of all himself. A proudly self-made man, he could be arrogant. He did not suffer fools, or meandering meetings, or ill-formed proposals. (He kept a set of rubber stamps on his desk, including one engraved BULLSHIT.) The best way to solve a management problem, he believed, was through “creative confrontation”—by facing people “bluntly, directly, and unapologetically.”*

Measuring what matters begins with the question: What is most important for the next three (or six, or twelve) months? Successful organizations focus on the handful of initiatives that can make a real difference, deferring less urgent ones. Their leaders commit to those choices in word and deed. By standing firmly behind a few top-line OKRs, they give their teams a compass and a baseline for assessment. (Wrong decisions can be corrected once results begin to roll in. Nondecisions—or hastily abandoned ones—teach us nothing.) What are our main priorities for the coming period? Where should people concentrate their efforts? An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.

Objectives and key results are the yin and yang of goal setting—principle and practice, vision and execution. Objectives are the stuff of inspiration and far horizons. Key results are more earthbound and metric-driven. They typically include hard numbers for one or more gauges: revenue, growth, active users, quality, safety, market share, customer engagement. To make reliable progress, as Peter Drucker noted, a manager “must be able to measure . . . performance and results against the goal.”

In other words: Key results are the levers you pull, the marks you hit to achieve the goal. If an objective is well framed, three to five KRs will usually be adequate to reach it. Too many can dilute focus and obscure progress. Besides, each key result should be a challenge in its own right. If you’re certain you’re going to nail it, you’re probably not pushing hard enough.

In my experience, a quarterly OKR cadence is best suited to keep pace with today’s fast-changing markets. A three-month horizon curbs procrastination and leads to real performance gains. In High Output Management, his leadership bible, Andy Grove notes: For the feedback to be effective, it must be received very soon after the activity it is measuring occurs. Accordingly, an [OKR] system should set objectives for a relatively short period. For example, if we plan on a yearly basis, the corresponding [OKR] time should be at least as often as quarterly or perhaps even monthly.

The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results—to measure “both effect and counter-effect,” as Grove wrote in High Output Management. When key results focus on output, Grove noted: [T]heir paired counterparts should stress the quality of [the] work. Thus, in accounts payable, the number of vouchers processed should be paired with the number of errors found either by auditing or by our suppliers. For another example, the number of square feet cleaned by a custodial group should be paired with a . . . rating of the quality of work as assessed by a senior manager with an office in that building.

A few goal-setting ground rules: Key results should be succinct, specific, and measurable. A mix of outputs and inputs is helpful. Finally, completion of all key results must result in attainment of the objective. If not, it’s not an OKR.*

We don’t hire smart people to tell them what to do. We hire smart people so they can tell us what to do. —Steve Jobs

In 2013, as we jumped from ten to thirty people, I assumed we’d become 200 percent more productive. I’d underestimated how much scaling slows you down. New engineers need extensive training before they can be as proficient as your holdovers. And with multiple engineers developing the same project, we had to

Here are some reflections for closing out an OKR cycle: Did I accomplish all of my objectives? If so, what contributed to my success? If not, what obstacles did I encounter? If I were to rewrite a goal achieved in full, what would I change? What have I learned that might alter my approach to the next cycle’s OKRs?

my favorite definition of entrepreneurs: Those who do more than anyone thinks possible . . . with less than anyone thinks possible.*

Two OKR Baskets Google divides its OKRs into two categories, committed goals and aspirational (or “stretch”) goals. It’s a distinction with a real difference. Committed objectives are tied to Google’s metrics: product releases, bookings, hiring, customers. Management sets them at the company level, employees at the departmental level. In general, these committed objectives—such as sales and revenue goals—are to be achieved in full (100 percent) within a set time frame. Aspirational objectives reflect bigger-picture, higher-risk, more future-tilting ideas. They originate from any tier and aim to mobilize the entire organization. By definition, they are challenging to achieve. Failures—at an average rate of 40 percent—are part of Google’s territory. The relative weighting of these two baskets is a cultural question. It will vary from one organization to the next, and from quarter to quarter. Leaders must ask themselves: What type of company do we need to be in the coming year? Agile and daring, to crack a new market—or more conservative and operational, to firm up our existing position? Are we in survival mode, or is there cash on hand to bet big for a big reward? What does our business require, right now?

At Google, in line with Andy Grove’s old standard, aspirational OKRs are set at 60 to 70 percent attainment. In other words, performance is expected to fall short at least 30 percent of the time. And that’s considered success!

Engineers struggle with goal setting in two big ways. They hate crossing off anything they think is a good idea, and they habitually underestimate how long it takes to get things done. I’d lived through this at Product Search, where they’d insist: “Come on, I’m a smart person. I can surely get more done than that.” It took discipline for people to narrow their lists to three or four objectives for their team, but it made a huge difference. Our OKRs became more rigorous. Everybody knew what counted most. After I took responsibility for search and discovery at YouTube, it only made sense to do the same thing there.

Just as quarterly OKRs have rendered pro forma annual goals obsolete, we need an equivalent tool to revolutionize outdated performance management systems. In short, we need a new HR model for the new world of work. That transformational system, the contemporary alternative to annual reviews, is continuous performance management. It is implemented with an instrument called CFRs, for: Conversations: an authentic, richly textured exchange between manager and contributor, aimed at driving performance Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvement Recognition: expressions of appreciation to deserving individuals for contributions of all sizes

Best of all, OKRs and CFRs are mutually reinforcing. Doug Dennerline is CEO of BetterWorks, the pioneer in bringing both of these tools to the cloud and smartphones and in helping hundreds of organizations make the processes their own. “It’s the marriage between the two—that’s the real home run,” Doug says. “If a conversation is limited to whether you achieved the goal or not, you lose context. You need continuous performance management to surface the critical questions: Was the goal harder to achieve than you’d thought when you set it? Was it the right goal in the first place? Is it motivating?

In Project Aristotle, an internal Google study of 180 teams, standout performance correlated to affirmative responses to these five questions: Structure and clarity: Are goals, roles, and execution plans on our team clear? Psychological safety: Can we take risks on this team without feeling insecure or embarrassed? Meaning of work: Are we working on something that is personally important for each of us?

Dependability: Can we count on each other to do high-quality work on time? Impact of work: Do we fundamentally believe that the work we’re doing matters?

As we’ve seen repeatedly—in Search, in Chrome, in Android—a team composed of a few percent of the company’s workforce, acting in concert toward an ambitious common goal, can change an entire mature industry in less than two years. Thus it is crucial that as Google employees and managers we make conscious, careful, and informed choices about how we allocate our time and energy—as individuals and as members of teams. OKRs are the manifestation of those careful choices, and the means by which we coordinate the actions of individuals to achieve great collective goals.