The Difference Between SMART Goals and OKRs

“Our goals can only be reached through a vehicle of a plan in which we must fervently believe. And upon which we must vigorously act. There is no other route to success."  -Pablo Picasso

Your Guide to Helping Select an Effective Goal-Setting Method

Staying focused on what matters most to your organization is crucial to succeeding in the fast-paced business world. At the same time, keeping your team motivated and engaged in meaningful work that positively impacts the things that matter most to your people and your business is essential. Most successful organizations use some form of goal-setting practice to track and measure their business objectives.

But setting and tracking goals isn’t as easy as buying a software solution with a generic goal-setting module. Successful organizations are committed to using proven goal-setting methods that help them execute strategy and achieve measurable results while engaging the employees that pursue those goals.

SMART Goals vs OKRs

Selecting and implementing proven goal-setting methods can be confusing and challenging. Two of the most famous goal methodologies in business today are SMART Goals and OKRs (Objectives and Key Results). Many organizations have traditionally used SMART Goals to help them stay on track with business priorities. Other organizations are turning to Objectives, and Key Results (OKRs) as a goal-setting methodology to help their business produce positive results.

SMART Goals

In Ken Blanchard’s book, Leading at a Higher Level, Blanchard and his coauthors define SMART Goals as business objectives that are Specific & Measurable, Motivating, Attainable, Relevant, and Trackable (SMART). By assessing a goal statement using the SMART criteria, essential business objectives are concrete, clear, trackable, and more likely to be achieved than common goals. SMART Goals are usually personal and designed to improve specific skills or tasks. Individuals or small teams often use them to set objectives aligned with organizational goals.

SMART Goal Examples:

• Increase site visits by 25% by generating more online traffic through three LinkedIn ad campaigns during the holiday season.
• Train 90% of new associates to a Level 3 Competence in the Credit Application Process by the end of the second quarter.
• Score an average rating of 8.9 on our Customer Service Questionnaire (10 questions) to be given to 400 customers twice over the next 12 months.

OKRs

In his book, Objectives and Key Results, Paul Niven defines an objective as “a concise statement outlining a broad qualitative goal designed to propel the organization forward in a desired direction.” However, many organizations still struggle with creating high-value, clear objectives for those pursuing them. To help construct better objectives, Niven encourages them to be Inspirational, Attainable, Doable, Controllable, Valuable, and Qualitative.

OKR Examples:

• Objective: Increase customer engagement on our website
  • Key Result 1: Increase monthly website traffic by 25% by the end of Q2
  • Key Result 2: Increase email list subscribers by 50% by the end of Q2    
  • Key Result 3: Increase social media scores by 35% by the end of Q2
• Objective: Increase Customer Satisfaction
  • Key Result 1: Increase Net Promoter Score (NPS) from 8 to 9 next quarter.
  • Key Result 2: Respond to all customer queries within 24 hours of receiving them.  
  • Key Result 3: Achieve a Customer Satisfaction Rating (CSR) of at least 90% on all product reviews.
    

The Difference Between SMART Goals and OKRs

SMART Goals are more operational and focused on individual performance. OKRs are more strategic and focused on aligning the organization toward business objectives. Both frameworks are effective goal-setting techniques, but their implementation depends on the size and type of the organization using them.

Executive teams often use OKRs to align with corporate strategy related to the organization's mission, vision, values, and profit. Unit leaders and team leaders also use OKRs to give the teams direction through the qualitative objective statement and transparency through the quantitative key results of the OKR.

While SMART Goals are exclusive to individuals, they are often best served to create a clear and concise quantitative and qualitative idea of what an employee should pursue. It’s a great foundation to create ongoing, meaningful conversations about performance, especially as the dynamics and motivations around performance goals are in constant flux.

The Similarities Between SMART Goals and OKRs

Upon careful reflection on Blanchard’s version of SMART Goals and Niven’s insights on how to write better OKRs, you’ll notice several similarities in how they approach goal-setting. Both methods emphasize the following:

Clear Measurability

A goal should give those pursuing it a clear idea of the end outcome. SMART Goals and OKRs emphasize creating a goal statement so people can understand what an excellent job would look like when the performance goal cycle is complete. A goal should allow people to imagine what is possible, then have precise measurements to show what has been achieved.

Inspiration and Motivation

Goals should be inspirational and motivating. Continually assessing your motivational outlook lets you stay in touch with why you're pursuing the goal. According to motivation expert Susan Fowler, in her book Why Motivating People Doesn’t Work. What Does, motivation theory is rooted in the human psychological need to control their environment, build competence, and connect to others while pursuing goals.

Attainability

Unachievable objectives can lead to a loss of motivation and create a lack of inspiration. Setting realistic goals for individuals and attainable strategic plans for organizations is essential. Unrealistic goals often lead to people and organizations guessing what measures matter most to individuals, teams, and the organization.

Relevancy

Blanchard and Niven suggest that goals should generate business value. Each goal within the organization should align with the strategy and lead to practical business outcomes. It is essential for goals to be relevant, not only to the organization itself but also to the clients the organization serves and the skills, knowledge, and motivation of those working towards achieving them.

Timeliness

Both SMART Goals and OKRs stress the significance of setting goals within a reasonable time frame. Without performance goal cycles, it's like running a race without a finish line or a sports team playing in a league without standings. It's crucial to ensure that your goals are achievable during the determined time frame, regardless of your cadence for performance goals.

SMART Goals vs OKRs Checklist

Why Goals Matter

Regardless of your goal-setting philosophy, whether SMART Goals or OKRs, setting goals is crucial for your organization. It helps teams and individuals prioritize their efforts, track progress, and boost performance.

Whatever goal-setting methodology your organization uses, you will need a reliable system to track and measure progress on goals. Even companies that use OKRs and SMART Goals often use outdated methods like spreadsheets and clunky legacy software features to track goals. It’s one thing to adopt a goal-setting methodology; it’s another to successfully implement an effective goal-setting practice that helps you solve business challenges and enables your people to thrive. 

Inspire Software is designed to teach and assist organizations, teams, and individuals to create and monitor smarter goals and better practices for themselves. Inspire integrates science-backed principles into their software to help individuals and teams coordinate and accomplish objectives more efficiently. Schedule a demo now to implement OKRs and SMART goals better into your organization.

See how we Inspire People and Performance at inspiresoftware.com.