CEO Initiative 2018: Measuring What Matters I Fortune

so we're here with the legendary John Doerr I I don't think I need to explain to anyone who you are but I was just thinking about the history of kleiner perkins the history of you and your in and your venture of funding and mentoring is really the history of technology as we know it it's starting with the birth of the the PC the dawn of the PC era and and and the chipper with your investments in Compaq and Lotus and an into it on the software side then you had the dawning of the internet age with Netscape the the routing companies there you had of course the next is the Google and Amazon yes of course Google at Amazon I was getting to the big ones right so the history of search with Google you were the first investor and an board member and coach Amazon of course the history of e-commerce the history of mobility with Square and nest I mean this is really kind of an amazing thing I didn't mention Genentech in history biotech which is another one so I guess we'll get to what's next here but this book measure what matters is really in some ways a compilation of how the companies with great ideas turned into the companies that actually execute it in some ways sure the message there we've all seen you we see thousands of brilliant ideas we get 3,000 business plans a year but these innovators don't know how to execute and so that's what sets all of you apart that you're leading your businesses because you do know how to execute cliff I like to think of this not as a business book but as a handbook and it has an ad uh zijn stories of how innovators startups nonprofits large established companies that are trying to change their culture how they very clearly take a system that I did not invent Andy Grove invented this in the 70s and and they use it to get their teams focused aligned committed tracking their progress and then stretching for goals be as the counterintuitive thing about this system is it's okay to fail you write down what your goals are you publish them so everyone internally can see them you try very hard to get them aligned and then at the end of a quarter you grade them and then you toss them aside the grades are not used for bonuses or for promotions they're used for a higher purpose which is to get a collective commitment across your team or teams to what matters the most so whatever something there and levy tells me I love Aaron he said you know John at any given time thirty percent of the people in an organization probably box included but most organizations are working on the wrong thing yeah the problem is we just don't know which ones and so let's with myself for a minute and just say explaining to those you don't know what ok ours are what an OK are is great ok R stands for objectives and key results and I have a website I want to recommend to you called what matters.com which has a classic video of Andy Grove professor Andy Grove teaching what these are simply put the objective is what we want to have accomplished like we want to dominate the microprocessor market and the key results or how we're going to get there and key results might be when a dozen new designs over Motorola really good key results are specific and time-bound they're aggressive they're realistic above all else they're measurable and verifiable those are key results and the objectives are more strategic and inspirational they they might be longer lives than the key results and the two of course are connected and they can change over time is that a good answer yeah it's a great answer and you know but one of your stars students for this Marissa Meyer at Google said you know if it doesn't have a number it's not a key result that's right it's got to be it has to be measurable and you have to know at the end yes or no did I achieve it did not achieve it for us no middle ground you know there's a famous video that you point to where Annie Grove is talking about in the early days the difference between a milestone and a key result right you know milestone you can make a judgement hey was this really a milestone but a key result is hey we hit our number we didn't now yesterday we have this great conversation Adam with Tim Cook in which we talked about the sort of long term ISM versus short termism the the fear that obsessing about numbers in the short term even if that's for outside of the company can be a dangerous technique but but you actually separate that out well because most organ this to their culture there's not one right way to do this and to be sure this is just a tool it's not a silver bullet it cannot substitute for strong culture or stronger leadership having said that most organizations when this is working well will say if I get to 70 percent mm-hmm of my goals my objectives and key results that's a good grade if I get to all of them if I have greens all the way a hundred percent I was probably sandbagging we weren't stretching quite far enough so Larry Larry Page who wrote the preface to the book and who I considered to be the high priest of 10x goals moonshots he likes to say I'd far rather have a team aim for Mars which is almost impossible and know that if we fall short we'll get to the moon mm-hmm then then have people sandbag or be more conservative so you truly have to have a risk-taking culture or it's okay to fail maybe you won't repeat the same mistakes right but that's the way you get with measured goals the best performance so that that is the challenge in this in the system and in this book you talk a lot about the stretch goals and you give great examples in Google specifically with YouTube and also with sundar Pichai and chrome which are great I'd love you to talk a little bit about those but then you also talk about the importance of having those goals be real and achievable and so there's that middle ground that would be good to explain and if the goals are always unachievable people will ignore and by the way if the goals are all top-down people are going to ignore them I have a goal to be healthy it's far better for me to decide I want to run a marathon than to have my doctor tell me to run a marathon so the decoupling the separation of the objectives what we want to do be healthy from the key results how we're gonna get that done you're gonna run a marathon allows the individual contributor or team leader to choose from among the multiple right answers in business the one to which they'll be most committed and I think that's part of the magic and so part of this as you say is transparency you know Google for example publishes the results of every Googler has their okrs every quarter and then they they grade them and then they post them and this year and the CEO sundar Pichai stands up on a videocast in front of 70,000 employees and says these were my objectives and key results for the quarter here by the way were those for the whole company here are our grades and if the CEO or the leader of the business unit doesn't commit the system sure to fail you know the system is working we're in staff meetings one-on-one meetings it becomes part of the language you and I will debate that it's it's super important for Google to gain more share on Alexa by having better AI answers in forging a commerce partnership with Walmart and they'll say fine John but if we're gonna make that a key result I've got to sacrifice this other thing because I'm maxed up and so it's sanctions a kind of conversation in your staff where you can sit back a little bit and and and let your team critique each other for having the wrong goals or not being ambitious enough so in this book you talk about having that transparency but without the judgment but when you're publishing your goals and you're being great on it isn't that a kind of judgment and won't your colleagues sort of see oh you know cliff hasn't met a goal in six months you know I mean if cliff if cliff has missed all of his goals yeah yeah then there's a problem yeah but don't don't let this system be used for bonuses right don't let it be used for promotions if you really want a culture that encourages risk-taking yeah now the hard question I often get was okay John what about sales I mean we're gonna pay sales people on quarters and so forth so there can be some overlap between these two systems just don't them have them be a hundred percent the same now the reason we wanted to bring you here and not just because of your history and your vision in in this part of the world and for much of the economy but also because we are gathered here in some respects to think about how do we achieve goals that better the world whether that's increasing whether that's improving sustainability or getting people on the economic grid or tackling the critical health problems or whatever it is society has a lot of problems that we feel as businesses there's a platform for social change and you write a lot about the fact that the both nonprofits and companies themselves could have kind these kinds of goals with achievable results and actually be more effective on that front as well it's not just about sales or getting more viewer time on YouTube or whatever I think it I think this this work is more important and interestingly it's getting a great reception from the nonprofit and advocacy community my dream is that okay ours are gonna spread well beyond our businesses to our families our schools our hospitals and even our governments this book is especially relevant now and I didn't really realize it while writing it I'll confess because I think we're at a moment in time where our leaders and some of our great institutions are really failing us they're failing us now sometimes it's because they're bad or unethical and that's pretty clear but too often it's because they've led us to the wrong objectives and that's produced absolutely unacceptable outcomes and this has got to stop it's not going to be easy we're gonna have to course-correct and get really clear and I dare say transparent about what it is that really matters you see it businesses you see it in our government I'm waiting for a City Council to adopt okay ours too transparently say to their constituents these are our goals here's how we're gonna measure our success and then commit to go do it I was talking to the leader of a hospital system which you might think is the last place you'd want to see risk in our lives he said no John I want measured and risk-taking I want people to understand the mission and the goals and my number one priority is the new CEO of this highly respected and Health System is we're gonna adopt okay ours so where have we failed I mean you you just cited a this big challenge that we have in terms of leadership and meeting that what what in the business in the business sector yeah well but we failed at their nose we failed at zenefits we failed to choose the right objectives and then to be transparent authentic inside the organization and regularly measure our progress and commit to them and in the book you talk we fit we failed at Wells Fargo the book talks about paired objectives and key results goes back to the Ford Pinto story you know Lee Iacocca with an iron fist drove Ford to make a was it a three thousand dollar a two thousand dollar highly affordable car but he failed to pair that objective with one around quality and safety and so for one of a two or three dollar part when a car collided into the back of a Pinto there was usually an explosion you know the car caught on fire so and in terms it's it's not just having a goal setting system it's which goals you choose that matter the most and I dare say why you choose those goals if objectives and key results are the what's in the house what really matters is why those are our values mm-hmm and so I like to think of objectives and key results as sturdy but it's parent vessels into which we pour our values why it is we do our work why it is that we run our political campaigns why it is that we invest so much time and love and our families that's what inspires us

Channel: Fortune Magazine

Views: 3,432

Keywords: CEO initiative, fortune, leadership, John Doerr

Id: RNNcdStRHE8

Length: 13min 38sec (818 seconds)

Published: Wed Jun 27 2018