OKRs vs KPIs: what is the difference, and which does your organisation need?

KPIs tell you how the business is performing. OKRs tell you what you are trying to change. Most organisations need both.

By Soren Achterberg, Fellow, AI & Operating Model · 26 September 2026 · 4 min read

Few management terms are used as loosely as OKRs and KPIs. Some organisations treat them as interchangeable. Others adopt OKRs with great enthusiasm, only to find a year later that they have simply renamed their existing targets. The confusion is costly, because the two tools do different jobs, and using one where the other is needed leads to either stagnation or chaos.

What a KPI is

A key performance indicator is a measure of how well an ongoing part of the business is performing. Revenue growth, gross margin, customer retention, on-time delivery and employee turnover are typical examples. KPIs are the vital signs of the organisation. They are tracked continuously, they usually have a target range, and they are expected to stay healthy.

KPIs answer the question: is the business running as it should?

What an OKR is

Objectives and key results are a goal-setting method. An objective is a qualitative statement of something the organisation wants to change or achieve, usually over a quarter or a year. Key results are two to five measurable outcomes that show whether the objective has been reached.

For example, an objective might be to become the easiest supplier in the industry to do business with. Its key results might be to cut average order-to-delivery time from ten days to five, to raise the share of orders placed online from 40 to 70 per cent, and to halve the number of billing queries.

OKRs answer the question: what are we trying to change, and how will we know we have changed it?

How they work together

The two are complementary. KPIs show where the business is healthy and where it is not. When a KPI moves in the wrong direction, or when the strategy calls for a step change in performance, an OKR is the tool for driving improvement. Once the change is achieved, the new level of performance is maintained through the KPI.

A company whose customer retention has slipped might set an objective to win back its most valuable customers, with key results tied to retention in that segment and to the causes of churn. When retention recovers, the OKR is retired and the KPI continues to be monitored.

KPIs keep the business healthy. OKRs make it better. Confusing the two produces neither.

Common mistakes

The most common mistake is to write every KPI as an OKR. The result is dozens of key results, none of which represents a real change, and a quarterly process that consumes time without shifting priorities.

The second is to set too many objectives. OKRs work because they focus attention. Three objectives for an organisation, or for a team, is usually plenty. If everything is an objective, nothing is.

The third is to write key results as activities rather than outcomes. "Launch a new customer portal" is a task. "Increase the share of orders placed online to 70 per cent" is a result. Only the second tells you whether the effort worked.

The fourth is to tie OKRs directly to individual pay. Because good OKRs are ambitious, teams will often achieve only part of them. Linking them tightly to compensation encourages people to set targets they know they can hit, which defeats the purpose.

Which does your organisation need?

Almost every organisation needs a small, stable set of KPIs that tell leaders how the business is performing. OKRs add most value where there is a clear strategy that requires change, and where that change depends on several teams working together. They are an effective way of translating strategic choices into quarterly priorities.

Start with the KPIs. Agree the ten or so measures that matter most and make sure everyone can see them. Then, for the two or three changes the strategy most depends on, write objectives and key results, review them every quarter, and retire them when the job is done.

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