OKRs vs KPIs

[Kevin McDonnell]

Many organisations have set up existing KPIs that help them to track the state of key measures across their organisation, with these either being transparent to all or shared at regular townhalls. The temptation would be to use these in their entirety within Viva Goals to power the key results of your OKRs but that would be a mistake. One of the super powers of OKRs is to have Focus and to share that Focus from the strategy of the organisation at the top down to each level. Empowering each layer in an organisation to define their own metrics for success for the top level objective brings a more personal goal that is aligned to what the organisation is striving to achieve.

You can read more about my thoughts on this in a recent article I shared through Reworked - Why You Need Both OKRs and KPIs (reworked.co).

What have you done in your organisation

[#2]

Great take Kevin! Totally agree that OKRs and KPIs need to work hand in hand. One example we often give is a stat like website uptime as a KPI. Yes, it's something that is totally necessary, and must be monitored. But in terms of being a true OKR and setting a stretch goal, there are other metrics that might make more sense.

Or the fun example we used to give is a road trip. If you're driving from Seattle to San Francisco, your OKR -- your ultimate goal -- is like a GPS. But along the way, there are KPI metrics such as monitoring your speed, your miles per gallon, and fuel levels, which are more of a dashboard. And of course, the projects/initiatives to get started are loading up on fun snacks and music playlists. :)

[#3]

Great examples there, love that (especially the snack and playlist although those are definitely goals for me!)

[#4]

This is a question I'm asked all the time. Appreciate the examples!

[#5]

Thanks for raising this Kevin because it is a real challenge for customers. The core issue we have found is the challenge that capacity is fixed and priorities can relate to existing work and improvement work so they need to be considered together and then prioritized. By saying KPIs are your health metrics and OKRs are your change/improvement metrics it creates unneeded complexity. We have worked with customers to solve the problems by including OKR measures within scorecards that include both KPIs and OKRs.

[#6]

@Kevin McDonnell Thank you for your post! I agree that it should be OKRs AND KPIs instead of or. One practice that I usually do with customers is to have them list their KPIs first, and then from the KPIs ask the questions of "which one(s) are you intentionally going to make an impact this quarter?" "which one(s) of these metrics will tell you what success looks like this quarter?". I found that it is easier to then highlight (and focus). 

I found Felipe Castro's analogy of the car as helpful https://felipecastro.com/en/blog/okr-vs-kpis/ as it gives customers the assurance that KPIs are not to be ignored if they are not a KR for the quarter, but should be an indicator of health. 

[#7]

That's a really great post, thanks for sharing. Particulary like that headline of "don't forget the K", referring to the fact that they are KEY results. It becomes too easy to try and measure everything but that focus to actually get things done is what needed. I know my own natural way is to try and do too much and I have really loved setting my own OKRs to keep me on track.

[#8]

You make a really good point here, Joe.
Just saying OKRs are for transformation activity and KPIs are for operations doesn't make sense when continuous improvement is brought into the equation. This is why our clients find distinguishing between "transformational" OKRs and those they use to focus on CI activity helpful. However, what these two "types" of OKRs have in common is that they focus on change and so therefore are unlikely to remain as a static measure like a KPI does.