How to Cascade Objectives and Key Results (OKRs)
Cascading Objectives is used in the Designed to Scale Coaching Program. In this multi-week program, you, the CEO, and a support role of your choosing (usually the head of Business Alignment or equivalent) will learn how to energize an OKR program that succeeds.
Prerequisites for this program are that the new Leadership Team and the Ultimate Leadership Team Process have been fully activated in your company.
How to Cascade Objectives
The bottom of the rocket is the cascading objectives. They provide the impetus to drive forward short-range business improvements. The rocket body consists of lifecycle-stage-dependent Top-Level OKRs. Members of the Leadership Team own these OKRs, which serve to drive forward the company’s strategy and point the way towards its 3-year highly achievable goal or 3HAG (3HAG Way, Shannon Susko, 2018). As a result, the 3HAG leads the company toward its long-range Big Hairy Audacious Goal or BHAG (Good to Great, Jim Collins, 2001).
With this image, I want to emphasize that an OKR program can’t be cascaded if it lacks a lifecycle stage-dependent strategy, a strong Leadership Team, and a process that drives the strategy forward. Once these elements are in place through the Designed to Scale Coaching Program, it is very feasible to launch and cascade a quarterly OKR process for the entire company. Here’s how.
How to Set Effective OKRs
An effective Cascading Objectives process ensures everyone in the company focuses on the most important things in their area to achieve the right short-term results that support evolving long-term strategic objectives.
In Organizational Physics Cascading Objectives, the following building blocks are used: Align the organization towards the right 3-Year Highly Achievable Goal based on stage-dependent Strategic Imperatives, which are supported by Annual Goals, which in turn are supported by cascading quarterly OKRs (objectives and key results).
3-year Highly Achievable Goal (3HAG): This is a company-wide, mid-range goal and rallying cry we can achieve if we implement our Strategic Imperatives quickly and well.
It is important to reinforce that we are not asking you to set a 3-year highly achievable goal first and then set Strategic Imperatives and Annual Goals. This is due to the fact that Strategic Imperatives must be lifecycle dependent! Without setting the right Strategic Imperatives first, we can end up with a 3-year goal that is out of sync with the company’s true stage. Resulting in an overly ambitious goal with poor execution. This would be like having a 4-year-old with a 3-year goal of getting into Harvard.
Strategic Imperatives: the top 3 to 5 big, corporate-wide, do-or-die objectives that will likely take about 3 years of sustained focus and effort for the business to complete. Synonyms could be “big rocks” “pillars” “swim lanes.”
Achieving a Strategic Imperative is what reduces internal friction, moves the business successfully to its next lifecycle stage, and simultaneously increases its capacity for sustained throughput and innovation. We recommend no more than 3 to 5 active Strategic Imperatives in total with one Big Implementer assigned to each imperative who is accountable for its success.
Annual Goals: the key results that fit within a given imperative. They are the year-long efforts that are concrete, specific, measurable actions to achieve this year.
We recommend 3 to 5 Annual Goals per Strategic Imperative with one implementer assigned to each annual goal. The Annual Goals for each Imperative are cross-functional. This means that the team assigned to that imperative is also cross-functional but with one leader (“the Big Implementer”) driving it to completion.
OKRs: the short-range individual or team-based objectives and key results that drive forward the annual goals and strategic imperatives.
Individual and departmental quarterly OKRs are how the company drives forward the strategy this quarter. Just as all roads lead to Rome, all quarterly OKRs must align with and support the company’s annual goals and strategic imperatives.
How this Program Works
At this stage in your program, the heavy lifting for Cascading Objectives has already been completed. Meaning, we already have a clear and compelling BHAG, 3HAG, and the right set of Strategic Imperatives and Annual Goals in place, plus an active and high-performing Leadership Team and process.
Now bottom-up OKR planning can begin. During the OKR process, each objective and/or key results owners, will create their own quarterly OKRs to help drive forward the strategic imperatives and annual goals. We also recommend you conduct a quarterly OKR retrospective to catalyze learning and continuous improvement.
Our job in this process is to equip you with our Cascading Objectives software (which is integrated with the Evolving Structure and Ultimate Leadership Team Process) and to provide coaching and perspective to you on how to run an effective OKR process with your team. About a quarter later, we will also coach you how to run an effective OKR retrospective.
Frequently Asked Questions
1. We already have OKR software. Should we use it?
It is up to you which OKR software program you use. Due to the lack of support on the market for the way I believe an effective OKR program should be run, I had my own custom OKR software built in Coda. If you are unfamiliar with it, Coda is a web database and doc that integrates with most existing IT environments (Microsoft, Google, Slack, Asana, etc.). It also integrates with the Evolving Structure and Ultimate Leadership Team Process so it has some advantages. The main thing I care about is that you adopt the OKR program principles, regardless of which tools you choose.
2. How deep should we attempt to cascade?
Of course, this is up to you, but I recommend you run your OKR program for one to two quarters with the functional heads only. In this way, the team can build the muscle to cascade it into their departments. It is important to cascade from a strong foundation if you want to avoid a failed change initiative.
3. How do you support the team with OKR setting?
This program is designed to work only with you, the CEO, and your right hand. My help in working with the broader team is not within this program’s scope. To work with your broader team, I run in-person workshops, which we can discuss if there is a need.
How to Apply
If you like this way of thinking and want to engage in a similar process for your company, schedule a consult or learn how this program module relates to the next.