What are the Differences and Why do you Need Both to be Successful
Some of the most common questions regarding OKRs are how they compare to KPIs, which of the two is better, and if they can be used together. Before we delve further into the topic, we should first briefly define both OKRs and KPIs.
What is a KPI?
Key Performance Indicators (KPIs) are metrics that evaluate a company’s progress toward certain Operational Goals. KPIs can evaluate the success of projects, programs, products, and other key business activities that a company chooses to monitor.
What is an OKR?
OKRs is a management and strategy execution framework that consists of three main components: the Objectives (O), the Key Results (KR), and the OKR Cycle. The Objective represents what you want to accomplish and is transformative by nature. The Key Results describe how you measure your progress towards achieving the set Objective. The OKR cycle is the system for achieving the organization’s OKRs and acts as a continuous feedback loop. It consists of monthly check-ins and quarterly reflect & reset sessions to evaluate and re-adjust the progress of a team.
The OKRs help move the needle of something strategically important to the company.
OKRs vs. KPIs
This brings us to the question "What's the difference between OKRs and KPIs?". KPIs are standalone metrics to track the Business-as-Usual Goals and respective activities (steady state of an organization). OKRs represent the agile framework of the Strategic Goals to scale up the business.
OKRs + KPIs = Best Business Management & Continuous Performance Management Framework
Simply put, OKRs encompass KPIs since OKRs are a larger strategic framework and KPIs are measurement indicators. Ideally, the one complements the other, since an organization should operate using both KPIs to track vital Operational (Business-as-Usual) activities and OKRs to ensure growth and future success.
Check out our article "What are OKRs? A brief intro to Objectives & Key Results" for more information on the OKR framework.