What’s the difference between OKRs and KPIs?
It can be easy to confuse OKRs for KPIs, but they focus on slightly different outputs. Which metric you use and how you use them can be different within your organisation. Successful organisations use OKRs to improve their KPIs.
Let’s start with Objectives and Key Results (OKRs). These metrics should have;
- Objective: to tell you where to go
- Key result: to let you know whether you’re there or not
- Initiative(s): to tell you what you need to do to get to your destination
For example, an OKR for a sales team may look like this;
- Objective: Grow new business revenue
- Key result: Close two deals worth £100,000 in the next six months
- Initiative: Market to FTSE100 with a focus on product x
Key Performance Indicators (KPIs) focus on evaluating the ongoing success of a process or activity. A sales team could use KPIs to measure their success. For example;
- Average Cost per Acquisition
- Sales Revenue vs Budget
OKRs provide the missing link between ambition and reality. While on the other hand, KPIs measure the success, output, quantity, or quality of an ongoing process or activity. They measure processes or activities already in place, so don’t lend themselves to continuous improvement.
How you use KPIs and OKR’s can depend on what your organisation does and whether it is activity-driven or results-driven.