OKR vs. KPI vs. SMART vs. MBO: Choosing the Right Goal-Tracking System for Your Agile Teams

What do you get when you combine the power of agile’s introspection and continuous improvement with solid goal setting? You get efficient delivery of value! 

However, not every agile team has a good goal-setting and performance management practice. And without a proper goal-tracking system, such agile teams can face frustrating issues like sudden blockers, clashing team priorities, and lack of transparency into progress. 

Tracking agile metrics can reveal a lot; for example, burndown charts may show that a team is either committing too much or not enough in each sprint; erratic velocity may show inaccurate estimation and forecasting. But these metrics are inadequate for effective improvement because they usually indicate symptoms of the problem, not a clear path to solving it.

Implementing a goal-tracking system can be a viable solution. 

Common Goal-Tracking Systems Used

But which goal-setting system works best with agile teams? Here’s an overview of the most common goal-setting systems and how they might work for you and your teams.

KPI

Key Performance Indicators are widely used to set measurable targets for companies as a whole, teams or individual employees. This goal-setting practice is common among a wide range of business types and focuses on hitting certain numbers, for example, “Increase sales by 20% in the next year.” 

KPIs are similar to business metrics, but not all metrics are equal for determining performance. It’s important to focus on the “Key”—these should be the priorities of the business or team. If you set them correctly, they can be an effective measurement. However, if you set too many, you may get bogged down in the numbers and lose sight of the big picture. 

KPIs tend to be longer range, rigid number targets, which may not work as well with agile’s shorter, more flexible cycles. Another challenge with using KPIs for agile teams is that agile builds in increments without a definite end.

SMART

It’s an acronym that stands for Specific, Measurable, Attainable, Relevant and Time-bound. The premise works for large and small companies and even for individuals setting personal goals like New Year’s resolutions.

The KPI example above, “Increase sales by 20% in the next year,” could also qualify as a SMART goal. It’s clearly Specific, Measurable and Time-bound. The goal-setters would have to ask themselves whether it’s Attainable and Relevant for them. SMART goal setting can be used in conjunction with other systems to evaluate objectives and targets, but may not be a sufficient system on its own. 

It helps to clarify priorities; for example, when setting sprint goals in agile, see if the goal meets each one of these criteria. The SMART method is a great start for setting team goals, but may fall short if you want to track progress toward the goals in real-time. 

MBO

Management by Objectives (MBO), first popularized by Peter Drucker, has been around since the 1950s and tends to work best in traditional, hierarchical companies. It’s characterized by a top-down approach; the supervisor has the major responsibility for setting the goals and determining if they’re accomplished.

In the goal-setting stage, there are one-on-one discussions with the employee, who can give opinion and some input, but the decision ultimately lies with the supervisor. Objectives are usually long-term and regular performance reviews are done, often closely linked to compensation; for example, if an employee increases sales by 20% in a year, they’ll get a raise.

Goals are passed down from each supervisor to employee rather than being a collaborative team effort. As this is used more for individual performance evaluation, it’s less effective for tracking team performance. The more authoritarian nature of this system also conflicts with the agile model.

OKR

A more nuanced system is OKR, Objectives and Key Results, which has become popular through modern tech companies including Google. The main goal is the objective and the key results are 3-5 smaller aims that need to be accomplished in order to reach the objective. 

In this system, the objective is generally broader, not numbers based, while the key results include specifics. A general formula for OKR set out by venture capitalist John Doerr is “I will (objective) as measured by (key results).” For example, “We will become an industry leader as measured by increasing sales by 20%, receiving 1000 positive reviews from customers, and being featured in five highly rated publications.”

The objectives are shared and agreed upon by everyone in a company or in a team; the key results may be team targets or individual targets. The OKR period tends to be set on a quarterly basis, which works well for businesses using an agile model.

3 Reasons OKR Works Better for Agile Teams

Now let’s see why OKR is the right goal-tracking system for agile teams. 

It works ideally with short cycles

OKR goal-setting not only works for long-term, broader company goals, but is also ideal for short-term goals, such as sprint goals. This OKR cycle is known as period or cadence. 

For example, when planning a sprint, the objective is the sprint goal and the key results are measurable accomplishments by each individual on the team. With the key results defining the process, it’s easy to regularly keep track of progress toward the goal. 

Besides that, a flexible OKR period also means that you can “fail fast and learn fast” when it comes to testing the OKR system and finding the right rhythm for your team. 

The process is collaborative

Unlike MBOs where the objectives come from the top-down, OKRs are decided collaboratively, which is one of the prominent themes in agile’s way of working.

Overarching strategic OKRs may be set by the company as a framework, but teams decide on how to implement short-term, tactical OKRs to support company objectives. 

This bi-directional OKR alignment ensures that every member of the team has input and the objectives are confirmed as a team, so they’re working towards one common goal with improved accountability.  

Results are measured transparently

Besides collaboration, OKR falls in line with another key agile value, transparency. The OKRs are clearly stated and shared so everyone on the team can see where they are towards reaching the target and what areas might be falling short. 

Frequent evaluation also allows for necessary adaptation and change. Other systems don’t measure results frequently enough and tend to focus more on the individual, with private performance reviews. With clearly defined and visible objectives and results, it’s easier to use tools to measure them frequently.

Setting and Managing Goals in Jira

If you decide to use OKR to set and track performance goals for your agile teams, what’s an efficient way to implement it? If you’re using Jira, the most convenient option to track your OKRs is by using a plugin. 

With OKR for Jira by Digital Toucan, you can set and track OKRs directly in Jira. What’s even better is that you can clearly map your team members’ Jira issues (AKA daily tasks) with OKRs. This powers up goal tracking and gives a sense of purpose to your team members.

Connecting Key Results to Jira Issues in Jira App Screengrab

You’ll also be able to see real-time updates on team progress to spot and address blockers early on. This will help you make more accurate estimations and keep everyone on task to reach their target results.

See OKR Progess Updates in Jira App

OKR for Jira is free to try so you can see if it’s right for your team’s goal and performance tracking needs.

OKRs: The Best Goal-Setting System for Agile Teams

With its flexibility, transparency, and collaborative approach to setting goals, OKR is the right framework for agile teams. But remember that choosing the OKR system alone isn’t enough to manage goals.

It all boils down to the best practices that you implement when setting OKRs for agile teams. For example, if you and your agile teams use Jira to manage projects, then using an OKR app is advisable for a seamless goal tracking system.

Check out our OKR for Agile Teams in Jira: The Definitive Guide for more expert tips and insights.

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