OKRs vs KPIs explained simply, with examples
· 8 min read
KPIs are the numbers you watch all the time to check that your work is healthy. OKRs are a short, deliberate push to change something, usually over a quarter. Think of KPIs as the gauges on a dashboard and an OKR as the plan for one particular trip. You need both, and they’re most useful when you know which job each one is doing. This guide explains each in plain words, shows how they fit together and walks through an example of a KPI turning into a key result and back again.
What is a KPI?
A key performance indicator (KPI) is a measure you’ve chosen because it tells you whether something important is going well. Most teams have dozens of numbers in their reports. Only a few deserve to be called KPIs.
A simple test separates them: if this number moved sharply next week, would you do anything differently? If the answer is no, it’s context, not a KPI.
Good KPIs share a few traits:
- They’re ongoing. You track them month after month, often year after year.
- They usually need to stay in a range, rather than climb forever. A customer satisfaction score of 4.6 out of 5 might be fine to hold, not something to push higher every quarter.
- There are only a few. Three to five per team is enough to steer by.
- They mix early warnings with final results. A lagging indicator, such as quarterly revenue, confirms what happened. A leading indicator, such as the share of quotes that turn into a follow-up meeting, moves earlier and gives you time to act.
The course chapter on measuring progress with KPIs goes further into choosing leading indicators and avoiding numbers that look good while the real result slips.
What is an OKR?
An OKR stands for objectives and key results. It’s a way of setting a goal for a fixed period that combines direction with proof.
- The objective says in words where you want to be at the end of the period. No numbers. It should be clear enough that the team could repeat it without notes.
- The key results say in numbers how you’ll know you got there. Each one has a starting point and a target, written as “from X to Y”, and a date. Three per objective is a good default.
- Initiatives sit underneath: the projects and tasks you’ll try in order to move the key results. You should expect to change them as you learn what works.
The most important rule is that a key result is an outcome, not a task. “Launch a new reminder system” is a task. “Cut missed appointments from 11% to 6%” is a key result. If you could finish something and nothing improved, it belongs in your initiatives.
For a step-by-step method and a template for writing your own, see the chapter on OKRs.
The difference at a glance
| Question | KPI | OKR |
|---|---|---|
| What’s it for? | Checking that something stays healthy | Changing something that matters now |
| How long does it last? | Ongoing | A fixed period, usually a quarter |
| What does success look like? | The number stays in a good range | The number moves from a baseline to a target |
| How many? | Three to five per team | One to three objectives, each with about three key results |
| How often do you look? | Weekly or monthly | Weekly or fortnightly during the cycle |
| What happens at the end? | Nothing: you keep watching it | You score it, then decide whether to set a new one |
How OKRs and KPIs work together
OKRs and KPIs aren’t competing systems. The most common relationship is simple: when a KPI drifts out of its healthy range, moving it back becomes a key result for the quarter. Once it’s back where it should be, it returns to the list you just monitor.
Your other KPIs act as guardrails during the push. They tell you whether you’re fixing one thing by breaking another. If you’re trying to cut costs, a quality measure you already track will warn you if the savings are coming from shortcuts.
A useful habit at the start of each quarter is to look at your KPIs and ask two questions. Which of these is out of range or heading the wrong way? And which one, if we moved it, would make the biggest difference to what we’re trying to achieve this year? The answers are often your next OKR.
Worked example: a physiotherapy group’s missed appointments
Jun is practice manager at Ravenshaw Physio, a group of four physiotherapy clinics. Each month she reviews five KPIs with the clinic leads:
| KPI | Healthy range | Last month |
|---|---|---|
| Share of clinician hours booked | 80% or more | 82% |
| Missed appointments (no-shows) | 6% or less | 11% |
| Patients who book their next visit before leaving | 60% or more | 63% |
| Average patient review score | 4.5 or more out of 5 | 4.7 |
| Revenue per clinic per month | On budget | 4% under budget |
Four of the five are close to where they should be. Missed appointments have nearly doubled over six months, and Jun suspects they explain most of the revenue gap, since an empty slot earns nothing but the physiotherapist is still paid.
So for the next quarter she sets one OKR.
- Objective: Patients turn up to the appointments they book, and the slots they can’t use go to someone who can.
- KR1: Cut missed appointments from 11% to 6% of bookings by 31 March.
- KR2: Raise the share of appointments confirmed by the patient 24 hours ahead from 40% to 85%.
- KR3: Fill late cancellations from a waiting list for 60% of cancelled slots, up from 20%.
- Initiatives: two-way text reminders that let patients confirm or cancel with one reply, a waiting list at each clinic’s front desk, and clearer wording about the cancellation policy at booking.
Jun also names the review score as a guardrail. If reminders feel pushy or the cancellation wording reads as a threat, it should show up there first.
Six weeks in, confirmations have climbed to 78% and missed appointments are down to 8%, but the waiting list is barely used, because front-desk staff are too busy to ring around. Jun drops the phone-based waiting list and switches to an automatic text offer for freed-up slots. By the end of the quarter, missed appointments are at 6.5%, just short of the target, and the review score hasn’t moved.
At the next quarterly review, missed appointments go back on the KPI list with the same 6% threshold. Jun’s new OKR focuses on something else. The KPI did its job by raising the alarm. The OKR did its job by fixing it.
Common mix-ups
- Turning every KPI into an OKR. If everything is a priority, nothing is. Keep OKRs for the one to three things you’re actively changing.
- Writing tasks as key results. “Introduce text reminders” can be finished without anyone turning up more often. Measure the result you want instead.
- Leaving out the baseline. “Raise confirmations to 85%” means little unless people know they’re at 40% today.
- Tracking too many KPIs. A 30-line report gets skimmed. Pick a few that you’d act on, and keep the rest as background.
- Forgetting the guardrails. When you push one number hard, check that the others aren’t quietly sliding.
If you’re choosing KPIs for a team that affects costs or margins, it helps to know where those numbers come from. Our guide on how to read a profit and loss statement explains the lines most teams can influence.
Which one do you need? A quick step list
- List the numbers you currently report. Mark each as KPI (you’d act on it) or context (you wouldn’t).
- Keep three to five KPIs and give each a healthy range.
- Check which KPI is out of range or heading the wrong way.
- Pick the one that matters most this quarter and write an objective in words for it.
- Write two to four key results as “from X to Y by date”, using real baselines.
- List your initiatives separately and expect to change them.
- Name your guardrails: the KPIs that must hold steady while you push.
- Review weekly or fortnightly, and at the end of the quarter return the KPI to monitoring.
The short version
KPIs tell you whether things are healthy. OKRs are how you change the things that aren’t, or the things that need to be better. Watch a short list of KPIs all the time, and when one drifts or matters more than usual, give it a quarter of focused effort with a clear objective and measurable key results.
If you’d like to write your own OKR with checks as you type and learn to pair early warnings with final results, the last module of Business Skills Essentials covers both.