OKR vs KPI: What’s the difference, and which is better?

OKR vs KPI: What’s the difference, and which is better?

Whether you’re a small business owner or a world-class athlete, measuring your progress is the ultimate way to improve. Having goals to work toward is a big motivator, not to mention something that provides a sense of direction — something that’s a must, no matter your line of work.

We’ve all heard of end-of-year reviews. But with the holidays fast approaching, many like to use the pause as an opportunity to review their progress throughout the year so far. It’s also a great time to reflect on what worked (and what didn’t), so you can put your best foot forward for the next quarter.

There are various frameworks for measuring progress, from informal chats and reviews to more structured approaches. Key Performance Indicators (KPIs) are one of the more popular methods, especially among marketers. But for techy people — especially people who have worked at Google, Amazon, Spotify, and Intel — Objectives and Key Results (OKRs) are the go-to.

But what’s the difference? And why choose one over the other? And can non-techy types benefit from OKRs? Let us explain…

What is a KPI?

KPIs are a way of measuring performance over time. They can be applied to a person, a project, an action, or an organization as a whole. They are usually linked to strategic objectives and measured against targets. So just to recap, KPIs must be —

  • Measurable, using quantitative data
  • Linked to strategic objectives
  • Target-based

KPI examples

Here are some real-world examples.

A marketing team’s KPIs

What: Increase published blog posts by 30%

Why: To attract more website traffic and generate more leads

How: By hiring an additional writer to create more content

Who: The content manager is responsible for this metric

When: The KPI will be reviewed quarterly

An HR department’s KPIs

What: Reduce staff turnover by 10%

Why: To save money on hiring new candidates

How: By investing in training and wellbeing courses

Who: The HR manager is responsible for this metric

When: the KPI will be reviewed quarterly

A clinic’s KPIs

What: Reduce patient complaints by 50%

Why: To improve our reputation and reduce complaint handling time

How: By improving scheduling so wait time is reduced. And by providing training.

Who: The practice manager is responsible for this metric.

When: the KPI will be reviewed quarterly

What is an OKR?

As the name implies, OKRs are tied to key results. It relies on metrics to track the progress of a goal. Think of it as being a bit like a loading bar on your computer, with key checkpoints marked off.

Typically, an organization will have 1-3 objectives, with 3-5 key results per objective. These results are numerically graded, so there’s no ambiguity around whether or not progress has been made. So to recap, OKRs must be —

  • Measurable, using quantitative data (numbers)
  • Timeline-based
  • Scored objectively on a numerical scale (0-1, or 1-100)
  • Realistically ambitious

The OKRs process was born in Google, before being adopted by the likes of Amazon, Spotify, LinkedIn, and Intel. It’s since bloomed into a popular goal management exercise, favored among companies that are heavily growth-focused.

OKR examples

Here are some real-world OKR examples.

A marketing team’s OKRs

Objective: Generate 20% more leads

1st key result: Improve site conversion by 10% by September 1

2nd key result: Engage in 10 Twitter chats with industry leaders per month

3rd key result: Increase the number of Facebook followers by 10%

4th ey result: Increase blog post output by 20%

An individual’s business OKRs

Objective: Boost the number of business inquiries by 10% by the end of this quarter.

1st key result: Increase social media connections by 20%

2nd key result: Boost posting frequency on Twitter to 4x daily

3rd key result: Attend 2x networking events per month

4th key result: Join 3 LinkedIn groups and leave a comment on the 5 most popular discussions per month

General business OKRs

Objective: become the market leader in our industry

1st key result: Increase customer base by 50%

2nd key result: Grow staff by 20%

3rd key result: Record $10 million in revenue

OKR vs KPI: What’s the difference?

Say one objective is to increase the number of blog posts written by 50%. This could be classed as an OKR. But… counting the number of blog posts produced could also be considered a KPI. So what’s the difference?

OKR is a self-contained framework for tracking your progress towards achieving that goal. As a KPI, it’s a point in itself and part of a wider framework. Or in other words, a KPI it’s a measurement, whereas as an OKR, it’s an outcome.

There are differences and overlaps — but if you keep the above distinctions in mind, you’ll be able to keep them separate.

Which is better?

It all depends on what it is you want to measure. If you want to maintain or improve on a current process or way of working, KPIs are a good option. If you want to change direction or aggressively scale, the OKRs should be your first choice. In some situations, you may want to run both.

KPI best practice

  • Do be as accurate as possible. Add context and meaning to each one by tying it to an objective, as well as a target for context (e.g. industry average)
  • Don’t use qualitative data. Stick to numbers and stats to avoid ambiguity.
  • Don’t track every single performance indicator. The word ‘key’ is important: keep it top level.

OKR best practice

  • Create your OKRs from the top down. This means start with your overarching organizational goal(s) — then break it down into department, team, and individual objectives.
  • Don’t build OKRs without taking other projects and goals into account. Consider the entire business when defining your goals.
  • Use OKRs when your business wants to grow fast.

Final thoughts

If you don’t set objectives, you’ll float along like a ship lost at sea, drifting without a goal. Setting targets is a great way to put the wind in your (and your team’s) sails, providing a sense of purpose and momentum.

The worst thing you can do when setting OKRs or KPIs is to create a doc, then hide it away on the server (or in an office drawer) never to be seen again. Our tip? Make your goal-setting a collaborative effort. And the best way to do that is to track goals on your project management software.

With Backlog, our own project management tool, you can set KPIs and OKRs — then share these with the wider team. As people complete jobs, the software automatically tracks progress and sends notifications when key milestones and objectives are reached. This makes it easier for everyone to collaborate and stay on track. And, when the quarter or year is out, you’ll be able to look back on your goals and see just how far you’ve come.

Georgina Guthrie Georgina is a displaced Brit currently working in France as a freelance copywriter. Before moving to sunnier climates, she worked as a B2B agency writer in Bristol, England, which is also where she was born. In her spare time, she enjoys old films and cooking (badly).