OKRs vs KPIs: differences, examples and when to use each

KPIs (key performance indicators) are the ongoing measures that tell you whether the business is healthy: revenue, gross margin, churn, cash, delivery time. OKRs (objectives and key results) are a goal-setting method for changing something within a fixed period, usually a quarter: a qualitative objective plus a few measurable key results. KPIs monitor; OKRs move. Most growing companies need both, and most of the trouble comes from asking one to do the other's job.

What is a KPI?

A KPI tracks the performance of something the business does continuously. It has a definition, an owner, a target or acceptable range and a review rhythm. It does not end: you will track gross margin next year and the year after. A good KPI changes behaviour when it moves. A bad one is reported every month and ignored.

The Balanced Scorecard, introduced by Robert Kaplan and David Norton in Harvard Business Review in 1992, argued that leadership teams should not rely on financial measures alone and should balance them with customer, internal process, and innovation and learning measures. It is still the best argument for a KPI set that covers more than the profit and loss account.

What is an OKR?

An OKR has two parts. The objective says what you want to achieve, in words people can rally behind: “Make onboarding effortless for new clients.” The key results say how you will know you got there, in numbers: “Average time to go live falls from 21 to 10 working days.” John Doerr, who learned the method from Andy Grove at Intel and popularised it in Measure What Matters, sums up the shape as: I will (objective) as measured by (key results).

OKRs are temporary by design. When the quarter ends, the objective is achieved, dropped or rewritten. Google's re:Work guide recommends three to five objectives with around three key results each, grades them on a scale from 0.0 to 1.0, and is explicit that OKRs are not the same thing as performance evaluation.

OKRs vs KPIs: the differences

Six OKR examples by function

The examples below are fictional, written for a company of around a hundred people. They show the shape of a good OKR, not benchmarks to copy.

Notice what is missing: tasks. “Launch a new onboarding checklist” is how the team might reach a key result. It is not the key result. If you want a working format, the OKR planning template follows this structure.

Ten KPI examples by function

Also fictional, and deliberately without targets: the right target depends on the business model and its stage. Most of the KPIs every growing SME should track fall into these categories.

How OKRs and KPIs work together

KPIs tell you where to look; OKRs tell you what to change. In practice the loop runs like this:

1. A KPI drifts outside its acceptable range for long enough to matter.
2. The leadership team decides the fix needs focused, cross-team effort and writes an OKR for the quarter, often with the KPI as one of its key results.
3. The OKR is worked through the quarter with a weekly check-in.
4. Once the KPI is back in range and stable, the OKR closes and the metric returns to routine monitoring.

Andy Grove offered a useful safeguard in High Output Management: pair your indicators, so that a measure of an effect is balanced by a measure of its counter-effect. If an OKR pushes delivery speed, a quality KPI should be watched alongside it. This is where the two systems protect each other.

The most common mistakes

• OKRs as task lists. Key results like “launch the new website” measure activity. Ask what the website is meant to change, and measure that.
• Twenty KPIs nobody owns. A long dashboard with no names on it is reporting, not management. Keep the measures someone will act on and put one name beside each.
• An OKR for everything. If every team has five objectives, nothing is a priority. Routine work belongs on the KPI scorecard.
• OKRs wired straight into bonuses. People quickly learn to set safe goals. Google's guide is explicit that OKRs are not performance evaluation.
• Changing KPI definitions mid-year. Trends stop meaning anything. Record the definition, and when it must change, keep the history.
• Setting OKRs and never checking them. Without a regular check-in, OKRs are written at the start of the quarter and remembered at the end.

A decision guide

If you go the OKR route, plan them in quarters with the same discipline as any other priority. The 90-day plan guide covers the planning session, the weekly rhythm and the review.

Frequently asked questions

Can a KPI be a key result?

Yes, and it often should be. If churn is too high, “reduce monthly churn to a set level by the end of the quarter” is a perfectly good key result. The difference is the time frame and the intent: once the target is reached and holds, it goes back to being a KPI.

Does a small company need OKRs?

Not necessarily. A company of twenty or thirty people often does well with a KPI scorecard and three quarterly priorities, each with an owner and a definition of done. That is the same idea with less vocabulary. Formal OKRs earn their place when several teams need to align on shared outcomes.

How many KPIs should a company track?

As few as the leadership team will actually review on a fixed rhythm, with one owner per line. Each function can hold more detail underneath. Our guide to the executive KPI dashboard covers how to choose them.

A practical next step

Start with the KPI dashboard template to fix the health measures, then add OKRs only where something has to change. If you would rather have an outside view of whether your goals and metrics fit together, an Operating Assessment maps that in a short, fixed-scope project, and our KPI dashboards and performance management work covers the build.