What's the difference between OKRs and KPIs?

In this week’s article, we’re going to dive into the differences between KPIs and OKRs, and how to determine what the real KPIs are in your business. Come along for the ride, and watch your business grow - literally!

Hey guys, let’s recap real quick before we dive into the differences between Objectives and Key Results, and KPIs.?

First, think of KPIs as the medical vitals for your business - height, weight, blood pressure, oxygen levels, pulse. They tell you how well, overall, your business is doing, and what may be some areas to improve. Secondly, KPIs are:

• a significant measure of performance and progress
• tied to specific business goals
• useful for both your stakeholders and across departments
• set a number of actionable benchmarks so you can see your progress.?

While we use metrics to measure overall performance, not all metrics could or should be KPIs. For instance, your overall social media engagement could be a sum of multiple metrics, like new followers, new likes and comments, click through rates, read rates, and more.?

Now, onto the new stuff!?

So, your OKRs and your KPIs might include some of the same things, but where they differ is in intention.?

Both are terms that are used in reference to goals which are tracked and measured.?

(Remember the old adage, you don’t achieve what you don’t measure? It applies to both OKRs and your KPIs.)

However, your KPIs, like I said earlier, are your vitals. They show whether or not your business is hitting its targets, whereas OKRs are more broad objectives, with specific key results that signify achievement in whether or not those objectives are being met. They are usually aggressive and pretty ambitious goals that align with your company’s overall big picture and vision.

Let’s break it down. Let’s say my tech company, Virtus, has the objective of becoming one of the top 10 providers by the end of 2023. Our OKRs could be something like

• Acquire 1,000 new customers each quarter.?
• Generate 4,500 leads every month to achieve 1,000 new customers.?
• Increase program sales by 15%.?

KPIs, on the other hand, are more ideal for scaling, and OKRs are designed for dramatic growth. OKRs are the goal-setting pieces that really push your teams to grow and stretch to meet the goal.?

So, in the above scenario, your marketing team might take the OKR of generating 4,500 leads and make it a KPI, but the “be a top 10 provider goal” would not become a KPI for multiple departments.?

So how do you determine your KPIs?

When you are wanting to determine your KPIs, here’s your key steps.?

1. Your KPIs should be directly related to your business’ goals for the year or year plan.
2. Your KPIs should be in line with your company’s current stage of growth.
3. Your KPIs should include both leading and lagging performance indicators so you get a full picture.
4. Your KPIs should focus on a few key metrics so you don’t get bogged down in data.
5. Your KPIs should empower you to make confidence business decisions.

We’ll go into more detail on how to measure these steps in my next article!?