The Heartbeat (Continued)

I wrote a post last year called The Heartbeat in which I advocated for a cadence and a rhythm in an organization.

I was reminded of that in this exchange on Twitter over the last 24 hours:

Many of USV’s portfolio companies use an OKR process to create this rhythm in their teams. What I have learned from watching these companies and listening to how the teams talk about the OKR process is that to some extent it is “form over substance” in that the process is ultimately more important than the specific objectives and key results that flow through the process.

I am not saying that teams shouldn’t be thoughtful in setting objectives and committed to hitting them. They should.

But I am saying that the regular setting of objectives (quarterly is a time frame most companies use) and the weekly or bi-weekly reporting against them is the most valuable thing that comes from the process. It sets the heartbeat and keeps it. And that is so valuable.

Many VC firms, including USV, use a weekly team meeting, often on Mondays, to align the group, report on the week that has past, and focus on the week to come. That weekly cadence allows us to be responsive to entrepreneurs, come to relatively quick decisions as a group, and stay in sync.

Public companies report on a quarterly basis. That rhythm sets up a cadence of setting expectations (guidance) and reporting on results (earnings reports). It is not entirely different from the OKR process in a few important ways. It creates a cadence that is super valuable for execution and performance.

I am a fan of all of these processes. They set a cadence and rhythm for an organization and force decision making and provide for timely execution.

The best companies master this and working in those organizations is fun and rewarding. Setting objectives and meeting them on a regular basis is a virtuous system that brings out the best in people and teams.


Comments (Archived):

  1. JamesHRH

    It is a long term foundation.The worst startups are in a constant state of adrenaline fatigue.

    1. Pointsandfigures


  2. William Mougayar

    I agree about the risk of “form over substance”. When the OKR process takes over and becomes too robotic, it loses its effectiveness. You start obsessing over filling out the form (or matrix) instead of whether your activity was really valuable.OKRs are a simplified method of the very old Japanese Hoshin Kanri process. In my many years of experience practicing Hoshin at HP, there were 3 critical parts:1/ the initial planning part, ie time you spend deciding what you put in,2/ keeping it short to the critical few, and not overloading it,3/ how it all links from the top down. The magic of OKRs is about the linking of strategy to implementation.

    1. JamesHRH

      Good Lord, how did you know this about OKR.I feel so New World ignorant. 😉

      1. William Mougayar

        14 years of it at HP. OKRs are Hoshin by another name.

        1. JamesHRH

          HP taught you Hoshin?I thought Larry Oracle was the only Japanese management guru in SV?

          1. William Mougayar

            Yup. It was an internal secret sauce. They didn’t brag about it.

    2. fredwilson

      Hoshin Kanri sounds great

  3. Anne Libby

    We’ve gotten past the place in “startup culture” where people think that setting goals is a bad idea (“but it’s corporate!”) I continue to be surprised by how many people managers do not know how to set meaningful goals.It’s a mistake to assume that everyone has this basic, but undertaught and underrated skill, which I’ve seen even people with impressive degrees struggle with. But if those OKRs are meant to be enacted throughout the organization…necessary.

    1. JamesHRH

      There is a great Brad Feld post about going to BoD meetings and only needing to know 3 numbers.OKR + KPI.

      1. karen_e

        Link please?

        1. JamesHRH

          Google Brad Feld theee numbers – it’s easier.

  4. Matt A. Myers

    Eh, the autonomous nervous system for self-regulation is more important. If you focus on sustaining a regular heartbeat then you’re not flexible in when the heartbeat must increase or decrease in pace – who knows, maybe irregular heartbeats or palpitations are a necessity too in the body’s clockwork as a release valve of sorts.VCs of course want something they can accurately measure so their own numbers look accurate for their own optics purposes – so they may want to apply pressure, pressure is of course adding stress – and stress in an unhealthy system leads to more problems and dis-ease, and applying pressure in the wrong places will cause more dis-ease in the long-term especially if it’s crowding out other areas that need attention but aren’t getting it – because it’ll slow down the heartbeat – or rather the specific pulse they care about; in Traditional Chinese Medicine, acupuncture specifically, practitioners actually feel for multiple energetic heartbeats that are associated with different energy flows – not simply the physical mechanical pulsing of the heart.I’d argue the only reason the process is important is so that then you can see the weakest links, comparing teams and individuals on those teams, with where bottlenecks are happening. If the process is outright not being followed then that’s one type of problem, if there’s someone not performing as needed or expected – then either more resources are needed for that role, or the person isn’t fit for whatever reason at that role, or they need extra temporarily help – especially during a learning/training phase.

  5. Tom Labus

    LYFT got smacked in the face badly with their IPO. They’ll have to reset a lot of plans and adjust. But if they are evaluating weekly hopefully they can respond.

    1. jason wright

      I haven’t been keeping up. What happened?- yet more meat grinding through the ‘sausage machine’.

      1. Tom Labus

        LYFT is accusing Morgan Stanley of selling a shorting product to Lyft’s pre IPO investors. Morgan, of course, denies this but who know. That bird was plucked pretty bare before it ever hit the table!!

        1. jason wright

          A gyft for the predators of Wall Street, and now Lyft is a little bit myft!”Everything should go public” – who said that?

  6. sigmaalgebra

    Can’t argue with any of that. Sounds fine.But, okay, for a relevant war story: At FedEx, there was a weekly senior staff meeting. There was a long table with founder, COB, CEO Fred W. Smith at the head of the table. The rest of the perimeter of the table was fully occupied with various managers. I was welcome to attend and did sometimes but sat next to the wall. It was at one of those meetings where Smith announced to the audience that my work on scheduling the fleet “solved the most important problem facing” FedEx.So, one day at the meeting, Smith had his calendar, notebook, TODO list, etc. and went around the table asking for status, input, data, etc. At each person, they didn’t have much but said that they would get the info for the next meeting, the next week.I was at the next meeting, also. There Smith went around the table again asking the same people for the same info. At the end of going all around the table, what he got was exactly zero, zip, zilch. No one had done their homework. None, nichts, nil, nada.Could maybe expect that since at the first meeting none of the audience took notes. E.g., they didn’t show up with the essentials, a calendar, e.g.. the old paper Week at a Glance, a TODO list, and a notebook with a dated page for the day of the meeting. Net, they didn’t write down their homework assignment and didn’t do their homework.Heck, I did the same in high school plane geometry: I nearly totally ignored the teacher (most offensive human I ever met) and absolutely ignored her homework assignments, three problems of easy to moderate difficulty from the lesson. Instead, sure, for the problems, I started on the last, most difficult ones and worked them in my head or the margin of the book until I got to the trivial ones and then turned to the problems for that lesson in the back of the book with much more challenging problems and worked ALL of them, never once missed even one. So, yup, in a sense I ignored her homework assignment but actually did essentially all the homework possible in that book — yup, could have used a better, more advanced, book! For one of the challenging problems, I started on it on Friday evening. Not doing much else that weekend, late Sunday night I got it. NICE problem!!! In class on Monday, with my head down sleeping as usual, I heard the teacher talking about an easy problem in the front of the book but with the same figure as the one at the end that I’d worked on all weekend. So, for the first and last time, I did some class participation: “There’s a problem in the back with the same figure.”. Fifteen minutes or so later, the teacher was fuming, urging, “Think, class. Think. Think about what is given.”. No one had a clue. I didn’t know I was the only student actually doing well on the homework or that the teacher was not doing all the homework, either and didn’t want to be accused of ruining the class. So, I spoke up saying “Why don’t we …” and the teacher interrupted me before I quite finished shouting “You knew how to do it all the time.” Of COURSE I did; NO WAY would let one of those problems go unsolved or ask HER for how to get a solution!!! NOT a chance!!!!But back to FedEx, OKR, and formality over reality:Q 1. After that second meeting when no one had their homework, what the heck was Smith supposed to do? Fire everyone else at the table???? Seems to me that this is an important question. I don’t want formality over reality, but at least I want some effort at some specific homework assignments. I’d be tempted to start small and create an example of one person and have the others learn from that without the norm of the meeting becoming everyone ignore the CEO.Q. 2. It seems to me that what the geometry teacher was looking for was a version of OKR. To me that was formality over reality — I was supposed to waste a lot of time writing out totally obvious stuff to nearly trivial problems. That was more penmanship exercise than math. Instead, I concentrated on the MATH and wrote as little as possible. And I came to class on Monday, actually everyday, fully “prepared” having worked every non-trivial problem in the book, front AND back. So, I concentrated on reality. The teacher was convinced that I was doing no homework at all — typical error in the formality over reality of OKR. The teacher was satisfied with trivial formality; I ignored that and went for a good case of reality. Uh, I did ALL the homework in plane geometry, hated the teacher, LOVED the subject, and on the state test, guess who was 1 or 2 in the class???So, for Q. 2., how the heck to get the team to do well not just on trivial formality but also on important reality? E.g., how to get the guys to dig into to their work, WAY beyond OKR, like I did in geometry?If at one of those weekly meetings Smith had asked about scheduling the fleet, I would have responded something like: (1) Well the software I wrote does get us a schedule showing that we CAN do what we want. (2) BUT so far we are likely WAY short of what we should want and likely can get, short on especially direct operating costs and likely reliability, growth rate, quality of the service, e.g., later pickup times and earlier delivery times, etc. (3) Generally the important data changes, and we should be taking better advantage of later and more relevant data. E.g., our current schedule was based on lots of averages and convinces us that we can carry the loads a year from now. But on a day a year from now, we will have for that day more data on delivery loads, pickup loads, winds, weather, plane outages, etc. and could do a better schedule THEN exploiting the relevant data we have THEN. (4) (i) Here is a first cut at much better scheduling in a nutshell: Assume the loads, etc. Start with a plane in Memphis and fly it through all possible tours serving the cities it stops at and returning to Memphis. Cost out and otherwise evaluate each tour. Tours that violate safety, engineering, time window, load, etc. limitations, discard. So, get maybe 100,000 tours that are actual candidates. We will fly only 33 of the 100,000. So, the question is, how to cover the 90 cities from 33 of the 100,000 at least total direct operating cost that day? There’s some pretty good evidence that doing that well could save us 15% of direct operating costs. (ii) On a given leg, how should we climb, cruise, and descend the airplane to meet all the limitations and minimize cost, essentially just fuel cost? Sure, can look into the flight manual, but maybe we could do a little better, pick up a percent or few in fuel costs, maybe. There’s some math for that, deterministic optimal control theory. I’ve met with world expert Mike Athans at MIT; you got the lift and drag equations from France. That’s a start. (iii) On a given tour, things, especially loads and weather keep changing, significantly even after the tour starts and the plane is flying. At each stop the pilot knows the load, winds, weather and wants to know how much fuel to buy and how to fly the next leg. Also we have from our extensive historical data relatively good probabilistic information about the rest of the tour and want to exploit that. If we do that well, we can get some more savings in opex. Eventually (i)-(iii) might save us on some capex. Can have more in a month.That beats OKR “like a rented mule”.Uh, IBM did really well, top to bottom, at OKR. At one time they had essentially everything in computing. Then along came Intel, Microsoft (likely never even tried anything like OKR!), Apple, Cisco, optical fibers, Western Digital, Dell, Lotus, WordPerfect, Diablo daisy wheel printers, B/W laser printers, …, and the Internet, Google, Facebook, and MOBILE!!!! All IBM could do is say “God ceased to smile on IBM.”.Lesson: Beware OKR, formality over reality. The effort you want is what I did in plane geometry — sleep in class, ignore the teacher, do by far the most homework of anyone on the class, do really well learning plane geometry, and totally blow the doors off the state achievement test. And want what I was doing at FedEx and could have reported at I outlined above. Eventually I did do that, called a meeting. My manager said that I couldn’t call the meeting because he was busy and couldn’t come. I told him, “Then don’t come.”. Smith and all the C-level attended without being asked, etc. Yes, somehow my manager managed to revise his really important, busy schedule and come also. After the meeting, my manager fired me. Smith ignored that and transferred me and promoted me to Director of Operations research reporting to the SVP planning with my office next to Smith’s. That meeting? Two applied Ph.D. dissertations came from it! All things considered, relatively good meeting!

  7. Jim Peterson

    In my companies we use a What by When process:The last month of the current quarter we set objectives in the key areas of the company for the next quarter- it fits on one piece of paper: sales; tech; web development, content creation.This forces “deciding” and having to make choices. Good for the team/ employees, and good for management to avoid having to many new “ideas” at one time to confuse the team on priorities. Good for keeping employees from going roque and working on whatever they want…or doing no productive work.After the What by When is made we think about the position we will be in if we achieve these goals. “How will it be better when we are done” (at quarter end).If the answer is – in a great place in achieving our overall goal, we then go nail it.

    1. Matt A. Myers

      I like this a lot – the simplicity is immediately comprehendible. Objectives and key metrics is the pre-requisite for why a feature has been decided to implement – with the what and when being the actual important focus and mantra to align/rally around.

    2. JamesHRH

      Simple is better. I assume you add ‘Who’ to the mix!

      1. Jim Peterson

        Yes. In our case The Who is the leader of each key area noted above.

        1. JamesHRH

          Comment was in winking, knowing, joking font – Disquds must not have it installed.Not the least surprised.

    3. fredwilson

      It sounds like a great process

  8. Guy Lepage

    I’m a huge fan of Scrum.. I have not heard of OKR but will check it out. Any book recommendations for OKR?

    1. aminTorres

      Almost 5 years old but really all you need to read to get a solid grasp.… Aren’t you one of the core team for blockstack? surprised you do not use OKRs.

      1. Guy Lepage

        Thanks Amin. Will check it out. I there was anything before I came along. We went with Scrum.

  9. David C. Baker

    I don’t personally, but a lot of my clients use the EOS (Entrepreneurial Operating System) that Geno Wickman developed in his “Traction” book. The success, I think, comes from that cadence approach.

    1. fredwilson

      Yet another great process.

  10. sigmaalgebra

    Heart beat, thump, thump, thump is pretty simple stuff. Sure, without a heart beat, have some biggie problems.But, given a working heart, brain, thought beat is what is REALLY important, and that doesn’t always go just thump, thump, thump.IBM did really well with heart beat, and Intel, Microsoft, Dell, Apple, Adobe, Western Digital, Lotus, WordPerfect, …, Google, Facebook (compare with IBM’s Prodigy done jointly with Sears), Amazon (compare with Prodigy again) beat IBM like a rented mule.Somehow I doubt there was a lot of OKR around when Gates was running Microsoft and Jobs, Apple — same for Lotus?

  11. sigmaalgebra

    Gee, OKR!!! Terrific!!Just look at the OKR!!!Wow, “management by objectives”, How to Succeed in Business without Really Trying!So, don’t have to walk around after closing time and chat with some of the remaining worker bees, ask them what their main problems are, what they could use but don’t have, how they could do better, how the company could do better?Don’t have to bother with SECURE anonymous employee surveys.And Trump’s father was wrong: IIRC, roughly,No one ever got rich sitting behind a desk. Go to the construction site, talk with the carpenters and electricians. Check if the walls are straight — easy to fix early on, really expensive later. Pick up the scrap lumber — can sell that.So, when Trump goes to the border and talks with the guys on the ground, waste of time?There was a TV movie Ike where Eisenhower, just after Kasserine, was in Fredendall’s “command bunker”and asked about where they could attack and with what; Fredendall handed Ike a typed report; Ike batted it away and asked “Have you ever been there yourself in person?” or some such.It appeared that Trump wanted to claim that the brass in the Pentagon was giving him poor information, “two years”, etc. about beating ISIS but when he flew into Iraq during Christmas found a local general who outlined how they could hit ISIS and “they wouldn’t know what hit them”. Well, not long after, apparently ISIS, the last 15%, 10%, 1%, etc. really was gone.From all I can see, OKR applied to the organization is not good enough to get even OKR for the owners.

  12. Andy Schornack

    Has anyone compared the OKR process to EOS traction?

  13. Matt Tucker

    These are both great blog posts!I was lucky enough to get to do 6 months of interviews with high performing teams looking for patterns of behaviors that made them really successful. The heartbeat / cadence theme came up often. One specific recommended behavior around goals / OKRs check-ins: check in on the progress of the metric, but also ask everyone working on the goal for a “confidence score”. The confidence score is their qualitative assessment about whether the team will hit the goal by the deadline and can be as simple as “red/yellow/green” status. Pairing quantitative data (metrics) with qualitative feedback is what leads to the best insights and discussions. I wrote up some recommendations at:

  14. Jim Peterson

    Thank you Jeff

  15. Jim Peterson

    The Effective Executive and Managing for Results are two of Druckers masterpieces.

  16. JamesHRH

    If you could only read one business author…..

  17. fredwilson

    Copying is the greatest form of flattery

  18. Richard

    Which 1940-50s western film (if any) best portrays the leadership style of the military?

  19. JamesHRH

    Do you think success allowed for the attainment of new gears?

  20. sigmaalgebra

    Keeping that one.

  21. JamesHRH

    It’s not the tortoise. It’s not the hare.It’s a coyote or a wolf maybe. Efficient. Determined. Consistent. Pack based.

  22. JamesHRH

    Essential Drucket is a solid MBA.

  23. JamesHRH

    Jeez, great question,