Over the past 15-20 years, digitalization has brought significant changes to our business life. Yet, there remains some disagreement as to the difference between OKR and KPI. Therefore, at the heart of the matter lies a contributing factor which is OKR vs KPI.
In the first place, one point which is believed to be absolutely pivotal is the fact that the topic of OKR vs KPI is controversial. Therefore, it is important to understand what is OKR and what is KPI.
OKR (OBJECTIVES AND KEY RESULTS) DEFINITION
Objectives and Key Results, briefly called OKRs, is the goal-setting framework commonly used by many companies. An OKR consists of an Objective and up to 5 Key Results. Each OKR can also have initiatives.
With OKRs, which can be determined weekly, monthly or yearly, you can set and monitor your goals and observe the road covered on the way to the destination. Therefore, it is a simple and powerful goal system that creates an alignment and focuses on the effort shown on the measurable goals.
The main purpose is to achieve measurable results by aligning individual and team objectives with the goals of the organization.
It is a short-term goal-setting and results-tracking system designed to provide more agility to the strategic management and performance system.
Objectives are mainly the steps to achieve a goal. Besides, they have a short time frame and a narrow definition. On the other hand, goals are the main targets that your company wants to achieve. They have a long time frame and have a broad definition.
Key Results are brief statements that are clearly defined, specific, and measurable. Therefore, they make it easier for employees and their leads to monitor progress. For best results, Key Results must have the following characteristics:
KRs are specific. Organizations that have used OKRs successfully see to it that they use specific language that is common to all their employees when drafting their key results and objectives.
KEY PERFORMANCE INDICATOR (KPI) DEFINITION
A Key Performance Indicator, shortly KPI, is an indicator of the efforts made for the specified purpose. It guides you in setting goals and what you can do to achieve them. Moreover, KPIs provide control over the road to the goal. Although KPIs give information mostly about quantitative data, they can also be qualitative.
There are two types of KPIs: high-level KPIs and low-level KPIs. While low-level KPIs are related to the departments within the company, high-level KPIs focus on the company’s total performance.
KPIs are performance metrics that demonstrate how effectively a company is pursuing its key business objectives. KPI goals are obtainable and they measure the process or a project already in place.
OKR vs KPI
KPI goals represent the results of the efforts made for the projects currently underway. On the other hand, OKRs should be neither too easy nor unreachable. In other words, they are not easy to achieve, but when the goals are reached, they are the factors that trigger growth by increasing the team and company motivation.
OKR has greater depth than KPI and provides a better framework for taking on new projects, ventures, even new directions for your business.
An OKR vs. KPI comparison is as different as chalk and cheese even though they both contain keys, but one is a combination that contains the other. Because of their complementary scope, OKRs and KPIs are natural companions.
To illustrate the difference between KPI and OKR, you can think of KPIs as experiences on the road to success. Suppose you have set up a new start-up. You will have to go and try many ways until you reach your desired growth, and of course these roads can lead to success or failure. However, failures are actually the tools that form the basis of success. But of course, they do not bring it directly. In other words, the ultimate growth is achieved with OKRs based on the experiences stored in KPIs.
Hence, as a result, while KPIs are used to monitor the process, OKRs solve problems by providing accurate solutions.