MANAGEMENT • 5 MIN READ

OKR vs KPI
Differences Explained

Are You Stuck Working “IN” Your Business?

The last few weeks of the year are ideal for setting goals. However, it is just as important to assess your overall performance as it is to assess your past. In fact, we believe that knowing a few acronyms and business terminology can set your performance review in better perspective.

If you’re familiar with technology and marketing, you probably hear the term “KPIs.” If you worked at a helpful little search engine organization called Google, you probably know about “OKRs.” Don’t panic if you don’t know either.

The tech industry is filled with buzzwords, jargon and acronyms, and it is hard to remember them all. Ultimately, they are all there to plan quarterly and annual goals.

In this article, we’ll explain the differences between OKR vs KPI and why both of these acronyms are very important to your business.

What is a KPI?

An organization or particular activity is evaluated based on key performance indicators (KPIs), which can include projects, programs, products, and a number of other initiatives. Anything from sales goals to social media metrics can be measured with KPIs.

Despite the fact that KPIs are unknown in their exact origin, the act of measuring performance dates back thousands of years. They are a great way of scaling your business and can even help you double your business and time!

In today’s business world, KPIs are being used to assess and forecast success by countless organizations. However, it only matters if a KPI inspires action and growth. In many cases, companies adopt KPIs from other companies, and then wonder why their goals aren’t met.

A KPI should be customized to your specific organizational objectives, how you plan to achieve them, and who can take action based on this information.

KPI Example

KPIs are important in every industry and for every business that’s seeking financial success. For example, the a marketing company would have the following KPIs:

Periodic number of new contracts signed.
Amount of new contracts signed each period in dollars.
The number of qualified leads engaged in the sales funnel.
Sales follow-up resources spent.
Time for conversion on average.
Percentage or dollar growth of net sales.

What is an OKR?

OKR is an acronym for Objectives and Key Results. OKRs are used in business to identify areas for improvement, communicate desired outcomes, and deliver results.

Most OKRs indicate areas for improvement and objectives that help you reach KPIs. An OKR is a key result that allows you to track the impact of changes and improvements you and your team decide to implement. You can use OKRs to improve any area of your business, including:

Enhance product engagement.
Personalized sales approach and better nurturing of new prospects.
Get more high-quality leads.
Build a team of QA engineers.
Create a business growth engine that enhances accounting processes.

OKR Example

Here are a few examples of OKRs at the company, team, and individual levels:

Company OKR 1:

Objective: Become the #1 most-downloaded Health tracking app

Key Result 1: By Dec 23, launch five of the top-ten most-requested features based on a survey
Key Result 2: Identify UX problems by conducting user tests
Key Result 3: Provide a customer survey showing at least 50% improvement in UX satisfaction
Key Result 4: By December 31, earn 150 five-star ratings

Marketing Team OKR:

Objective: Increase social media presence by 33%

Key Result 1: Develop an engagement strategy by February 12 by researching and identifying two new target audiences’ most popular social media sites
Key Result 2: Engage in six industry-led Twitter chats
Key Result 3: Ensure that new Social Media comments are responded to within the day
Key Result 4: 20% increase in Instagram and Twitter followers

Individual OKR:

Objective: Reach 20% more people via social media

Key Result 1: Increase Twitter and LinkedIn posting frequency to 8 and 3 posts per day, respectively
Key Result 2: Set up a Facebook and Quora social media presence
Key Result 3: Leave comments on the ten most popular discussions in five LinkedIn groups with at least 1,500 members each
Key Result 4: Every week, post three answers and one question on Quora

OKR vs KPI Difference

As we can see from the OKR vs KPI examples above, these two acronyms aren’t exactly incompatible. However, a key difference between OKRs and KPIs is the purpose of setting goals.

A KPI goal is usually achievable and represents the outcome of an existing process or project, whereas an OKR goal is more ambitious and aggressive. While OKRs should be bold, they shouldn’t be insurmountable.

As a result, you can push your team (and yourself) to perform more efficiently and effectively by crafting aggressive OKRs.

KPI vs OKR: Can They Work Together?

It actually makes a lot of sense for KPIs and OKRs to work together: KPIs are used to identify improvements and problems, and OKRs specify measurable outcomes.

You cannot operate a well-organized and functional business if you do not analyze your performance against KPI targets.

However, having these numbers does not really tell you how to improve them directly. In order for a business to grow, you cannot simply say, “We need to increase revenue”. What should be done if your KPIs are falling behind to get them back on track?

Importance of Measuring Performance

No matter what technique you choose, improving performance is all about measuring and reviewing it. Setting objectives or reviewing them at the end of the year or quarter gives you the chance to learn and improve if you do not take the time to do so.

Using performance metrics is a great way to learn from failures and successes. A dependable performance metric system will also reduce your workload and stress! You might be surprised at how quickly you and your team reach your KPIs in the future.

The Bottom Line

The concept of OKRs vs KPIs entails two frameworks that have completely different intentions and logics. However, there is a great deal of overlap between Key Performance Indicators and Objectives and Key Results, so you should use both frameworks in your business, but for separate functions.

In short, OKRs should be used for improving your business, while KPIs should be used for monitoring your overall performance.

As a whole, this methodology offers great benefits for organizations, such as promoting transparency across departments, communicating priorities effectively, and aligning goals.

If you’d like to learn more about how KPIs and OKRs are different, check out our full article examining the importance and characteristics of KPIs.