SMART Goals and OKRs – Strategy Planning and Why It’s Important

This is an entire chapter from my book, THE AGENCY. If you have read the book and want to download the outline, you can do so here:

Download the OKR Strategy Session Outline

If you’ve not read the book (WTF? Why? Buy it now :)) and are here just to read ‘SMART and OKRs – Strategy Planning and Why It’s Important’… happy reading then :).

SMART Goals and OKRs – Strategy Planning and Why It’s Important

One of the most misunderstood and misused tools I have come across in two decades of building businesses is goal setting. It is mind-boggling that the vast majority of people with any sort of ambition, in business or otherwise, fail to set and execute goals in a structured way. According to the 4th Annual Staples National Small Business Survey, more than 80 percent of the 300 small business owners surveyed, don’t keep track of business goals. This turns my brain inside out. How the fuck is anybody going to achieve anything if they don’t even take the time to decide what they want to achieve?

At risk of stating the obvious, I feel I have to mention how unbelievably important it is to set goals. Not setting goals is like embarking on a long drive to an unknown destination, without sat-nav or directions of any sort. Setting goals badly is like having half an address and using an outdated system or map. If you don’t set goals, you are hitting a golf ball without knowing where the hole is. If you set goals badly, you’re hitting it with a broom. Into football? Not setting goals means there are no goalposts and you’re kicking the ball blindfolded; if you set them badly, you’re playing with wellies on.

Okay, no more analogies: if you are building something remarkable (and if you’re not, why the hell are you still reading this?), not setting goals means you’re working towards something unknown; this will inevitably force you to take a short-sighted approach, which will cost you time, money and opportunities. Setting goals badly will reduce your chances of success many-fold.

Set goals, and make sure they’re important; think about what you want to do now, but also about your ultimate goal. How is your big WHY encapsulated in your goals? Twitter used to say that they wanted to reach every person on the planet. To achieve such a lofty ambition, every goal must somehow contribute to this.

So for goodness’ sake, take the time to set goals – or better, set OKRs.

GOALS AND OKRs

There are many goal setting methodologies, and one of the most commonly used is SMART goals. This framework has been around for a long time and it certainly offers massive benefits and useful guidance.

SMART

The SMART framework was introduced by Peter Drucker, a management consultant and author, whose work contributed to the foundations of business management as we know it today.

The SMART methodology offers clear guidance in writing goals. It is led by the criteria behind the acronym, which stands for:

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

Let’s break these down:

Specific

“Grow the agency” is not specific. “Win X new clients, each generating a gross profit of X per month/year, and win X awards” is much better. Being specific simply means being as clear as you can – if a stranger who has no idea about your goals only reads the S- part, they should know exactly what you want to achieve.

Measurable

When and how will you know that you have achieved the goal? This is where you include indicators of progress and success, and specific milestones.

“Win X new clients, each generating X gross profit by X.” This is the Smart and Measurable version of our original goal.

Achievable

If it’s humanly possible then it’s achievable. You should focus on creating a goal which is hard and ambitious but humanly possible. By ‘humanly possible’, I mean that if any other human, in your circumstances, with your resources, could do it, then so could you. That’s about it. It’s hard to put more conditions on it than that. Ambition is not only fine, but required – as long as it is humanly possible, then you are on to something achievable, as far as I’m concerned.

Yahoo told Larry and Sergey that it wasn’t possible for yet another search engine to succeed, but look at Google. If I had shared my goals with people who knew me 20 years ago, nobody would have said I could have achieved them. This happens all the time – people set out to do things most others, including us at times, don’t believe are achievable, and they achieve them anyway. You might be one of them, perhaps after finishing this book.

Relevant

Your goal needs to be aligned with the bigger picture, your mission and other goals you might have. It’s also important to ensure it is aligned with your values. If you’re running a digital agency and its mission is to engage millennial customers on the latest social platforms for clients in the fashion industry, a goal to launch a computer literacy service for seniors might not fit. If you are a marketing agency running a project to help reduce people’s debt, as part of your social responsibility campaign, then aiming to win customers in the financial industry might be against your values.

Time-bound

When will you achieve the goal? There is always a ‘tomorrow’, a ‘next year’ a ‘next quarter’. Being specific with your goals’ deadlines allows you to move at the right pace with the right urgency and be able to measure your progress. Knowing when to change strategy, adjust, and sometimes even quit is vital.

This last point is not strictly related to SMART goals, but it applies to most projects: knowing when to quit. If you are building something new, innovative and really revolutionary that has not been done before – and this can be a way of doing things, a new piece of tech or simply a new marketing strategy – it’s important to persist and be resilient but also to know when to quit.

How do you decide when to quit without running the risk of quitting too early? Imagine this: you invest all your money in digging machinery because you know you’ve found a spot in the desert above a river of oil. You dig for months but no oil can be found. You quit, sell your machinery to a scrapyard man and go home defeated. The scrapyard man pays a professional expert in the local mining industry who tells him that at that particular spot the oil vein makes an atypical turn and it’s forty inches to the right. The scrapyard man digs forty inches to the right and gets the oil.

That’s what quitting too early can do. But not quitting when you should, could hurt even more if you don’t know about the atypical vein route. In this example, the oil miners did lose the oil to the scrapyard man, but they sold the machinery before it was too old and before they were too tired and worn. They went home and started a new business there. Had they waited too long they might have not made any money from the equipment and might have been too worn out to start a new venture.

So what’s the correct answer? Like most things, plan the exit. Give the project, the new piece of tech, the new structure or whatever you’re innovating and changing a deadline and then call it a day when that comes. Of course, apply your common sense to this but be wary that sometimes common sense gets blurred, especially if we are emotionally connected. The way you protect yourself from yourself is to involve a team – perhaps the board, the senior management team, your mentors or colleagues, depending on your company structure, network and nature of the project. If you are starting out and don’t have these people around you, you might involve a friend or family member. Everyone, no matter what their status, needs advice and mentorship. So make sure you have people who can be the voice of reason that helps you make good decisions.

OKRS

Creating something remarkable and different to what’s already out there is vital if we are to progress and build a remarkable business. This is true for all things, including management and planning. For goal setting specifically, one of the remarkable evolutions from the traditional techniques and frameworks, such as SMART, is OKRs (Objectives and Key Results).

The OKR framework was introduced by Intel CEO Andy Grove and brought to Google by venture capitalist John Doerr. Today OKRs are used by many companies, including Google, LinkedIn, Twitter, UBER and, of course, Genie Goals (I’ll share the guidelines we give managers at Genie Goals for setting their OKRs soon). This very book was written using the OKR methodology.

The basic question we are trying to answer with OKRs is: Where do we want to get to? The point of OKRs is to make sure that we always have a focus on the long-term growth of the company (for MDs and C-suite), of your team (for managers) and for your own project/career (personal OKRs).

OKRs help you describe in an inspirational yet crystal clear way what’s important to you as an organisation, team or individual. They offer the right structure to illustrate the road ahead in a way that pushes us to take more risks, because they provide a degree of control and confidence that other goal settings frameworks don’t.

From a company perspective, OKRs offer control and transparency. They allow you to see that everyone is working towards a common goal. From an individual viewpoint, OKRs help you form a clear picture of what you need to and can achieve personally whilst contributing to the company goal and also ensuring you are progressing in line with your own ambitions and desires.

The value of setting goals is greatly loaded toward the very fact that we stop and consciously think about where we want to go, rationally. Most shortfalls and challenges are solved by thinking, but we can’t solve problems with the same thinking we created them with.

OKRs require you to engage in structured thinking. Much like SMART goals, OKRs force you to stand back and think hard about where you want to get to as an organisation or individual and crucially, how and whether you can get there.

Once the company-level OKRs are created, everything else must feed into these. This doesn’t mean that team and individual OKRs must match the company’s OKRs, it just means that they have to contribute towards them.
For example, if the company’s OKRs are “Achieve exceptional business growth through scalability, use of technology and people development whilst delivering account excellence to provide a remarkable experience for all clients”, then as an individual it would be perfectly fine to include in your OKRs something like “Become the best manager I can, through formation and leadership training”.

You could also include something around learning new skills, networking, speaking at conferences, personal development and more, as these would all feed into the company’s OKRs.

Once you have built your OKRs, you will have a super-clear idea of what’s important to you, not only that year but that quarter, that month and even more granularly. This has a positive impact on productivity, on the ability to get and stay in flow, on your ability to prioritise and on the energy level it creates in the environment, as everyone will find it much easier to keep their eyes on the prize, even when dealing with unpleasant or boring tasks.

This is the first goal setting framework I have ever come across that offers a useful and effective built-in reporting system. As you will see, the OKR structure offers a fantastic way of planning, executing, reporting and therefore adjusting as you go. It allows you to look back and essentially get data for future decisions.

We’ve adapted the OKRs to work better for us and I’ll detail our methodology shortly. If you are interested in hearing Google Ventures partner Rick Klau talk about OKRs at Google, go to a cafe, grab a coffee and a notepad, and watch the following video (it’s 81 minutes long): goo.gl/krqmAK.

Some key features

All OKRs must be public within the company – everyone should have access to everyone’s OKRs.

All personal OKRs will be negotiated with line managers and will not be dictated by each individual. This is to ensure that people create OKRs that are inspirational and important to them whilst also contributing to the company’s OKRs.

Company OKRs will be discussed at the level of the senior management team or board.

Further features are embedded within each section of the OKRs.

Objectives
Objectives are the ultimate goal, the North Star for that period. We should be able to review the objectives at the end of the period and, without need for interpretation, understand whether we have been successful and to what degree. This should be as close to black and white as possible in terms of the score – a traffic light system can work well for this:

• Green: nailed it
• Amber: delayed/in progress
• Red: missed

(We use numeric scores at Genie Goals, which are detailed soon.)

Objectives must be massive and transformational. They should be risky and make you uncomfortable. They often involve committing time and money to something that may not work and might not happen. If you look at your OKRs and feel super confident you’ll achieve them, then you’re not thinking big enough.

Objectives should not contain numbers and they should be inspirational.

Time allocations:
Obviously, there are different levels of focus on OKRs vs operational tasks, depending on roles and positions within the organisation. More junior staff will typically be spending 80 percent of their time on operational tasks, whereas a more senior team leader or manager may be focusing 80 percent on OKRs.

Key results:
Key results are the KPIs of the objectives. They are the things that tell you that you have achieved the objectives. They must be measurable – if it doesn’t have a number, then it is not a key result (“made it better” is not a key result).

The only exception is for key results that are binary for things that are either hit or miss, like “launch website”.

Annual and quarterly OKRs

At Genie Goals we set annual OKRs which run in line with the calendar year. So you should be asking yourself, for example, “where do we want to be next January?” Annual OKRs are critical because they draw a clear picture for the 12 months ahead but also allow you to set quarterly OKRs from which you will build your roadmap of tasks you must complete.

You can revise your annual OKRs each quarter; they should not be seen as too rigid. However, that doesn’t mean you should use them as a backup if you lose confidence, it just means that if something unforeseen happens which dramatically changes the situation, then you can and should adapt.

For example, imagine you planned to “become the most influential agency in the UK through winning awards and accounts with great brands” (this would be your objective) and your key results were to win X accounts, X awards and be invited by Google to speak to other agencies about agency growth (BRAG ALERT – I have been invited three times at the time of writing). You’re on track, but halfway through your journey you win a massive account in the US which causes you to change focus, for a great reason. In this case, it’s totally okay for you to revise your annual OKRs.

Annual objectives may typically be broader or more strategic, as you’re looking at the final product or outcome for the year, at the end of which you will set brand new OKRs, which might be (though they don’t have to be) totally different and focused on completely different areas of the business.

Quarterly objectives are typically more tactical and more geared towards achieving the yearly goal – they contribute towards the bigger goal and are therefore slightly more rigid and execution-focused. Things like “Test CRM project to establish a new revenue stream” or “Achieve best customer feedback rating and inspire clients to refer us to other clients” could be examples of quarterly objectives.

Grading

At the end of each quarter and year, you must grade your OKRs. The results should be published within the organisation. Grading is supposed to be quick, you should not need to spend ages doing it. If you have set clear OKRs, grading will be just matter of looking at the statement and putting a mark next to it. No need for much interpretation.

The intention of grading is direction, correction and monitoring, not to judge one’s work. Whilst the successful achievement of OKRs may be used during appraisals to compliment your staff, OKR scores and outcomes should not be used as criticism (constructive or otherwise) in appraisals. The point here is to measure and observe what went well and what didn’t, to inform future decisions and next steps. If something has succeeded, what happens next? If something has failed, do we ditch it? Try again? Remember the keyword here: direction.

The mechanics of grading:

Each objective and key result should get a score between 0 and 1. Here are some example scores:

• Zero = complete fail, or OKR just wasn’t done
• 0.6 = satisfactory result
• 0.7 = good result
• 1 = nailed/100% result

Key results get a score each and then the objective relating to those key results gets the average score of the KRs. But don’t be too strict in applying this. It’s easy to imagine a scenario in which you’ve met the key results, but you still don’t feel you’ve achieved the objective and perhaps, though less likely, the opposite too.

Here it’s also useful to include comments as to why you’ve arrived at the scores, including lessons you’ve learned and thoughts on direction.
There are at least two types of OKRs that require a slightly different thought process for grading:

• Some KRs are binary – yes or no – and should therefore get a binary grade, i.e. 0 or 1 (e.g. “launch new website”).
• Quantitative KRs should get quantitative results. If the key result was to drive £100k in revenue and you managed £50k, then your grade is 0.5.

When assessing the first two kinds of OKR, you should indicate whether a particular success or failure was due to circumstances that are unlikely going to appear again or are out of your control. For example, a client got an injection of cash and invested all of it with you, which caused you to achieve your targets and without which you would not have done, or a client was sold to a larger group with an in-house team, which caused you to miss your target. You get the point.

Like I said before, don’t take OKRs as a way of being measured on your work or measure your team on theirs. They should help you monitor and manage the direction and effectiveness of everybody’s efforts. So be honest, be super critical and be proud.

Action

Planning is vital but planning alone is useless; you must take action. Once you have set your OKRs, you must follow through with action. This is why at Genie Goals we have adapted the OKR framework to include a roadmap section, as an integral but visual and structural part of the process. In this section, we list all the projects and steps that are required to achieve each KR. It has a powerful positive impact on our focus on OKRs. This is what it looks like

As you can see, the addition of a roadmap brings action to the planning framework and allows people to use the OKR documents as guidance in their decision making and direction each month.

Here are a few tips for making the most out of your OKRs:

• Learn your team objectives by heart – everyone in the team should – this is your mission for the year or quarter.
• Look at your OKRs daily – print them and stick them on your desk if necessary.
• Get familiar with other people’s OKRs so you can help them and they can help you.
• Talk about them incessantly to your teams, to your colleagues, to your friends and family, and to strangers in the pub (Ciaron’s idea).
  Work hard to make your OKRs inspirational; resist the temptation to think small and in the box.

OKR crimes

As you have seen in the Google video (not watched it yet? Do it!), failing to hit OKRs is not a crime. But there are OKR crimes, things you must not do. Here they are:

• Not put in enough effort to achieve them. Failing to get the results you wanted is very different to failing to put the work in. Put the work in and don’t let that be the reason you’re not achieving your goals. Hard work beats talent any day.
• Not make time and let ‘more important’ stuff come up. You have a whole quarter to work on your OKRs. If you leave it till the last minute and something more important comes up, then you’ve screwed up long before the deadline. OKRs are vital, so prioritise them accordingly.
• Not know your objectives by heart.
• Not enforce OKRs within your team.

This was a long chapter on planning; I know it can be boring, but planning is the equivalent of programming your sat nav correctly before you set off, chopping the ingredients before you stick the roast in the oven, setting up the chessboard and pieces before you start playing. I freaking hated planning with a passion – I didn’t like coming up with OKRs, organising the sessions, or writing up the notes and all that follows. I am a dirt guy… I like to be in the field, working the soil. But OKRs are vital to my success, so I learnt to love them by focusing on the big WHY.

Whether you decide to adopt SMART, OKRs or any other framework, choose one and invest in planning and setting goals. If you fail to do the planning, you cannot do the fun part, you will most probably not get to your destination, your roast will be weird, and you’ll look stupid playing a chess game on an empty board.

As Benjamin Franklin famously put it, “By failing to prepare, you are preparing to fail”.

Actions

• Book one day for OKRs planning out of the office
• Download The OKR Strategy Session Outline
• Invite all key staff members. Depending on how many people work with you, you might even invite all of them for certain sections of it
• Follow up with all member
• Communicate clearly what the OKRs for the period ahead are
• Assign owners to roadmap items/projects