The interesting thing about KPIs is they fit very nicely as a “Key Result” in the OKR framework. As they are so often confused, mixed and misunderstood, we labelled this post OKR vs KPI. Just because you set goals and determined how you will achieve it and what actions you'll have to take towards that goal doesn't mean you should forget about daily tasks and activities, such as going to the store for groceries. OKR vs KPI - Definition OKR meaning. Let’s first have a closer look at what OKRs and KPIs really are. Usually, a company or business has three to five high-level objectives and the same number of results per objective. Let's say your KPI, NPS (Net promoter score), is -100 at the lowest rate and + 100 at the highest score, and you want this NPS to be at least at 70. Objectives and key results will help you solve the problems and improve processes within the company, while KPIs will help you monitor performance and identify the origin of the issues. Very often, a KPI that needs improvement will be a starting point for creating an OKR, and it will become a Key Result of an Objective. It is a type of performance measurement, aimed at evaluating the success of an ongoing process or particular activity. OKR is a goal-setting tool that sees organizational objectives as inspirational goals that the company wants to achieve with measurable results, whereas KPIs are health metrics that help measure the success of your ongoing activities, processes, projects, etc. KPIs can also be qualitative, but this approach isn't recommended because it can lead to confusion and personal interpretations of data. If you’ve heard anything about OKRs, you might be wondering how they differ from KPIs (key performance indicators). First things first, in order to understand these two concepts, you need to determine what they mean and what they are used for. As long as our NPS is 75 or above, we’re good. It’s certainly a question that I’m getting asked more and more. OKR examples: What should you do to accomplish this? Now you see that KPIs and OKRs do work together. How will you know have you arrived at your desired destination? ... Scrum and OKR do play together and work well where Sprint Goals become Initiatives for OKRs. To understand the interplay of the two concepts, a differentiation into lead and lag goals is helpful. Your objective is what you want to accomplish. Difference Between KPI and OKR The main reason for the difference between KPI and OKR is why they are set and for what purpose. To illustrate the differences between KPI and OKR, you can think of KPIs as experiences on the road to success. (KPI: gross profit margin) Increase company revenue to $5M in Q3. The OKRs framework is a constant cycle of dynamic improvement. Need proof? The goal of OKR is to define how to achieve objectives through concrete, specific and measurable actions. Simply if you see that average waiting time dropped from 43 to 30 minutes. The relation between these is that the existing KPI is the then OKR, that is those KPIs matter most and they will be part of your OKR. You will need both key performance indicators and objectives and key results to obtain a successful business or company. OKRs grant the benefit of a realization management framework that allows the alignment of company driven essence values and objectives. The key is “can be”. How would you know if you achieved this goal? High-level KPIs are focused on the overall company's performance. Let’s look at a few popular KPI examples. Your key results are how you get there. Transparency breaks the theory that performance needs to be managed, moving focus on sharing the company's vision. What will you do to make that happen? Key performance indicators may be the part of OKRs, as their metrics for key results. Because KPIs are more focused on overall strategy, they are less ideal for setting goals for major changes you hope to address. Key Performance Indicators vs. Until the indicators on your dashboard are within the thresholds, you will not pay much attention to them. If you choose the OKR approach, you will need to ask yourself a few questions, like: The last question will form Initiatives, which are necessary so you can get to your OKRs. How would you know you’ve improved it or not? An OKR vs KPI comparison is as different as chalk and cheese even though they both contain keys, but one is a combination that contains the other. OKRs are better used for dramatic business growth goals. If a KPI result indicates a need for improvement, it may become the “key result” of a new or existing OKR. In fact, quite often, changing the value of a KPI is used as a key result in an OKR. Create clarity and transparency around strategy. Get on the same page. Each department or team will use different KPIs to measure success. Objective: A statement of … After you fix the customer support experience, you should track it over your KPI dashboard. You’ll need both. An Example OKR/KPI Structure. An OKR is more general, just going into detail with KRs. On the other and, key performance indicators are there to verify the result. But we will compare them through this theory once again, all together, so you can finally get a crystal clear image of these acronyms! We wrote an OKR eBook that has everything you need to get started. KPIs are also more specific and can be something like “increase market share by 10%” or “improve user retention by 15%”. They both have a positive impact on the company's growth. How are they different? They provide the house and apartment number. Simply put, an Objective tells you where to go, and a Key Result will let you know whether you’re there or not. KPI is a metric with a particular target, while OKR has various metrics ( key results), and it's practically a goal framework. So that would be your Key Result. OKR/KPI/KRA : Raise funding of $1.5 Mn by end of March 2019. Objectives & key results are more focused on accomplishing the company's goals, while KPIs measure and monitor the results. Here are some additional OKR examples: Increase gross profit margin to 30% for Q1. But opting out of some of these cookies may have an effect on your browsing experience. Initiatives will complete the context and help you understand the difference between key results and initiatives. We are the easiest-to-use product. There are countless numbers of KPIs across different industries. For a detailed comparison read our article OKR vs KPI – a delineation. So first, let's start with a definition. Able to accurately scored on a 0-1 or 0-100 scale, Ambitious (if they're easily achievable, you should pick the more ambitious ones, or set them for the shorter period). You also have the option to opt-out of these cookies. KPI dashboard can be beneficial when you want to determine new OKRs. You should make your KPIs measurable, as adding quantitative values will make the comparisons of performances easier whatever you have to measure. Without KPIs, the organization wouldn’t know what to fix or improve, and without goals or OKRs wouldn’t be able to focus during the given period. This category only includes cookies that ensures basic functionalities and security features of the website. We also use third-party cookies that help us analyze and understand how you use this website. You probably want to create an Objective to Improve customer support. OKRs will help you solve those obstacles and problems to improve the process and drive reform for better performance. That would be a big Objective to which many teams contribute: Support, Success, Product, etc. (KPI: company revenue) As you can see, KRs intrinsically encompass KPIs. But it doesn’t set out, in the same way as an OKR, what specifically you hope to do differently. We offer the best resources & support. In other words: OKR and KPI work perfectly together. The people at Booking and Perdoo founded the original version of this analogy. For instance, if KPI results indicate sales are flagging, a company might develop an ambitious OKR focused on improving overall profits, marketing, or customer service, all of which could include key results based on meeting the existing KPI. The answer is the Objective. OKRs have a soul and directionality to them. Ongoing or repeating goals are generally better measured by KPIs, or Key Performance Indicators, which are numerical metrics for mature, or well-developed process, events or even “weekly” or monthly performance metrics. To simplify the meaning of OKRs, an objective tells you where to go, and the key result will show you whether you are on the right track or not. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. KPIs are mainly used for leaders to lead and not for planning, designing, or active management. How will you know you accomplished that? Let's explain the questions listed above furthermore: If your business is focused on maintaining its offerings or growing slowly, don't use the OKR framework. OKRs will encourage employee engagement, and it will trigger meaningful conversations about the business. In this article, we’ll look at the distinction between OKRs and KPIs – and see how the two fit together. Accordingly, an OKR vs. KPI comparison is a bit like comparing a fruit salad with an orange, they both contain fruit, but one is a combination that contains the other. KPIs help monitor performance and identify problems and areas for improvement; OKRs help solve problems, improve processes, and drive innovation. In other words: OKR and KPI work perfectly together. THE DIFFERENTIATION OF KPIS AND OKRS. OKR stands for Objective & Key Result. Where do you want to go? They measure processes or activities already in place. With initiatives, the things you should do to reach your key results and objectives. Regardless of the company's size, there is always a struggle with limited resources for all objectives achievements. The best way to show how they work together is to give some examples. Let's say you're planning to go on a road trip, and the first thing you will do is to decide where do you want to travel. We just launched Goal Diggers—a podcast on OKR, KPIs, strategy and everything in-between! Examples: The answers are Initiatives, the things you’ll do to achieve your Objectives and Key Results. But as we will see, OKR and KPI work together quite wonderfully. But if you don't, and the average waiting time per ticket is, let's say, 43 minutes, you will probably need to create an objective to improve the performance of your support team. Key results can be measured on a 0–100% scale … OKR is a strategic framework, whereas KPIs are measurements that exist within a framework. OKR is your navigation software. Objectives & key results motivate and move forward while key performance indicators observe and measure. At the same time, low-level KPIs are more focused on tasks or processes for a particular department such as marketing, human resources, sales, customer support, and others. If you want to make a drastic change in your business or a particular department, and you want to reform it completely, OKRs are the best way to handle this, as they can change your company's overall direction. Necessary cookies are absolutely essential for the website to function properly. We have an approach that works. With objectives & key results approach, you can be more creative with how you will achieve your desired goals, and unlike KPIs, they allow you to extend your goals, push your team further and make a high impact on your company's improvement. Your teams will be able to assess current actions and plan the next steps. Key performance indicators may … In this post, we look at how OKR compares to KPIs. Examples: The answers are Key Results, the results you need to achieve to reach the Objective. Stay up-to-date on our latest developments and insights. KPIs and their trends indicate how well your business is doing or parts of your business are doing. As long as that is the case, you’re all good. The OKR process should only be used for companies looking to grow in a large, meaningful way – not merely maintaining growth or growing slowly. Companies are using KPIs at various levels to evaluate their success towards desired goals. Because of the increased visibility, every team in your company will be able to create clear expectations for all interactions. Get a special offer from IO Scout with a 5-day money back guarantee. OKRs and KPIs work perfectly together, and you need them both to run a successful business, company, or organization. COVID-19 has impacted b... End of year might be a really busy period for you — or business may have already started to calm down. A KPI may tell you that you have a problem, but you’ll need an OKR to actually fix it. This makes it indispensable for every orga… Because of their complementary scope, OKRs and KPIs are natural companions. The target â as we mentioned before, every KPI needs to be linked to a specific target within a given period. Now that you understand what a KPI and OKR do and how they work together, you … OKRs bring adjustment from strategic devising to actual achievement. After you pack and you've started your car, you will input the destination in your GPRS so that you can follow the right track and correct course. There are many different types of KPIs, and choosing the right KPIs depends on factors like the industry you’re in and the maturity of your organization. Mainly, this should be done on a monthly basis. For example, my OKR may be to "Get in the best physical shape possible in 2020." KPI stands for Key Performance Indicator. These cookies do not store any personal information. Examples of KPIs for various industries and departments: OKRs are made for long-term or high-level goals and targets that will drive employees and companies forward. Examples: Objectives & key results and key performance indicators are both used to follow the company's goals and visions, regardless of the company's growth, whether it's small or enterprise. If your fuel level (KPI) indicates you’re running out of gas, you need your navigation software to get you to the closest gas station. An overview of all our content such as videos, blog articles and ebooks. Many people are impressed by the successful implementation of OKR by Google. For every KPI, you must provide meaning and context. Let’s use an example, your Quarterly Sales KPI is $200k MRR whereas your OKR is to Build a Sales Machine with KRs of Helping sales learn to better quality prospects, Make 100 calls a … Since we want to get our customers excited about your product and services, NPS is a prominent KPI on our KPI dashboard. Read our customer stories. Key Results in turn can be associated with a KPI. Good Objectives contribute to your company’s Ultimate Goal or fix problems that prevent you from realizing your dream. OKR vs. KPI: which is better? You could create a KPI that measures the average reply time for incoming support tickets. A KPI, on the other hand, measures the success, the output, quantity, or quality of an ongoing process or activity. Follow only the high-level KPIs, which has the most critical impact on your business or company's performance. That is, apply a target value to any KPI, and you can use it as a Key Result. SMART is a model to set your goals (and works both when setting OKRs and KPIs). The key to understanding the difference between an OKR and a KPI is to look firstly at what they are. When working with OKR, you will, therefore, have to ask yourself two questions: The third question will generate Initiatives: things you’ll do to get to your OKRs. Method 1: Open leads with … When you're driving your car, the navigation system is the OKR. OKR vs KPIs The Balanced Scorecard has a 20-year history as a strategic management framework used by companies across the world. How do they work together? Create your OKRs in a pyramid structure, starting with the employees, then to the manager, and executives on the top, to achieve your long-term goals. One of the simplest ways to achieve this is by making a KR one of your KPIs. If you are trying to implement the Objectives and Key Results (OKR) method in your company, OKRs and KPIs may seem to you similar on the surface. So you will take a travel guide and choose your destination. While you are driving to your desired destination, the car's dashboard will show you the necessary metrics, such as the fuel status. When you build OKRs, you shouldn't lose the vision of other parts of your business. When your fuel indicator (which is KPI) is showing you that you don't have enough fuel for your trip, your GPRS (in this case, OKR) will assist you to get to the nearest gas station. If your company or business isn't very small, your KPIs should be divided by the department and specific industry, if you are a conglomerate company. Let's say you discussed this with your support team, and you both agreed that waiting time shouldn't be over 20 minutes or if it's possible less then 20 minutes. In other words, KPIs are related to observations about the processes of projects under construction, while OKRs include tactics for new breakthroughs and developments. It should provide a clear direction, such as a street name. KPIs help monitor performance and identify problems and areas for improvement; OKRs help solve problems, improve processes, and drive innovation. KPIs are also more specific, and might be something like “increase market share by 10%” or “improve user retention by 15%.” An OKR is more general, only going into specifics with the KRs, for example: O: Give our users a great customer service experience KR: Reduce time between CS responses by X% Due to their complementarity, OKRs and KPIs are natural companions. Can you use KPIs as OKRs? 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