OKR vs KPI: Definitions and Examples

20 of September, 2022

The importance of setting goals and achieving them in a workplace cannot be over-emphasized. For this to happen, it is important to monitor the progress of assigned projects. OKR vs KPI are important tools that can be used for achieving this purpose. Keep reading to learn more!

What is an OKR vs KPI?

The difference between KPIs and OKRs is common knowledge but not everyone knows it. Key performance indicators are great for measurement. While they can judge good or bad metrics, they don’t always provide context or direction for teams to take.

OKRs instead, provide the very much-needed direction and context. The objectives describe what you want to achieve, and key results describe how you’ll know you’re making progress. Because KPIs are measurable, they can produce great, meaningful results.

In other words, instead of talking about OKRs and KPIs, we prefer to think of them as complementary. Still not clear about the difference? Keep reading to better understand.

What is an OKR?

Objectives and Key Results (OKR for short) is a framework strategically tied to ensuring the production of key results through objectives. Simply put, it is a framework that is used to set goals by individuals, groups, and even businesses or organizations. The use of OKRs ensures that measurable goals are defined to enable the tracking of results.

It was brought about by Andrew Grove when he introduced the approach to Intel in the 1970s.

What is a KPI?

Key Performance Indicator (KPI for short) can be defined as an indicator used to measure the success of an activity. These include programs, products, and projects among other initiatives. KPIs help with effective means for improvement which are both strategic and operational. It also helps create an analytical standpoint for decision-making, which helps the organization pay attention to what really matters.

While it might seem that OKR vs KPI are similar, it is important to know that they are different. However, a company cannot make use of OKRs without KPIs even if they are two different approaches.

Some examples of ways in which KPI can be used in OKR include:

1. OKR: Grow new customer acquisition in 50% by Q3.
2. KPI: Acquisition of New Customers.
3. Implication: The acquisition of new customers as a KPI is sure to help the company or organization succeed in terms of raking in profit.

1. OKR: Increase gross profit margin to 40% by Q3.
2. KPI: Gross profit margin.
3. Implication: Gross profit margin helps in the success of an organization as the sole reason for an organization’s existence is to make a profit.

Metrics for OKRs

It is important to know that an OKR must not always include a KPI, especially when it does not involve a metric. This can be seen when working on a goal that might not immediately add to the success of an organization. In this case, the goal is measured by whether the tasks are completed or not. 

Speaking of metrics, there are three different types of metrics to choose from when using OKRs and they include:

Threshold Metrics

These metrics help to indicate a range in which you have to land. While there isn’t a specific number, the range is given to ensure that the results do not fall below expectations.

Baseline Metrics

This indicates a number or figure that is considered acceptable, anything less would indicate failure in acquiring the desired results.

Positive or Negative Metrics

This is basically an expansion of the baseline metrics. The only difference here is that you can choose to increase or decrease a certain number or figure from what it originally was depending on what is needed to acquire the desired result.

A Final Thought

As amazing as OKRs and KPIs sound, it is important to know that not just anybody can get it right on the first try. This is why it is important to leave the measurement to experts. Because what works for one area might not necessarily work for the other. 

Sesame’s Task Tracking Software is dedicated to ensuring that the OKRs and KPIs in your organization are properly tracked. This means that goals will be properly set and a success in the company effectively tracked to ensure steady growth for a longer period.