Monday, January 28, 2019

OKR and KPI are Very Powerful Indicators

For any process or project, Objective and Key Results (OKR) and Key Performance Indicators
(KPI) are very useful indicators as that they can help in gauging the system so that necessary
modifications can be carried out in it. Both OKR and KPI can be used to keep a process in
track and provide valuable details regarding it. While KPI can broadly be called as a
short-term determinant, OKR can help in looking at the bigger picture. We can also compare
KPI vs OKR in terms of their functionality, but before that, a thorough knowledge of both
the management frameworks should be there. Therefore, we take a look at them individually
before making the comparison.   
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Getting an understanding of OKR
If we can describe Objective and Key Result in a simple way, then it can be said that an
objective defines where to proceed and Key Results help in knowing whether it has been
achieved or not. Therefore, when working with OKR, there can be two fundamental
questions that must be answered.
  • Where are you planning to go? It is clearly the objective that has to be reached.
  • How do you know that you have achieved your goal? It is the Key Results that are
needed for achieving the Objective.

In addition to these two questions, there can also be a third one:
  • What steps will you take to reach your goal? This third question will help in taking
actions that can help in attaining the OKRs and completes an OKR process while at the
same time helps in comparing KPI vs OKR.

KPI should also be known
KPI is also known as health metrics because it is sort of achievement evaluator. It helps
in measuring the accomplishment of an ongoing activity or a particular process. There can
be various forms of KPI and selecting the correct KPI may depend on conditions like an
industry type, its establishment into the business, etc.
Each team in an organization may use different types of KPI that suit the process for
evaluating success. For example, in a Sales team, KPIs like Trial-to-Customer Conversion
Rate or Customer Lifetime Value can be good determinants whereas, for a Support team,
KPIs like Average Reply Time or Tickets per Month can work well.
Difference between an OKR and KPI
Having understood OKR and KPI, it is important now to differentiate between the two so
that there is a proper understanding of both the fundamentals. OKR can be said to be the
missing part between what is desired and the real picture that exists on the ground. Quite
often, they can also help in opening up a new paradigm for an organization. If there is a
big goal to be accomplished, OKRs can help in taking an organization over there.
On the other hand, KPIs help in evaluating activities or processes that are already there.
They help in determining the output quality or success of an activity that is going on.
Therefore, at times, when a KPI may need modification, that can be the first step towards
an OKR creation, and in the long term, it can become an Objective's Key Result.
Comparing both of them is like making a comparison between a sandwich and toast, in
the sense that both are forms of bread, but one combines with the other to make the best
The complementary nature of OKR and KPI
It would not be wrong to mention here that both OKR and KPI can work together for
an advantage. The best way to understand their functioning can be with an example as
described below.
Suppose that if a Service Support team's performance is to be found out, an average reply
time can be made for it. That is the KPI of the Support Team. If the average reply time is
within the KPI limits, then one can clearly say that KPI is met satisfactorily. If that is not
the case, then an Objective may have to be created to improve on the reply time. Hence,
in this case, the Key Result would be to bring the average reply time within the KPI limits.
For attaining the result, different types of interventions may be required like streamlining
the process or hiring extra personnel, etc. Hence, all these interventions are types of steps
for reaching a determined goal that is already in place.

Hence, we can see that OKR and KPI are very powerful indicators for monitoring
performance and can be used with great effect. Both of them can help in making a
process or department into well-oiled machinery for the benefit of an organization.

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