The acronym, though seemingly complex, is much simpler than one might think. It stands for Objective and Key Results. In other words, it’s about setting an objective and measuring its key result.

This straightforward definition brings us into a world of rationality and analytical capacity. Too often, companies find themselves working by inertia, without understanding the bigger picture. Such an approach almost always leads to the failure of annual objectives because the right strategy isn’t found, or worse, the wrong objective is pursued altogether.

Are OKRs the same as KPIs?

You might wonder: Are OKRs and KPIs the same thing? The answer is no; they are actually quite different.

The most evident difference is that KPIs are metrics, indicators of a company’s or team’s performance. They determine whether our performance aligns with expectations. OKRs, on the other hand, are a methodology of work—a thinking strategy that enables better analysis of the situation.

Can KPIs Be Used Alongside OKRs?

Since KPIs are metrics, not methodologies, they can be integrated into a context where a company is moving towards OKRs. In this case, one does not exclude the other.

The Origins of OKRs

John Doerr worked at Intel from 1975 to 1980, where he encountered Andy Grove’s revolutionary methodology. While companies typically set top-down objectives tied to production bonuses, Grove allowed teams to figure out how to achieve the goal. According to his philosophy, people performed better when given the freedom to reach the result on their own.

How Do OKRs Work?

For instance, if my company aims to reduce production costs by 10% by the year’s end, the key result would be to increase production efficiency by 10%. The strategy employed can also incorporate KPIs to monitor essential points.

Differences Between OKRs and KPIs

In summary, OKRs are specific action-oriented objectives, such as reducing production, and must be measurable. KPIs, on the other hand, are quantitative business indicators, monitoring factors like the number of hours used to produce a single item.

OKRs should reflect the company’s aspirations and mission, while KPIs, being quantitative metrics, are unrelated to these parameters and focus solely on numbers.

OKRs should be changed every four, six, or twelve months, depending on the objective. KPIs can remain the same for years, even with changing objectives.

Implementing OKRs: What’s Needed?

For successful OKR implementation, all departments must believe in them. Everyone should understand the purpose of their work and how to achieve the desired result. Without motivation, nothing can be achieved. Alongside motivation, it’s necessary to rationalize processes and enter a more analytical and strategic dimension.