By Mike Williams

Measuring is a part of our daily lives. We do so in a variety of ways, but to simplify, let us use body weight as an example. Some of us measure anything from the time it takes us to run or walk a mile, the amount of weight we can lose, the number of hours we sleep at night, the amount of water we drink per day, and even the number of calories we eat or burn in a day – all of those with the exception of the amount of weight we lose can be considered Key Performance Indicators (KPIs) while losing weight could be an Objective with a key result (OKRs) of losing 20 lbs. over 12 months.

In business and leadership, OKRs and KPIs are the primary methods we use to measure the success of long-term objectives and short-term performance that may contribute to achieving those objectives.

Let us quickly review the difference:

  • OKRsare a framework that helps you define success through achievable outcomes as a team or company. The “Objectives” are key strategic initiatives that will include one or more “Key Results” to help you measure whether or not a desired outcome has been achieved
    • Characteristics:
      • More strategic
      • An overall metric that is measured infrequently (i.e., once, or twice a year)
  • KPIs – are more tactical in nature and are performance centered around a specific or individual results
    • Characteristics:
      • More tactical
      • Measured frequently (i.e., weekly, or monthly)
      • Measure steady-state against a benchmark or threshold target

Like your daily life, measuring is also a critical part of leadership and business success. In business, OKRs and KPIs are used every day within large and small enterprises to measure the quality of leadership and business success within those enterprises.

For example, a common business OKR would look like this:

Objective: Increase Revenue in 2022

Key Result: 

  1. Increase sales by 15%
  2. Acquire / Add 300 new customers
  3. Increase sales revenue pipeline by 30 percent 

Just remember when defining an OKR, the “Objective” is big picture and high-level and should not include a quantitative value. On the other hand, “Key Results,” are quantitative and clear – they outline specifically what an organization must do in order to successfully achieve the objective.

Some common business KPIs are:

  1. Sales per month
  2. Customer Acquisition Costs (CAC)
  3. Monthly Recurring Revenue (MRR)
  4. Number of Incidents
  5. Average Response Time

Additionally, depending on your company or function, a Net Promotor Scope (NPS) or Customer Satisfaction (CSAT) score can be a common KPI, however, it can also be a “Key Result” of an “Objective.” Companies and leaders also use NPS or CSAT scores to measure how well they are servicing their customers or leading their employees.

In the end, every good leader will use a combination of both OKRs and KPIs to achieve operational, business, leadership, and cultural objectives. The key is ensuring that you selectively choose what you measure and how you plan to measure it. What you measure really does matter as a leader – it is your tool to enabling and empowering your you, your company, or your people forward.