It’s far better to allow your teams to set their own goals, aligning theirs to the company objectives in their own terms.
Many companies embarking on their first OKR rollout want to make sure that every goal cascades perfectly down through the organization. The company’s Objectives become executive Key Results, which become the VPs’ Objectives, whose Key Results become the Directors’ Objectives, and so on down the org chart until everyone is working towards the same goals. And sometimes this works out-- the company was pushing towards a single project and came away with a sense of unity and strategic alignment. From then on, every quarter, the great cascade starts again.
But for many of these cascading companies, the system starts to fail. Goals aren’t hit (if they’re even set), and instead of alignment throughout the org, there’s growing [discontent] around the system itself. And that’s because requiring cascaded goals is a terrible system for goal-setting. Doing this every time takes way too long, teams hate it, and it’s counterproductive to building alignment. As Felipe Castro puts it, cascading goals is “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.” It’s far better to allow your teams to set their own goals, aligning theirs to the company objectives in their own terms.
Now, this doesn’t mean abandoning company level OKRs! In order for teams to align their own OKRs, they need a strategic north star to align to. When you have a Tier 1, all-hands-on-deck, major project, cascading some of your goals makes sense. The issue arises when cascading your goals becomes the be-all-end-all structure for setting your team’s goals.
One of the biggest issues with the cascading strategy is, for lower level teams, the process of setting goals can end up wasting huge amounts of time that could be better spent delivering them. In a cascading system, because each team will need to wait until the team above them has set their goals, any issue or delay has an outsized ripple effect. Depending on how far down the chain the team is, they may lose weeks or months waiting to learn their objectives.
But beyond timing, it also pigeonholes your teams into specific Objectives that might not align with what they need to work on for the quarter. When one team’s Key Results become another’s Objectives, it forces the second team to narrow their thinking and strips them of their autonomy.
This has multiple negative effects; one of the most damaging is removing the flexibility that makes OKRs such a successful framework. Being able to reassess mid-quarter and change or eliminate Key Results or entire Objectives allows employees set big, audacious goals. By having their Objectives decided for them, employees lose the drive to push harder and farther. They focus, instead, on just meeting the expectations that were set for them. In his book on OKRs, Measure What Matters, John Doerr put it this way:
When our how is defined by others, the goal won’t engage us to the same degree. If my doctor orders me to lower my blood pressure by training for the San Francisco Marathon, I might grudgingly take it under advisement. But if I decide of my own free will to run the race, I’m far more likely to reach the finish line— especially if I’m running with friends.
It’s worth looking at the main justification for cascading again-- that it creates alignment. Done sparingly, it can. Highly targeted projects or initiatives that need all hands on deck, for instance, benefit from laying out clear, direct steps at every level. But practiced regularly, it constrains teams and discourages the cross-functional agility modern companies need to grow.
John Doerr, again:
Connected companies are quicker companies. To grab a competitive advantage, both leaders and contributors need to link up horizontally, breaking through barriers. A transparent OKR system, as Laszlo Bock points out [in Work Rules!], promotes this sort of freewheeling collaboration: “People across the whole organization can see what’s going on. Suddenly you have people who are designing a handset reaching out to another team doing software, because they saw an interesting thing you could do with the user interface.”
Encouraging teams to look not just at the company level OKRs, but also their peer teams’ OKRs, can spark new ways of thinking, open up more collaboration, and allow them to innovate. Outside of offering more opportunities for cross-functional work, this builds alignment through positive social feedback-- if everyone else is focusing on how they can contribute to a company objective, anyone that isn’t stands out and can self-correct.
Teams thrive when they have the autonomy to ensure their work matters. Moving beyond tightly cascading goals doesn’t mean giving up on alignment, it means trusting that your teams will use their strong suits to advance your company mission-- that the goals they set will push the company forward. Let your teams set their goals and see just how far they’re willing to push.
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