In short: all companies working with OKRs, still use and monitor KPIs as well. So it is not about either / or. It is more about understanding what the differences are. Tricky thing is, sometimes this question comes up within management before or during implementing OKRs. It can be a signal of mistrust against the „new“ OKR methodology. Sometimes, the real question is: „apparently we are doing quite well to run our business with KPIs, so why do we need OKRs?“
KPIs are great to handle and monitor mid- or long term effects. KPIs are mostly used within your annual OKRs or your yearly strategic targets.It requires many initiatives to stimulate a KPI in the long run. Take customer satisfaction rate for example. It's a rather long term KPI and a single initiative like embedding a new QuickStart Manual into a product might pay into it, but the measurement lags at least one or two quarters.
OKRs are for change, improvement and focus - they help to focus and align on the right things in order to influence KPIs positively.
KPIs are to monitor and keep an eye on things.
Here is an example:
A CMO and his team is about to launch a redesign next quarter in combination with a campaign. This will influence how customers experience the brand, the product or services and the website and will definitely influence both, brand perception and recognition. Its about standing out from the crowd and offering a better experience. Cool. But, what if these quarterly OKRs, to be precise the Key Results, would be around brand perception or recognition?
The team would probably recognise at the end of the quarter, that these results are actually lagging indicators and they are not able to measure success. Not ideal. Brand perception or recognition is rather a longterm KPI. There should be other ways to measure success for the redesign and the campaign. Metrics which are accessible at the end of the quarter, for example:
Because KPIs are rarely engaging and often too far off for employees to connect on how and where they contribute to or what's the purpose of their job. With OKRs you are able to connect individual or team contributions with longterm KPIs and use your available resources on the right things.
Absolutely, for example if this KPI is clearly out of range or focus is lacking to bring it back on track. Or if for seasonal reasons you need to put special focus behind this metric in a quarter. Another example is, if you are using yearly/ annual OKRs, a KPI metric can well be a Key Result in there.
A true pioneer in OKRs. Keynote speaker for OKRs, goals and result-based leadership. Specialised in enabling C-Levels and Management Teams to use OKRs successfully in order to execute strategy with radical focus. Experienced Manager with international background in various industries. Based near munich, Germany.