Key Differences to Know
On a surface level, the two tools may look almost identical. However, the biggest difference between them is OKR’s ability to work outside of isolation.
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What are OKRs?
OKR stands for “Objectives and Key Results.” It is a goal system and simple tool used by many large enterprises to generate engagement as well as alignment within a team around tangible and measurable goals.
OKRs are collaborative goal-setting platforms that can be used by both individual people and whole teams. OKRs can measure progress and provide a more visual view of how one can reach goals with very measurable results.
This tool can be used for everything from software projects to office operations, on any and all company levels.
“Objectives” in the context of OKRs represent what one wants to and can achieve in a simple way. They’re the mission statement of the goal– concrete and clear, without any fluff or confusion.
“Key Results” in the context of OKRs represent the act of benchmarking over monitoring how one can reach the established objective. Efficient key results are extremely specific and bound by exact timelines. They’re realistic, but also very much measurable and ideal. Key results can also change and evolve throughout the process of achieving the objective.
OKRs have been adopted by a significant number of large enterprises and nonprofit organizations, including Netflix and Code for America.
An example of when to use OKR
The definition of OKR may seem a little too vague and theoretical– that’s why examining examples is key to understanding the merit of these tools.
Let’s look at an OKR example for retail.
Goal: Build more stores around the country.
Objective: Increase the number of stores in the United States by 40% within twelve months.
- Select 50 new franchise candidates within six months.
- Train at least 40 of the candidates within seven months.
- Establish contracts with 30 of the candidates within nine months.
- Open 25 stores within twelve months.
Conclusion: At least 25 new stores will be established within twelve months, thus reaching the 40% franchise goal within a year.
Some business professionals debate whether or not the objective in an OKR should even contain a tangible number. This isn’t necessarily set in stone, but objectives are a clear destination. If having a number in your objective is extremely relevant an necessary to your overall goal, feel free to include one. Otherwise, don’t be afraid to set an objective that is clear and concise without a percentage or number in it.
For example, say a business has a goal that involves increasing product volume by 10% within two months. That number was just sort of thrown in there to paint a more vivid picture. However, the real goal for the business is to overall increase product output. This is still specific, but not so specific that there can be no deviation from the OKR plan (and that changeability is what makes OKRs so lucrative.) Instead of “increase product volume by 10% within two months,” the objective for this OKR could be “increase overall product output for the main store.”
This one’s a nice free e-book you can download. It’s a practical guide to goal setting that offers concrete examples to help you start setting impactful and meaningful goals. This book teaches you how to manage a team better and create a feeling of success.
This one is a “How-to” guide to get started with OKRs and to help your team or a company implement the best goal setting system currently out there. Filled with a lot of practical example Objectives and Key Results it’s a good quick handbook to launch and implement OKRs in your team.
Download it here
What are SMART goals?
SMART, like OKR, is a goal-setting tool that focuses on building structure and the ability to track progress in the goal-setting and goal-reaching process.
SMART breaks up the process into five key parts:
- Specific. What do you really want to achieve?
- Measurable. What level of effort, time, and cost will it take to reach that goal?
- Attainable. Is the goal really acceptable after weighing all the pros and cons?
- Relevant. Is the goal really relevant to you and your business?
- Timely. What are your deadlines, timelines, and measurable time restrictions?
SMART goals are essentially a very basic guide and set of concrete rules for teams and business people that want to use goals to aid in progressing their business.
An example of when to use SMART goals
Finance website DollarSprout used the SMART goal-setting process in the past to reach a search engine traffic goal.
Goal: Increase Overall Search Engine Traffic by 10% Within Two Months
- Specific: DollarSprout will increase search engine traffic by 10% in two months.
- Measurable: Re-optimize five excellent and proven successful pieces of content in order to aid ten backlinks to that specific content.
- Attainable: If every member of the editorial team pitches ideas for improving the copy, this goal is extremely realistic and viable.
- Relevant: Search engine traffic provides the most traffic to our website. This goal plan is the most efficient and likely way for us to increase our organic traffic. As a result, this goal directly translates into overall business success.
- Timely: This goal will be accomplished during the next two months.
Conclusion: Within two months, DollarSprout will increase its search engine traffic by 10%. This will be done by focusing on re-optimizing current content and putting effort into earning at least ten backlinks to that established content.
OKR vs SMART goals: What are the main similarities?
Either of these goal-setting tools are developed under the notion that goals are absolutely key to achieving business and organizational success. While they do differ pretty significantly, both have the same objective– to flesh out a goal and the plan needed to reach that goal in a realistic and timely fashion.
Both OKR and SMART goals involve removing the “vague” factor from setting and reaching goals. Both can be used by businesses, nonprofits, and individuals alike. They also have a similar number of criteria, despite SMART’s appearance.
Both tools are specific, but OKRs are specific and allow for key result groupings that show more of a representation of success. Both tools are also measurable, achievable, and time-bound.
OKR vs SMART goals: What are the main differences?
On a surface level, the two tools may look almost identical. However, the biggest difference between them is OKR’s ability to work outside of isolation. OKRs can provide an extra level of business context, which turns the goal-setting process into a company-wide process.
OKRs are essentially the methodology that one should use long term, and SMART goals are just a specific method of structuring goals. More or less, both goal setting tools have all the same basic principles. OKRs, though, expand on those principles further for a more in-depth goal-setting plan. One of the best things about OKRs is that they have elements that are extremely unique to them and they can evolve throughout the goal-achieving process without making the process more complicated or convoluted. This ensures that OKRs are very simple and user-friendly for just about everyone.
OKRs are also great for those who don’t usually use goal-setting methods. Because the methodology of OKRs are so easy to understand, those who don’t use goal setting tools can jump right into using them easily.
SMART goals are not without their use cases. One can use the SMART goal-setting process for structuring more minor goals within a team or for an individual. But overall, OKRs are better business strategy-wise than SMART goals. They can certainly work together, but when we look at strategic leadership and daily work management, OKRs along with weekly planning is the best strategy.