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The three-letter acronym KPI or Key Performance Indicator has many names and can be thought of as a metric that drives organizational behavior.
KPIs seem to be used by almost every organization on the planet. You must have been using KPIs for years too.
However, when your company or team starts to grow, KPIs often disappear. This is why many leaders and opportunists turn to another method called OKRs or Objectives and Key Results to focus on their goals.
So comparing KPIs to OKRs is like comparing apples to oranges. These terms are often thrown around in performance review meetings.
While there may be some overlap between the two, they are completely different approaches with different goals. So, let's take a look Difference Between OKRs and KPIs.
What are KPIs?
KPI, short for Key Performance Indicators, is an indicator used to better understand how performance measurement works.
As the name suggests, KPIs are measurable metrics or values used to assess an individual or organization's progress against some expected outcome.
KPIs are about identifying key metrics that can be used to drive organizational behavior.
For example, if you're a YouTuber, some of the key metrics that drive your progress or performance level are the number of subscribers, the amount of revenue, the number of views per post you generate, or the minutes per post.
So these are the performance metrics that determine how well you are doing in terms of performance and progress.
These key values determine how close you are to achieving your goals. Key performance indicators help you track your work through a measurement system.
What are OKRs?
OKR, short for Objectives and Key Results, is a goal-centric framework or goal-setting tool used by individuals or teams to achieve substantive goals.
OKRs are all about bringing sustainable change in performance to achieve your goals.
It is a collaborative framework that uses certain measurable values to track the achievement of your goals.
OKRs have made companies like Intel and Google industry leaders while helping them achieve their expectations and providing people with a great place to work.
OKRs, as the name suggests, use objectives and key results to set goals — goals represent where you want to go, and key results determine how you plan to achieve them.
The development of the OKR methodology is credited to the late Intel CEO Andy Grove in the 1970s, an acronym coined by legendary venture capitalist John Doerr in 1999. Promoted when Google was introduced.
Differences Between OKRs and KPIs
Significance
– OKR stands for Objectives and Key Results and is a collaborative framework that individuals and teams use to achieve their desired goals.
Goals represent where you want to be, and key results are a few key points about how to get there.
KPIs, short for Key Performance Indicators, are measurable values used to assess the progress of an individual or organization against some expected outcome.
KPIs are performance indicators that help you track your work through a measurement system.
Purpose
– KPIs are like a performance tracking tool that determines how close you are to achieving your goals.
They are metrics for monitoring performance at the individual or organizational level. A KPI is a quality measure or a growth measure or progress toward the desired outcome.
If you want your company to be an industry leader, the KPI goal might be to increase revenue by at least 10%. OKRs, on the other hand, is not a tracking system, but a goal-setting tool that sees organizational goals as inspiring goals that companies want to achieve with measurable results.
Method
– The method of OKRs is very simple. You start by defining some key goals at the organizational or team level, which must be inspiring but challenging, qualitative but measurable.
Then some key results must be defined under each objective which should identify the results that show that you have achieved the set objective.
Creating good KPIs takes a lot of effort and time, and involves many systematic steps.
The first step is to identify the goal, then envision what it would look like if the goal was achieved, and then determine a way to quantify how close you are to the end goal.
Generalize
OKR is a goal-setting tool that sees organizational goals as inspiring goals that a company wants to achieve with measurable results, while KPIs are health indicators that help measure the success of your ongoing activities, processes, projects, etc.
Objectives in OKRs reference the bigger picture, and Key Results will tell you how to get there.
In a nutshell, KPIs define "what," and OKRs define "what," "how," and "when." OKRs are about process, while KPIs are about recording results as measurable values.
