OKRs … They both enable growth to be measurable. They have different purposes. Today, we’re going to just focus on two. The focus of a KPI is to measure success rather than set the goals themselves. When you start the process, you should think of: The best KPIs are the ones that focus on outcomes and not business activities. In the first OKR example above, a key result was to “Increase staff by 45 percent.” Counting the number of employees could also be a KPI. OKRs Vs. KPIs Vs. OKR is a strategic framework, whereas KPIs … Adding quantitative value makes it easier to provide context and compare performance for whatever you’re measuring. KPI vs OKR – Purpose (Desired Output) Perhaps the biggest difference between a KPI vs OKR lies in the intention or purpose by which they are created. OKRs speak to the larger vision, the big picture of what the company is trying to achieve, whereas KPIs … OKRs … While KPIs are a key figure for the success driver of a company, OKRs define quarterly goals (Objectives) and corresponding Key Results. A strong KPI contains meaningful information that helps shape the decisions you need to make. KPIs … There’s also plenty of room for creativity. It’s important to note that, unless you have a very small company, your KPIs can and should be broken down by department (and by industry if you are a conglomerate). The best OKRs are snappy, memorable and inspiring: Google famously sets its OKRs too high for their teams to reach. Your … This makes it indispensable for every orga… If you need to improve the performance of a feature, plan, or product, look at your KPIs. In the real world, you will have some gray areas—a twist in nomenclature can turn a key result into a KPI (or vice versa). OKRs are not equivalent to KPIs. How useful was this post? Sometimes teams need to work at different rhythms and the OKR system adapts to them by adopting a nested model. OKRs vs KPIs: What’s the Difference? KPI stands for Key Performance Indicator. OKR is a goal-setting tool that sees organizational objectives as inspirational goals that the company wants to achieve with measurable results, whereas KPIs are health metrics that help … It’s important to note here that OKRs uniquely are not tied to employee benefits/compensation. Focus on what you want to achieve at the end rather than what you want to do along the way. OKRs are often used to help companies break out of the norm and grow into new territory. OKRs are: The OKR framework was popularized by Google and Intel, but it has also been used by Amazon, LinkedIn, Spotify, and other hugely successful companies for goal management. Differences between OKRs and KPIs OKR is a goal-setting framework. If you want to grow, improve and sustain your business, you should learn to use both. KPIs goals are typically obtainable. KPI, or Key Performance Indicator, is one those three-letter acronyms that seem to be used by every organization on the planet. So while key results are the end goal, KPIs are the measurement used to determine how that goal is met. OKR vs. KPI: what are the differences? Any more than 5 will be too complicated and much less memorable. KPIs correspond to the detailed work within an organization that facilitates the delivery of their projects. On the other and, key performance indicators are there to verify the result. KPIs … OKRs speak to the larger vision, the big picture of what the company is trying to achieve, whereas KPIs … KPIs focus mostly on the outcome, whereas OKRs are also concerned with the process. OKRs should be created in a pyramid structure—with the foundation starting at the employee level, then the manager, then the department head, and so on—to lead to the achievement of your stretch goals. A KPI measures the success, quality, quantity or output of an ongoing process. Keep reading and this will become clearer. One can use OKRs and KPIs to achieve the same objective – but they perform different functions. Key Performance Indicators (KPIs) Objectives and Key Results (OKRs) Key Result Areas (KRAs) So, let’s review some basics of each to help clarify the difference between KRAs, OKRs, and traditional KPIs. OKR is the acronym for objective and key results—more specifically, an objective is tied to key results. Key results are numerically graded to obtain a clear performance evaluation for the objective. Click To Tweet. When people first learn about OKRs (Objectives and Key Results), a lot of times they’ll be confused how are OKRs different from KPIs (Key Performance Indicators).Admittedly, there are … They are usually set by c-level executives for the whole company to follow, keeping everyone on the same path. Using OKRs is an effective approach to strategy management, but it’s not the only one. Did you know financial KPIs are the most-used metrics? You can use % Complete or Milestones for example. It is only natural that people … industry average, year-over-year growth, etc.). OKRs define a goal with a set of metrics, while KPIs are metrics that can be part of an OKR’s Key Results or be standalone … Also, don’t use the OKR framework if your organization is focused on maintaining its offerings or growing slowly. Experts recommend between 2-5 KRs for every O. KPIs may inspire action plans, but they’re generally about taking a task and doing it more … KPIs focus mostly on the outcome, whereas OKRs are also concerned with the process. Summary: OKRs vs. KPIs As discussed, KPIs are business metrics that are directly relevant to a specific business goal and are used to evaluate the progress towards that goal. For starters, OKRs don't replace KPIs, they complement and utilize them. Yes, absolutely! OKRs serve as a framework for improving KPIs and allowing people to focus on priority KPIs at all levels and across all functions of the company. The biggest differentiator between OKRs and KPIs is the drive towards an outcome as opposed to an action. By sharing your email, you agree to our Privacy Policy and Terms of Service, Silicon Valley Product Managers Reveal All. OKRs provide a simple and powerful approach to set business targets, measure progress and achieve … OKR is a strategic framework, whereas KPIs are measurements that exist within a framework. An acronym for key performance indicator, KPIs are used to evaluate performance over time for an organization, individual, program, project, action, etc. OKRs are not equal to KPIs. The secret to OKRs and KPIs…you need both! Find out the main differences between prototypes and MVPs in product development. Like the revenue of a product line or the uptime of a key service. KPI vs OKR: when to use each? You’ll need both. KPIs are lag goals, which describe and verify the desired, measurable final result. A KPI could truly be any quantitative (and in rare cases, qualitative) measure a company uses to evaluate its progress and successfully reach its goals. OKRs and KPIs are different, but they can play together. Your KPIs should be set the same way. BI, USP, FDD, GTM, JTBD, MVE, MVP, ROI, NPS, UX, UI, VOC…(If you’re already confused, don’t panic! What they don’t tell you when you’re in school about being an adult, is how many acronyms you’ll have to learn. OKRs? Evaluate performance at your company with any of these 68 financial KPIs. Your metrics should both complement and countermeasure each other. A Strategic OKR focuses on the bigger picture for the company, usually set annually by c-suite executives, whilst Tactical OKRs are more low-level for the teams working on individual products. To understand the interplay of the two concepts, a differentiation into lead and lag goals is helpful. OKRs are described as manipulatable success drivers of a particular goal. Sometimes they can seem pretty similar, that pesky K really trips people up! In that way, KPIs are an important component of OKRs. Aspirational means knowing that you won’t hit all the KRs, but you’ll do really well trying! When you hear about KPIs and OKRs, you may believe that these notions are very similar to one another. Comparing OKRs vs. KPIs is a hot topic you’ll hear in performance management meetings, but it’s an apples and oranges discussion. KPIs and OKRs are not the same. READ MORE. Not to create confusion, but sometimes an organization’s KPIs are the same as the key results used in an OKR framework. You cannot switch from KPIs to OKRs as they are not interchangeable and their purpose is completely different. Schedule a Call with Our Admissions Team Who Will Answer Your Questions and Help You Move Forward, Fill the form and submit your application. While you may have some outliers, these indicators should usually: We highly recommend you make your KPIs measurable. KPIs … If your key results and key performance indicators start to sound similar, that’s ok. Just remember that one’s an outcome and the other a measurement—overlap the wording but not the usage of each. KPIs are also more specific, and might be something like “increase market share by 10%” or “improve user retention by 15%.” An OKR is more general, only going into specifics with the KRs, for example: O: Give our users a great customer service experienceKR: Reduce time between CS responses by X%KR: Improve ratio of 5 star reviews in app store to X:Y. OKRs speak to the larger vision, the big picture of what the company is trying to achieve, whereas KPIs aim to scale or improve a certain project. OKR is a strategic framework, whereas KPIs are measurements that exist within a framework. If you’re looking to improve the overall direction of your startup, OKRs are probably the better choice. At the strategic level, you only want to track and measure the indicators that have the biggest impact and value for your company. To see some examples of what great OKRs look like, check out these Product Management OKRs from okrexamples.co. KPIs help monitor performance and identify problems and areas for improvement; OKRs help solve problems, improve processes, and drive innovation. OKRs and KPIs. On the other hand, OKR goals tend to be more aggressive and ambitious — without being unreachable. But the truth is that there are some differences, and all you need is to … Essentially, the OKR system sets targets and provides a means of measuring results. While there can be overlap (more on that later), these two concepts are really very different. Used by Google, Spotify, Airbnb, Twitter, and LinkedIn, the OKR system has been tried and tested by the best! KPIs? The logic behind this, is that they don’t expect their teams to reach their lofty targets, but they’ll push harder and achieve more. Talk about alphabet soup! Balanced Scorecard. This should give you a clearer understanding, and the confidence to move forward as a goal-setting, success measuring hero! There are near unlimited examples of KPIs across all industries. To put it very simply, it doesn’t matter how many hours a person works if they don’t actually do anything productive. Generally speaking about OKRs vs. KPIs, the former are a good fit for organizations heavily focused on growth. Your key results are how you get there. John Doerr, the famed venture capitalist originally brought OKRs to Google, and you can actually hear the man himself talking about them at TED: The best way to structure an OKR is to use Doerr’s formula: For example, this could be filled out as: Your OKRs should always have some kind of metric, otherwise, they aren’t achievable. The word “key” is used for a reason. OKRs are designed to be reviewed and changed quarterly. OKRs help you define your top strategic goals and identify how you will achieve them, while KPIs help you measure performance against your goals. 1901 N. Moore Street, Suite 502 | Arlington, VA 22209 | 866-568-0590 | [email protected], Copyright © 2020 Ascendant Strategy Management Group LLC d/b/a ClearPoint Strategy |. Most often with a certain time lag. Short answer. Typically, an organization will have three to five high-level objectives and three to five key results per objective. That’s especially true in the tech/product worlds! READ MORE, What are the essential tools and software for product managers in 2020? A number of clients have asked about the difference between OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators). When talking about OKRs some experts quote Oscar Wilde; “Shoot for the moon. They represent the intended output of a process, project, or initiative, or the expected level of performance of an employee. KPIs aim to give managers an overview of how the team or area is working, whereas OKRs focus on providing the team a direction … Key Performance Indicators (KPIs) Key Performance Indicators (KPIs) are the elements of your plan that express what you want to achieve by when. OKRs are lead goals, which define goals as success drivers for the achievment of the lag goals. If you want to manage an inclusive goal, you will need both KPIs and OKRs … Don’t build OKRs in a vacuum without visibility into what other parts of the business are doing. OKRs can combine KPIs and Operation Goals when writing Key Results. Your objective is what you want to accomplish. OKR is the acronym for objective and key results—more specifically, an objective is tied to key results. OKRs have a soul and directionality to them. But, if you include KRs as KPIs it’s important to not change your KPIs every quarter! Co-host of the Product Podcast, she’s passionate about helping more women into tech and spends her free time trying (and failing) to learn how to code. OKRs are better for dramatic growth goals. You need to be able to set realistic targets and hold your teams accountable, and you also need to be able to inspire and push for more ambitious results. OKR is a simplistic, black-and-white approach that uses specific metrics to track the achievement of a goal. HEADS UP: Our Product Manager Certificate will cost $1,000 more next year. For each OKR, there is an objective to be achieved, along with a set of metrics that will measure the achievement of that objective, called key results. OKRs and KPIs aren't the same things, but they are aligning. As Felipe Castro says, “Measurement is what makes a goal a goal. Creating qualitative KPIs is possible, but not advisable because this structure can lead to confusion and subjective interpretations of data. Keep reading to learn how. Even if you miss, you’ll land among the stars.”. To save, book today! READ MORE, The definitive guide to Product Management, with everything you need to navigate all of our resources and become an… OKR is a strategic framework, whereas KPIs are measurements that exist within a framework. check out these Product Management OKRs from okrexamples.co. We’ll go into what they are, the benefits of each, and how to implement them. Without it…all you have is a desire.”. Meanwhile, OKRs are combinations of those business goals and the KPIs … KPIs are typically reviewed at the executive level, so don’t track every single performance indicator in your organization in the same place. OKR is a strategic framework, whereas KPIs are measurements that exist within a framework. What do … OKR stands for Objectives and Key Results. Though KPIs, OKRs… Update your gear with this tailored guide and… Measure how they do, not what they do. Since KPIs … OKRs and KPIs are two different systems for setting goals and measuring results. This means that not every Key Result needs to have a KPI in. More specifically, give the KPI context by tying it to an objective and compare it to a target for context (e.g. Whatever framework you decide on, ClearPoint can help you drive it all with our comprehensive system for strategy management. The OKR system is all about being agile, and making them work for you. When comparing OKRs vs. KPIs, we’ve used some clear-cut examples. There’s also a difference between Strategic and Tactical OKRs. OKRs are often for the inspiring goals that often take company-wide involvement. KPIs focus mostly on the outcome, whereas OKRs are also concerned with the process. A Curated List of Tools and Software for Product Managers in 2020, Your target outcome and why it’s important, How often you’ll re-evaluate the goal and your progress. Here are some common KPI examples for a variety of industries and divisions: OKRs are built on big-picture goals and targets that are designed to push employees and companies forward, so they should toe the line of “almost impossible.” The OKR framework is a continual cycle of fast, dynamic growth. OKR vs KPIs, What is the Difference? When creating your KPIs, don’t be vague. More often than not, KPI goals are attainable and represent the output of a process or project already in place. OKR vs. KPI: How can you tell the difference? OKRs are the major elements … You must provide context and meaning for each KPI. If you measure Customer Acquisition without also measuring Customer Retention, it sends the message that you only care about gaining new customers and not keeping them happy. OKRs Vs KPIs Posted at 10:58h in Leadership , OKR Goal Setting , Productivity by noeldykes As people leaders, we all need systems of management, ways to measure performance and to assess whether or … Your final OKRs frequently have a blend of both KPI … The OKR framework is simplistic and based on tracking data, and a KPI is usually a single data point, so you will find cases where there’s overlap. Because the goals are by default too ambitious, employees shouldn’t miss out on annual bonuses for not meeting them. Committed OKRs are more fixed – these are the targets you’re expected to meet. So how do OKRs and KPIs differ? They’re both management tools that are designed to set goals and make sure growth is measurable, but they go about it in very different ways. OKRs are considered a strategic framework, and the KPIs are the metrics inside that framework. Now that you know the difference between these two concepts, you can choose the right approach for goal achievement in your organization. There’s a glossary specifically for these things!) If you opt to change an entire OKR stack … They are the quantifiable, outcome-based statements … 8 min read KPI, or Key Performance Indicator, is one those three-letter acronyms that seem to be used by every organization on the planet. It is only natural that people … KPIs are a very common way of measuring how a company is growing as a whole, as well as keeping individual teams accountable. Able to be objectively scored on a 0-1 or 0-100 scale, Ambitious (if you easily achieve your objective, it wasn’t aggressive enough). Defining KPIs isn’t easy, as there are lots of factors to take into account. Some common KPIs for Product Managers include: They’re both management tools that are designed to set goals and make sure growth is measurable, but they go about it in very different ways. If you think of strategy management as a spectrum of complexity, KPIs are on one end and the Balanced Scorecard is on the other, with OKRs … Leave a friend's email below and we'll send them their own 'The Product Book' straight away! Carrying Forward KPIs. Teams can differentiate between aspirational and committed OKRs. Ellen Merryweather is the resident Brit and self-appointed Blog Queen at Product School.