Key Performance Indicators (KPIs) and Objectives and Key Results (OKRs) are both tools that big businesses use in strategic planning and execution. They’re also great tools for small-to-medium business to use to compete and perform like the big dogs. Let’s take a look at the similarities and differences and get a handle on why you need both.
|Key Performance Indicators||Objectives and Key Results|
|Structure||List of measures & metrics||List of overarching goals and. for each, indicators of success|
|Data||Numeric/quantifiable||Quantifiable and Activities/achievements defining success|
|Orientation||Roll up from teams and departments to central management||Bi-directional alignment. In smaller companies, tend to be management-driven.|
|Timing*||Current & Past Performance||Forward-Looking|
|Role/Use*||Operational Management / Execution; Check performance||Strategic Planning & Forward Management|
|Redefinition Frequency||Infrequent – Annually or every few years.||Frequently – Every quarter, or at least every year.|
|Core Purpose*||Guide Daily Execution||Drive Dynamic Change & Improvement|
If you walk down the table above and compare and contrast each point, you should have a really good idea of the purpose and use of KPIs vs. OKRs and when to use each.
What About That Pesky Asterisk*
There’s just one catch. I have high expectations of myself and my clients. I don’t use Key Performance Indicators quite the way they’re intended. What’s the fun in that!
There are three items in the chart above that have asterisks:
- Core Purpose
Because I have my clients go beyond identifying KPIs to also define a Performance Budget, in the Pivot Habit method, KPIs become:
- Timing – Past performance, current performance, and forward looking.
- Role/Use – Strategic & Forward management as well as execution management.
- Core Purpose – Driving dynamic change as well as guiding daily execution.
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