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OKR vs KPI: Difference and Why Both are Critical in 2022

OKR v/s KPI - how are they different when both are the foundation of the success of any organization. Let us understand the key differences between the two-goal setting techniques.
Sagrika Mehta

Sagrika Mehta

OKR vs KPI

OKR vs KPI ! are these two goal-setting techniques really different? Yes! OKRs and KPIs – are the foundation of the success of any organization.

But the terms are often confusing and many questions click in mind when we talk about these two terms. 

What’s the difference between OKRs and KPIs?  Do they work together? If yes, how do they work together and, last but not the least, how to track them alongside each other? 

In this blog, you will learn why KPIs and OKRs matter, how certain organizations have benefitted from OKR and KPI and we will finally establish the role that both these goals play within an organization. 

Why do KPIs matter?

Why are KPI's important

Measuring the right Key Performance Indicators (KPIs) is vital for the success of your business.

However, questions like “Why do we need KPIs?” or “Why should we use KPIs?” or “How important it is to set KPIs” are often heard. 

Some leaders even think that their way of doing things isn’t broken so why do they need KPIs.

KPIs are important metrics that ensure that you achieve your business objective. 

Why do OKRs matter?

Ideas are easy but the execution is difficult. OKRs help you transform your ideas into great execution.

They help enhance employee engagement and motivate teams to perform better. 

Click Here to read about different goal setting techniques

OKR vs KPI

OKR vs KPI: How are they different 

Both OKR and KPI are tools that help management to set goals that can measure growth, but they are different in a few ways.

In OKRs the process to achieve goals is also taken into account while in. OKRs act as the bridge between ambition and reality. 

They help you break out your boundaries and explore new areas. If you have an inspiring Ultimate Goal — for your company, OKRs can take you there.

A KPI, on the other hand, focuses mostly on the outcome. It measures the success, output, quantity, or quality of an ongoing process or activity. It measures processes or activities that are already in place.

OKRs are the ultimate goal company is planning to achieve, whereas KPIs are often project-related and aim to scale or improve the project.

OKRs are like GPS that guides you to your destination. They are temporary in nature and change from time to time. Once you achieve one landmark you will set the next objective. 

KPIs on the other hand are specific and don’t change from time to time.

OKR VS KPI
OKR VS KPI

for Example “increase inbound sales by 20%” or “improve bounce rate of the blog by 20%.” 

An OKR is more general, only going into specifics with the KRs, for example:

Objective: Give users a great customer support experience  

KR: Bring down the time taken between CS responses by X%

KR: Increase 5-star reviews on google to X

OKRs are better if you want to improve the overall direction of your startup, but if you need to improve the performance of your team, product or plan you will have to set your KPIs right.

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If yours is a results-driven organization you require both KPIs and OKRs. Because, If you were only monitoring KPIs, you will have no clue how you are progressing towards your destination. 

Do I need OKRs or KPI?

The secret is for the success of any business it is not OKR VS KPI because you need both!

For achieving more ambitious results you should be able to set realistic targets.

Your teams should be accountable towards the target, and there should be inspiration and motivation to work towards the goal. 

OKR VS KPI: Do they work together?

KPI vs OKR

OKRs and KPIs are natural companions and complement each other. Both of them mostly help organizations to realize their strategy.

Using OKRs often also helps in improving KPIs. Let us look into the example below to understand the concept better.

Let’s say that critical business as usual for your Sales team is to bring in more business. You create a KPI that measures the conversion rate as X% every week.

As long as X%  business is coming every week you know everything is going well. But if the X% target is not met it indicates the average sales going down. You can create an Objective to improve the conversion rate.

In order to create clear Key Results for this Objective, you’ll need to dig in for exactly what caused the conversion rate to go down. 

Can OKRs and KPIs be tracked alongside each other?

OKRs and KPIs perfectly go hand in hand. KPIs help track performance and identify problems and areas for improvement; OKRs help in problem-solving and improving the processes to drive innovation and results. 

Tracking OKRs and KPIs alongside will provide you with a bigger picture of the strategy you curated to achieve your goals.

Conclusion

The difference between activity-driven organizations and results-driven organizations is that the latter treats processes and Initiatives as an end result. They seek activities as output goals that help them achieve the desired outcomes. 

Results-driven organizations also have output goals, but they work with — KPIs and OKRs which act as an extra layer over goals and define what these desired goals are, and track whether the desired goals are being achieved or not.

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