Below are the passages I feel are important. They are lightly edited in some cases and include my highlights and a few comments.

Terminology

Objective

An OBJECTIVE… 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 Result

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. 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.)

Superpower #1: Focus and Commit to priorities

Communicate with clarity

For sound decision making, esprit de corps, and superior performance, top-line goals must be clearly understood throughout the organization. Yet by their own admission, two of three companies fail to communicate these goals consistently.

Key results: care and feeding

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.

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.

Pairing key results

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:

Their paired counterparts should stress the quality of 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.

Perfect vs good

Remember that an OKR can be modified or even scrapped at any point in its cycle. Sometimes the “right” key results surface weeks or months after a goal is put into play. OKRs are inherently works in progress, not commandments chiseled in stone.

Less is more

The one thing an [OKR] system should provide par excellence is focus. This can only happen if we keep the number of objectives small. . . . Each time you make a commitment, you forfeit your chance to commit to something else. This, of course, is an inevitable, inescapable consequence of allocating any finite resource. People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.” . . . We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing.

From Andy Grove:

The one thing an [OKR] system should provide par excellence is focus. This can only happen if we keep the number of objectives small. . . . Each time you make a commitment, you forfeit your chance to commit to something else. This, of course, is an inevitable, inescapable consequence of allocating any finite resource. People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.” . . . We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing.

Superpower #2: Align for teamwork (e.g. Superbowl)

The example below shows an OKR structure for an NFL team. Some are good and some are bad notes in []

Example OKR structure

GM: Make $ for owner

1. Head Coach Win Super Bowl
2. Marketing SVP Fill home stands to 90%

Head Coach: Win Super bowl

1. Offensive Coach Generate 300 yards-per-game passing attack
   1. Achieve 75% pass completion rate
   2. Cut interceptions to fewer than 1 per game
   3. Hire new quarterbacks coach
2. Defensive Coach Give up fewer than 17 points a game
   1. Allow fewer than 100 rushing yards per game
   2. Increase number of sacks to 3+ per game
   3. Develop a Pro-Bowl cornerback
3. Special Coach Improve to top 3 ranking for punt coverage team
   1. Allow fewer than 10 yards per punt return
   2. Block 4 punts over the season

Marketing SVP: Fill home stands to 90%

1. Marketing Director Upgrade team branding
   1. Target two colorful players for new marketing campaign
   2. Create a more compelling team slogan
2. Publicist Improve Media coverage
   1. Arrange for players to attend two charity events per season
   2. Invite 20 sports reporters to meet and greet
   3. Share photos of events on social media
3. Merchandise Manager Revitalize in-stadium promotion program
   1. Contact 10 souvenier companies
   2. Price out 5 options
   3. Present 3 ideas for stadium giveaways by August 1

Example OKR structure (critiqued)

GM: Make $ for owner [Lacks intrinsic motivation for subordinates]

1. Head Coach Win Super Bowl
2. Marketing SVP Fill home stands to 90%

Head Coach: Win Super bowl

1. Offensive Coach Generate 300 yards-per-game passing attack
   1. Achieve 75% pass completion rate
   2. Cut interceptions to fewer than 1 per game
   3. Hire new quarterbacks coach
2. Defensive Coach Give up fewer than 17 points a game
   1. Allow fewer than 100 rushing yards per game
   2. Increase number of sacks to 3+ per game
   3. Develop a Pro-Bowl cornerback
3. Special Coach Improve to top 3 ranking for punt coverage team
   1. Allow fewer than 10 yards per punt return
   2. Block 4 punts over the season

Marketing SVP: FIll home stands to 90%

1. Marketing Director Upgrade team branding [What constitutes an ‘upgrade’?]
   1. Target two colorful players for new marketing campaign
   2. Create a more compelling team slogan
2. Publicist Improve Media coverage [What constitutes ‘improve’?]
   1. Arrange for players to attend two charity events per season
   2. Invite 20 sports reporters to meet and greet
   3. Share photos of events on social media
3. Merchandise Manager Revitalize in-stadium promotion program [What constitutes ‘revitalize’?]
   1. Contact 10 souvenier companies
   2. Price out 5 options
   3. Present 3 ideas for stadium giveaways by August 1

Top-Down and Bottom-up

In moderation, cascading makes an operation more coherent. But when all objectives are cascaded, the process can degrade into a mechanical, color-by-numbers exercise, with four adverse effects:

• A loss of agility. Even medium-size companies can have six or seven reporting levels. As everyone waits for the waterfall to trickle down from above, and meetings and reviews sprout like weeds, each goal cycle can take weeks or even months to administer. Tightly cascading organizations tend to resist fast and frequent goal setting. Implementation is so cumbersome that quarterly OKRs may prove impractical.
• A lack of flexibility. Since it takes so much effort…people are reluctant to revise them mid-cycle. Even minor updates can burden those downstream, who are scrambling to keep their goals aligned. Over time, the system grows onerous to maintain.
• Marginalized contributors. Rigidly cascaded systems tend to shut out input from frontline employees. In a top-down ecosystem, contributors will hesitate to share goal-related concerns or promising ideas.
• One-dimensional linkages. …[cascading is] less effective in connecting peers horizontally, across departmental lines.

Fortunately, we have an alternative. Precisely because OKRs are transparent, they can be shared without cascading them in lockstep. If it serves the larger purpose, multiple levels of hierarchy can be skipped over. Rather than laddering down from the CEO to a VP to a director to a manager (and then to the manager’s reports), an objective might jump from the CEO straight to a manager, or from a director to an individual contributor. Or the company’s leadership might present its OKRs to everyone at once and trust people to say, “Okay, now I see where we’re going, and I’ll adapt my goals to that.”

Considering that Google has tens of thousands of employees, its innovative culture would be hamstrung by OKRs cascaded by rote. As Laszlo Bock, a former head of the company’s People Operations, observes in Work Rules! :

Having goals improves performance. Spending hours cascading goals up and down the company, however, does not. . . . We have a market-based approach, where over time our goals all converge because the top OKRs are known and everyone else’s OKRs are visible. Teams that are grossly out of alignment stand out, and the few major initiatives that touch everyone are easy enough to manage directly.

To avoid compulsive, soul-killing overalignment, healthy organizations encourage some goals to emerge from the bottom up. Say the [abovementioned football team’s] physical therapist attends a sports medicine conference and learns of a new regimen for injury prevention. Of her own volition, she coins an off-season OKR to implement the therapy. Her objective may not align with her direct manager’s OKRs, but it aligns with the general manager’s overarching objective. If the Unicorns’ top players stay healthy through the season, the team’s chances of winning the Super Bowl will soar.

Micromanagement is mismanagement. A healthy OKR environment strikes a balance between alignment and autonomy, common purpose and creative latitude.

Peter Drucker wrote :

[The] professional employee,needs rigorous performance standards and high goals…. But how he does his work should always be his responsibility and his decision.

At Intel, Grove took a dim view of “managerial meddling”:

[T]he subordinate will begin to take a much more restricted view of what is expected of him, showing less initiative in solving his own problems and referring them instead to his [or her] supervisor…. [T]he output of the organization will consequently be reduced….

Cross-functional coordination

Even as modern goal setting successfully transcends the org chart, unacknowledged dependencies remain the number one cause of project slippage. The cure is lateral, cross-functional connectivity, peer-to-peer and team-to-team. For innovation and advanced problem solving, isolated individuals cannot match a connected group. Product relies on engineering, marketing on sales. As business becomes more intricate and initiatives more complex, interdependent divisions need a tool to help them reach the finish line together…. A transparent OKR system, as Laszlo Bock points out, promotes this sort of freewheeling collaboration

Superpower #3 Track for accountability

The setup

[Essentially says that custom software helps, and should be set up correctly] These platforms deliver transformative OKR values:

• They make everyone’s goals more visible. Users gain seamless access to OKRs for their boss, their direct reports, and the organization at large.
• They drive engagement. When you know you’re working on the right things, it’s easier to stay motivated.
• They promote internal networking. A transparent platform steers individuals to colleagues with shared professional interests.
• They save time, money, and frustration. In conventional goal setting, hours are wasted digging for documentation in meeting notes, emails, Word documents, and PowerPoint slides. With an OKR management platform, all relevant information is ready when you are.

OKR Shepherd

For an OKR system to function effectively, the team deploying it—whether a group of top executives or an entire organization—must adopt it universally. No exceptions, no opt-outs. Yes, there will be late adopters, resisters, and garden-variety procrastinators. To prod them to join the flock, a best practice is to designate one or more OKR shepherds.

OKR Hygiene from Andy Grove

Intellectual Honesty

The essence of a healthy OKR culture—ruthless intellectual honesty, a disregard for self-interest, deep allegiance to the team—flowed from the fiber of Andy Grove’s being. But it was Grove’s nuts-and-bolts approach, his engineer’s mentality, that made the system work. OKRs are his legacy, his most valuable and lasting management practice. Here are some lessons I learned at Intel from the master and from Jim Lally, Andy’s OKR disciple and my mentor:

Less is More

“A few extremely well-chosen objectives,” Grove wrote, “impart a clear message about what we say ‘yes’ to and what we say ‘no’ to.” A limit of three to five OKRs per cycle leads companies, teams, and individuals to choose what matters most. In general, each objective should be tied to five or fewer key results. (See chapter 4, “Superpower #1: Focus and Commit to Priorities.”)

Set goals from the bottom up

To promote engagement, teams and individuals should be encouraged to create roughly half of their own OKRs, in consultation with managers. When all goals are set top-down, motivation is corroded. (See chapter 7, “Superpower #2: Align and Connect for Teamwork.”)

No dictating

OKRs are a cooperative social contract to establish priorities and define how progress will be measured. Even after company objectives are closed to debate, their key results continue to be negotiated. Collective agreement is essential to maximum goal achievement. (See chapter 7, “Superpower #2: Align and Connect for Teamwork.”)

Stay flexible

Stay flexible. If the climate has changed and an objective no longer seems practical or relevant as written, key results can be modified or even discarded mid-cycle. (See chapter 10, “Superpower #3: Track for Accountability.”)

Dare to fail

“Output will tend to be greater,” Grove wrote, “when everybody strives for a level of achievement beyond [their] immediate grasp. . . . Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.” While certain operational objectives must be met in full, aspirational OKRs should be uncomfortable and possibly unattainable. “Stretched goals,” as Grove called them, push organizations to new heights. (See chapter 12, “Superpower #4: Stretch for Amazing.”)

A tool, not a weapon

The OKR system, Grove wrote, “is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. It is not a legal document upon which to base a performance review.” To encourage risk taking and prevent sandbagging, OKRs and bonuses are best kept separate. (See chapter 15, “Continuous Performance Management: OKRs and CFRs.”)

Be patient; be resolute

Every process requires trial and error. As Grove told his iOPEC students, Intel “stumbled a lot of times” after adopting OKRs: “We didn’t fully understand the principal purpose of it. And we are kind of doing better with it as time goes on.” An organization may need up to four or five quarterly cycles to fully embrace the system, and even more than that to build mature goal muscle.