Understanding the Unique Utility of OKRs vs. SMART Goals

Objectives and key results (OKRs)andSMART goals(specific, measurable, achievable, relevant, and time-bound) are two methods of defining goals or objectives for an organization, project, or individual.

Since the 1980s, SMART goals have provided a structured framework for targeting efforts and achieving goals. But in recent years, many startups and multinational enterprises have adopted the objectives and key results (OKRs) method, which centers on bigger-picture aims. For an in-depth explanation of what OKRs can offer, read "Essential Guide to OKRs."

SMART goals are comparable to the “key results” part of OKRs, but how do these methodologies differ — and how do they work together?

"A set of OKRs in an organization should align and reinforce each other,” explains Daniel Montgomery, Managing Director ofAgile Strategies. “With SMART goals, you're just talking about the structure of the goal itself.”

OKR and SMART methodologies have distinct uses. When choosing which method to use, consider the following qualities of your endeavor.

Use OKRs in the following situations:

• When you have a clear destination:OKRs should represent what you most want to pursue or accomplish in a quarter.
• When you are developing long-term goals:Drawing on top-level strategic objectives, groups and teams should contribute directly to setting quarterly or longer-term targets.
• When you have goals that will evolve:OKRs offer flexibility. The weekly review cadence provides a way to track success on a more minute scale. Frequently reviewing goals also helps you to monitor changes that may require you to shift or drop key results. "Most goal setting is annual, both for strategic plans, which may include a three- to five-year strategic outlook, and at the level of an individual employee," explains Montgomery, author ofStart Less, Finish More: Building Strategic Agility with OKRs. "The thing is, a year can be a long time, especially in today's organizational world. What happens with OKRs is that you create a quarterly cadence of setting and reviewing goals. That way, you have a more frequent strategic conversation about what's going on in your environment."
• To create an extra level of organizational context:Well-aligned OKRs that are transparent confirm OKRs as ideal for aligning efforts throughout an organization. Doug Gray is CEO ofAction Learning Associates, LLC, and author ofObjectives + Key Results (OKR) Leadership: How to Apply Silicon Valley's Secret Sauce to Your Career, Team or Organization. He says, "OKRs work best for knowledge workers, such as IT or managers, who need to define their objectives, and demonstrate achievement using key results."
• To set multimetric goals:Each key result draws on a different measure of success, like an individual SMART goal. Thus, a single objective includes multiple metrics. Distinguishing between multimetric and single-metric targets may matter depending on whether you want to declare victory for the entire OKR package or specific accomplishments.

Use SMART goals in the following situations:

• To provide top-down direction for repeated behaviors and processes:"Fast food operators, for example, require top-down measures for effective performance or behaviors," says Gray.
• When you don't quite have a destination:The process of creating SMART goals provides an easy framework for creating a clear, precise goal on a timeline.
• To set and track discrete goals within a team or for an individual:Sometimes, teams or individuals have aims that are important to the team but don't contribute directly to the larger-scale strategic plan. SMART goals are an excellent structure for writing such goals. For example, a lead may want to shape behavior, such as drawing out a passive employee by assigning them the responsibility to troubleshoot problems in a frequently used program. Such a target may not be strategic, but it builds the organization's potential by empowering the employee.

Christina Wodtke is a professor, speaker, and the author of the OKR-based bookRadical Focusand a new bookThe Team that Managed Itself. "There's no dividing line between SMART goals and OKRs," she says. "They're very similar, as long as you check in every week to ask, ‘Are we closer or farther away from our goal?’ People need to own an objective and be inspired. KPIs are just all numbers. SMART goals may be inspiring, and they have numbers. OKRs offer something for people who aren't numbers-driven."

Read our article to learn more aboutOKRs and KPIs.

Each approach can be useful in certain situations. These are some of the qualities to consider before choosing a method:

• Adaptability:With a typical annual cadence, SMART goals offer little opportunity to pivot. They work well with a clearly defined target in fixed circumstances. By contrast, with quarterly cadences for teams and individuals and broader objectives, OKRs permit changing key results to adjust for changes, such as in the competitor landscape.
• Alignment:Ideally, most SMART goals and OKRs are grounded in strategy and reinforced by executive buy-in.
• Aspirational Expansiveness:OKRs have a reputation for encouraging fearless exploration of new alternatives. A SMART goal may promote work toward achieving a specific purpose, after which people start to coast, thus limiting expansion and higher corporate and personal success. On the other hand, SMART goals fix focus on attainable aims.
• Morale:The narrow focus of a SMART goal may cause employees to disregard other profitable work to meet a goal. When people fail to achieve a goal, they may be demoralized because they can't see the big picture of their total accomplishments.
• Planning:Because of the specificity of SMART goals, they may take longer to create.
• Precision:SMART goals zero in on specific metrics and precise time frames, which may be desirable for clear targets in the short term. By contrast, objectives in OKRs are broad, and key results can shift as circumstances change.

If you’re ready to try setting goals, consider these tips for writing product OKRs and SMART goals:

• Choose Your Goals Carefully:Poorly crafted or ill-chosen goals don't help you.
• Create Team and Individual Goals:Whether setting OKRs or SMART goals, it's always a good idea to collaborate with employees on setting team goals and to allow them to select at least some of their own goals.
• Write Down Goals:Writing down notes or goals can inspire commitment and follow-up in any undertaking. Furthermore, communicating with other team members and across the organization about goals promotes transparency and understanding.
• Plan for Success:It isn’t enough to set goals — for best results, participants must review progress frequently, such as in weekly OKR status meetings. Management, from the top level down to each lead, must also plan for success with training and other necessary resources.
• The Useful Fail:According to Christina Wodtke, "The difficult question for companies is, ‘What are we capable of?’ People fear that the new and different can cause problems with performance reviews. By contrast, OKRs ask, ‘What would you actually do if you weren't afraid? What if we went to a new market? What is success? What if we focus on a new customer?’ OKRs are about how to create a safe base to be creative."

You can greatly simplify the process of writing SMART goals and OKRs with a template. In this section, we’ve provided the most helpful free templates for download, all of which are fully customizable to meet the needs of your situation.

To learn more about how to write personal objectives and key results (OKRs) in general, refer to our article "How to Write Effective Professional and Personal OKRs".

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change.

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed.

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.Try Smartsheet for free, today.