Key Results Vs. KPIs: Understanding the Differences and Similarities
To achieve a goal, one must know what it is. That may sound simple, but articulating strategic goals remains a core challenge across all organizations.
In this article, we’ll explain what OKRs and KPIs are, their differences, and similarities.
What are OKRs?
OKRs, which stands for Objectives and Key Results, is a goal-setting framework that helps organizations set and achieve goals. The objective defines a clear and specific goal, while key results are measurable outcomes that help an organization track its progress towards achieving its objective. In short: Key Results tracks the progress towards achieving a goal to change something.
The OKR methodology was introduced by Andy Grove, former CEO of Intel, and has since been adopted by countless organizations worldwide. OKRs are used to align teams and departments to a larger company goal, fostering collaboration and accountability. Having been applied in various industries, OKRs have shown to be effective regardless of size or industry.
What are KPIs?
KPIs, or Key Performance Indicators, are metrics used to evaluate the performance of an organization or individual. They measure the current status of important health metrics such as customer retention, satisfaction, incoming leads, etc.
KPIs are often used to help organizations identify areas that require improvement.. KPIs can be used by any organization, regardless of size or industry. In short: KPIs measure the status of a metric. No change needed.
Differences between OKRs and KPIs
Although both OKRs and KPIs are used to measure performance, they serve different purposes and have unique characteristics. Here are some of the main differences between OKRs and KPIs:
Strategic vs. Operational
One of the main differences between OKRs and KPIs is their focus on strategic versus operational goals. OKRs are often used to set strategic goals that are aligned with an organization’s vision, mission, and long-term strategy objectives. These goals can be related to growth, innovation, customer satisfaction, or any other area that is critical to an organization’s success.
For example, an OKR for a technology company could be to develop a new product that disrupts the market and increases market share. This goal is aligned with the company’s long-term vision and requires significant resources and planning.
On the other hand, KPIs are typically used to measure operational health and the current status of metrics or risk factors. These goals are often related to specific functions or departments within an organization, such as sales, marketing, or customer service. KPIs can be used to track daily, weekly, or monthly performance, and are often focused on a single metric.
For example, a KPI for a sales team could be to make a certain number of sales calls each day. This goal is focused on the team’s daily operations and is tied to a specific metric that measures their performance.
Long-term vs. Short-term
OKRs are often used to set long-term goals that are aligned with an organization’s strategic vision and mission. These goals typically span a quarter, and require focus to be achieved.
For example, an OKR for a manufacturing company could be to reduce their carbon footprint by 50%. This goal requires significant focus, accountability, and proper processes, and training to be achieved.
There are usually far more KPIs than OKRs. While OKRs are designed to create focus on priority areas, KPIs can measure everything and anything. A leadership team usually has about 3-5 Objectives, each with 3-5 Key Results. That’s a maximum of 9 to 25 metrics per quarter.
On the other hand, a leadership team may measure hundreds of various other KPIs in that timeframe.