Objectives and Key Results (OKRs) are great tools that big businesses use in strategic planning and execution. They’re also great tools for small-to-medium businesses to use to compete and perform like the big dogs. But it can be easy to confuse OKRs with KPIs. Let’s take a look at the similarities and differences and get a handle on each, and why you need both.
|Objectives and Key Results||Key Performance Indicators|
|Structure||List of overarching goals and, for each, indicators of success||List of measures & metrics|
|Data||Quantifiable and Activities/achievements defining success||Numeric/quantifiable|
|Orientation||Bi-directional alignment. In smaller companies, tend to be management-driven.||Roll up from teams and departments to central management|
|Timing*||Forward-Looking||Current & Past Performance|
|Role/Use*||Strategic Planning & Forward Management||Operational Management / Execution; Check performance|
|Redefinition Frequency||Frequently – Every quarter, or at least every year.||Infrequent – Annually or every few years.|
|Core Purpose*||Drive Dynamic Change & Improvement||Guide Daily Execution|
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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