KPIs and OKRs: Employing Both to Get to the Next Level

Several years ago, I read the book “What Got You Here Won't Get You There” by Marshall Goldsmith. Since reading the book, I started to approach just about every business-related situation with these key considerations: How did we get here? What's our next goal? And most importantly, what steps do we take to reach our desired goal? In almost all cases, the title of the book is remarkably pertinent: a new approach is often required in order to achieve the next level or next step.

An enlightening blog post from one of our highly regarded partners discussed transitioning from key performance indicators (KPIs) to objectives and key results (OKRs), reinforcing my belief. This piece explored the concepts of KPIs and OKRs, prompting me to delve deeper into how these two approaches can synergistically coexist, driving meaningful transformations. By strategically adopting KPIs and OKRs, your teams can chart a course toward your desired goals.

Uniting KPIs and OKRs for unmatched performance

The business world continues to evolve, with innovations happening on a daily basis, particularly in areas like artificial intelligence (AI) and augmented or virtual reality. To succeed, organizations need to adapt and transform along with this innovation. The question is how to best define organizational goals and measure progress towards those objectives?

The answer is two popular performance management frameworks: KPIs and OKRs.  While KPIs track progress toward a specific goal, OKRs are your ambitious goals with measurable results. Often seen as rivals, the two frameworks complement each other and can work together to accelerate your business growth.  

What are KPIs and OKRs?

KPIs and OKRs are both goal-setting frameworks, but they have different purposes. KPIs are used to track progress towards a specific goal, while OKRs are a set of ambitious goals with measurable results.

KPIs are specific, tangible, and quantifiable metrics used to evaluate the performance and success of an organization, a department, or an individual. Unlike OKRs, KPIs are often used to monitor ongoing processes and performance, providing a more continuous assessment. Finance, operations, customers, and employees all fall under the scrutinizing gaze of KPIs.

KPIs are typically associated with operational and day-to-day activities, and they are closely tied to the strategic objectives of the organization. KPIs can measure different aspects of performance, including metrics related to finance, operations, customers, and employees. For example, a marketing team might track the number of leads generated as a KPI.

Here are the components of OKRs:

• Objectives. These are ambitious and qualitative statements that describe what an organization or team aims to achieve. Objectives should be inspiring, memorable, and time-bound.
• Key results. Key results are specific and measurable outcomes that indicate progress towards achieving objectives. Each objective typically has two to five results that serve as quantifiable indicators of success.

OKRs are set at various levels in an organization, including company-wide, departmental, and individual levels. They encourage transparency, alignment, and focus on measurable results. OKRs are usually set for shorter periods, such as quarterly or annually. For example, a company might have an OKR to increase sales by 20% in the next quarter.

The benefits of using both KPIs and OKRs

OKRs and KPIs can coexist in an organization and complement each other in the following ways:

• Alignment and focus. OKRs set high-level objectives and key results that align teams with the organization's strategic priorities. KPIs then provide ongoing monitoring of critical operational metrics to ensure the organization is on track to achieve its OKRs.
• Strategic direction and performance evaluation. OKRs help teams set ambitious goals, direction, and priorities, while KPIs aid in measuring progress and success in day-to-day operations. This ensures that the organization stays focused on the right objectives and also maintains high performance levels. This can help organizations to innovate and achieve higher levels of performance.
• Different time horizons. OKRs are typically set for shorter periods and are more dynamic, while KPIs are more stable and are monitored over longer periods. This means that OKRs can be adjusted more frequently to adapt to changing circumstances, while KPIs provide a consistent view of ongoing performance.
• Qualitative versus quantitative. OKRs emphasize qualitative and inspirational goals, while KPIs are focused on quantitative and specific metrics. This balance ensures that both the vision and the execution are well-managed.

KPIs and OKRs can be used together to provide a comprehensive view of organizational performance. This can help people across the organization make better decisions and improve their overall performance.

Seamlessly integrating KPIs and OKRs for epic results

Are you prepared to strike a dynamic balance between KPIs and OKRs? Consider these three guiding principles and make a move forward:

• Leverage the power of alignment. Your KPIs and OKRs are probably sitting in silos. Marry them! Ensure your KPIs act as the barometers of progress toward your goals. This means that KPIs should measure the progress of OKRs.
• Make your KPIs SMART. Transform your KPIs into performance-tracking stars. Ensure they are SMART (specific, measurable, achievable, relevant, and time-bound). Breathe life into them, so they spread their wings as meaningful benchmarks that you can effectively track and analyze.
• Shoot for the stars with OKRs. Set OKRs that are ambitious yet attainable. Energize your teams this way and watch your organizational performance take big leaps forward.

What got you here will not get you there

In today's agile world, it is more important than ever for organizations to be able to adapt and innovate. This means that teams need to be able to set ambitious goals and measure their progress towards those goals.

KPIs and OKRs are two frameworks that can help organizations to do this. By using KPIs and OKRs together, organizations can create a culture of continuous improvement and enhance their ability to achieve their most important goals.

Conclusion

KPIs and OKRs are two powerful performance management frameworks. When used together, they can help organizations to set ambitious goals, track progress towards specific goals, and measure results. This can lead to improved performance and innovation.

If you are looking for ways to improve your organization's performance, consider using KPIs and OKRs together.

Ready to start aligning OKRs and KPIs? Contact the Broadcom ValueOps team today to learn more about how our solutions can help you optimize the usage of OKRs and KPIs. Find out how ValueOps can help you establish a powerful performance management system that fosters focus, alignment, and continuous improvement within your organization.