Enough with the Jargon!
...or, OKRs and KPIs, oh my!
While researching an article on product strategy, I’ve come across several articles that confuse and conflate OKRs and KPIs. A common mistake is to think that they are comparable and that the difference between them needs to be explained. Often, the author concludes that the two are compatible, but that KPIs are appropriate in some cases, while others are better suited for OKRs. OKRs and KPIs are very different and simple concepts that have become obfuscated.
KPI: an important metric
Performance indicators are metrics; a measure of how a business or an area of the business is performing. If leadership decides a particular metric is important to the business, it’s a key performance indicator, or KPI.
OKR: A goal for improving an aspect of the business, where progress towards the goal is measured by 2-5 KPIs
“OKR” stands for Objective and Key Results. The objective is a clearly defined goal; it is not a metric, but an aspiration. Key results are specific, concrete, measurable sub-goals the organization has determined need to be achieved in order to achieve its broader objective. By definition, key results are KPIs—important measures of performance. Objectives are also often KPIs, but may be more conceptual goals that are not easily measured, such “improve customer service”.
Strip away the jargon and the message of both KPIs and OKRs is clear: it’s important to choose metrics that are important to your business’ success and monitor them as you seek to improve them. If you have lofty ambitions for an improvement that crosses multiple functions, involves multiple teams or may take multiple quarters, you might break that down into 2-5 metrics that contribute to the larger goal.