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The essence of OKRs by Andy Grove

Andy Grove is widely recognized as the grandfather of OKRs for his pioneering work on the OKR framework at Intel. His two-minute video on OKRs remains a classic piece of management wisdom that has inspired countless organizations since then.

In this video captured in 1978, Andy Grove explains the OKR framework in the simplest way that he can. However, even though he keeps the explanation simple, each of the specific details he provides are both critical and fundamental to the success of an OKR implementation. If you take time to listen carefully to this 2-minute video, you would avoid many of the mistakes that companies are making today when they attempt OKRs without understanding how OKRs should be integrated into their current processes. This post will highlight and confirm 5 critical implementation details directly from Andy Grove himself.

Since we don't want to miss any details in the video, it's worth pointing out that at position 0:05 of the video he refers to OKRs as the "Management by Objectives system", also referred to as MBOs. The reference to MBOs is because that framework was the inspiration for OKRs. Where MBOs involved setting specific, measurable objectives with employees, OKRs used the same philosophy to set goals for the organization.

Critical callout #1 - Aspiration: 0:15 - "We want to dominate the midrange microcomputer component business". No extraneous detail about how they're going achieve it or by when, just the simple fact that domination of their market space is their goal. He didn't go into detail about the psychology of setting aspiration goals - he just made sure to give a meaningful example to say of what a legitimate objective looks like. If you want to do OKRs like Andy Grove - make them aspirational!

Critical callout #2 - Transparency: At position 0:30 Andy Grove offers up an example of a measurable key result. He mentions that the key result has to be measurable so that it can be evaluated in the next time period. He is emphasizing the importance of learning - without any argument and no judgment, did we achieve it or not? The word we use for that today is called transparency. It's an atrophied muscle that needs to be redeveloped in today's modern organizations. At position 0:52 he shows the depth of his leadership by pointing out that success isn't guaranteed - the company's ability to dominate the microcomputer business is a detail to be argued in the years to come, but over the next time period we will know if we are heading in that direction or not. Key results must be measurable or they provide no value. As Andy Grove says, "you don't maybe achieve" key results.

Critical callout #3 - Annual and Quarterly Cadence: At position 1:17 he begins to explain that they run two versions of their OKRs - an annual version and a quarterly version. This is a fundamental component of OKRs that is frequently missed. He not only describes the two levels, but he mentions that the objectives at each level are set by the business units themselves, which gave them autonomy to achieve their goals. It's worth noting that at position 1:43 Andy Grove goes on to explain that the more significant of the two versions is the quarterly OKRs. Rapid learning was the name of the game in the 1970's and it's the name of the game today.

Critical callout #4 - OKRs as part of Annual Planning: Starting at position 1:24 Andy Grove mentions that the "annual version" is done in conjunction with their annual planning process and that each major operating unit is responsible for coming up with their annual OKRs. Many organizations that are doing OKRs today are not including OKRs as part of their "traditional" annual planning process. As a result, they attempt to produce OKRs after annual planning and the result is OKRs that are project-centric rather than business outcome-centric.

Critical callout #5 - Learning and adjusting the plan: Starting at position 1:36 he begins to describe that at the beginning of the next planning cycle they begin by looking back at the OKRs for the prior period. They look at them and evaluate how they have done against their OKRs and how the OKRs should be modified. They then determine what the follow-on or next steps should be and begin the process again. That is an established cadence of systemic learning and adapting and it is built into the culture of Intel as a result of his leadership.

Andy Grove's simple explanation of OKRs and critical implementation details are still relevant today. Aspiration, transparency, annual and quarterly cadence, incorporating OKRs into annual planning, and learning and adjusting the plan are all essential to a successful implementation of OKRs. By following these five critical implementation details directly from Andy Grove himself, organizations can set themselves up for success in achieving their goals through the use of OKRs.

If you are interested in getting started with OKRs or are doing OKRs with sub-par results, give us a call today and we can get you started in the right direction.

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