Charting your Course: Are goals, KPI’s or OKR’s the right method of alignment for SME’s?

Welcome to 2025!? In our first article of the new year, I thought it was the perfect time for all of us to set our sights on the common goals that will drive our business success in the weeks and months ahead. Given the challenges and uncertainties that marked our turbulent economic landscape in 2024, including the vast number of global elections (including our own) and a more than significant budget (directed mainly at business!), the importance of alignment within your businesses has never been more crucial.

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Thankfully, the private sector in 2024 demonstrated impressive resilience.? This was despite all the ongoing challenges mentioned above (and Elon Musk’s current infatuation with our present situation) and underscores the vital role that SMEs play in our economic fabric.

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Why you need Alignment..

With productivity still being a challenge, this year we truly need to ensure that every team member is rowing in the same direction, maximising efficiency and driving towards shared objectives. For small businesses like ours, where resources are often limited and you need to do a lot with a little, this cohesion can be the difference between thriving and merely surviving. Additionally, as we look towards an economic recovery we can all benefit from, the performance of SMEs will be pivotal. With 99% of the business population being businesses employing less than 250 people, better SME performance will undoubtedly contribute to a swifter economic rebound, benefiting not just us but the nation as a whole.

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So, now we’re agreed that alignment is essential, I’d like to be able to recommend a method for doing that to you!? But, before that I think it’s probably important that you understand the distinctions between the different methods available to you.? Clearly you could just have firmly stated Company goals, but what about Key Performance Indicators (KPIs), and Objectives and Key Results (OKRs).

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What are those methods….?

Goals are broad, overarching aims that a business sets out to achieve – these are the very minimum you should have in place!? I don’t care if they’re written on a beer matt or painted on your boardroom wall; they provide at least a general direction.? Of course, they will lack the specificity needed for clear measurement but they’re typically long-term and aspirational, serving as a north star for everyone in the business. While they're important for setting the overall direction, they often need to be broken down into more manageable and measurable components to be truly effective.

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KPIs on the other hand are quantifiable metrics used to evaluate a company's progress against specific, desired results. Typically, they’re used to monitor the health of a business, analyse growth patterns over time, and measure the success of various initiatives. KPIs are particularly useful for tracking ongoing performance and identifying areas that need improvement.? They could be things like:

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·?????? Monthly recurring revenue (MRR)

·?????? Customer satisfaction or NPS scores

·?????? Website conversion rates

·?????? Employee turnover rate or ENPS scores

·?????? Cost per acquisition (CPA)

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KPIs are excellent for providing a snapshot of current performance and tracking progress over time.? The downside is that they may not always push a company towards ambitious growth or innovation.

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OKRs on the other hand are a goal-setting framework that combines ambitious, qualitative objectives with quantitative key results to measure progress. This was a method originally pioneered by Intel and has been adopted by tech giants like Google and LinkedIn. OKRs are more proactive than KPI’s because they are designed in a way that pushes organisations beyond their comfort zones, encourages innovation and significant growth.

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OKR’s involve having an objective i.e. What you want to achieve (qualitative) alongside a key result i.e. how you'll measure success (quantitative).? For example, an objective might be ‘to become the leading marketing agency in the UK’ and the key results to measure success might be win the award for top marketing agency in the UK within the next year, increase client retention from 85% to 95% and achieve a client Net Promoter Score of 9 or higher.

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OKRs are typically set for shorter periods (often quarterly) and are designed to be ambitious and at least a little uncomfortable. The idea being that even if you don't fully achieve your OKRs, you'll have made significant progress.

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And what do you think we should have?

I’m happy with you having something… anything!? But if a client was asking me for a system, of course, I would recommend OKR’s – particularly in the current climate!?

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Why?? Well, they’re designed for shorter periods which allows laser focus one quarter at a time.? This quarterly approach is really agile and allows us to adapt our businesses quickly according to various factors and of course, in uncertain times this is a crucial advantage.? They also encourage us to set stretch goals, which can drive innovation and growth—essential for those of us looking to expand and compete. By pushing beyond just comfortable targets, or expressions of desire, we can unlock the potential in our people and processes that we might not have realised we had.

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OKR’s are also hierarchical in nature, which means that its much easier to align individual and team objectives with overall company goals, and create a really strong sense of purpose and direction. ?This clear purpose, alongside having more accountability, boosts employee motivation and engagement, all of which in turn, boosts productivity.

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And finally, they’re really clear and transparent.? It’s easy to track progress and make data driven decisions, which maintains focus or allows for adaptation.? Unlike traditional goal-setting that focusses simply on outputs, OKRs emphasise outcomes. In my experience, the shift in focus leads to more meaningful and impactful results.

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Ok, so who’s done it already?

Well, one of the most well-known adopters of OKRs, Google, has been using this framework since 1999. And I don’t think I need to explain their growth trajectory!? They attribute much of their success to the effective use of OKRs, with both annual and quarterly ones in place and a scoring system of 0 (zero) to 1 (one).? Interestingly, a score of 0.7 is considered successful.

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LinkedIn is yet another tech giant that’s leveraged OKRs to drive growth. The company credits OKRs with helping them become a $20 billion company in a relatively short time, with their approach focussing on creating a clear connection between individual contributions and company-wide objectives.? They feel this fosters a sense of purpose and alignment.

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Right…. So how do I do it?

Ok, yep, this is the more complicated bit!? But nothing in life worth having is free or easy (or so I was always told anyway!)

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Your first step is to make sure your senior leadership team is onboard; they need to understand all the benefits, how it differs from traditional KPI’s, why you need to utilise them and how they’ll operate at an individual, team, and company level.? Then you need to cascade this knowledge to everyone. It's crucial that everyone understands not just the mechanics of OKRs, but also the philosophy behind them.

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Secondly, you then need to set 3-5 strategic objectives that resonate with your company's mission. These should be ambitious yet achievable goals that you feel will inspire your team; both qualitative and aspirational.? To ensure buy in and a better bedding in process, you should try and involve different people across the business – not just senior leadership.

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Next, for each objective, establish 2-5 measurable key results. These should be specific, time-bound, and quantifiable outcomes that will clearly show your progress.? Of course, they should be challenging but not impossible – I’d aim for ones that you're about 70% confident you can achieve! This balance ensures that the goals are ambitious enough to drive growth but not so unrealistic that they demotivate the team.

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The next step involves every member of senior leadership working closely with both teams and individuals to create the aligned OKRs that will support the company objectives.? The team should be encouraged to develop their own so that there is more innovation and greater buy-in although this can be supported by their senior sponsor.

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Once the OKRs are in place it will be important to implement a system of regular check-ins to review progress on them. This could be weekly team meetings or monthly company-wide updates and whatever you use, your aim should be to celebrate successes, address challenges, and make necessary adjustments.

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It would also be a good idea to implement a traffic light system (red, amber, green) to quickly visualise the status of different OKRs during these check-ins.

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Finally, at the end of each OKR cycle (typically a quarter), conduct a thorough review. Assess what worked well, what didn't, and use these insights to refine your approach for the next cycle.? This helps you stay agile in approach as it often takes several cycles for organisations to fully optimise how their OKRs are working in practice.

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And what might go wrong….?

Well, of course, with any new system, implementing can come with its challenges and here are some that our clients have experienced:

Lack of Buy In – hopefully self explanatory!

Setting unrealistic goals – Of course, OKRs should be ambitious BUT they shouldn't be impossible. Aiming for that sweet spot though, where goals are challenging but achievable, is difficult the first time around.

Too many - Keep your OKRs focused. You can’t take on the world all in one go!

They’re not a ‘to-do’ list - ?they should focus on outcomes, not tasks.

Infrequent reviews - OKRs (a bit like plants, animals and kids) require regular attention. Implement weekly check-ins and monthly reviews to keep everyone on track and allow for timely adjustments.

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Charting Your Course for Best Success

As we all navigate the complexities of the business landscape in 2025 and beyond, our businesses have a crucial role to play in driving recovery and growth. By implementing OKRs, you can create a clear roadmap for success, aligning your team and focusing their efforts on what truly matters.

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Remember, the journey of implementing OKRs is one of continuous learning and refinement. Be patient with the process, celebrate your wins, and don't be afraid to adjust your approach as you go.? Good luck!