Why Cascading OKRs is Bad for Your Startup in 2024? Steps for OKR Alignment

We're talking about OKRs, of course. Leaders use these numbers and metrics to judge teams' progress towards achieving company goals. But when done poorly, OKRs can be costly and time-consuming. This blog discusses cascading OKRs, a technique for optimally managing multiple OKR processes without sacrificing alignment and strategic integrity.

OKRs are the key performance indicator that differentiates top teams from the rest. It's a common goal-setting practice in many companies to help employees align their goals with the company's goals.

What Is Cascading?

Cascading OKRs are a popular method for setting high-level objectives in organisations. High-level OKRs can help clarify and focus company strategy, increase accountability, and motivate team members to succeed. The cascading model is often used in traditional organisations but is not considered a top-down, one-way flow conducive to agile organisations.

Instead, cascading OKRs can be helpful for any organisation to define its goals better and outline a clear path. However, it's essential to consider the benefits and drawbacks of cascading before using this method. 

First, cascading can lead to confusion and uncertainty among team members. By providing clarity and direction of high-level objectives, teams can work towards achieving these goals effectively. Additionally, cascading should be done carefully to make the sets of OKRs meaningful and appropriate to the overall plan.

What Are Cascading OKRs?

Cascading OKRs are a popular approach to setting key objectives in organisations. They involve high-level goals being passed down to departments, teams, and individuals who take ownership of key results to achieve those objectives. By cascading OKRs, organisations can increase clarity, focus, communication, accountability, and motivation.

Traditional cascading goal models are a top-down, one-way, irreversible flow with no feedback cycles, characteristics which agile and innovative organisations want to avoid. In contrast, OKR cascading involves objectives and critical results being set at each level of the organisation from the top down, ensuring that everyone is aligned towards the same goals.

Although cascading OKRs benefit an organisation's overall goal-setting process, they may also lead to pitfalls. One drawback of cascading goal models is that they can result in key performance indicators (KPIs) needing to be more granular and detailed. This can result in confusion and a lack of clarity around individual goals. Another pitfall is the failure to communicate critical objectives clearly across all levels of the organisation. 

To avoid these issues, it's essential to use cascading OKRs appropriately and consider all relevant factors before implementing them.

Why cascading OKRs fails?

1. Cascading OKRs assume that the strategy is perfect, making it difficult to adjust to changing markets.
2. The cascading model is expensive and slows to move, leaving teams on the sidelines.
3. The cascading model is often seen as a remnant of a command & control mindset, making it difficult for agile and innovative organisations to adhere to.
4. Cascading OKRs take too long to implement, making adjusting quickly to changing markets difficult.
5. When cascading OKRs are used, the key metrics and result areas should be clearly defined before initiating the cascade with each team member.

Furthermore, a team member's key result area does not align with the cascading key metric or critical result area. In that case, it should be communicated immediately to make adjustments accordingly. 

It assumes your strategy is perfect

Cascading OKRs, also known as cascading goals, is a goal-setting technique that involves cascading goals from top-level goals down to the divisional, departmental, team, and individual goals. In this approach, the top-level goals are set by the CEO or other high-level management and cascade down to the divisional, departmental, team, and individual goals. The cascading of goals assumes that your strategy is perfect and you are setting the right goals at each level. 

However, it can create complexity if too many goals are cascaded down. This can result in an unfocused and complex organisational goal-setting process. It's also important to remember that each level should have specific objectives that contribute to the key results of the above level. Outputting such a goal-setting process can result in improved organisational performance.

It's expensive and slow to move

When cascading OKRs are used in a company, key objectives and results are typically defined at all levels of planning, from top management to operations. This requires time and resources, resulting in high costs for companies looking to cascade their OKRs. Moreover, cascading OKRs can result in continuous changes from one key result to another, which could be more efficient and costly.

To overcome this issue, companies must invest time and money into setting up new OKRs. Defining key objectives and results for different teams or business units requires significant effort and skill. Moreover, transitioning from one key result cycle to another can take time and effort, requiring careful planning and preparation.

It leaves many teams on the sideline

Cascading OKRs is a popular tool for setting goals and measuring organisational progress. However, cascading OKRs can confuse team members and reduce performance if executed poorly. When cascading OKRs are used to set goals for multiple teams or departments, it can result in missed targets and decreased motivation for individual sections. To avoid the negative impacts of cascading OKRs, it's essential to understand the critical elements involved in its implementation.

Effective cascading OKRs must be tailored to each team or department's goals, objectives, and critical results. Additionally, it's essential to ensure that all participants understand the vital elements in cascading their goals. By taking these steps, you can ensure the successful cascading of objectives and achieve optimal organisational performance.

4 Steps for OKR Alignment

Set Overarching Company Objectives

To ensure that goals are aligned with the company vision and goals, companies should set objectives that provide steps to reach these goals. Objectively, companies must track progress against their objectives to ensure they achieve their goals. In addition to setting clear targets, companies must also develop a clear vision and purpose to guide their actions. These goals should be cascaded down the hierarchy to ensure everyone is working toward the same objective.

Companies must research potential markets and develop entry strategies to expand into new markets or attract new customers. By developing effective outlines, companies can increase their chances of success in the market. When creating objectives for their organisational goals, companies must consider factors such as industry trends and competition.

Communicate Quarterly Objectives with Teams

Companies should set quarterly objectives to work towards a larger yearly goal. Objectives should be discussed and brainstormed with the team to create 3-4 critical plans for the quarter. This helps to ensure that teams are aligned on the key results they wish to achieve over the quarter.

Communication between OKR teams can be facilitated through discussions, chat communication, automatic notifications, and feedback. This allows teams to stay in touch and share progress as they achieve their quarterly key result.

To ensure that teams stay aligned on crucial results, companies can have an annual or quarterly cycle with yearly objectives and quarterly vital results. By breaking down goals into smaller unit targets, teams can respond quickly to business conditions or progress changes.

Teams Should Set Contributing OKRs

Step 3 of OKR alignment involves teams and departments setting OKR goals and contributing to larger organisational objectives. Teams should set individual and team-level goals, with the leadership team setting organisational goals. Teams must also place aspirational and bi-directional goals, with individuals setting goals for the team and the leadership setting goals for the organisation. At the end of each quarter, teams and departments should meet to review their progress against their contributing OKRs.

The process of OKR alignment involves defining objectives and key results for the entire cycle at all levels of planning. This includes identifying key marks for projects and programs, as well as key results for individual employees or members of a team. It also includes creating key result metrics that can be used to track progress towards achieving organisational goals. Capturing and monitoring key results can help organisations identify areas where they are excelling or falling short, which can help improve performance over time.

Share, Agree, and Align

Alignment in an organisation is key to achieving goals and delivering high-quality services. One key way to achieve alignment is through the visibility and transparency of OKRs across teams. 

By making OKRs visible to all levels of personnel, it becomes easier for everyone in the organisation to understand and agree on the goals and objectives that need to be achieved. Besides, a shared OKR strategy can ensure multiple teams work in tandem with each other. 

This helps them deliver better results and stay aligned with their goals. A cascading of objectives can also be eliminated by incorporating a 360-degree alignment in the OKR process. Instead of having different teams define their goals and objectives independently, they should work together to create a unified vision and plans for the organisation. For example, they can use a standard measurement system or metrics to track progress towards their goals. 

And lastly, use OKR software to create a hierarchy of parent and child objectives that can be used to calculate progress and visualise the OKR process.

Conclusion

OKRs are a powerful way to align teams around a common goal. However, cascading OKRs can result in teams setting too high goals and creating employee confusion. Our approach is to set company-wide objectives, communicate quarterly goals with groups, and let teams determine their contributing OKR goals. We also encourage sharing company-level OKRs with individual contributors and aligning them. 

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