Here’s the biggest mistake you should avoid while implementing OKRs.

One of the biggest reasons for failed OKR (Objective & Key Results) implementation is Cascaded OKRs. Cascading means that the business head’s Key Results are taken as the objectives for her direct reports, and then the flow of cascading goes on till the last person in the company. It looks something like this: OKR Cascading

There are 3 major flaws with Cascading OKRs

1. If you follow a quarterly OKR cycle, then you end up spending too much time going top-to-bottom. What if the cascaded OKR ownership needs to be changed? In 90 days, deciding your OKRs and then cascading means you end up your entire time in cascading than execution.
2. Cascading means CXO’s and Managers are not owning any Key Result, which means they are not executing anything. But that’s not true in the real world and should not be. If that is how things work in your organisation, it’s time to relook at your organisation’s structure
3. Deciding which Key Result to cascade and which not is confusing and challenging too.

We at PeopleStrong, learned this the hard way after many implementations. Most organizations in Asia want to cascade goals across levels, and we have given them what they want. But in the end, to make the system, we had to restrict the cascading levels of OKRs.

From what we have learned in our journey, below two things are imperative for successful OKR implementation:

1. Aligning OKRs with CEO’s Annual Operating Plan or Strategic Initiatives. This approach is bi-directional and works wonderfully. It gives clarity to the CEO and the rest of the organization where the company is going. It provides them visibility on how they connect to the big picture. The only trick here is to successfully set 3 to 5 business priority statements that don’t overlap and are linked to what the company wants to achieve in that financial year.
2. Creating Team-based OKRs: Rather than cascading, create team-based OKRs where the Key Results need to be owned by multiple people. These KR’ can go beyond the hierarchies and departments. The concept is a bit more difficult to digest at first, as managers want to hold their boundaries and don’t want people coming from different teams and hierarchy to impact their OKRs. But it beautifully solves the problem of cross-functional communications and collaborations. Mind you; this needs a bit of change management to succeed. CEO or the CXO project sponsor, himself/herself, must take the ownership of communicating why they are doing this.

Summary

1. Cascading OKRs results in wasting too much time setting them.
2. For successful implementation, align OKRs with company’s Annual Operating Priorities or Long-term Strategic Priorities.
3. Creating team based OKRs aligned with the company’s priorities, results in better team communication and collaboration.