Since 2013, with a video on theYouTubewhere the CEO ofGoogle Venturesexplain how Google used OKRs back then and, subsequently, in 2018, with John Doerr's book, ‘Measure What Matters’, OKRs have become popular worldwide and what we have seen since then is a confusion with the alphabet soup of management tools, after all: what is the difference between KPIs – Key Performance Indicators (KPIs) and OKRs – Objectives and Key Results
Let's go, KPIs are key metrics that indicate the past, they are mirror indicators, that show how the progress was, the situation, the health of processes and daily activities. Based on this historical data, it is possible to make decisions about what to do next. In general, they are revenue indicators, customer satisfaction, quantities sold, costs, among others, in addition to not having a defined deadline
OKRs areframeworkof setting ambitious goals with a framework of Objectives and Key Results, are a look ahead. They have a deadline, usually quarterly, in addition to being recommended to use the other characteristics of SMART goals. And instead of using rearview mirror indicators, it is more appropriate to use trend indicators in these KRs. Therefore, clearly the two tools have different purposes
Back in 2017, when I found myself in the middle of the largest OKR implementation in the Americas, the following analogy helped us better discern the role of each one: KPIs are the indicators on a car's dashboard: fuel, oil, among others. While OKRs are the Waze. You need to know if you have enough gas to reach your destination, and you can miss the route along the way and recalculate it to reach your goal
On the other hand, if the purposes are different, why do people confuse? The point is that, within the management process, at various moments, the application of the concepts of the tools blend together. KPIs exist due to the nature of the operation, of what the company does and the current processes. Both have metrics and we see a KPI being KR, as well as improving a KPI being a goal. They are metrics and people want to improve the metric
In the background, the confusion happens even when we do not identify the best moment to use one concept or another. For this reason, it is essential to know and be able to apply both tools simultaneously, as they complement each other and will improve your overall management. It's like an art, there are different ways to apply a brush, a paint and both are means to create the final product
In this sense, it is necessary to pay close attention to the reality of your company in general and how the management is being conducted, because from an existing indicator (a KPI), a business goal (an OKR) may arise, but not all KPIs will need to be improved, inclusive, many times we will not have financial resources, materials and even humans to improve several at the same time
In light of this scenario, it is necessary to learn to prioritize, choose where to place the chips at that specific moment: these chips are OKRs. That is to say, you need to analyze the KPIs, what are the indicators that have already occurred, to be able to outline the OKRs, that are still going to happen. And so, everything will be interconnected and making sense, so that you achieve your goals, achieve your goals and achieve the best results at the end of the cycle
You cannot solve multiple problems at the same time, you need to understand what problems you face in order to eventually increase your revenue. Only from that, it is possible to define your OKRs, prioritize the problems and as you move forward in the direction of properly solving them, then you choose another, adjusting your course and moving closer to your goal
