Translated from Português (Brazil) • View original There is a lot of confusion about the meaning of these terms. Because of this, we have prepared this post to answer all your questions!
KPI (Key Performance Indicator), the famous Key Performance Indicators or OKR (Objectives and Key Results), are three-letter acronyms used by countless organizations on the planet. However, for a management focused on innovation, with so many attributes impacting the matrix market reasoning in which we are inserted, it is necessary for people to question the difference between OKR x KPIs. The challenge is that "KPI" can mean different things to different people, which makes this discussion somewhat timely. Throughout my 22 years of marketing experience, doing innovation management in industry and retail, I have tried countless different ways to reflect on this topic. However, I finally found one that seems to resonate with the demands of the modern world.
The first question regarding this subject that you need to understand is: OKR is a system that forces you to separate what really matters from the rest, and to set clear priorities. To do this, you need to learn to say "no", because if everything is a priority, in reality, nothing will be.
This approach is a significant departure from the way many organizations track results. Companies often have a monthly meeting where employees refer to KPIs page after page, in a mind-numbing exercise that can last for hours. There's so much going on that employees lose sight of what's important. But what happens, in reality, is that they're drowning in a sea of conflicting metrics and priorities.
In this sense, we need to keep in mind that we cannot forget the definition of "K". The letter "K" in KPI and OKR means "key". There should be a few, the most important. The use of KPIs should force companies to separate what really matters (the main indicators) from the other factors, but many people forget that.
If you have 30 "KPIs," you don't actually have any — just indicators. That's why in OKRs we limit the number of Key Results. A project should only have one goal in a given period of time, with ideally up to five Key Results. On the other hand, it's important to also make it clear that OKRs aren't about tracking everything you do. Otherwise, company OKRs would have to include key results to keep the lights on, clean the office, etc. An excellent way to understand the difference between your OKRs and everyday work is to think about the goals you have in your personal life: you can save money for a trip, spend more time with your family, or lose weight. I bet buying groceries isn't one of your goals, but you still need to do them. What if your trips to the grocery store start to take up so much time that they'll start to hurt your personal goals? Then you'll need to change the way you perform them. When people say they can't achieve OKRs because their daily work gets in the way, it's because they don't understand. Good OKRs force you to reevaluate low-priority or non-value-added activities, as well as reduce, automate, or outsource them so you can focus on what really matters. OKR is about creating sustainable change with a focus on effective performance. This means that simply using a system to produce a temporary improvement isn't enough. OKRs focus on changing behaviors, systems, tools, or processes so that you can develop new and better levels of performance. The question regarding OKR analytics is, "If all areas of our company continue at their current level of performance, which areas will the changes have the most impact?" To set relevant OKRs, you must evaluate the different aspects of your business and identify the ones where a change in performance would have the greatest impact. What happens when a metric/KPI that isn't in your OKRs starts to deviate from the previous trend? You need to act on this, and you may even need to include it in OKRs to ensure that you get back to where you should be. And if something is unstable, you can create an OKR to get back to "steady state." To understand how to do this in practice, let's "take a trip." Imagine you want to take a road trip. The first thing you need to decide is where you want to go, so use a travel guide and choose to travel by car from São Paulo to Rio de Janeiro. Once you've decided where you want to go, get in the car and enter the destination into your GPS, which will help you track if you're on track. Finally, as you drive to your chosen destination, your car also has a dashboard that tracks many other metrics and tells you, for example, how much fuel you have. As long as the dials on the dashboard are within certain limits, you don't care about them. What matters is getting to where you want to be. But if your dashboard shows that you're running out of fuel, you'll need to adjust the course and find a gas station. This analogy is a great way to understand the difference between strategy, OKRs, and monitoring KPIs. Strategy: It's the process of deciding your destination. It helps you decide where you want to go. OKR: It's your GPS, i.e., your car's navigation system. It will help you track if you're on the right track and, if necessary, correct the course. And just like a GPS, OKR doesn't help you decide the destination, nor formulate your strategy. KPIs: These are the dials on your car's dashboard. They tell you if everything is correct. Ultimately, success is only proven when behaviors change, and you no longer need to include this topic in your OKRs. All you need is basic business rigor to make sure nothing is falling apart. But the most important thing is when everyone in the organization understands the why of OKRs. Source: Época Negócios
For efficient OKR management, use Goalous, the application for managing goals and tasks.
Request a presentation of Goalous for your business. Our team is ready. Let's go on this journey together. Daniel Alves (11) 97632-1226 daniel.alves@colorkrew.com Colorkrew | Move on