Did you know that only ⅔ of new businesses will survive their first two years? One of the main reasons for these statistics is a lack of goal management.
This important system allows you to define your business goals and measure whether your current strategy is helping you achieve them. There are many goal management strategies you can consider.
But, in this OKR guide, we’ll be going over two popular ones: OKR vs. SMART goals. That way, you can decide for yourself whether either of these options is right for your specific business. Let’s get started!
What Are OKRs?
OKR is an acronym that stands for Objectives and Key Results. Most OKRs consist of between three to five objectives. Each of these objectives needs to work towards an overarching inspirational goal.
You can think of them as answers to the question, “Where does my company need to go?” For each of these objectives, key results will be taken to measure progress.
These key results need to be as specific and time-bound as possible. Key results answer the question, “How do I know I’m getting to my destination?”
Key results are needed so a set of initiatives can be used to push progress away from the key results. This strategy was invented by Andrew Grove when he was working at Intel.
However, it would later be popularized at Google. Many appreciate OKRs because of how transparent it is. This can go a long way toward alignment between different teams within a company.
What Are SMART Goals?
The SMART goals guide became popular in the 1980s when Peter Drucker introduced it in his Management By Objectives (MBO) framework. Compared to other goal management strategies, SMART goals are fairly simple.
It lays out a basic structure for creating goals that are realistic and quantifiable. According to SMART, all goals need to be:
- Specific
- Measurable
- Achievable
- Relevant
- Time-Bound
Let’s go over each of these letters and what they mean. Specific means that the goal needs a straightforward description of what needs to be achieved.
Measurable suggests that the goal requires some sort of metric to gauge whether it was a success. The goal should be achievable in that it’s possible given time and budget constraints.
Relevant means that the goal should be aligned with the overall organizational goals of the company.
Finally, the goal should be time-bound. Once the end date comes around, the strategy should be reviewed to see whether it was effective.
OKR vs. SMART Goals Similarities
At a DNA level, both OKR and SMART goals believe that setting objectives are the secret to long-term success for businesses.
Both OKR and SMART goals work to create goals that are both time-bound and realistic to complete. In this way, a lot of their criteria for structuring goals look the same.
Both of these methods are also good at bridging the gap between corporate goals and individual team goals. They also need justification for the goals. For SMART goals, it’s the relevant factor.
For OKRs, it’s the objective behind the key results. Finally, OKR and SMART goals aren’t confined to businesses. They can also work effectively in nonprofit and individual settings.
OKR vs. SMART Goals Differences
The main difference between these two strategies is the long-term impact. OKRs intentionally make their objectives more aspirational and less specific than SMART goals.
This is done to lead to either a breakthrough success or serious change within the company culture. It has the effect of making OKRs more flexible than its counterpart.
For example, you can easily change key results to take advantage of changing conditions. SMART goals, on the other hand, usually will only measure a single metric.
Typically, this is something like quality or profitability. It’s normal for SMART goals that are geared toward individual efforts to progress the overall goals of the company.
But, if SMART goals aren’t connected to the strategic picture, it’s easy for them to go wrong. When a SMART goal is bad, it will feel like a to-do list. This kind of environment doesn’t lead to any of the breakthroughs that occur with OKRs.
Which One Is Right for Your Needs?
Ultimately, the right goal management system for you depends on where you’re at as a company. Let’s start with SMART goals. This system is ideal for businesses that require top-down direction.
It’s also good for businesses that don’t exactly have a destination in mind. The simple framework can easily help you make one. Finally, SMART goals are great for providing objectives for both individuals and teams.
Often individuals will contribute to the larger plan, so this can be important. However, there are plenty of situations where the OKR system is appropriate.
For example, if you have a clear destination in mind, you usually don’t need to waste time with SMART goals. This method is also good for aligning goals on an organizational level.
Finally, if you want long-term goals or goals that can evolve, OKR is the right option for you.
Just remember that OKR solutions typically require a lot more time and energy than SMART goals. So, make sure you understand more about OKRs before proceeding.
Want More Content? Keep Exploring
We hope this article helped you learn the differences between OKR vs. SMART goals. As you can see, both of these strategies excel at allowing you to produce precise goals that can be achieved realistically.
But, OKRs are a bit more intensive and require extra time and effort to implement. So, it’s important to ask yourself whether you want these goals disseminated at a management level or an entire organization level.
If you found this article helpful, you’re in the right place. Keep reading to find hundreds more just like it.