Organizations that have historically identified and measured goal progress with the help of Key Performance Indicators (KPIs) often ask how they can achieve more rapid business growth. Many organizations that are beginning to investigate the benefits of using the Objectives and Key Results (OKR) methodology in their business wonder how KPIs are different from OKRs, and whether their business can, or should, use both methodologies to accelerate growth.

What is a KPI?

First, a KPI can be thought of in this way: a Key Performance Indicator (KPI) is a quantifiable metric for evaluating progress by analyzing data tracked within the parameters of the KPI. The keys to KPIs are that they should almost always be quantifiable. Rarely should KPIs be of a qualitative nature. The most common KPIs are financially-focused, customer-focused, or project management-focused.

Examples of KPIs include:
  • Quarterly sales
  • Net profit margin
  • Cost per conversion
  • Percentage of projects completed on time

As you can see, a KPI identifies what you're going to measure. Key Performance Indicators are a good starting point to identify areas of focus that, when improved, will correlate to progress. But, KPIs on their own are not strong enough to determine how goals will be achieved. KPIs don't inherently give leaders the framework needed to meet the growth goals that many business owners are after. In order to make KPIs relevant and profitable to an organization, targets need to be set within the KPIs and progress must be tracked with data.

According to kpi.org, "Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against that target." You see, KPIs can be incredibly helpful for identifying what you're going to measure. But when targets are identified, and the methods of tracking progress are identified, then we begin to talk about results.



KPI = what you're going to measure

KPIs ≠ how goals will be achieved

What is an OKR?

Now, within the Objectives and Key Results (OKR) framework, goal setting looks different. Targets and progress are not always independently identified and measured. Rather, initiatives are connected back to higher-level, organization-wide goals. With OKRs, managers start from the top and break down high-level goals into achievable, quantifiable goals for their teams.

The OKRs framework has a great reputation for success, and for good reason. Used by successful enterprises like Google and LinkedIn, OKR is a proven framework for rapid growth in tech organizations, from start-ups to large enterprises.

OKR is a highly effective strategic framework used to identify and achieve high-level company goals, and quite quickly. A key aspect of establishing OKRs is that the company's objectives must be transparent to everyone within an organization, providing bigger-picture goal buy-in from all departments. OKRs aim to align cross-functional teams with these common high-level goals for rapid goal achievement. However, within OKRs, measurable objectives need to be defined to get teams from point A to point B. That's where the "Key Results" aspect of this methodology comes into play.

Examples of Key Results in the OKR methodology include:
  • Increase quarterly sales by 20%
  • Increase net profit margin by 10%
  • Decrease cost per conversion by 5%
  • Increase percentage of projects completed on time by 10%
What are the differences between KPI and OKR frameworks?

OKRs identifies the main objective as well as the key results — the framework and the way to get there. To achieve the objectives identified with OKR, teams must establish measurable actions to take in order to achieve high-level goals. OKRs are often highly ambitious and are designed to align and push the company into full-gear as a cohesive unit, but also give individual contributors autonomy, which encourages innovation on the road to goal achievement.

To distinguish OKRs from KPIs further, see this example:

  • OKR (the objective): Increase sales by 20% this quarter.
  • KPI (the "what"): Sales revenue per quarter.This doesn't tell us what the target is, it just identifies the metric to be analyzed
  • Key Result (the "how"): Each salesperson to convert an additional $20,000 in revenue from the previous quart
        Think about using the SMART methodology when setting your Key Results: specific, measurable, actionable, relevant, and timely. And only the most impactful Key Results should be measured in order to drive business growth.

        The OKRs framework works for tech organizations because:

        • Employees are aligned toward common goals with clear expectations, so they keep company goals at the forefront of their work and decisions.
        • Communication is improved organization-wide, improving focus and motivation.
        • Cross-functional teams are aware of each other's contributions toward the bigger picture, providing transparency that inspires achievement.
        • Individual autonomy is supported, providing a structure for innovation.
        Many business owners are beginning to see the value in OKR methodology and want to implement this framework into their business model. OKRs is a proven framework that is incredibly effective, but when implemented manually, it can bring challenges.

        Challenges with Manually Tracking OKRs

        OKRs work incredibly well for goal achievement for many companies, but we find that teams are still using spreadsheets to manually track OKRs. Many of our clients started out this way, too. Using manual tracking methods produces a range of challenges including inefficiencies, incredibly expensive administration upkeep, inconsistencies with processes, and difficulties in tracking Objectives and Key Results from quarter to quarter, not to mention year over year.

        Because we've talked to so many clients who needed to revolutionize the way they were tracking OKRs, we have identified solutions that integrate into the management software that their teams were already using.

        Managing OKRs within Jira

        A variety of tools can be used to implement and manage OKRs that offer a range of benefits. In our experience, teams have reported the best tools are those that offer simple implementation, customization of features, dynamic tracking capability, and ease of use.

        With an OKR plugin for Jira, goal tracking is automated, cross-functional transparency is improved, and companies are able to plan ahead for the future, log their plans easily, and are ready to execute on their plans at the right time. Using a plugin for Jira such as OKR Board can improve the process of managing OKRs ten-fold.

        A plugin solution for Jira is advantageous for many reasons, including:

        • Automatic upgrade of grades and seamless integration into the familiar Jira environment to minimize issues.
        • Access your OKRs in one place. No need to juggle and update multiple spreadsheets.
        • Reduce onboarding costs and stresses. Training is minimal since the interface works with the Jira platform that teams are already using.
        • Adjust user permissions to tailor information to users. Stakeholders and executives can view high-level information they care about, while individual teams can access micro-level information for their day-to-day work.
        • Improve consistency with an interface that is the same across teams. In our experience, before using an OKR plugin, team leads were creating their own processes and formatting, leading to inconsistencies and confusion when comparing OKR progress across teams. With OKR plugin for Jira, formatting is consistent and easy to interpret.
        • Customize features like the length of the cycle (Annual, Quarter, Month) to fit your business needs.
        • Dashboards provides at-a-glance view on All, Group or your Personal OKRs
        • And many other features.
        Get rid of frictions of managing OKR and get the framework adopted easily.