OKRs do not cascade
Goals cascade. It seems it is just something that they do.
Goals start at the top and then cascade down the organization. That is very common. And flawed.
What are the characteristics of a cascade (or waterfall)?
It’s a top-down, one-way, irreversible flow, with no feedback cycles that ends crashing on the rocks. Everything an agile, innovative organization does not want to be.
The cascading model is a vestige of a command & control mindset in which decisions simply flow downwards from the top. We have to stop using top-down analogies. Words and images are very powerful and help shape the culture of organizations.
Although cascading goals is an improvement over the previous approaches, it takes way too much time. As James Harvey wrote:
[The traditional model]…is a top-down approach and often takes too long to achieve alignment. Direct reports are often dependent on the completion of their supervisor’s goals before they can begin building their own goal plan.
I have seen global corporations in which the goal setting process takes 4 months. Besides the huge amount of time spent setting a plan, that is 1/3 of the year without clear goals. There has to be a better way.
As Google’s Laszlo Bock wrote in his book, Work Rules!:
On the topic of goals, the academic research agrees with your intuition: Having goals improves performance. Spending hours cascading goals up and down the company, however, does not. It takes way too much time and it’s too hard to make sure all the goals line up. 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. So far, so good!
That is why I created Castro’s First Rule of OKRs:
OKRs never cascade. OKRs unfold or develop.
You can also use verbs like define or set. Just avoid command&control analogies. OKRs are set in a parallel process in which individuals and teams define OKRs that are linked to the organization objectives and validated by managers, in a process that is simultaneously bottom-up and top-down.
When properly used, OKR also solves another problem of the cascading model. Cascading is focused only on vertical alignment – making sure your goals are aligned with your manager – which can create silos. By using 360º alignment as described in the previous section, organizations adopting OKR can avoid this issue.
It is important to understand that the high level strategic OKRs for the organization should not be set by the top executives in isolation, without inputs from the team. In his article titled Should You Build Strategy Like You Build Software?, Keith R. McFarland describes a model to create a more refined and execution-ready strategy:
Since people at many levels of an organization make daily tradeoffs that impact the company’s strategic success, the process needs to be designed to tap into ideas from all corners of the organization – more than just the top executives.