Why Cascading OKRs is Bad for Your Startup in 2024

You must have already come across the term Cascading OKRs either from John Doerr’s “Measure What Matters” or from some other source. 

You must also have heard some global organizations that have spent 4-5 months planning and cascading goals but have ended up failing. 

But why?

Why do these organizations fail? What role does cascading OKRs play in it?

This is exactly what we will be answering in this blog.

But before moving forward you must have a clear idea about what is cascading OKRs all about?

Cascading OKRs – what actually does it mean?

Cascading OKRs is about moving forward together with collective effort and coordination. It is meant to connect various functions and lending purposes of the entire organization. 

The OKRs flow downwards from high-level departments. This waterfall effect creates a hierarchy and the people at the bottom are denied power in the decision making. It, in short, creates a chain of subgoals. 

In layman’s language, the Key Results of the people at the top of your startup will become the Objective of the people underneath. 

Let’s understand with an example:

Let’s assume a company named ‘xyz’ that deals in smartphones desire to adopt company-wide OKRs. Cascading OKRs at the top level of their organization might look something like the following-

Objective:  Become the best smartphone selling company in Asia

Key Result 1: Increase brand awareness by 60% by end of the quarter.

Key Result 2: Get hold of 60% of the smartphone market in the region.

Key Result 3: Increase customer success OKR and customer relation rate to 90%.

From this, the marketing manager will cascade OKR and draw his/her objectives from the key results in the following way-

Objective: Increase brand awareness by 60% in the region.

Key Result 1: Increase social media presence by 40%.

Key Result 2: Increase social media engagement by 60%.

Key Result 3: Hire 50 influencers as ambassadors for the latest product.

Following this, the content manager will take one of the key results of the marketing manager and turn it into their objective.

Objective: Increase social media presence by 40%

Key Result 1: Hire 5 new content writers.

Key Result 2: Increase the number of blogs about the products to 30%.

Key Result 3: Increase the frequency of social media posts by 50%.

Now comes the big question- 

Is casacading OKRs right for your startup?

The answer is pretty simple.

“NO”. 

Lazlo Bock, Former VP of People Operations at Google has explained in his book Work Rules! as- “Having goals improves performance. Spending hours cascading goals up and down the company, however, does not.”

The concept of cascading and the whole team pulling together in the same direction at your organization might sound perfect.  In fact, almost ideal.

Although the concept sounds fancy and appealing on paper. When implemented it’s much more complex, time-consuming and hazardous.

In reality, organizations function differently and need multi-directional goals to be achieved.

Secondly, industry experts often suggest that key results should be written in metrics while objectives shouldn’t be.

But Cascading OKRs clearly defy it as someone’s key results are automatically going to be taken as the objective for the person down the line.

Moreover, the top-down approach of cascading which is more common is nothing more than the traditional command and control. Organizations don’t function that way anymore.

In addition, cascading of OKRs happens vertically. It fails to connect the horizontal dots. It is one-dimensional. While you need a multi-dimensional perspective to win the race, especially, if your startup is scaling up.

6 reasons why your Start-Ups should stop cascading OKRs now-

1. Mistakes magnify with a snowball effect

The best thing about cascading OKRs is that it creates a network where everyone’s goal is related. Ironically, it is also the worst thing about it.

This interconnection among goals at various levels makes the whole structure more fragile. 

Company level objectives tend to change with the smallest change in the market and company strategy. While you are Cascading OKRs, one change or shift at the top and the entire network of OKRs will change. 

Moreover, if someone on the top makes an OKR mistake the whole company will be doing the same mistake with a snowball effect. Making things right again at such a huge scale can be exhausting and in some cases impossible. 

2. It consumes time and resources

In the process of cascading OKRs, the focus shifts from execution. People at the bottom of the organizational structure have to wait for the people upstream to set their OKRs. And this waterfall of OKRs may take days, weeks and even months to finally reach the ground. 

On top of that, if your startup is scaling and extending to multiple departments, imagine the amount of time and resources it will take to coordinate, discuss, plan and set goals at each level and cascade OKRs across all levels.

3. It comes with a price tag

Apart from the time wasted in planning, cascading OKRs can cost you a big sum. 

No startup is perfect in its predictions and decisions. Mistakes are sure to happen. Especially now when startups are going gaga about experimenting with new and creative ideas every now and then. 

Cascading OKRs will only intensify these mistakes. Every mistake will have repercussions. That is one thing done wrong and the entire system will topple down like a house of cards. And

if shattered once (for any reason) you will have to rebuild the entire network again. 

4. Costs agility and involvement of the team

Cascading OKRs is a slow process and works in a rigid structure. Everyone’s objective ladder up to someone else’s. 

It, thus, snatches away the autonomy and flexibility from team members who stand at the lower end of the hierarchical structure. Instead, readymade objectives are served on their plates from above. 

Cascading OKRs further marginalizes the role of the people at the bottom. When you are not involved in the process, you are sure to feel less motivated and have a lesser sense of ownership. 

This lack of involvement affects employee motivation and in the long run their productivity and accountability. Teams lose risk-taking appetite, experimentation and innovation. 

5. Encourages micromanaging

In a research, 71% of respondents said that being micromanaged at the job has negatively affected their performance. While 85 % of respondents agreed on the negative effects of micromanagement on employee morale.

Instead of collaboration among departments, cascading personal OKRs examples usually lead to micromanaging what each person’s goal ‘should be’. When you are controlling your people in this manner, OKRs lose their purpose in the first place i. e. directing people to the desired outcome.

As Steve Jobs has also said that there’s no point in hiring talented people if you need to micromanage them. Cascading OKRs will thus directly affect your company culture and rule out empowerment.

Evidently, cascading OKRs at your startup can risk your team’s performance and forbid your teams to move forward at a high pace. It’s for these reasons you will find OKR experts and consultants discouraging cascading at all.

Instead, align and create tactical OKRs

Shift everyone’s focus to the North Star. Align your teams’ OKRs at the company, department, team and individual levels to keep everyone on the same page. 

Here are 6 tips to align OKRs at your startup instead of cascading. 

1. Promote cross-functional OKR ownership.
2. Measure connectivity of OKRs across all teams.
3. Organize frequent OKR progress reviews and meetings.
4. Promote flexibility and autonomy.
5. Use a software solution like Peoplebox to make tracking and aligning OKRs easy peasy for your teams.
6. Reuse objectives where possible i.e two or more teams at your startup may have parallel objectives, but their key results will vary.

Bonus tip: Stress on flexibility instead of perfection

Misalignment is naturally going to occur. With frequent check-ins, a velvety communication system and a feedback loop these can be easily done away with.

To Read in detail about OKR alignment with the teams click here

Conclusion

Cascading OKRs might look seducing on the surface. But a few days along the line you are sure to get disillusioned. Because the chances of implementing rigid cascading and successfully running the system from the top are rare. 

You can simply replace the complexity of Cascading CEO OKRs with a simple top-down or bottom-up approach. Keep your focus on alignment. And most importantly, trust your teams. Help them set their own OKRs based on company strategy and let them make it work instead of micromanaging every detail. 

So, ditch the thought of cascading best OKR software at startups and make alignment the kingpin of your OKR success.

Frequently Asked Questions

What is cascading OKRs?

Cascading OKRs is a top-down approach where high-level objectives set by leadership flow down through each organizational level. Each team’s OKRs align with those of their manager or department, theoretically ensuring alignment but often leading to rigidity and reduced flexibility in goal-setting.

What is the risk of only using cascading to align OKRs?

Relying solely on cascading OKRs can lead to micromanagement and limit employee autonomy, making it challenging for teams to adapt goals dynamically in fast-paced environments.

What is an example of a cascading goal?

An example would be a company-level objective to “Increase market share by 10%.” This cascades down to the marketing department as “Boost brand awareness by 15%,” and further to individual marketing team members as specific objectives, like “Increase social media engagement by 20%.”