When it comes to business and strategy, there are a lot of acronyms. OKR, KPI, ROI… what do they all mean? How can you tell them apart? How can you use these metrics to make your business more successful?

OKRs and KPIs are two different frameworks for setting measurable goals for your business.

OKRs and KPIs are two different frameworks for setting measurable goals for your business.

KPIs are used to measure and monitor the performance of a business. They’re typically used by organizations, but individuals or teams can also use them. For example, if your goal is to increase revenue from 20% to 30%, then you’ll need a specific KPI that shows how much money came in this week (or month).

OKRs are used to measure and monitor the performance of an organization, team or individual. While both OKRs and KPIs have measurable goals set out in advance, there are some distinct differences between them:

OKRs stand for objectives and key results.

OKRs are objectives and key results.

Objectives are the goals you’ve set for yourself and your team. Key Results (KRs) measure the progress towards accomplishing those objectives.

As a manager at Google, you might have an objective of increasing revenue by 20% in Q1, but your KR would be something like: “Developed a new product that drew in new customers and drove up conversion rates by 10%.” This KR demonstrates how you achieved your objective through specific actions or activities (developing a new product). It also shows how much impact those activities had on achievement of business goals (increased revenue).

Key results are numerical metrics of your progress toward the goal.

Key results are a way to measure your progress toward a goal. They’re also a way to evaluate the effectiveness of an OKR.

Key results should be numeric values that can measure progress toward an objective, and they should reflect how well you’ve met each objective. For example, in one company we worked with, they included key results like “increase number of new customers by 10%” in their OKRs for growth objectives.

If you have concrete metrics and measures for your key results—such as revenue numbers, sales pipeline metrics or customer satisfaction scores—it will be easier for everyone on your team (and especially managers) to understand how well each objective is being met or missed, so that you can make adjustments accordingly if necessary (or celebrate successes).

KPIs stand for key performance indicators.

One of the most common questions I get asked by my clients is, “What’s the difference between OKRs and KPIs?”

KPIs are nothing but key performance indicators. They’re measurements that help you measure your progress over time. They’re usually financial in nature, but they can also be used to measure business and operational performance as well as customer experience.

Both OKRs and KPIs can measure quantifiable goals like sales targets and profit margins.

Both OKRs and KPIs can measure quantifiable goals like sales targets and profit margins. Many companies use both methods for the same purpose: tracking progress toward a specific goal. Similarities between OKRs and KPIs include the following:

  • Both are typically set at the beginning of each quarter or year by the management.
  • Both help employees understand how they contribute to business strategy.
  • Both provide an opportunity for management to evaluate employee performance during review meetings (or annual reviews).

KPIs are often used in financial reporting, like balance sheets and profit-and-loss statements.

KPIs are often used in financial reporting, like balance sheets and profit-and-loss statements. These documents show how well a company is doing financially. KPIs can also be used to track the success of a business or measure its financial health.

OKRs are more general than KPIs because they don’t measure just one thing but multiple things at once. For example, OKRs could be set up to track sales numbers as well as employee satisfaction surveys within your team.

OKRs and KPIs aren’t interchangeable; they’re two different ways of achieving a specific goal.

One of the main differences between OKRs and KPIs is that OKRs are used to measure more arbitrary things, whereas KPIs are used for financial reporting.

This means that OKRs can be used to measure anything you want, while KPI’s should only be used when it makes sense from a financial perspective. For example, if you want to increase sales by 50% over the next year, this would be a good KPI (because it’s based on revenue). But if you want to increase customer satisfaction by 10%, this would be a good goal for your OKR because there is no direct correlation between customer satisfaction and revenue (though there may be indirect ones).

Conclusion

As you can see from the above, there are many key differences between OKRs and KPIs. For example, OKRs are used for strategic reasons (such as setting goals), whereas KPIs measure performance at a much more granular level. Finally, OKRs are usually set on an organization-wide basis and may be difficult to measure objectively, but KPIs can vary widely depending on what you’re measuring – whether it’s sales metrics or inventory levels – making them more flexible than their counterpart.

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