Goal set­ting is an indis­pens­able part of busi­ness strat­e­gy, form­ing the back­bone of any busi­ness’s pur­suit of suc­cess. With­in this area, two terms fre­quent­ly emerge at the fore­front of strate­gic plan­ning dis­cus­sions: OKRs and KPIs. These acronyms rep­re­sent pow­er­ful tools in a com­pa­ny’s arse­nal, dri­ving focus, align­ment, and per­for­mance. But how do they dif­fer? And how do they com­bine to cre­ate a strong goal-set­ting strategy?

While one sets ambi­tious tar­gets to pro­pel a com­pa­ny for­ward, the oth­er tracks the tan­gi­ble out­comes of busi­ness activ­i­ties. This arti­cle will explain the dif­fer­ences between OKRs and KPIs, out­lin­ing how the two can be used togeth­er to enhance your busi­ness’s performance.

Let’s dive in.

OKRs (Objectives and Key Results)

What are OKRs?

Objec­tives and Key Results (OKRs) are a goal-set­ting frame­work used by organ­i­sa­tions to define mea­sur­able goals and track their out­comes. In this con­text, an Objec­tive is a qual­i­ta­tive and inspi­ra­tional goal set on a quar­ter­ly or annu­al basis. For example:

• Grow com­pa­ny profits
• Give cus­tomers an excel­lent experience

Clear­ly, these goals are a bit vague and broad. How­ev­er, that’s what the Key Results part is for. Key Results are spe­cif­ic, time-bound, and ver­i­fi­able. They are the ways in which you can prove you have reached your Objec­tive. For example:

• See a 10% increase in com­pa­ny prof­its in six months.
• Reduce man­u­fac­tur­ing costs by 5% by swap­ping to a cheap­er provider in the next twelve months.
• See a 20% increase in the num­ber of pos­i­tive cus­tomer expe­ri­ence scores in twelve months.
• Resolve cus­tomer ser­vice queries by 10% in six months.

Key Results must be real­is­tic and relate direct­ly to their cor­re­spond­ing Objec­tives. Usu­al­ly, there are between three and five Key Results per Objec­tive. They can be seen as a sort of ‘roadmap’ towards achiev­ing your Objec­tive. For example:

Objec­tive:

• Boost com­pa­ny web­site’s SEO performance. 

Key Results:

• Dou­ble month­ly blog out­put from 4 to 8.
• Invest in a key­word research tool.
• Raise con­tent qual­i­ty by con­tract­ing an expe­ri­enced writer.
• Gain 15 back­links in the next six months.

Benefits of using OKRs

By hav­ing Objec­tives and Key Results laid out in this way, things are made super clear for every­one. It cre­ates a process where­by CEOs and depart­ment leads must think about their goals deeply and come up with pre­cise tac­tics to reach them. Plus:

• OKRs improve focus.
• Com­pa­nies using OKRs are more transparent.
• Dif­fer­ent parts of an organ­i­sa­tion can be bet­ter aligned as they are work­ing togeth­er towards a com­mon goal.
• OKRs encour­age reg­u­lar check-ins to track progress.
• Every­one under­stands how their efforts con­tribute to the busi­ness, improv­ing account­abil­i­ty and role satisfaction.

Once OKRs are in place, progress towards goals will be huge­ly enhanced by mon­i­tor­ing KPIs.

KPIs (Key Performance Indicators)

What are KPIs?

Key Per­for­mance Indi­ca­tors (KPIs) are quan­tifi­able mea­sures used to eval­u­ate the suc­cess of an organ­i­sa­tion, employ­ee, or a par­tic­u­lar activ­i­ty. Here are some examples:

• Return on invest­ment (ROI)
• Con­ver­sion rate (CR)
• Bounce rate
• Aver­age order val­ue (AOV)
• Cus­tomer acqui­si­tion cost (CAC)
• Prof­it margin
• Net pro­mo­tor score (NPS)

KPIs aren’t the goals them­selves. They are the met­rics used to mea­sure whether a com­pa­ny has achieved its goals. While OKRs can be set quar­ter­ly or annu­al­ly, KPIs are typ­i­cal­ly tracked con­tin­u­ous­ly. They are cru­cial in assess­ing the health of an organ­i­sa­tion and are used in tan­dem with OKRs.

Benefits of using KPIs

The ben­e­fits of using KPIs are several:

• KPIs help organ­i­sa­tions mea­sure their progress towards goals.
• KPIs keep staff mem­bers informed so that adjust­ments to strate­gies can be made promptly.
• KPIs eas­i­ly com­mu­ni­cate per­for­mance across a business.
• Employ­ees are empow­ered by hav­ing clear per­for­mance targets.
• KPIs can enhance oper­a­tional effi­cien­cy due to bet­ter deci­sion-mak­ing and a deep­er under­stand­ing of the fac­tors that dri­ve busi­ness success.

Despite being dif­fer­ent things, OKRs and KPIs are often confused.

Comparing OKRs and KPIs

Once and for all, these two acronyms stand for very dif­fer­ent things. While both OKRs and KPIs are used in the remit of goal-set­ting and goal-reach­ing, they serve dif­fer­ent pur­pos­es and offer busi­ness­es dif­fer­ent ben­e­fits. Here’s a com­par­i­son table to make things simple:

So, while OKRs dri­ve the strate­gic agen­da of a com­pa­ny and set a path for future suc­cess, KPIs pro­vide the dash­board for the organ­i­sa­tion, reflect­ing its cur­rent oper­a­tional sta­tus. Under­stand­ing the rela­tion­ship between these two acronyms enables com­pa­nies to nav­i­gate efforts towards long-term goals while ensur­ing excel­lence in dai­ly operations.

How OKRs and KPIs work together

The art of com­bin­ing OKRs and KPIs lies in under­stand­ing how they can com­ple­ment each oth­er to dri­ve suc­cess. When inte­grat­ed, they can offer a robust frame­work for both aspi­ra­tional plan­ning and prac­ti­cal execution:

They work best when they’re aligned

If you decide to use both OKRs and KPIs, you should make sure they’re not in con­flict with each oth­er. OKRs and KPIs work best when they’re aligned. For exam­ple, there’s not much good in mon­i­tor­ing aver­age order val­ue if your OKRs relate to social media engagement.

The combination creates a useful feedback loop

When your busi­ness is using both OKRs and KPIs, it can devel­op a high­ly cohe­sive oper­a­tion. Since KPIs offer real-time feed­back on a com­pa­ny’s progress towards OKRs, busi­ness­es gain valu­able insights into cur­rent efforts.

For exam­ple, the KPI of con­ver­sion rate on a mail­ing list sign-up form isn’t increas­ing, sig­nalling that your efforts to opti­mise the form have not been suc­cess­ful. Equipped with this insight, your team can go ahead and inves­ti­gate why their efforts failed and improve the form, work­ing towards its OKR relat­ing to cus­tomer acqui­si­tion and mail­ing list growth.

This feed­back loop allows your busi­ness to remain focused on reach­ing its Objec­tives, as team mem­bers are made aware of progress in real time.

Using both helps you balance short and long-term goals

OKRs push a busi­ness towards future achieve­ments, while KPIs ensure that the com­pa­ny’s cur­rent oper­a­tions remain sta­ble and effec­tive. By align­ing KPIs with the direc­tion set by OKRs, a com­pa­ny can bal­ance its imme­di­ate oper­a­tional needs with its long-term strate­gic ambitions.

OKRs and KPIs help unite the entire company

When OKRs and KPIs are aligned, they encour­age dif­fer­ent parts of your organ­i­sa­tion to work togeth­er towards com­mon goals. For exam­ple, a KPI focused on cus­tomer sat­is­fac­tion in the sup­port depart­ment can direct­ly impact an OKR in the sales depart­ment aim­ing to increase

cus­tomer reten­tion. This refers to what is known as a ‘cas­cad­ing strat­e­gy’ – pop­u­lar for its cohe­sion of com­pa­ny departments.

Do’s and don’ts for KPIs and OKRs

So, we’ve gone through the ways in which KPIs and OKRs dif­fer and how they can com­bine to cre­ate a unit­ed work­force, a focused strat­e­gy, and suc­cess­ful goal attain­ment. Now it’s time for our sum­marised list of do’s and don’ts to keep your use of OKRs and KPIs optimised:

Do:

✅ Cre­ate OKRs that are inspi­ra­tional and stretch the organ­i­sa­tion’s capabilities.

✅ Define Key Results that are spe­cif­ic, mea­sur­able, and direct­ly tied to oper­a­tional success.

✅ Align KPIs with OKRs to ensure they are work­ing towards the same objectives.

✅ Ensure each team under­stands how their KPIs con­tribute to the busi­ness’s OKRs.

✅ Reg­u­lar­ly review OKRs and KPIs, mak­ing adjust­ments as necessary.

✅ Use KPIs to inform the progress of OKRs and iden­ti­fy areas need­ing attention.

✅ Encour­age open com­mu­ni­ca­tion about goals across all lev­els of the organisation.

✅ Pro­vide train­ing and resources to help every­one under­stand how to use OKRs and KPIs.

Don’t:

❌ Cre­ate too many goals that can lead to con­fu­sion or a lack of focus.

❌ Set OKRs that are so com­plex they’re not eas­i­ly under­stood or communicated.

❌ For­get that OKRs and KPIs should fit with­in the com­pa­ny’s cul­ture and values.

❌ Use KPIs as a puni­tive mea­sure, which can lead to a tox­ic work environment.

❌ Be rigid in OKR and KPI tar­gets and not adapt to chang­ing circumstances.

❌ Ignore feed­back from the team on what’s work­ing and what’s not.

❌ Focus sole­ly on OKRs or KPIs at the expense of day-to-day operations.

❌ Set and for­get either OKRs or KPIs; they should be liv­ing, breath­ing parts of your strategy.

By adher­ing to these do’s and don’ts, com­pa­nies can effec­tive­ly utilise OKRs and KPIs to dri­ve strate­gic growth while main­tain­ing strong oper­a­tional health and a hap­py workforce.

Final thoughts

In prac­tice, inte­grat­ing OKRs and KPIs requires clear com­mu­ni­ca­tion between teams, con­sis­tent mon­i­tor­ing of met­rics, and a will­ing­ness to adjust as con­di­tions change. When the pow­er of OKRs and KPIs is har­nessed effec­tive­ly, it can make your busi­ness much more respon­sive, agile, and successful.

So, why not review your com­pa­ny’s goals and set up some OKRs?

While this guide has pro­vid­ed a foun­da­tion­al overview of the OKR and KPI basics, you can learn more by check­ing out our oth­er arti­cles on e‑commerce KPIs and email mar­ket­ing KPIs. Plus, why not sub­scribe to our email newslet­ter for week­ly arti­cles about dig­i­tal mar­ket­ing, busi­ness man­age­ment, and more?