2 Popular Approaches to Cascade Corporate Strategies

Simple, Clear Strategies Work Best to Cascade Corporate Strategies
Complex businesses like the one diagrammed on the board above require complex strategies, right? Wrong.  To effectively cascade corporate strategies throughout an organization, strategic priorities must be easily understood, clearly stated, and embraced by all employees.

The Key for Leaders to Cascade Corporate Strategies
Our organizational alignment research found strategic clarity accounts for up to 31% of the difference between high and low performing organizations in terms of revenue growth, profitability, customer loyalty, leadership effectiveness, and employee engagement.  We know from project postmortem data that without clear and compelling strategies, your chances of being able to execute the strategy successfully across the company dwindle rapidly.

If your goal is to motivate your team, improve and reward behavior, and boost overall performance, then the key to an effective strategy is one that outlines clear and compelling choices about where to play and what actions to take. Done right, a successful strategy sets an organization up to perform beyond the sum of its parts because it creates crystal clear focus and alignment across all functions.

Two Popular Approaches to Cascade Corporate Strategies
To effectively cascade corporate strategies, you must effectively cascade corporate goals and objectives to create alignment between where the company is going and what people do on a day-to-day basis.  The two most common approaches are MBOs and OKRs.

1. MBOs
   Since Peter Drucker first used the term “Management By Objectives” in 1954, the practice of using MBOs has gained traction and won advocates because it brings results. MBOs are about setting clear goals and performance standards that are aligned with corporate goals and monitored on a consistent basis. MBOs give employees an understanding of their roles and what is expected of them so they have a clear line of sight about how they contribute to the achievement of the goals of the organization.

   Done well, MBOs:

   — Force the clarification and prioritization of objectives.
   — Increase communication and transparency.
   — Clarify roles, responsibilities, and team norms.
   — Foster commitment.

   Done poorly, MBOs increase administration and take time away from getting the “real work” done.

2. OKRs
   OKR is an acronym for Objectives and Key Results. Similar to MBO, OKR is a system connecting strategy with execution on a company and team level. OKRs involve:

   — Identifying the critical few major Objectives that the company wants to achieve.
   — Defining Key Results that, if achieved, will mean that you achieved the Objective.

   The Objectives are meant to be larger ideas than you want to achieve and do not necessarily have to be quantitative.  Often shared across the organization, OKRs aim to provide teams with visibility of company goals in order to align, coordinate, and focus effort.

What Is the Difference?
Not much.  Both systems help managers cascade corporate strategies, set goals for their employees, and monitor progress.  MBOs are usually longer in duration than OKRs. In terms of performance measurement, OKRs tend to produce quantitative metrics while MBOs most often measure both quantitatively and qualitatively.

What we care about most is not which acronym you choose, but that you do it right to help cascade corporate strategies and performance expectations across your organization.

The Bottom Line
To effectively cascade corporate strategies across your organization, leaders must ensure that the strategy is clear, believable, and implementable enough.  With employees reporting that the corporate strategies are 50% less clear than their bosses, we cannot overemphasize the importance of strategic clarity.

Once you strategy is clear enough, select the best method for your unique situation to cascade and monitor corporate goals, roles, success metrics, and interdependencies to align and prioritize effort and resource allocation.  That’s what gets you to where you want to go.

To learn more about how to cascade corporate strategies across your organization, download 3 Big Mistakes to Avoid When Cascading Your Corporate Strategy