OKRs and KPIs are both ways of measuring performance, so they are easy to confuse. The short answer: a KPI measures how something is performing now, while an OKR sets out something you want to change and how you will know you have changed it. Most organisations need both.
The difference in one sentence
KPIs monitor; OKRs move. A key performance indicator (KPI) is an ongoing measure of health, such as customer retention or gross margin. An objective and key results (OKR) set is a time-bound goal to improve something, with a few measurable results that show progress.
OKR vs KPI at a glance
| KPI | OKR | |
|---|---|---|
| Purpose | Monitor ongoing performance | Drive a specific improvement |
| Time frame | Continuous, reviewed monthly or quarterly | Fixed cycle, usually a quarter |
| Structure | A single metric with a target or range | One objective plus 2 to 5 key results |
| Ambition | Realistic, often a must-hit target | Often a stretch; missing slightly is acceptable |
| Typical owner | A function or role | A team, often across functions |
| Example | Customer retention rate of 90% | Objective: make onboarding effortless. KR: cut time to first value from 14 to 7 days |
What is a KPI?
A KPI is a metric that tells you whether an important part of the business is on track. Good KPIs are few in number, clearly defined, owned by someone and reviewed regularly. Revenue, gross margin, customer satisfaction, staff turnover and on-time delivery are common examples.
KPIs work like the dashboard of a car. You do not try to change the oil pressure every quarter; you watch it and act when it moves out of range.
What is an OKR?
OKRs were developed by Andy Grove at Intel and later popularised by John Doerr, who introduced them at Google. Each OKR has two parts:
- Objective: a short, qualitative statement of what you want to achieve. It should be memorable and motivating.
- Key results: two to five measurable outcomes that show whether you achieved the objective. Key results describe outcomes, not tasks.
A common mistake is writing tasks as key results. "Launch a new onboarding email sequence" is a task. "Increase the share of new customers who complete setup in week one from 40% to 65%" is a key result.
Worked example: the same team, KPIs and OKRs together
A customer success team at a software company tracks these KPIs every month:
| KPI | Target |
|---|---|
| Customer retention rate | 90% or higher |
| Net promoter score | 40 or higher |
| Average first response time | Under 4 hours |
Retention has slipped to 86%, and analysis shows most losses happen in the first 90 days. The team sets one OKR for the quarter:
Objective: Make the first 90 days so smooth that new customers stay.
- KR1: Increase setup completion in week one from 40% to 65%.
- KR2: Cut 90-day churn from 9% to 5%.
- KR3: Raise new customer onboarding satisfaction from 7.1 to 8.5 out of 10.
The KPI showed the problem; the OKR focuses effort on fixing it. Once 90-day churn is back under control, the team keeps watching the retention KPI and moves its OKR to the next priority.
When to use KPIs and when to use OKRs
Use KPIs when:
- You need to monitor something continuously, such as cash flow or safety incidents.
- The target is a standard to maintain rather than a change to make.
- Regulators, investors or contracts require consistent measures.
Use OKRs when:
- You want a team to focus on a small number of priorities for a set period.
- The goal needs several teams to work together.
- You want people to aim high and learn, not just hit a safe number.
Can a KPI become a key result?
Yes. When a KPI drifts out of range or you want a step change, it can become a key result for a cycle. In the example above, 90-day churn was a supporting metric that became KR2. When the improvement is achieved, it goes back to being monitored as a KPI.
Common mistakes
- Too many OKRs. Three objectives per team per quarter is usually the limit. More than that and nothing is a priority.
- Tasks disguised as key results. If you can tick it off without changing a number, it is a task.
- Tying OKRs directly to bonuses. People then set safe targets. Keep stretch OKRs separate from pay decisions and use KPIs and wider performance reviews for those.
- Set and forget. Check OKR progress every week or two, not only at the end of the quarter.
- KPIs nobody owns. Every KPI needs a named owner and a clear action when it moves out of range.
How OKRs and KPIs fit with SMART goals
SMART goals (specific, measurable, achievable, relevant, time-bound) are a useful test for individual goals. Key results should be SMART; objectives deliberately are not, because they describe direction and ambition. Our guide to SMART goals vs regular goals and the free goal-setting template show how to write them.
Frequently asked questions
What is the main difference between OKRs and KPIs?
KPIs measure ongoing performance against a standard. OKRs set a time-bound goal to change something, with measurable key results that show progress.
Should a company use OKRs or KPIs?
Both. KPIs keep track of the health of the business; OKRs focus effort on the few improvements that matter most this quarter.
How many key results should an objective have?
Two to five. Fewer than two rarely captures the objective; more than five dilutes focus.
What is a good OKR score?
Many teams that set stretch OKRs treat reaching around 70% of a key result as a good outcome. If you always hit 100%, your OKRs are probably not ambitious enough.
Are OKRs only for tech companies?
No. They started at Intel and spread through technology firms, but charities, public bodies, schools and small businesses use them too. The method works anywhere that needs a few clear priorities.
Where can I learn to set business goals and measures?
Our Business Planning and Goal Setting course covers goal-setting frameworks, OKRs, KPIs and turning strategy into plans, live online or in London.