okr examples

What is the Difference Between KPI and OKR?

On the road to success it is not enough just to set the target. Tools and methods such as process tracking are needed to improve it. In this well-designed process, OKR and KPI are the most important guides. Well understanding of the both concepts are essential. In the following sections, definitions of KPI and OKR and the question ‘what is the difference between KPI and OKR ‘will be explained.

What is KPI?

kpi and okr

KPI, which is an abbreviation for ‘key performance indicator’, is a way of observing your company’s performance, how it and employees succeed or not in the process.One of the most important points of being successful on the way to the goals is to determine the KPIs correctly by customizing them. What is meant by customizing is that there should be differences between departmental KPIs. Because, for example, the functioning of a marketing department and production department, employees and methods are different. Even within the same department, KPIs must be at different levels. In short, KPIs helps us to monitor the path covered in the success process.

Although KPIs are generally based on numerical data, there are also KPIs that indicate a status like positive or non-positive. In both cases, however, KPIs should consist of measurable and verifiable concrete data.

There are some important KPIs for Marketing Department:

ROI

ROI means return on investment. Shortly, you spent $1000 and earned $1300.

Spent/Earned=1300/1000=1.3 which means that there is a 1.3% ROI.

CR

Conversion rate is a data of how many visits to your site turned into a sales or a target. It can be calculated by Conversion/Visits.

Visitors: 665

Conversion: 13%

CR= 13%/665= 1.95%

What is OKR?

With OKRs, it is possible to manage satisfactory development and change in performance. It is not about focusing and working on everything. Unlike, it is about choosing the most instrumental target and determining a path to accomplish that goal. This success has to be permanent, not temporary and also be progressive. OKR is a powerful tool that represents new goals and fundamental changes. Instead, your company will be powerful if you know how to write good OKRs. The objective to be selected should be innovative and development-oriented. In this way, the key results to be set direct employees to ambition and success will allow them to approach more.

 

Difference Between KPI and OKR

what is the difference between kpi and okr

The main reason for the difference between KPI and OKR is why they are set and for what purpose. In other words, KPIs are related to observations about the processes of projects under construction, while OKRs include tactics for new breakthroughs and developments. OKRs are mostly based on ambition and encouragement which leads to push the team to do a better job. In other words, OKRs represents the priorities and duties that change with time. On the other hand, KPIs are permanent which means that they are almost the same year to year. While OKRs tend to be adaptive and change with the new targets, KPIs are performed over time.

To illustrate, you decided to cook quesadilla. Once, you prepared the recipe and the necessary ingredients for your meal. On a small board, which represents the dashboard, it says how much sugar, salt and other ingredients present. Therefore, you can control the amount of them if they are within the thresholds.

In the above example, your recipe is your OKR and the dashboard which shows the limits of your ingredients is your KPI.

OKR Examples and KPI Examples

Example 1

Sales of newly produced product is not as expected.

  • KR

Increase ad budget 30%

  • KPI

Growth in sales

Example 2

Website improvement

  • KR

Make 50% faster by decreasing the sizes of the images

  • KPI

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