OKRs: Great on paper, but do they scale?

by Cascade Team, on Nov 23, 2021

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John Doerr, who introduced Google to OKRs, once said: “OKRs have such enormous potential because they are so adaptable. There is no dogma, no one right way to use them; it’s up to you to find your points of emphasis and make the tool your own.” 

OKRs stepped up just as the world was at the cusp of the tech revolution and showed incredible promise for leaders who wanted to (and did) change the world. Now, it's more relevant than ever, as businesses use OKRs to align and rally remote teams together and make strides towards their goals while working from home.

But what exactly is OKR?

OKR stands for Objectives and Key Results—a goal-setting framework used by individuals, teams, and organizations to define measurable goals and track their outcomes as a means of implementing their corporate strategy. 

Typically, an OKR template allows you to outline your objectives and expand on your key results.

The objective is a statement of what you want to achieve, and the key results are quantifiable measures that you will take to achieve your objectives. So if this was being written by a video streaming company, it would look something like this:

Objective:

Become the world’s leading streaming platform.

Key Results:

  • Increase paid subscriptions in North America by 35%
  • Spend 65% more on original content
  • Expand to at least 3 new regions 

These are then further broken down and applied to each team and individual in the company. 

OKRs changed the way organizations looked at performance analysis and progress and promised a lot of great things:

  • A perfect translation of a grand vision into achievable targets for the entire organization
  • An easy, quantitative way to measure employee performance across departments
  • If executed perfectly, it’s a means to improve accountability across the organization 
  • A guaranteed way to stay on top of goals and achieve goals faster than ever

And the list goes on. Each of these promises is a powerful contributor to a company's growth on its own, and a system that offered them all, and connected them from end to end sounds incredible.

So... what's the catch?

Born from good intentions: OKRs’ theoretical value

On paper, the value proposition that OKRs provide is irrefutable. It brings answers to a very important problem that businesses have been trying to solve for a long, long time. It tied the different branches of the organization together, synchronized them, and drove them in tandem towards a shared purpose. 

OKRs are the perfect combination of KPIs, balanced scorecards, and an array of other great performance metrics to measure and optimize productivity across the organization. They've helped leaders to bring their vision down to reality into something that can be attained through rigorous strategy, ruthless execution, and perseverance.

What could possibly be disadvantageous with this seemingly simple method of measuring employee performance and achieving strategic goals? 

By simply looking at OKRs’ devout fans, though, it’s easy to see a pattern emerge:

  • Google
  • Microsoft
  • Amazon
  • Intel

They’re all tech companies, and they’re all pretty much top-down management styles. It’s worked wonders for them, but not without a fair bit of tweaking. 

When Sundar Pichai took over Google in 2015, he had to rehaul the company-wide OKR practices. While under Larry Page, every employee had two sets of OKRs—quarterly and yearly—Pichai whittled it down to yearly OKRs. He replaced the quarterly OKRs with mandatory quarterly progress reports from each department instead. 

So the question is, of course, why?

Why would one of the earliest adopters of OKRs diverge from a method that has been instrumental in their success?

OKRs don’t fit the mold. They ARE the mold. 

All, or most, good things come with a catch. In the case of OKRs, the catch slowly starts creeping up when you start implementing the system for your business. Over time, you begin to notice that your organization is the one that's trying to adapt to the OKR system and not the other way around. 

The core structure of OKRs makes them rigid by nature—by complying with a pre-determined framework, you'll find yourself rejecting activities that fall outside of its purview, even if they had the potential to grow and snowball into something truly special. To put it bluntly, that sucks.

Apart from the shaky execution of well-intentioned OKRs, there are some inherent, systemic drawbacks to OKRs that affect how they perform in real life. As businesses grow, it becomes all too clear that OKRs have more drawbacks than advantages to offer. Let’s address why:

  • OKRs slow down your organizational goals
  • OKRs do not cascade
  • They’re easy to lose track of
  • OKRs come with resistance

Slow and unsteady—OKRs slow down your organizational goals

OKRs are often jargony and more suited for tech companies—for industries that are non-dependent on tech, it’s too rigid and much too time-consuming to implement. 

Today's OKRs are great if your aim is to be meticulous, but not so great if you want to be fast. Simply laying the groundwork for the framework to fit in is time-consuming—it can take months to establish OKRs and integrate them into your everyday operations. That's a lot of precious time wasted by leaving the business and its employees in a state of free fall, without direction, purpose, or clear-cut goals to achieve. 

Beyond org-wide OKR implementation, OKRs are just as much of a speed breaker for teams and individuals. The top-down, waterfall structure of OKRs only allows goals to trickle down from broader goals into smaller actionable ones. This means that teams and individuals need to wait on other teams and their managers' completion of the goal-setting process before they can start planning theirs.

Rigidity slows things down too. This can be incredibly frustrating for agile teams that pivot their strategies and execute them on the go for faster growth. These problems are becoming more visible to companies who have been using OKRs and end up disillusioned with the results.

This is precisely what happened with Spotify. 

spotify-okrs-do-not-work

In 2016, Spotify, a market leader in the music streaming and entertainment industry, talked about why they chose to stop using employee OKRs completely a few years prior. Their biggest reason for moving away from individual OKRs? It slowed them down with no benefits in return. 

Typically, organizations are expected to set targets that span over a quarter—for more ambitious businesses, their growth trajectories are driven by targets focused on much shorter timeframes. New ideas pop up, and they pivot on the fly to new strategies and targets—things change really quickly with agile teams.

So when they try adopting a system that sets quarter-based targets, they’re not given any leeway for deviation; modifying broad OKRs would lead to rehashing team and individual OKRs across the board, leading to an even bigger waste of precious time and resources. This led to an increasingly unscalable solution for Spotify, who quickly recognized that the OKR system in place was doing more to stifle their growth than foster it.

With the speed we run at, the foundation you need in place for setting good OKRs just keeps changing and lagging for. What went into the OKR process was often already outdated when we got that far. So the OKRs that came out were too.

We noticed that we were putting energy into a process that wasn’t adding value. So we decided to ditch it and focus on context and priorities instead. We make sure everyone knows exactly where we are going and what the current priorities are, and then we let the teams take responsibility for how to get there.

They quickly moved to a simple approach that still pushed teams towards the heart of the problem they were trying to solve. With their new approach, teams and individuals had the freedom to reach their targets without being bogged down by smaller processes. This also meant that they could reorganize their workload nimbly when the strategy is tweaked to accelerate growth. With a flexible yet focused process in place, they rapidly kept executing their strategies to become the best music streaming service in the market. 

No way but down—OKRs are inherently top-down in their approach

okrs-explanation-infographic-1

Since we’ve seen how OKRs are typically planned and implemented, one thing has become clearer than ever—the top management sets the rules, and it trickles down to smaller and more individual targets based on the rules set by them. That’s great. It’s effective, faster, more accurate ...right?

In this kind of one-dimensional framework, there’s no room for bottom-up feedback or even horizontal flow of communication between teams whose goals overlap or are interdependent. 

When one piece of the puzzle doesn’t fit, it impacts the results of multiple teams and individuals. 

Disconnected, siloed teams and departments

Let’s take an example. If the sales team’s OKR is to ‘improve new customer acquisition by 20%’, its implementation depends on the marketing team bringing in relevant leads from the right channels, as well as the product team implementing proper enhancements to stay ahead of the competition. 

The problem with OKRs is that this human aspect of the implementation is not considered. At this crossroad, organizations are either forced to drop the OKRs and move on to wider goals, or teams become more siloed and set goals that eventually become disconnected. 

The goals lose direct relevance from the bigger picture, employees struggle with prioritizing tasks, and the overall corporate strategy lays forgotten. 

Clouded, stunted individual contributions 

With individual goals being handed down from the top, employees become limited by their focus on achieving their own key results. OKRs fail to involve people in more strategic conversations instead opt for the carrot and stick policy. 

With so much emphasis on planning and setting OKRs, it’s natural to equate it to employee performance. But research shows that it is nowhere near accurate, nor effective. In fact, research shows that OKRs are not meant for employees in the first place. 

According to HBR, OKRs encourage employees to create binary goals that are easy to measure but don’t help determine whether they’ve grown or improved in a meaningful way, somewhat like this:

Objective: Improve my coding skills and achieve a mid-level software developer rating by the end of Q2 2021.

Key Result: Take three courses on the latest programming languages.

Key Result: Read 10 books on becoming a great software engineer.

Key Result: Achieve my certification as a DevOps professional.

OKRs become more tedious and stop being of use to anyone apart from the employee—this affects the team direction and becomes the starting point of slow strategic deviation. 

At some point, like Google or Spotify, most companies realize that OKRs are hurting the overall productivity and are forced to rethink their performance strategy. While they retain OKRs on a broader level, it becomes more of a disadvantage on a granular level. 

Chaos and resistance—is it worth the fight?

Introducing OKRs into the organization can be met with a lot of resistance—This, of course, can apply to introducing any new method of working. But in this case, tolerating the resistance comes with no payoff in the long run.

It’s yet another task management framework that the employees have to adapt to, followed by more planning and long-winded discussions that take away from the time that can be spent working towards their goals. 

Typically, to ensure that OKRs don’t bring your company to a total halt every new quarter, the annual OKRs need to be set by the top management—this by itself requires at least a month of planning. 

After this comes multiple hours of meetings to set the company OKRs, and at least two weeks for teams and departments to set their OKRs in accordance.

By the time the OKRs are reviewed and revised before the new quarter begins, the company has invested a significant amount of time and effort in just the planning stage of it. So, it isn’t so hard to understand why this wouldn’t be easy to introduce to your organization. 

In most organizations, OKRs are introduced and forgotten within the first few months since it requires plenty of overseeing and regular tracking to ensure that teams and employees are adhering to the new performance framework. 

There are plenty of lists and blogs that provide a step-by-step guide on how to overcome resistance to OKRs, you get the perfect OKR templates, and they all have something in common—you are asked to spend more time trying to blend your organization into this framework than the other way around. 

The worst part? It’s easy to keep creating different levels of strategic and tactical OKRs, to the point where you may need to set an OKR just to keep track of them all. OKRs become outdated in almost no time, at which point you find yourself introducing another performance framework into your organization. 

For something that fails 70% of the time, there probably has to be a better solution. 

Focusing on what matters—The alternative to OKRs

What next? Two-way cascading!

OKRs were widely accepted by so many companies around the world as the solution to a very important management problem until they became a problem that had to be managed. This boils down to issues that are fundamental to its nature—its rigidity, lack of room to scale and experiment, and the sheer amount of time and effort it needs to simply keep the system functional—issues that couldn’t be fixed without taking the whole system apart. 

It’s safe to say that we’ve outgrown the solutions that OKRs offer. The OKR system can still find relevance and provide value for slow-paced businesses that don’t need to be intensely aligned, but they completely fail to support agile software companies that want to move fast and build world-class products in hyper-competitive markets. 

It’s important to remember that while OKRs were a means to an end, it was never the endgame itself. It was a good but outdated management system that helped leaders convert strategy into action, but they always needed much more to execute ambitious strategies to their fullest potential and reach the company’s vision. Which begs the question, how does one choose a management platform for their business?

We have the solution. OKRs are used to implement the corporate strategy. Its main purpose is to provide a shared goal that every employee, team, and department can work towards. It’s a means to provide more transparency in the organization and enable quick, measurable success across the board. For a while, OKRs provide this. But in today’s rapid growth environment, why separate strategy from goals?

Using a strategy execution platform can be the perfect framework you’re looking for:

  • It fits the company with little to no resistance. Decision-makers are able to consolidate and holistically connect operational plans in one place. The platform seamlessly adapts to shifts in strategy with a minimal ripple effect across the company. Teams are tightly knit together by establishing clearly defined team goals across the board—they can see the impact their work is making on the corporate strategy in real-time. Increased transparency helps teams feel seen while helping them understand the value that other teams bring to the table. Individual employees are empowered to pursue their objectives with freedom.

  • It helps you execute faster at scale. The system takes minimal time to set up and implement to help your business hit the ground running. Once the overall strategy is established, you can use these comprehensive strategy toolkits to create smaller, measurable tasks to expedite execution. It brings focus to just the essential KPIs, unlocking your teams’ potential by optimizing for speed and agility.

  • It cascades both ways to design feedback-driven goals. This type of system encourages a feedback loop that connects your ground teams to your executives and everyone else in between. At the top, executives are able to access practical insights that help them build more actionable strategies and set goals that are more in touch with reality. At the bottom, jargon is pushed aside for employees who have complete clarity on the overarching goal, and their role in achieving it, in a much more collaborative, aligned manner. 

At the end of the day, OKRs are just that—they’re OK. The management system you use needs to drive your organization forward and make your lives easier. But if you’re doubtful of the value you get from using it, then it’s probably time to let it go and start looking elsewhere. 

You can use Cascade to keep track of your team’s OKRs and KPIs in a structured and easy way.

Download resources to kickstart your strategy into action:

Strategic Planning Template

KPI Reporting Template   

Gap Analysis Template

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