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What's the difference between OKRs and KPIs?

We already said a lot about OKRs in previous articles. But we are often coming across the comparison between OKRs and KPIs. Are these the same? What's the core difference? Which one should you use to improve the performance? Let's quickly dive in and try to find the answers and clarify these questions.

What are OKRs?

OKR is an abbreviation for Objective - a clearly defined and motivating goal and Key Results - specific and measurable results that collectively allow us to achieve the Objective. The main benefit of using this methodology when setting goals is to focus on what you want to accomplish with a high level of transparency and alignment from the vision to the daily task. The process is easily measurable so that you can (and you should) review it regularly.

The process is as follows:

  1. You evaluate your current situation. Position yourself where you are at the moment and where you want to be in a given period.
  2. You define your Objectives - your motivating goals.
  3. You define your Key Results - measurable steps you need to do to achieve your Objectives.
  4. Break down your Key Results into actionable items - Make a daily action plan.
  5. Take Action and get your hands dirty.
  6. Measure and Review your progress regularly - an essential step to ensure your ongoing progress.

It's essential to set your OKRs right

When thinking about your goals and setting up OKRs, you need to consider that this will be your focus for the next 90 days if you are setting up quarterly goals. The point of following OKRs is to achieve some meaningful, positive change in your life and grow in your personal or business life. Change behavior and improve performance. Don't be afraid to think big and set the bar high. In this way, you will push yourself to get there.

If you always reach your goals 100 %, you did not set them aspiring enough. Be honest with yourself and stop sandbagging; it will kill your progress, e.g., 70% success rate encourages competitive goal making.

Your OKRs have to be clearly defined, which is vital in an organization or if setting them for yourself. The need to give you a clear direction, and each step need to bring you closer to your overall goal.

These are OKRs in a nutshell - if you want to learn more about it, check out The Ultimate Guide to OKRs (with OKR Examples), where we guide you step by step on how to create and set up your OKR system.

What are KPIs?

KPI is an acronym for a Key Performance Indicator. They are used to evaluate performance over time for an organization, individual, program, or a single project. You can use KPIs to monitor the overall performance - organization as a whole, or performance on processes and departments, like HR, Customer Success, Sales, etc.

The success rate shows how effectively one organization is coming closer to its core business focus. We should not confuse them with goals, KPIs are more an indicator that shows if you are on track to reach a certain goal.

Make sure to define the KEY indicators for your business

KPIs should be well-defined and communicated well through each department and organization as a whole.

They should be quantitative (presented with a specific value - Objective- preferably numeric measured against a standard) rather than qualitative (based on or influenced by personal feelings, tastes, or opinions). An example would be Customer Churn Rate, Average Customer Response Time, Customer Lifetime Value (CLV), Total Page Visits, etc.

Make sure to provide enough context to your KPIs, so each member of the department/organization knows the important metrics. KPIs are focused on "KEY" indicators, which have the most impact on the company's growth. You should not determine 20 KPIs; this would mean that you are not completely sure what your business's KEY FOCUS is.

What's the main difference between OKRs and KPIs, and which one should I use?

There is a difference. The OKRs are a more aggressive approach, and by using this methodology, you can push yourself and your team to perform better and reach set goals with a better success rate. It's not about measuring everything you or your team does, but focusing on certain things that bring you closer to the goal and leaving out the ones that are holding you back. You are changing the behavior, which should result in more productive and sustainable change.

KPIs are more of a control instrument; they help you monitor the overall performance of the business. If your KPIs are met, it means that you are doing a good job, and no further improvements need to be made. OKRs are impacting the performance itself.

KPIs are more straightforward, and you can start implementing them to your system at any time, also in the middle of the project. They are specific and easily used to scale and control the performance of the department. With KPIs, you should continue and improve the processes that are already in place. So in this way, the KPIs would be a good choice to go with.

OKRs, on the other hand, help you to change the direction of where you want to go as an organization. They allow you to reevaluate your focus on a deeper level and align your powers to go in that direction.

We can use OKRs in professional and personal life. You can grow your business and achieve better results, or set a goal to improve your physical and mental health and start working towards that. You need to be clear when choosing tasks that you want to pursue and will bring you closer to your short-term and long-term goals, and get rid of the tasks that are holding you back and are not bringing you forward.

OKRs are a link between our vision and dream and reality; for that reason, we prefer to use them. But OKRs and KPIs can also be used together. Setting OKRs up for yourself or your team will help you break out from the current situation and move towards the goals set, and measuring important KPIs will help you determine and see if the key indicators are met on the way.

Are you using any of these strategies for achieving your goals? Leave a Comment!

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