KPIs vs OKRs

Every business has strategic goals toward which the entire team is aligned. But how do we determine the progress of the team as they inch closer to the goal?

Here, KPIs and OKRs play the role of heroes. 

With the help of KPIs and OKRs, you can easily determine and quantify your progress. With it, you can evaluate the performance of your specific business activities. I feel that every team has to work as per these metrics. Doing so will help us collectively reach the company-wide target.

Continue reading to learn KPIs vs OKRs and about how to use them to your business advantage. 

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What is a KPI?

Key performance indicators or KPIs, hold great value as they are measurable markers of progress towards a fixed or desired outcome. KPIs usually give attention to the most important things. Besides that, they will establish an analytical foundation for decision-making. Also, you can see them serve as a midpoint for operational and strategic improvement.

Managing with the support of KPIs involves establishing goals that are the intended performance level and monitoring improvement towards those goals.

Simply, when you are working with KPIs, it is usual to make use of leading indicators to predict current and improve future results. Also, you can make use of lagging indicators to measure outcomes. This will help you in the long run, as you can be sure that you are in the perfect line to meet your goals, and you can also make corrections if you make any errors. Treat both error and advancement the same so that you may reach your goal as effectively as possible.

What is an OKR?

OKRs are so famous among productive communities as they act as a goal-setting framework. OKR is also known for its objectives and key results. It aims to match the team and individual’s Product goals, which are actual corporate goals.

OKRs are well known to set high and accurate goals. They will also watch out for the progress with the help of measurable and specific outcomes, which are commonly referred to as key results. These are the primary focus of OKRs. 

Every aim will replicate your passion for the outcome and also the key results will specify how you are going to assess your progress.

There are a lot of industries that make use of OKRs. A lot of industries actually include business Scrum teams, nonprofits, and also productive individuals. 

The evaluation is so simple. You should understand that the key results are effective, and they are intended to be specific, as OKRs use a simple pass-or-fail method to show if the goals are met or not.

With the support of OKRs, teams can ensure accountability and focus by doing regular check-ins every three months. These sessions will ensure that everyone is in the same boat. As a result, there will be improvement in communication and Agile team work. 

As OKRs maintain clarity and transparency, productive communities consider them to be effective. Now, everyone has the chance to collaborate to reach a common goal because of the clear structure of OKRs. As OKRs offer frequent reviews, everyone will maintain constant focus and determination toward the goal.

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Key Differences Between OKRs and KPIs

Here, you are going to learn about the difference between OKRs and KPIs, and you must carefully read them and choose what is best for your business.

As you are about to learn about KPIs vs OKRs, you need to learn that each business will have a lot of tasks in its pipeline in order to expand change to achieve operational excellence. 

Although these tasks hold great value for long-term success, because of these tasks and the grind to achieve regular goals, people forget the risks involved. 

Today, most companies are well aware of KPIs, as they are usual measurements to show how well your company is doing. KPIs are responsible for a broad evaluation of the total health of the business. Businesses should understand the difference between OKRs and KPIs and make the best choice to enhance business efficiency and reach their  Scrum goal.

They focus on key performance indicators such as revenue, produced goods, customer happiness, and email signups. But, as stand-alone measures, you cannot expect them to communicate the reasons behind the goal, such as its purpose, direction, or advancement. 

KPIs usually keep an eye on a steady state. On the other hand, you need to learn that OKRs are meant to explain outcomes or how your actions influence those KPIs.  This is another factor you need to learn when it comes to OKRs vs KPIs

OKRs can connect results to a business’ mission. As a result, businesses will get more strategic functions than they actually get from KPIs. Also, you can expect OKRs to drive your teams to make those missions as impossible as possible, as they will explain to your team the importance of the goals more clearly and precisely than typical KPIs.

Imagine what if KPIs have soul; that is how OKRs work for you as they offer metrics direction and meaning. Their ability to motivate ownership leads to operational excellence. This is what you need to learn on priority when you read about KPIs vs OKRs.

In simpler terms, OKR will explain the importance and depth of achieving the Product goal, whereas a KPI shows how you are doing well at the moment. Understanding the difference between OKRs and KPIs will give you a clear view of what framework is apt for your business.

KRs vs KPIs: How to Decide Which to Use?

When you are about to decide between OKRs and KPIs, you cannot say this is right and that is wrong. It will be good if you think beyond KPIs vs OKRs. You should clarify your goals in order to choose which framework works best for you. You should choose KPIs if you are eyeing improvement in the ongoing Scrum project or the previous initiative. You can customize these indicators according to your needs and you can track your progress in real time.

On the other hand, if your business needs to meet more ambitious goals, you have to go with OKRs. You better break down the goals into parts for the convenience of you and your team so that you can reach the goal quicker with much more motivation. As OKRs will make you run towards the goal with all passion, motivation is what you get as a compliment from OKRs.

Yes, it is important to remember you are under no urge or compulsion to consider the frameworks as OKRs vs. KPIs. You have the option to maximize the business performance if you choose both of the frameworks for goal-setting measurement. It is okay to explore a lot regarding KPIs vs OKRs, but it is best if you blend both of these to your advantage.

Above everything, you should listen to your instincts and make the right choice when it comes to KPIs vs OKRs for the betterment of you and your business.

Can OKRs Replace KPIs?

The target can be changed back to a KPI to sustain the new performance level after the team reaches this OKR. In this sense, OKRs offer a calculated push for expansion, and KPIs support the maintenance of those gains. When it comes to OKRs vs KPIs, there are a few differences, but choose wisely for the best of your business.

KPIs are necessary for you as they can monitor important company measures over time. They serve as if they are a pulse to the daily performance of your company. For example, a sales team might have a KPI so that they can contact a specific number of new customers within a given time frame. As a result, you can witness consistency in performance and processes will run smoothly.

But what if KPIs fall short? Here comes the heroic role of OKRs. If a sales team routinely falls short of its client outreach goal, KPI may momentarily change into an OKR. With key outcomes like “reduce client response by 15 percent within two months." The goals will be more likely to "boost outreach efficiency.” This approach will help you advance rather than being stranded in the same situation for a long time. Instead of considering it as KPIs vs OKRs, you shall consider it as KPIs and OKRs.

Can OKRs and KPIs work together?

Yes, you can work with both OKRs and KPIs together, which will increase your business success. KPIs usually use measurable information such as monthly sales or customer retention rates. They use it to monitor constant business success. On the other hand, OKRs will focus on strategies and ambitious goals with measurable results.

When KPI indicates underperformance, then OKR will focus on it. For example, if a business finds its client’s happiness is going down, it may establish an OKR with the intention of enhancing customer service. Here, the KPI acts as a crucial output to achieve this.

Similarly, when a team meets OKR, there will be new KPIs born to watch out for the business or sustain future progress. For example, if an OKR effectively increases marketing efforts, this will lead to new KPIs being born in order to monitor lead conversions or social media engagement.

Overall, the integration of OKRs and KPIs promotes confidence and transparency. When a business decides to use both Scrum frameworks, they are doing good for their business. People will collaborate and will work passionately to reach the goal. This motivation will improve the potential of your business at the end of the day.

Conclusion

At the end of the day, you need your business to meet the goals. So, choose the framework wisely by considering the goals of your business. To have deep knowledge about these frameworks and to stand out in the crowd, you may rely on certified scrum master certification from Scrum Alliance. Remember to make the best out of your KPIs and OKRs to maximize the efficiency of your business.

FAQs

1. Are OKRs better than KPIs?

OKRs and KPIs have a lot of benefits for your business. So, OKRs are your cup of coffee if your business has ambitious goals, as OKRs focus on a lot of strategic objectives. On the other hand, KPIs are a perfect match for you if you want proper tracking of your regular business progression. At the end of the day, the decision is all yours to make based on your intentions and goals.

2. How to combine OKR and KPI?

The idea of combining OKR and KPI has a lot to offer for your company. KPIs have the efficiency to track the everyday activity and progression of your business. But OKRs establish strategic directions. You can let OKRs take care of your major goals and let KPIs track the progression of your business. With this integration, you can balance consistent measurement and long-term vision.

3. Are KPIs or OKRs better for long-term goals?

If you are concerned about long-term goals, using OKRs can be better because they will devise some strategic ideas to improve your activities and tasks to reach the business goal. OKRs will help you track your daily progress. Also, if you blend both, you will get some favorable results.