OKR vs KPI: Main Differences to Know

On a surface level, the two tools may look almost identical. However, the biggest difference between them is OKR’s ability to work outside of isolation

Jump right in:

What is an OKR?

Being able to measure your initiatives and goals in a business or team is the key to success. How else can you find what went wrong or what went right? Luckily, there are a notable amount of popular business metrics platforms and tools out there that make measuring your metrics a walk in the park. OKRs and KPIs are two of the most common ones.

Surprisingly, these two metrics are not mutually exclusive. Let’s look into the key differences and similarities between OKRs and KPIs, and when and how to use them both to the benefit of your business.

How to Set Good OKRs With Examples
How to set good OKRs with examples

OKR stands for “Objectives and Key Results.” It is a type of goal-setting and goal-searching tool used by many businesses and nonprofit organizations (as well as individuals) to improve business-wide engagement as well as alignment within a team around specific project goals.

OKRs are collaborative goal-setting platforms that can be used by both individual people and whole teams. OKRs can measure progress and provide a more visual view of how one can reach goals with very measurable results.

“Objectives” in OKRs represent what one wants to and can achieve in a simple way. They’re the mission statement of the goal – concrete and clear, without any fluff or confusion.

“Key Results” in OKRs represent the act of benchmarking over monitoring how one can reach the established objective. Efficient key results are extremely specific and bound by exact timelines. They’re realistic, but also very much measurable and ideal. Key results can also change and evolve throughout the process of achieving the objective.

OKRs have been used by a significant number of large enterprises and nonprofit organizations to reach their business goals, including Amazon, Dropbox, and Facebook.

What is KPI?

KPI stands for “Key Performance Indicators.” KPIs are performance metrics that weigh the success of a business or a particular goal. KPIs can be used for everything from products to project goals to programs. They measure the success of everything within a particular team, such as sales goals or search engine traffic.

KPIs are quite useful, but they are really only as useful as the tangible action they promote. Businesses will usually try to adopt KPIs from other businesses that found success, but the results rarely are up to par. A KPI should be unique to an organization’s niche goals and output.

KPIs can be split into different sections per goal or desire. These sections are Why, What, How, Who, and When.

OKR vs KPI: What are the Main Similarities and Differences?

Both OKRs and KPIs are goal-setting methods, but that’s more or less the extent of their similarities.

OKRs vs KPIs - Learn the Difference | Weekdone

The overall intention when it comes to goal setting is one of the biggest differences between OKR and KPI. KPI goals are usually very obtainable and essentially represent the output of a specific process or project that is already taking place. OKRs, on the other hand, are ambitious and aggressive in nature.

While OKRs should always be somewhat bold in nature to really push for success in a business, they really should not be totally unreachable or lofty. The real ideal behind the OKR strategy is that through building aggressive OKRs, you can push your team, business, and self to perform at a higher standard.

When it comes down to it, KPIs are a key figure for a business’s driver of success. OKRs define objectives and key results that correspond to business goals.

How OKRs and KPIs Can Coexist

There are situations in which OKRs and KPIs are better as individual use cases. For example, if you want to scale or increase productivity in a project that has already been established, a KPI may be a better choice. If you have a more broad vision or want to change the full direction of your company or project, an OKR would be the superior alternative. OKRs have more depth for grander plans, and they also make it easier for you to be more creative in your goal planning.

Still, OKRs and KPIs can (and should) be used together for the most part in the business context. Performance will always need to be measured in order to see what is working for a specific goal and what is hindering its success. Both KPIs and OKRs can do that.

Without taking the time to set specific objectives, or setting objectives and not regularly reviewing their metrics, you’re missing a massive opportunity to take your business to the next level. It’s vital to learn from failure and success within a business’s lifespan, so it would be wise to use goal-setting tools to implement performance metrics.

There are many examples of mutual use cases for OKRs and KPIs. For example, a successful KPI could be considered a key result in an OKR in some situations.

Say you wish to measure the success of your business’ production department. You have the option of creating a KPI that specifically measures the average time it takes for the department to package and send 100 parcels of product. If you can agree with your production team that the amount of time to package and send this volume of products should be under one hour, you will be able to see immediately whether or not your target under the KPI is being met.

If the goal is being met, then you’re solid. But what is the KPI is indicating that the production team is packaging and moving 100 products in about three hours? From there, you could create an OKR with an objective that focuses on improving production speed. You would be able to know if the production process is improving if that packaging and processing time drops from three hours to one hour. As such, it would become a key result under your OKR. They’re still quite different things, but they work well together in reaching business goals.

OKR Solution for goal setting

Weekdone is an OKR platform dedicated to helping you and your team organize your goals, improve team coordination, and engage in weekly planning for a more effective goal-oriented result. Our platform makes it easy to track weekly activities in order to create more collaborative and interconnected teams, as well as support and guide your team through personalized discussions.

Interested in focusing more on feedback and recognition? Weekdone makes it simple and easy to engage in peer recognition and boost morale, even if you’ve scaled past the point of making it easy to reach everyone in your company.

Weekdone follows a specific flow to success: Set regular quarterly goals, plan out your week, share progress with your team members, provide feedback, and get regular reports. It’s simple! OKRs have never looked better.

Want to learn more? Check out our case studies to see why OKRs are so important and how Weekdone could make using them much simpler.