Understanding and leveraging both will improve performance
Ask what a company's goals are, and the answer comes back as a list of Key Performance Indicators (KPIs). This is understandable—the things that the company wants to track and improve are specific performance metrics; reducing their support response time, improving their uptime, anything that’s easily measured and tracked seems like it’s perfect to be set as a goal. After all, from quarter to quarter, these metrics are changing, so why not call them the overall goals for the organization?
There’s nothing wrong with setting goals around your KPIs. But goal frameworks like OKRs need a different way of thinking. Instead of focusing on an individual metric and trying to improve it, the focus shifts to broader outcomes, solving problems, and truly pushing the company forward. KPIs are a measurable result, but they’re only a piece of a puzzle. A singular focus on them is a disservice to your organization.
Think about your overall goal strategy like a basketball game. You have an overall mission (win the game), but need to focus on smaller pieces in order to see it through. OKRs are the playbook—how you’re going to work each quarter towards your outcomes. Like any good playbook, OKRs are driven by what the team can get done on the court—just running the plays won’t mean you’ve achieved your mission. KPIs measure stats— field goal attempts, steals, assists—they affect your goals and what plays you run, but getting a triple-double means little if you lose the game.
What KPIs Tell Us
Let’s imagine we run a customer support team. Our CS team has started seeing a higher volume of support requests, and we’ve set a team KPI for 200 ticket responses per hour. This is an 11% increase over last quarter’s KPI (180 tickets per hour), but by the end of the quarter, we are consistently hitting 200 tickets an hour and meeting our KPI.
This tells us that the team is meeting expectations for performance. And that’s great! We have a good team and our customers' issues are getting resolved. However, what we don’t see is that our volume is still increasing, and our response time is following suit. Our customers don’t like waiting, and that’s affected our Customer Satisfaction Score—one likely culprit in our rapidly falling retention rate. Meeting our KPI hasn’t avoided a support crisis.
On their own, KPIs have a limited scope and tend to account for a small part of what we’re trying to achieve. We wanted to handle the larger volume of requests, but still ended up with a major problem to solve. We treated a symptom as opposed to a problem. Even if we add in additional KPIs for response time and CSAT and retention, we’re looking at disparate pieces that don’t tell a complete story.
See the bigger picture with OKRs
While KPIs focus on individual aspects of a team’s duties, OKRs allow for teams to solve bigger issues, advance more readily, and take moonshots without losing sight of the minutia. Our CS team wouldn’t simply adjust its numbers and hope that they end up helping. We’d take a broader approach to what we wanted to do, and use our metrics to better measure whether or not we’ve accomplished our goal. To put that into action, we could set up the following:
Objective: Solve our support ticket crisis
Key Result 1: Reduce first response time by 10%
Key Result 2: Improve CSAT by 5%
Key Result 3: Increase tickets handled from 180 to 200
Even using the same KPIs, we’re still able to see more clearly how these individual pieces can affect our overall objective. Individual contributors can better understand their place in helping the team achieve their goal. And OKRs give us the flexibility to update goals as new information comes in throughout the quarter. If we continue to see a rise in volume, we can adjust as needed, either by adding an additional KR (Increase visits to help center material by 15%) or adjusting our existing KRs as needed.
Focus on outcomes, not actions
The biggest differentiator between OKRs and KPIs is the drive towards an outcome as opposed to an action. KPIs may inspire action plans, but they’re generally about taking a task and doing it more efficiently. OKRs, on the other hand, are focused entirely on the outcomes, the results that need to be achieved. We want to be a better support team, so we need to see these outcomes. Tasks and actions are still needed, but by focusing on the outcome, each team member is given the autonomy that they need in order to make their impact in the best way they know how.
This focus on outcomes also allows for more flexibility. If the outcome we want to see is a better customer experience, we might be able to miss one of our Key Results, while still delivering an overall better experience. If the first response time only gets lowered by 7% instead of 10%, we still might be able to over-perform on the other Key Results and end up better managing support tickets, which means a better customer experience.
The keys here are balance and helping your team understand how the pieces fit together. Just like our basketball team, we need to know our stats to make better decisions about which plays to run. We run those plays because we’re driven by our overall strategy. And by balancing our KPIs and OKRs, we’ll drive our broader mission forward.
If you want to talk about anything we’ve covered in this post or learn more about what Koan can do to help you enhance all of this, just let us know - we’re happy to help!