Why are OKRs better than SMART goals?

What are SMART goals?

The SMART criteria ensure that goals are specific, measurable, achievable, relevant, and time-bound. This framework is widely utilized in different industries and settings to enhance goal-setting and performance management. 

Let’s now break down each component of SMART goals:

• Specific: be specific and clear about your goal. Knowing exactly what you want to achieve will help you stay on track.
• Measurable: develop specific criteria to measure the extent of progress achieved in attaining the intended goal.
• Achievable: Ensure that the objective is practical and achievable, considering the available resources and time.
• Relevant: make sure that the objective is significant and in line with the overall goals.
• Time-bound: To prevent procrastination, it is crucial to set a deadline for your objective. 

This will generate a feeling of urgency and assist in maintaining concentration.

Now, let’s see an example of a SMART goal.

Goal: Increase revenue by 15% in the upcoming quarter

Specific: The sales team has set a goal to increase revenue by 15% in the upcoming quarter.

Measurable: This goal is measurable because it has a clear metric of a 15% increase in revenue. 

Relevant: It is achievable because it is within the team’s capabilities and market conditions. It is relevant to the company’s overall growth objective, and it is time-bound with a specific timeframe for the next quarter. 

Achievable: To achieve this goal, the team will focus on reaching out to new clients, implementing a more targeted marketing strategy, and improving customer retention efforts. 

Time-bound: Regular updates and evaluations will be conducted to ensure progress and make necessary adjustments. 

This SMART goal clarifies the sales team and aligns with the organization’s broader objectives.

Reasons why OKRs are better than SMART goals

Here’s a comparison of OKRs and SMART goals based on the specified points:

1. Flexibility vs rigidity

One key difference between OKRs and SMART goals lies in their approach to flexibility and adaptability. 

OKRs are generally more flexible, allowing for adjustments and learning throughout the goal-setting period.

For example, if a company sets an OKR to increase user engagement by 20%, they may experiment with various strategies, and if one proves more effective than anticipated, they can shift resources accordingly.

On the other hand, SMART goals are often more static, emphasizing the adherence to a specific plan.

For example, if an individual establishes a SMART goal to complete a project within a designated timeframe and budget, any deviations from the initial plan could be viewed negatively.

2. Number of metrics

OKRs involve setting a small number of high-impact metrics to measure progress toward the key results.

For example, an organization wants to improve the quality of its product by reaching key results like cutting down product defects by 15%, boosting customer satisfaction scores by 10%, and hitting a 95% on-time delivery rate.

On the other hand, SMART goals involve setting multiple metrics to measure various aspects of goal achievement.

For example, an organization wants to reduce product defects by 10% and improve customer satisfaction scores by 5% within the next six months.

3. Level of ambition

OKRs are typically more ambitious, encouraging teams to set challenging objectives that may not always be fully attainable. For example, a company wants to launch a groundbreaking product (Objective) that revolutionizes the industry, achieving market dominance with a 20% increase in market share (Key Result).

SMART goals, on the other hand, emphasize setting realistic and achievable goals to ensure success. For example, a company aims to increase market share by 5% within the next fiscal year through targeted marketing and product enhancements.

4. Visibility

OKRs allow for flexibility in changing key results as needed. Unlike traditional goal-setting methods, OKRs allow adjustments and modifications to be made throughout the goal period. 

This flexibility enables organizations to adapt to changing circumstances, market conditions, and priorities. For example, cascade the organizational objective of achieving sustainable business practices to each department, with marketing aiming to reduce the carbon footprint (Objective) by 20%, measured through Key Results like paperless campaigns and eco-friendly packaging.

SMART goals may be more localized, with individual or team goals being communicated within specific departments or among team members. For example, an organization wants to implement paperless campaigns and adopt eco-friendly packaging in the marketing department to reduce the carbon footprint by 10% within six months.

5. Adaptability

OKRs allow for adaptability and encourage learning even if the original goals are not fully achieved. They can be adjusted and refined over time. For example, a company wants to experiment with innovative marketing strategies to increase brand visibility (Objective) and adjust tactics based on the success of key results such as website traffic, social media engagement, and conversion rates.

SMART goals encourage adherence to the original goal and may not be as flexible in adapting to changing circumstances. For example, a company aims to increase website traffic by 15% within the next quarter through a targeted content marketing strategy.

Conclusion

OKR and SMART goals offer two distinct yet complementary frameworks to drive performance, foster accountability, and achieve meaningful results.

OKRs emphasize ambitious objectives, and key results promote transparency, collaboration, and a unified focus on strategic priorities. It encourages teams to stretch their capabilities and fosters a culture of continuous improvement.

On the other hand, SMART goals provide a structured approach to goal-setting. This framework enhances clarity, accountability, and the likelihood of single-goal attainment.