OKR, or Objectives and Key Results, is a framework for setting goals and tracking progress. It involves setting specific, measurable, achievable, relevant, and time-bound objectives, along with key results that measure progress towards those objectives.

KPI, or Key Performance Indicator, is a metric used to measure the success of an organization or a specific aspect of its operations. KPIs are chosen to reflect the most important aspects of performance for a particular organization and are used to track progress and identify areas for improvement.

Differences between OKR and KPI

While both OKRs and KPIs are used to measure performance and track progress, there are some key differences between the two. OKRs are broader and focus on setting specific goals, while KPIs are more specific and focus on measuring performance. OKRs are also more flexible, as they allow for regular reassessment and adjustments to be made, while KPIs are typically fixed and measured over a longer period of time.

Overall, OKRs and KPIs can be used together to provide a comprehensive view of an organization’s performance, with OKRs setting the overall goals and direction, and KPIs providing specific metrics for tracking progress towards those goals.

What are KPIs?

KPIs are a way to measure various activities within an Organisation, activities such as acquiring new customers, customer retention, building products, running marketing campaigns, accounting and finance and so on. Stakeholders often want to quantify and measure the performance of these activities in order to achieve better results, have more accountability and learn from those activities to do better in the future.

By setting KPIs upfront, organisations are able to measure, assess and improve the performance of these activities. KPIs also help align the teams on what is being measured in that activity

Examples of KPIs

Sales KPI:

  • Deals Closed in a Quarter
  • Average deal size

Marketing KPI:

  • New customer acquisition
  • Customer acquisition cost (CAC)

What are OKRs?

OKR (Objectives and Key Results) is a comprehensive Goal setting framework used by organizations to define measurable goals and track their outcomes.

An Objective communicates what we want to achieve. Objectives are concrete, action-oriented, and inspirational. When properly crafted, they offer context for what needs to be measured and help align all departments within the organisation.

Key Results communicate how we know if are getting there. Effective KRs are specific and time-bound. Most of all, they are measurable and verifiable. 

Sales OKR:

  • O: Become a leader in US and UK
    • KR: 10% Increase in deals closed
    • KR: Average deal size > 100k

Marketing OKR:

  • O: Generate Qualified Leads for sales
    • KR: Improve website conversions by 10%
    • KR: Reduce customer acquisition cost (CAC) by 5%

OKRs vs KPIs – Similarities and differences

Notice that the Key results in OKRs (Objective and Key Results) most likely started their life as KPIs. they are both specific and measurable. however, KPIs When wrapped within an OKR, give much more context around what we need to achieve and why. KRs in OKRs are not only specific and measurable but also ambitious.

Purpose of OKRs

  • Alignment
  • Strategy
  • Focus
  • Measurable

Purpose of KPIs

  • Focus
  • Measurable

The measurable part in OKRs and KPIs serve the same purpose, however, OKRs offer a more complete way more defining and communicating goals. which includes the measurements, but in the context of what we want to achieve. An organisation could have a number of KPIs and teams could try and focus on all of these, but they don’t clarify which KPIs are important, and how they help achieve the company goals and strategy.

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