Have you ever wondered why, despite hitting all your targets, sometimes, there’s still a lag in the business growth? You’re tracking performance metrics, achieving goals, and checking all the boxes, but it still doesn’t align well with the vision. This dilemma is common among SMEs (small and medium-sized enterprises) which rely solely on KPIs (Key Performance Indicators). 

 

While KPIs help you track specific business outcomes, today’s evolving and highly competitive markets demand more agile project management approaches. This is where OKRs (Objectives and Key Results) step into the picture. 

 

In this blog, I’ll help you understand the difference between OKRs and KPIs in business and how to use them for better business growth and success.

 

What Are OKRs and KPIs in Business?

Performance metrics like OKRs and KPIs in business are crucial for 360-degree goal setting and tracking progress. Both are designed to measure success but focus on different needs.

KPIs in Business

KPIs in business: How does it help?
KPIs in business: How does it help?

 

KPIs are quantitative metrics that track the outcomes of your business. They focus on measuring performance within a specific area, such as teams, projects, or individuals.

 

Here are some examples of KPIs in business:

  1. Sales: Increase product sales by 40%  in the market.
  2. Marketing: Achieve at least a 30% growth in website conversion rate.
  3. Customer service: Reduce ticket resolution time by 50%. 

 

KPI metrics should be unique to match your goals. For example, you shouldn’t use the same KPI to monitor the progress of a marketing campaign and sales operations.

Today, many SMEs and even large corporations use KPIs together with OKRs to achieve SMART goals. 

OKRs in Business 

OKRs for agile project management
OKRs for agile project management

OKRs combine ambitious business objectives with measurable key results that create alignment and motivation across various teams. It includes both qualitative and quantitative goals, which are achieved through a series of smaller, measurable actions.  

To explain with an example, let’s consider your business objective is to improve customer retention. The key results could be:

  • To improve website content creation.
  • To implement royalty rewards or bonuses. 
  • To conduct social media AMA sessions or giveaway contests. 

What makes OKRs stand out is their emphasis on alignment, transparency, and accountability. Target Align software – OKR-based SaaS – is one of the best tools in the market for OKR setting.

OKRs vs. KPIs: Key Differences

Some of the key differences between OKRs vs. KPIs in business are:

 

KPIs OKRs
What is it A performance valuation tool that focuses on the numbers of your business. An ambitious goal-setting tool that combines objectives with measurable key results.
Based on  Past results, current projects, and future goals.  Aspirational and mission-oriented goals. 
Purpose  Key performance evaluation tool.  Motivational tool.
Criteria Monitors and measures specific benchmarks and steady growth. Tied to the overall company mission and growth.
Duration Monitored consistently over a fixed period or based on current progress. Typically short-term (quarterly review) but aligned with long-term vision.
Actions taken When numbers are off-track and don’t align with the goals.  When certain risks, issues, or impediments arise. 
Software Tableau  Target Align 

 

Benefits of Performance Metrics: Real-life Examples

The OKRs and KPIs in business help provide clarity on what matters most while tracking progress toward goals. 

Perks of KPIs in Business

KPIs have several benefits in business, such as:

  • Customer satisfaction: Tracking KPIs like response times and issue resolution helps you to improve services and meet customer demands.
  • Improved competitiveness: Real-time KPI tracking helps you to stay ahead of competitors.
  • Improved decision-making: KPIs offer real-time data insights, enabling you to make informed decisions on resource distribution and operations.

Real-life wins with KPI implementation

Retail giants Walmart and Target have successfully shown the power of KPIs in improving operational efficiency and customer satisfaction.

  1. By adopting an advanced KPI dashboard, Walmart tracked their inventory levels, sales, and customer satisfaction in real-time across thousands of their stores. This approach led to a 10% increase in Walmart’s peak-season sales. 
  2. Similarly, Target implemented a KPI management system to address inventory and supply chain challenges. By gaining insights into product movement and customer preferences, they reduced excess inventory by 15% and stockouts by 20%, delivering an enhanced shopping experience.

 

Advantages of OKRs

OKRs like Target Align software provide advantages like:

  • Alignment: OKRs help everyone in the team to be aligned with a common business or team goal, promoting better engagement and collaboration.
  • Transparency: By making OKRs visible across the teams, every member and stakeholder can recognize their roles and tasks effectively.
  • Accountability: Since the OKR setting involves everyone from the business, their collaboration and accountability will help teams to cooperate effectively.

Read more: The Ultimate OKR Guide and how to set OKRs for business. 

Pinterest’s big win with OKRs

Pinterest adopted a pyramid structure for OKRs: Company → Pillars → Teams → Individuals. The company ensured that each team’s objectives directly supported broader business goals and vision. The result? Pinterest successfully scaled globally and became one of the leading image and creative ideas-sharing platforms we know today.

A report by Datalligence (2023) also stated that with OKRs, organizations can grow their revenue 58% faster, with over 70% profits.

Which is Better, OKRs or KPIs?

OKRs vs. KPIs: Which is better?
OKRs vs. KPIs: Which is better?

 

Deciding between OKRs and KPIs depends entirely on your business needs. OKRs are ideal for SMART goal setting and drive innovation and alignment across teams. On the other hand, KPIs focus on specific, ongoing metrics that measure performance and monitor progress toward defined goals. Recognizing the need for both and implementing them accordingly can help optimize business outcomes.

By understanding the strengths of both KPIs and OKRs, you can choose the right performance metric to achieve your desired outcomes, whether it’s maintaining operational success or pursuing revenue growth.

Best Practices for OKRs and KPIs in Business 

  • Limit the number of OKRs and KPIs to ensure clarity and effective resource use for achievable results.
  • Regularly review and update OKRs and KPIs to align them with broader business vision.
  • Use goal-setting software like Target Align to simplify tracking, task management, and employee empowerment. 

How Can Target Align Help You?

Use Target Align software for your SMEs
Use Target Align software for your SMEs

 

If you already have KPIs in business and want to focus on a broader vision for your SMEs, then Target Align is your answer. It streamlines your OKRs by offering a user-friendly platform to track, update, and collaborate on goals. Its comprehensive dashboards help in agile project management (SCRUM), while adapting to market needs. 

 

Learn how to write impactful OKRs for your business. 

 

Ready to take control of your business goals? Reach out to the team and submit your queries instantly. Visit our website, www.targetalign.com, to get more detailed insight about our products, training, and price plans

 





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