How OKRs can turn into KPIs (and vice versa)
Henrik-Jan van der Pol
CEO at Perdoo (#1 strategy execution software). OKR expert.
I’ve sometimes said that some OKRs can turn into business-as-usual. This is often the case with Build OKRs, where you are creating something new.
OKRs aren’t a great tool to keep track of your business-as-usual (you’d be working on the same OKRs all the time). KPIs are better equipped for this purpose: they provide you with simple indicators that instantly tell you on a high level if certain things are going well or not.
We recently ran into a situation where one of OKR became business-as-usual and, thus, turned into a KPI. I thought I’d share this example with you to help you better understand the relationship between OKRs and KPIs.
How an OKR became a KPI
In the previous quarter, our Marketing team was working on an OKR to optimize our website conversion rates.
We’ve used Google Optimize in combination with Google Analytics to run all sorts of experiments to help us increase the performance of our website and convert more website visitors to leads.
The OKR was a great success but we’ve also learned that running these experiments takes a lot of time. Each experiment must run for at least two weeks, and sometimes much longer depending on the traffic that you get on a particular page.
Because our website is the main place where people can learn about us and where we can learn about those people, it’s always going to be important that the conversion rates are as high as possible. Since we believe there’s always room for improvement, we’ve decided that running experiments (with the aim to increase conversion rates) should become business-as-usual for our Marketing team.
So after we’ve accomplished our OKR and gave our conversion rates an initial boost, we’ve decided to create a new KPI for our Marketing team that safeguards the constant tweaking and optimizing. This KPI, Optimize website conversion rate by 5% per month, makes sure that running experiments with the aim to increase conversion rates becomes business-as-usual. These incremental increases will have a big impact in the long run.
How a KPI can become an OKR
It can also work the other way around.
For example, we also have a Marketing KPI that tracks the overall conversion rate of our website. We want this KPI to be at 7% or higher. That means that as long as 7% of our website visitors converts to a lead, we’re all good and Marketing doesn’t need to put extra focus on this.
Should this KPI show that the conversion rate drops below 7%, Marketing could make it a priority to fix this KPI and bring the overall conversion rate back to the desired level. In other words, Marketing could create an OKR to fix this KPI.
Conclusion
As you see, there can be strong relationships between KPIs and OKRs. OKRs can turn into KPIs or the other way around. This is why it makes sense to track both KPIs and OKRs in one place, which is why we bring the two together in Perdoo.
Combining them also gives you a holistic view of the performance of each department and team.
Originally published on Perdoo's Resources Hub: How OKRs can turn into KPIs (and vice versa)
Henrik-Jan van der Pol Thanks for taking the time to write your experiences down. The way I distinguish between kpi and okr is that I see KPI more as a sanitizing discrete measure and OKR more as a improvement proces. In your example I would say that improve with 5% must remain an OKR and overall conversion of 7% is a KPI. So exactly the other way around. To me, my approach worked and seemed logical. Can you elaborate a bit more why you see it the other way around?