What’s the difference between KPIs and OKRs?

(This note has been put together after coaching 100s of teams. There isn't an instance when this dilemma betweem KPIs and OKRs has not come up. A summary of our learnings have been put together to bring this conceptual clarity. )

Imagine yourself on a dewy morning, armed with a fresh brew of coffee, as you reach out to a plate of donuts drawing you closer. You skip the Old fashioned, and make your way to the Glazed. Finger licking good indeed! Just like Donuts and the spread of that sugary glaze, OKRs (Objectives and Key Results) and KPIs can go well together!

What gets super critical in OKRs is to carefully craft them around themes which would propel the business forward.

To those who are new to OKRs here’s your 30 second read:

OKRs are an acronym, ‘stands for Objectives and Key Results

They help not only leaders , but next level teams come together, to cherry pick metrics that matter most.  With a focus on the ‘vital few, rather than the trivial many’, company CXOs are able to communicate the most strategic priorities for next levels to connect & align. 

Anything but set and forget, the magic of OKRs is building the muscle with check ins and rituals to keep it real and real time! 

Ah yes, everything about OKRs is quantitative and measures progress from X to Y.  

For a quick primer on OKRs, refer to our book on the ABCs of OKRs (https://www.fitbots.com/ebooks/okrs-foundations)   

KPIs are definitely not new to the business world either. Key Performance Indicators are metrics measured at a point of time, which tell you ‘how exactly are you doing’?   You would see your favourite KPIs being measured week on week. For instance, Report Turnaround time, average weekly response time, conversion ratios. 

You would also notice KPIs at the company / business outcome level with Growth, profitability , CSAT portraying the health of your organization. So, if your Health Metrics are humming, your CEO would be a happy camper indeed!  

So, how do you actually set OKRs? 

Before you set OKRs, you would need to get ‘all hands on deck’. CEOs are the best sponsors of OKRs, who ensure that OKRs are not only implemented, but become a language in the organization and part of reviews.  

OKRs being a prioritization framework, requires leaders and next level teams to not pick OKRs around a bunch of business as usual activities. For instance, a business as usual activity may be to 'make a report' of free trial to paid users. That’s what you are pretty much required to do and would be hired to do. 

However, if your team comes together and says ‘Hey let's focus on improving customer free trial to paid sign ups from 4% to 8%’ and different teams from Product, Customer Success, Marketing and Sales come together to align their Key Results to move the needle on this company KR.   

And if you have that KPI , which is blinking red at you, and you know if it has to be fixed, definitely something to craft an OKR round. Much like the free trial to conversion example above, where the KPI becomes your OKR. (Just got reminded of more warm glazed donuts mmm mmm).

This article has been put together after 100s of coaching hours and working closely with teams. Should you have any thoughts, please do drop a line in the comments section or DM me.