What's the difference between OKRs and S.M.A.R.T. Goals?
Structurally, OKRs and SMART Goals are more alike than they are different. The chief structural difference between an OKR and a SMART Goal is the number of metrics used for measurement.
- SMART Goals are "single-metric goals": The M in SMART stands for Measurable. Most SMART Goals are measured by a single metric, whether that's growth, revenue, profit, quality or otherwise.
- OKRs are "multi-metric goals": As stated above, OKRs tie together an inspirational/aspirational goal with multiple metrics (i.e. Key Results). In this way, each Key Results is the equivalent of a SMART Goal. The Objective, then, ties together several SMART Goals under one inspirational Objective.
Beyond their structural differences, there are sometimes philosophical differences between organizations that practice OKRs vs. SMART goals.
- Stretch: OKR advocates emphasize the "stretch" in stretch goals
- Achieving 70% of your Key Results is often considered "success" on an OKR. (Over 70% may mean you didn't aim high enough. Under 70%, you didn't achieve the objective.)
- OKRs are generally kept separate from compensation. OKR advocates believe linking goal-setting to compensation leads to "sand-bagging" because employees are incentivized to set goals they can clearly hit.
- The "A" in SMART means Attainable. This sometimes holds SMART Goals back from emphasizing "stretch".
- Visibility: OKR advocates emphasize transparency (making goals visible to everyone in the organization)
- The idea is that transparent goals create disciplined thinking about goal setting, inform what's important, facilitate communication, focus effort on cross-functional alignment.
- Of course, SMART Goals can be transparent. But OKR advocates tend to emphasize it more.
- Frequency: OKR advocates emphasize shorter goal-setting cycles
- OKRs tend to be set on quarterly or monthly basis. This allows for a continuous renewal and avoids stale goals
- Traditional SMART Goals are often based on annual and hierarchical goals which function on an annual financial calendar.
What's the ideal time frame to set Goals and OKRs?
This varies by organization. It's important that your goal-setting cadence match what works for your culture. Quarterly goal-setting may feel too frequent for an organization that's always set annual goals. On the other hand, quarterly goal-setting may not be fast enough for a startup trying to find market fit.
Organizations that embrace OKRs often move to quarterly goal-setting. Even in organizations that are practicing quarterly goal-setting, goals and OKRs can be stretched over multiple quarters. Alternately, you may want to duplicate an OKR but increase the key results.
How many Goals and OKRs should I have?
Because each OKR is essentially a collection of SMART Goals, it's important you don't commit to too many OKRs.
Best-practice is to make sure you have no more than 2-5 OKRs (with 2-4 key results each) at any one time.