What Matters: OKRs over KPIs

January 6, 2023

What Matters: OKRs over KPIs

“If you cannot measure it, you cannot improve it.”—Lord Kelvin

We set goals for our businesses and personal growth, and yet we often forget another crucial factor: measurement. Knowing what to measure and how to measure them is equally important as setting a purpose to work towards and focus on. Otherwise, no matter how many goals and tasks we set, we have no way of knowing, objectively, how much progress we’ve made and how close we are to achieving our goals.

What we measure matters. It sheds light on what aspects of growth and development are important to us for both personal and business reasons. And as the quote above says, if we don’t measure things, it is hard to improve them.

How we measure it also matters. We don't use a yardstick if we need to get a cup of flour, the same way we don’t use weighing scales to measure how far point A is from point B. And even if we do use the right tool but use the wrong units of measurement, our data points will be all over the place.

Measurement is important. It allows us to track our growth, keeps us accountable, and helps us evaluate and celebrate our success. That is exactly why businesses have tried to measure performance for decades using KPIs (key performance indicators).

While KPIs are very powerful and helpful tools for entrepreneurs, sometimes, they make us focus on the wrong things. Businesses frequently make the mistake of using KPIs from other companies because those companies were their former employers. But what worked for others might not necessarily work for your business in particular. 

That’s why I believe that OKRs (objectives and key results) are better. Don’t get me wrong. KPIs and OKRs are both important and essential in business. But when it comes to focusing on growth and change, OKRs definitely work better to our advantage.

While KPIs are mostly a measuring tool for business health and performance and strictly a top-down process, OKRs are more of a collaborative planning and leadership communication tool. 

It functions by establishing a purpose or goal that is significant, real, actionable, and, ideally, motivating. Then you break that objective down into 3-5 key results, or milestones, to mark how close you are to achieving that objective. These key results should be specific, time-bound, aggressive yet realistic, measurable, and verifiable.

The key results can be measured rather simply: Was this accomplished? The answer is clearly either YES or NO. It can be utilized both on an organizational and team/departmental level.

With the aid of OKRs, we can create ambitious and difficult goals with quantifiable outcomes that managers can explain in a straightforward manner. Additionally, it is presented in a way that enables groups and organizations to monitor progress, establish alignment, and promote engagement, commitment, and focus.

Usually, it is used to set commitment (must-do), aspirational (stretch goals), or learning (learning something new that produces valuable outcomes) goals.

OKRs help businesses focus on priorities, keep teams aligned and accountable in black-and-white, track progress with no gray areas, and allow teams and individuals to be stretched beyond their current skills and capabilities.

Both OKRs and KPIs are essential, but if your focus is on objectives beyond profit, such as personal and professional development for both individuals and teams, learning new skills, or trying something new, OKRs will definitely work better for you.

It is time we learned how to focus on and measure what really matters.

Thanks for reading “A Brilliant Tribe.”