Cascading OKRs: rigid vs. directional

Recommended reading: How to roll out OKRs for the first time?

Transcript

Henrik-Jan: Welcome to another episode of Goal Diggers. I’m Henrik, CEO of Perdoo an OKR software focused on strategy execution. I’ll be today’s host and today we have Peter Kappus with us. Peter is an international OKR coach, using OKR and agile practices to help teams maximize clarity delivery and joy. Peter, welcome back to Goal Diggers.

Peter: Thanks Henrik. It’s great to be back!

Henrik-Jan: Peter, last time we spoke about individual OKRs, today we wanted to talk about cascading OKRs. Can you tell us what cascading OKRs means?

Peter: So a lot of people first encounter the idea of cascading OKRs, through either John Doerr’s book Measure What Matters, where he talks about this fictional Sandhill unicorns fantasy football team.

It was also cited by Rick Klau in his now-famous or infamous Google ventures video about OKR from a few years ago. And, the main thing that people think about with cascading OKR, is what I often call rigid cascading. And this idea that every person’s OKRs, are kind of descended from someone else’s OKRs further up in the organization.

So in the book Measure What Matters, John Doerr talks about this idea that, you know, the general manager wants to make money for the football team. And one way of doing that is to win the Super Bowl and then the head coach, then his Objective becomes to win the Super Bowl and so his Key Results become: a passing attack amasses 300 yards per game, defense allows fewer than 17 points per game. I’m just reading these directly from Measure What Matters, but the idea is that at each level, that person’s Key Results become the Objective of the person underneath. It’s all very rigidly, kind of tied together.

Henrik-Jan: Yeah. We also noticed that with Perdoo. So lots of prospects that come to us expect, actually, that this is how the software works. And then often they refer to the book Measure What Matters. And unfortunately, this is not how Perdoo works, or fortunately. What’s your experience with this?

Peter: Yeah, it’s funny because I think it’s a beautiful dream that really appeals to people who initially gravitate towards OKRs because it makes it look like everything in your organization is pulling in the same direction.

Everyone is working towards the same set of goals. And I think it kind of sticks in people’s minds is this kind of ideal image, like a flawless diamond or something, but most organizations that I’ve worked with, they drop that approach almost immediately within their first few conversations in a multi-team kind of environment.

And the funny thing is, you know, the real world is more complex. It’s more organic. It just doesn’t, it doesn’t work that way. And, you know, if you read Measure What Matters, you see this example and it looks great. It looks great on paper. And I think a lot of people just stop reading at that point, because it looks like such a clear way to join everything together.

But what a lot of people, myself included, the first time I read it, I missed this and you know, and that is that the next five pages he spends totally debunking this notion. You know, he says, yeah, you could do this very rigid, kind of tight cascading where everything has to ladder up to the goal above it.

But it does some things that are not great. It’s it creates a loss of organizational agility, really for one thing. Cause it’s slow, you know — if you’re constantly having to every quarter, wait for everyone upstream from you to set their OKRs that could take days, weeks or even months. So, so it makes you less responsive and it makes you less flexible.

That’s the second thing that he talks about is: it’s very brittle. So, you know, humans are notoriously bad at predicting the future. And if we pick the wrong goal, anywhere in that chain, then the whole thing falls apart, like a house of cards. And you have to rethink all of the goals all the way down into every team.

So you lose a lot of flexibility. The third thing that he mentioned is, it really marginalizes contributors. So instead of thinking up what your own goals should be, you have them handed down to you from above. And that’s, you know, really counterproductive. That doesn’t help. So it cuts off a lot of really interesting, important conversations that people could have.

There’s one other thing too, which is that the only kind of linkages you create in that environment are one-dimensional. So they only go kind of up the chain. You miss out on all these horizontal linkages that you could have. And other places where you can kind of have more interesting conversations and connect.

So all of those things make it kind of a poor choice for most organizations.

Henrik-Jan: Okay. But one thing that I never understood myself, when organizations have this expectation of cascading OKRs, and Key Results becoming Objectives for someone else, is that it is a good and well-known best practice, even amongst these organizations that want to take this approach. That Key Results should contain a metric. And then it’s also well known best practice that Objectives should never contain a metric. If a Key Results is a Key Result or an Objective, depending on who looks at it or wherever it appears in the hierarchy, that never holds up, right.

That never works. And then the other thing that I find surprising is that if a Key Results should contain a metric, then only the metric that is used in the Key Result can drive progress for the Key Result. And the completion of sub-goals doesn’t automatically mean that the value for that metric has changed, right?

So that expectation of progress propagating up and, other people completing sub-goals, be it Objectives or Key Results. However, you want to call it in this way, that automatically that progress, drives progress of the goals, higher up the chain. Whereas of course not always your Key Results will have metrics, and sometimes it’s hard to identify good metrics, but at least a good amount of your Key Results should contain a metric.

Progress cannot propagate up anymore. And the only thing that can drive progress for that particular Key Result is whatever value that metric has at any point in time. Right? Or am I…

Peter: Yes, that’s exactly right. I mean, Objectives don’t usually have metrics or these big inspiring. You know, I think like the book covers that kind of gets you leaping out of bed in the morning.