Why KPIs Vs OKRs? It’s KPIs and OKRs

Objectives and Key Results (OKRs) consist of objective (single non-number statements that describe a vision) and Key Results (number based targets that test whether you are heading towards the vision over the next 90 days). The power of OKRs is that they are a means to dramatically improve the performance of the business, rather than just track it.

Key Results can be informed by KPIs, but do not always have to be. The best Key Results are set so that they drive transformational improvement in the business. To do this, we recommend that the team first sets their objective i.e. describe their vision. This then helps determine the top measurable targets (Key Results) that measure achievement towards this objective.

If the team chooses to make use of a KPI to inspire a Key Result, the first step is to set a measurable target for the team. We often find that the KPIs which have been set either describe the minimum level of performance to keep the business running or have been set arbitrarily by management and therefore are not a good target for the Key Result.

Set the target for the Key Result by thinking about the best possible outcome that can be achieved in the next 90 days if the team is truly focusing on the objective. What would you expect to see improve or reduce at the end of that period if the team was truly focusing on that objective?

We often find that limiting a team to selecting from a predefined set of KPIs is not helpful in inspiring them to take ownership of business improvement. The best Key Results that motivate your team to go above and beyond often are not captured in the company’s rigid KPI framework.

That does not mean that the team should not use Customer Satisfaction Scores if they are a Customer Service Team, but if Customer Satisfaction is already high and is not an issue, then leave that to be tracked by KPIs and use the Key Result for what needs to be improved within that team.

One client found that delivering “magic moments” for key clients was a driver of retention of the top clients. They cared about their key clients and would send them small gift when they thought they could add value (e.g., one customer representative hand wrapped their favorite brand of cough lozenges and delivered them to the client when they mentioned they were unwell). Not surprisingly, their objective was not about customer satisfaction, but about customer care.

It is important that the measure means something for the team, another client measured that each non-green Tier 1 client moved up one color code from a customer delight perspective — same concept but different measure.

KPIs do not always exist, especially if it is a new product or service. Take the time and figure out what the true goals of the project are and what would constitute project success. This should be the driver of Key Results in this case. Similarly, if some of the organizations Key Results are not the best way of tracking improvement over the next 90 days, brainstorm with them what would be — sometimes these Key Results may even inspire the next generation KPIs.