October 3, 2018
Back in 1999 when Google was barely a year old and hadn’t yet transformed the way we organize our data, the legendary chair of Kleiner Perkins gave the 20-something founders some profound advice.
Follow the principles of OKR and you can’t go wrong, John Doerr told them.
OKR stands for Objectives and Key Results, and the concept was championed by the late Hungarian-born billionaire Andy Grove, the founder and CEO of Intel who helped transform the semiconductor industry.
The OKR management philosophy helps leadership collaboratively set goals, and measure progress toward achieving them. It helps focus teams around important activities and the company’s broader mission, and guards against distractions and muddied thinking.
For example, a startup software company might set an Objective of doubling sales within two years, and to achieve that the company could set Key Results of meeting with 25 prospective customers per month and converting at least 10 of them into paying customers.
The Key Results piece is binary: you either achieved it or you didn’t. There is no gray area.
Google co-founders Larry Page and Sergey Brin and their young leadership team became converts and began following OKR immediately. They have said it helped them gain clarity around early goals and benchmark their progress. Companies including BMW, Disney and Exxon follow similar strategies.
Doerr, who took a gamble and invested $11.8 million in Google before it had much revenue, calls OKR the greatest “gift” to the pair of Sanford grad school dropouts.
Page once boldly declared that Google would have revenue of $10 billion one day, which implied a market valuation of around $100 billion. It took behemoths like Microsoft and IBM years and years to achieve such a milestone, and many were skeptical.
As it turns out, Page was wrong about Google’s market value.
Google’s parent company Alphabet Inc. now has a market value of around $840 billion.
That’s more than eight times larger than Page envisioned in Google’s early days.
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