No matter how long you’ve been in business, you’re bound to be overwhelmed by all the acronyms tossed around. In this article, we’ll discuss OKRs vs. KPIs, two popular acronyms that help you set your goals, and measure performances and results.

We’ve covered OKRs a bunch in previous posts, so we’ll start with KPIs. We’ll discuss OKRs down the line. But first….

What does KPI stand for?

KPI stands for 

Key
Performance 
Indicators

They are performance metrics aimed at evaluating success, output, quantity, and/or quality of ongoing activities (i.e. projects, programs, products, and etc), and individuals. KPIs are unique for each team, company, and industry so don’t go implementing someone else’s KPIs into your workflow because it worked for them.

How do I define my KPIs

You define your KPIs according to your core business objectives. They should be linked to strategic objectives and not just anything that can be measured, otherwise, you are wasting time and resources. It can be a challenge, but you can ask yourself 6 simple questions:

KPI OUTCOME

What is the desired outcome
Why is the outcome desired
How will you influence your desired outcome
Who will be in charge of the outcome
When will you track the outcome

Here’s an example of how to answer these questions:

KPI OUTCOME: Website traffic growth
What: Increase website traffic by 10% this quarter
Why: Achieving this target will build brand presence which in turn can make the brand more profitable
How: Adding more SEO-friendly content, improving funnels to the site, adopting new marketing strategies and tools, creating more engaging content on social media.
Who: VP of Marketing will be in charge for this metric
When: The KPI will be reviewed on a weekly basis

Tips for super effective KPIs

• Make the information succinct, clear and relevant to be absorbed and acted upon more quickly
• Focus on outcomes, not business activities
• KPIs metrics should be very carefully thought through. No random numbers for the sake of having a number.
• KPIs need to express metrics that are integral for a business’s success
• Ensure that your KPIs are attainable

When you encounter a KPI that needs improvements, it becomes a starting point in creating OKRs.

What does OKR stand for?

OKR stands for

Objective
Key
Results

Like KPIs, half of OKRs are metrics while the other half is the objective aka your goals. With OKRs, you set your objectives and see your success with your key results. They’re more inspirational and help everyone share the company vision.

Aspects of OKRs:

• Measurable – there should be a significant percentage/number of improvement you need to achieve.
• Ambitious – the goal must seem impossible but can be reached with enough effort. They should be inspirational.
• Flexible & Agile – Your timeline to meet these goals must be to respond to changing conditions.
• Clear – everyone needs to know and understand what your OKR is and how they are contributing.
• Bidirectional – this means that teams define their tactical OKRs (bottom-up) and see how they align with the C-levels strategic OKRs (top-down).

Companies such Google, Microsoft, and Netflix use OKRs. C-level executives set these objectives for everyone to follow, with contributions made by the team. OKRs are both strategic (annual goal) and tactical (monthly/quarterly). Their purpose is to align teams with transparent goals and metrics in which the teams set their own goals in a bottom-up approach. When employees are able to have a voice in company goals, employee engagement increases.

In the battle of OKRs vs. KPIs, the ambitious nature of OKRs means your goals will be hard to achieve 100% of the time. It’s best to achieve 60-70% of your objectives, while anything more means it was too simple and anything less means you didn’t plan well enough to execute it. KPIs measure the metrics to help you achieve your goals by helping you see what areas you can improve or adjust on.

It’s important to note that because you are setting ambitious goals that will be very hard to achieve, failure of achieving an OKR should not be calculated into an employees’ bonuses. If you connect bonuses with OKRs, then employees will not set ambitious goals for themselves that could have benefited the company.

Objectives themselves are not countable, but with key results they are. Key results are the metrics that tell you what you have done and what else needs to be done to get to your goal. Teams can choose one or several key results, but it’s recommended to have three to five. The less you have the more you can focus.

How do you set OKRs?

John Doerr, who brought OKRs to Google, used the following formula:

I will (objective) as measured by (this set of key results)
Here’s an example of how that would be filled in:

I will get people to visit my website as measured by (1) Increasing traffic from 5,000 to 10,000 by the end of the quarter and (2) creating 20 new pieces of SEO-friendly content on the website.

OKRs are commonly written this way:

Objective: Get more traffic to my website

Key Result #1 Increase traffic from 5,000 to 10,000 by the end of the quarter

Key Result #2 Create 20 new pieces of SEO-friendly content on the website

If you remember only one thing about OKRs, then remember they MUST be measurable. As Felipe Castro says, “Measurement is what makes a goal a goal. Without it…all you have is a desire.”

Pros and Cons: OKRs Vs. KPIs

The pros of OKRs

John Doer outlines the 4 superpowers of OKRs

Superpower #1 – Focus and Commit to Priorities

You hone in what’s important and everyone is clear on what is not. OKRs dictate the hard choices leaders need to make and make communication between departments, teams, and individual contributors more precise.

Superpower #2 – Align and connect for Teamwork

Making goals transparent and shared everyone links to the overall company goal, identify cross-dependencies, and coordinate with other teams effectively and share ownership. When individuals connect with the organization’s success it makes top-down work more meaningful.

Superpower #3 – Track for Accountability

As OKRs are periodicly checked, graded, and reassesed thanks to data, if a key result is endanger, you are notified and are able to track it or revise/replace it.

Superpower #4 – Stretch for Amazing

With OKRs’ ambitious nature it motivates workers to excel by pushing themselves more than they thought possible. It tests their limits due to no fear of failure to worry about.

The cons of OKRs

While there are good aspects of OKRs, there are some drawbacks

OKRs, in general, are just straightforward lists that can easily make it hard to find relationships between different objectives and how each objective can feed into another. This creates transparency and alignment issues. Transparency issues can also arise if OKRs are only designed bottom-up creating a lack of clarity on what the business is trying to achieve as a whole.

Because of the difficulty in making different OKRs relate and align, it also comes with a hefty investment. It can a long time to fully integrate a company, or even a single team, to OKRs, and some departments like experimental and research-based, can’t even make OKRs work at all, no matter the effort. People can be hesitant about trying a new approach and end up throwing in the towel because it’s easier to just go back to how things was like before because it was familiar.

The pros of KPIs

KPIs track progress and make performance across teams visible with access given to accurate results and metrics daily, weekly, and/or periodically. This helps to track the progress of a team’s goal and make decisions easier, especially for managers looking to redesign or modify future strategies. It also shows who is underperforming and how to improve upon that as well

The cons of KPIs

Result-oriented and short-term oriented KPIs runs the risk of a decrease in quality of standard and output as workers feel discouraged from implementing innovative approaches and lose the overall strategic vision. If attaining short-term goals begins to take more priority, it gets in the way of long-term goals.

What is the difference in KPIs vs. OKRs?

First, OKRs sit on top of KPIs, but not because it’s better.

OKR is a strategic framework while KPIs are measurements within that framework.

The overall difference between OKRs vs. KPIs is the intention behind setting goals. OKRs are aggressive, ambitious goals concerned with the whole process and improving performance drastically while KPIs are treated as health metrics to check and measure the output of ongoing projects and specific activities.  They are substantially different but will make you more productive and help achieve your goals faster.

Look over this chart for a quick go-to reference:

Conclusion

So, in OKRs vs. KPIs, which one is better?

Well, it’s not that simple. They have different purposes. and so can be used alone for certain things.

Let’s say you want to scale or improve current plans or projects, KPIs are the way to go.

On the other hand, if you have a more broad vision or want to change the full direction of your company or project, OKRs are better.

Instead of seeing it as OKRs VS. KPIs, think of it as OKRs AND KPIs because ideally they should be used together. KPIs can coincide with the Key Results of OKRs. By implementing both OKRs and KPIs, you drive your team to grow and accomplish greater goals.

We built a focus management platform to help companies be more effective and stay focused on top priorities in daily operations. You can try Focus for free to automate check-ins, one on one meetings, and OKRs. Start working smarter with Focus today.

The post What’s the difference between OKRs vs. KPIs? appeared first on Focus.

What are some Product Management OKR examples and why do you need to set them? Product is probably the most important function in your company. Together with Sales and Marketing they are the ones that make sure the hard earned money you invest in them is delivering the maximum value to your business. This means that a focused Product Team can be the pilot who adjusts the engines (your engineering team) on the rocket-ship you call a company. But this also means that every effort that is not spent on delivering on the main objectives for the company will be a loss multiple times over, loss of the effort put in, and a loss of the opportunity cost of something better that it could have been spent on. OKRs are a great way to get your Product Team focused, but how is it done?

Throughout our content at Focus we are referring to functions with capital letters, such as Product, Sales, Customer Service, etc. When we don’t use the capitalized version, we mean the thing being built. Psst, are you in Marketing? We have 21 OKR examples for you too ?

What is Product Management?

Why are we talking about this in a post that’s about how to set OKRs for Product Teams? We are talking about it because Product is a nebulous, nascent and often misunderstood field. This can lead to the whole OKR thing going sideways for unfortunate Product folk even before the first O is set. So, what is Product Management? Let’s take a step back and see Product within the Scrum framework:

Scrum (n): “A framework within which people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value.”

Scrum Guide November 2017 version

I highlighted the part about value because at its simplest form, that is what Product Management is about. Are you a Portfolio Manager, Product Manager, Product Owner, Business Analyst or god forbid a Project Manager doing Product stuff at an organization that doesn’t understand the role? First of all, make them listen to Marty Cagen and explain to them that your daily activities should be tied to maximizing value to users and, consequently, to the business.

Product Team OKR examples

Cool, why don’t we just set this as our main objective? Not so fast. Product Management is also about finding the balance in delivering this value. Could you deliver outstanding value today by ignoring technical debt? Sure, you could. But what about tomorrow? Could you only focus on your users and shut your internal stakeholders up? Sure, but your relationships would suffer and you couldn’t effectively lead without authority, one of the hallmarks of any good Product Manager.

With this is mind, let’s group some of the activities a Product person does at a company. Since Product can take many different forms and different companies, this list by no means will be exhaustive, but let’s give it a shot. If you have ideas or feedback, do get in touch via the chat bubble on the bottom right.

Let’s group Product Management and Product Owner activities into 4 large areas. Sometimes it’s one person dealing with all of them vertically, sometimes the responsibilities are split between strategic and tactical, so pick accordingly.

• Vision and strategy
• Ideation, alignment, validation, prioritization
• Build, measure, learn
• Release and grow

Let’s break these 4 big areas down into smaller ones and let’s look at some examples. You should only select 3-4 OKRs per quarter per team, so don’t think that you need to have as many OKRs as we have in our examples here. Identify what area needs improvement the most and formulate your powerful OKRs to support you and your team.

Vision and strategy

Without a bold and clear vision and a killer strategy, it will be difficult to prioritize and ultimately deliver maximum value to your customers and the company. What OKRs can help focus your efforts when it comes to vision and strategy? Let’s look at some themes and OKR examples.

Domain knowledge

Objective: We have so much awareness on our competitors that we can sell their product better than they can
Key results:
– Talk to 10 customers who have switched to a competitor
– 8 out of 12 of the Sales Team members can name our top 5 competitive advantages
– Increase the number of new users who switched from a competitor from 5% to 15%

Objective: Become the champion ti the customer
Key Results:
– Conduct interviews with at least 40 of the top 100 customers
– 80% of people in the company can name at least 3 out of our 5 user personas
– Reduce churn rate from 20% to 12%
– Increase NPS (Net Promoter Score) from 47 to 65 
 

Share the mindset

Objective: Everyone at the company should share our awesome vision
Key Results:
– 50 out of 65 of our employees should accurately recite our vision and mission statement
– Reduce vertical feature requests from 5 per month to 1
– Increase eNPS (Employee Net Promoter Score) from 35 to 70
– Time spent in meetings remains an average 8 hours per week for each employee

Objective: Make the Jobs-To-Be-Done approach a core skill for everyone
Key Results:
– 9 out of 10 user stories submitted by sales have a well formulated user story
– 2 out of 10 feature requests can be solved without building new features
– Increase day 30 retention from 65% to 85% 

Turn vision into strategy into roadmap

Objective: Create a culture where metrics and data drive our business and product decisions
Key Results:
– 8 out of 10 user stories have success metrics defined and evaluated after release
– 4 out of 10 user stories have a projected business value attached to them
– New feature adoption is at a minimum of 60%
– Marketing investment on feature launches remains stable at 4 hours per feature launched

Objective: Be radically ahead with your backlog
Key Results:
– There are 4 times as many written user stories in the backlog as stories on a sprint
– There are estimated tickets for the next two sprints - average storypoint: 85 

Ideation, alignment, validation, prioritization

You can be the best PM in the world with the most contacts, stellar industry knowledge, and a time machine. You still will fail if you don’t rally the company around coming up with new ideas, aligning on what to do, why, and in what order of priority.

Empower to ideate

Objective: Make stakeholders the center of the ideation process
Key Results:
– 4 out of 10 completed user stories came directly from stakeholders
– Increase eNPS (Employee Net Promoter Score) for the sales team from 32 to 55
– Increase the demo to sign-up conversion rate from 30% to 60%

Align team and stakeholders

Objective: Delightfully transparent and radically aligned prioritization
Key Results:
– 0 sprints are affected by mid-sprint critical priority items
– Stakeholders rate the transparency of the prioritization process with at least 4 out of 5
– Complaints about prioritization come up only at most on 3 retrospectives out of 10
– New feature adoption is at least 40% 

Build, measure, learn

This is the mantra of a well tuned Scrum Team. After the team, together, with the stakeholders has identified problems to solve, created user stories, refined and estimated them, they are ready to be taken into a sprint. 

Seamless maker time

Objective: Create a blissful work environment for the scrum team
Key Results:
– Sprint goal is delivered 8 times out of 10
– Zero new stories are taken into the sprint after it has been started
– Story points delivered each sprint can increase from 45 to 55 

Build with quality

Objective: Deliver a delightfully smooth customer experience while shipping more
Key Results:
– Maximum 2 critical bugs are reported by customers per sprint
– NPS score stays 65 or increases
– Story points delivered per sprint stay flat at 45 or increases 

Measure what matters

Objective: Switch from gut feeling product decisions to being radically data driven to reduce complexity
Key Results:
– Every user story has success metrics attached to it
– Increase eNPS score for the Sales and Customer Service teams from 40 to 65
– No new feature with less than 40% adaption rate remains live by the end of the quarter 

Iterate with confidence

Objective: Bring maximum value to customers with the least amount of investment
Key Results: 
– Every feature must have an MVP version and at least 1 iteration
– No feature shall be delivered over multiple sprints
– Increase NPS score from 65 to 75 

Release and grow

You have identified your customers’ pain points, devised and validated a solution, broken it down to manageable iterations and built it, feels good, right? Don’t want to discourage you, but if you botch the release even the best feature or improvement can fall flat and fail to gain adoption, ultimately not contributing to the most important measure most companies have, growth.

Release smoothly

Objective: Achieve magical CI/CD (Continuous Integration / Continuous Delivery)
Key Results:
– Increase number of releases from 4 per quarter to 16
– Reduce complaints on retrospectives about deployments from an of average 2 to 0.5
– Keep number of critical bugs reported by customers below 2 per release

Objective: When we release, our customers can’t help but be impressed
Key Results:
– Increase NPS from 45 to 75
– Increase average first month feature adoption by customers from 30% to 65%
– Maintain newsletter unsubscribe rate in line with the current 6%
– Maintain average product related customer service conversations at 34 a day 

Product Management OKR examples to grow

This is where all the AARRR metrics (Acquisition, Activation, Retention, Referral, Revenue) come into place and where having well implemented analytics is crucial. Don’t worry, a bit further below we’ll give you examples on what to track if you only have limited analytics capabilities. AARRR metrics make for some of the most impactful Product Management OKR examples.

Objective: Convert more visitors, simple as that
Key Results:
– Increase demo signups by 20%
– Increase demo conversion rate to signup by 10%
– Increase self serve signup from 5% to 20%
– Keep cost of a demo booked below $45

Objective: Make a radically smooth user onboarding and activation experience
Key Results:
– Reduce churn through onboarding funnel steps 3 and 4 from 60% to 20%
– Reduce time to wow moment (setting up first OKR) from 4 days to 1 day
– Increase profile completion rate from 20% to 85%
– Increase NPS score from 55 to 75

Objective: Achieve stickiness
Key Results:
– Increase day 30 retention from 30% to 75%
– Increase weekly frequency of usage from once a week to three times a week
– Increase free to paid plan upgrade rate from 5% to 15%
– Keep Customer Success time invested per free user flat

Objective: Spin up the referral flywheel
Key Results:
– Increase customer acquisition through referrals from 0 to 0.2 per existing customer
– Maintain 30% churn for referral cohort, in line with sales acquired 
– Don’t let LTV (Lifetime Value) drop below $50 from $75


Objective: Achieve sustainable profitability
Key Results:
– Reduce customer acquisition cost from $150 to $75
– Increase LTV (Lifetime Value) from $50 to $100
– Reduce churn from 75% to 30%

Objective: Shut_up_and_take_my_money.gif (Increase cash flow)
Key Results:
– Increase value of yearly payments from $130k to $300k
– Increase number of large accounts (50+ seats) from 8 to 25
– Increase free to paid plan conversation rate from 15% to 30%
– Maintain free plan churn at 45%  

Product Management OKR examples when you have limited data

A key tenet of OKRs is that KRs need to be measurable. This assumes you have done the necessary groundwork and have readily available, reliable data. But what if that’s not the case in your organization? A lot of small companies don’t invest in data in the beginning. And I’ve seen even bigger, post Series A companies where data just wasn’t there. Sounds familiar? Don’t worry, there is a lot of data you can get even out of a simple Google Analytics implementation to your website and asking devs to help you with some database queries once in a while. And there is data you can gather just by sending out a simple Google Forms.

Objective: Convert more visitors, simple as that
Key Results:
– Increase time spent on page from 30 seconds to 2 minutes
– Increase number of pages viewed per visit from 1.1 to 2.1
– Increase number of of visitors who sign up for free trial (visitors vs new free users) from 5% to 15%

Objective: Make a radically smooth user onboarding and activation experience
Key Results:
– Reduce steps to wow moment (when customers said in research they definitely will keep using the product) from 12 to 6
– Increase activated users (one who created a check-in) from 10% to 40%
– Increase proportion of users with a profile picture from 30% to 80%

Objective: Make our product well known and well liked
Key Results:
– Increase NPS score from 55 to 75
– Add 200 reviews on Capterra
– Increase average review score on Capterra from 4.1 to 4.6 

Product Management OKRs are Scrum Team OKRs

I’m a big proponent of Scrum Teams having one set of OKRs on a team level. If it’s your first time doing OKRs, it’s probably best to only set them at a team level anyway. This way you can avoid one of the biggest mistakes -having conflicting OKRs.

You should still assign one person to be the lead on the OKR itself though. It is logical to choose your Scrum Master or Product Owner as the lead, but if you want to instill a bit more outcome driven thinking, ask a developer to volunteer.

All right, but how does a Scrum Team OKR look like? In a healthy company, each Scrum Team has a single Product they are responsible for or a group of features within a more complex Product. This makes it pretty simple to pick a set of OKRs as usually you have a clear idea of what makes the Product or feature set successful for the given period. And you can use the examples we shared above and tweak them to fit your team.

Get focused

Having great OKRs set up is only a piece of the puzzle. What is more challenging is keeping the team focused on their objectives day after day, sprint after sprint. This is why we developed Focus, where you can set your OKRs up, but instead of forgetting about them until the next quarter, we devised a solution that can help your team stay on top of them. We incorporated OKRs into daily and weekly check-in rituals. They take no more than 2 minutes a day but the result is a team who knows what they are working on that day is moving the needle. Reduce useless work, drive motivation by clarifying purpose and reach the maximum potential of your team. Check out focus and use some these Product Management OKR examples to get started.

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