How to Cascade OKRs. OKRs that Work (Part 3/6)
In this 7-minute video, learn to create and cascade OKRs (Objectives and Key Results) that move through your organization.
What is an OKR?
As a recap, OKRs are Objectives and Key Results. Objectives address what will be accomplished and what will be delivered to an organization. Key results represent how the outcome will be delivered.
When we talk about OKRs, we’re talking about a basket representing Objectives and a handful of KRs. This comprises a single OKR. OKRs are cascaded or driven through the organization from a company-wide, team, or department, or function, and individual.
Aligning Your OKRs
With companywide OKRs, it is important to align them to the overall vision of the organization. Without aligned OKRs, organizations are left with an OKR puddle or several objectives that fail to align resources, time, talent, and treasure, to the overall vision your organization is working towards.
First of all, you need a vision. If you haven’t landed on a solid vision, check out this whiteboard video < /resources/video-how-to-write-a-vision-statement/> and get begin! With a vision in place, a roadmap emerges addressing where you want to be in year one, in year two, and year three. It may not be this specific, but a solid vision is key to realizing your OKRs.
Setting Up & Writing Your OKRs
We’re looking at creating objectives—companywide objectives, from year one, to set your annual outcomes and priorities that align with the first year of your roadmap, or the second or the third year.
However, let’s assume you have a new roadmap. This is how you will establish your companywide objectives. So, super important, pull objectives from your roadmap to clarify the priorities are for the organization.
Once you’ve identified that, the next thing you need to work through is creating the cascade. The cascade below has been copied from the video. This is an example of a cascade beginning with the CEO. Diversifying and expanding into three markets, cascading down to the VP, cascading down to the individual.
Below is an example of CEO-level OKR:
O: Diversify by expanding into three new markets.
- KR1: Grow revenue from new markets from 0-10% by the end of the planning period.
- KR2: Customize the highest margin offering to be market- and language-relevant./li>
- KR3: Sign contracts with one in-market partner per market.
Let’s break this apart just a little bit. You need to decide, with your KRs, if you’re going to own them or delegate them, or maybe both. In this case, the CEO’s objective is to diversify into three new markets. There are three key results to achieve that outcome, two of them, lowering total IT costs, and customizing one offering, the CEO is going to continue to own.
And here is an example of how this might cascade into a VP-level OKR:
O: Grow revenue from new markets 0-10%.
- KR1: Hire 2 new associates with language specialization..
- KR2: Launch outbound sales campaigns.
- KR3: Increase pipeline 5% month over month.
The key result of growing revenue from the new markets from 0 to 10% is going to be delegated to the VP. You can see that repeated in the example. The key result is cascaded to the VP and becomes that VP’s objective.
From the VP’s Objective of growing new revenue, three new key results address how they will be accomplished. The VP decided to keep two KRs—maintain hiring two new associates, maintaining the launch of outbound sales, but to delegate increasing pipeline to the team.
Finally, here is an example of how this might cascade into an Individual-level OKR:
O: Increase pipeline 5% month over month.
- KR1: Engage all qualified leads weekly
- KR2: Form 1 new lead ever month
Increasing pipeline to 5% becomes the objective for an individual within the team. That individual then determines how they will increase the pipeline. This exemplifies how OKRs are cascaded in a tight coherent way.
Tight or Loose Alignment?
This example is pretty tight. We’re keeping a few of them as actions as I’m talking as a CEO, and I’m asking to lead my team to accomplish the revenue growth, and then that gets cascaded, and so on, and so forth. That said, the ownership and the responsibility for all of these key results are mine, as the CEO, or the VP, or the individual, as the case may be. Let’s talk about these a little bit more.
Another idea around cascadings. It can be tight, this is a pretty tight cascade, or it could be loose. By loose we mean everyone would cascade off of the overall company objective. If we were doing a loose alignment, we wouldn’t cascade the KRs. The KRs would be owned by the person who is delivering the outcome for the objectives.
Annual or Quarterly Cycle?
We talk about the OKR cycle being a quarterly cycle, where deliverables, or commitments are set, for the next 90 days. You assess your performance against them, and reset for the next 90 days. When we talk about Annual or Quarterly, the corporate or company-wide objectives are annual. That makes more sense.
From there, setting quarterly key results, or objectives, and resetting targets. We’re keeping the specific action and we’re resetting a target on a quarterly basis. The company-wide objectives should be annual for the most part. And then, most of the cascaded items would be quarterly if you’re managing the methodology in its classic sense.
You wouldn’t delegate a KR, you would own the KR. Those are kind of two choices to make. Are we going to do a tight alignment, or a loose alignment? Neither is right, you just need to be clear about which approach you’re taking.
All About the Deliverables
And the last thing to talk a little bit about is the fact that the KRs are really talking about deliverables, not actions. That’s a really specific, fine point with the OKR methodology.
What do we mean by that? In traditional goal cascading, or goal setting exercise the children of an objective would be actions and they would be milestones of accomplishments in an incremental fashion. In this case the flip is I’m not interested in the actions, I want to know what you are going to deliver. What do I need to deliver to ensure the outcome of the objective? What are the 3-5 key results that I need to drive in order to expand into 3 new markets?
So, that is a really important way to make sure you have a great goal cascade
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