KPI (Key Performance Indicator)
A KPI (Key Performance Indicator) is an ongoing metric that monitors the health and performance of a business process. Unlike OKRs, KPIs measure the status quo and keep running operations in view, rather than driving targeted change.
What is a KPI?
A KPI (Key Performance Indicator) is an ongoing metric that measures the performance of a business process, department, or entire company. KPIs are continuous measurements – they don't change quarterly like OKRs but are permanently monitored.
KPIs vs. OKRs – The Key Difference
| Aspect | KPI | OKR |
|---|---|---|
| Purpose | Monitor ongoing performance | Drive strategic change |
| Timeframe | Continuous | Quarterly cycles |
| Ambition | Realistic thresholds | Stretch goals (70% = success) |
| Structure | Single metric + target | Qualitative Objective + measurable Key Results |
| Response to miss | Investigate cause | Learn and adapt |
KPIs and OKRs are not opposites – they complement each other. KPIs preserve, OKRs change.
When Does a KPI Become a Key Result?
A KPI transforms into a Key Result when you pursue a significant change:
- KPI: Customer satisfaction stays above 4.2 out of 5 (ongoing monitoring)
- Key Result: Increase customer satisfaction from 4.2 to 4.7 (strategic improvement)
The KPI becomes a Key Result as soon as an ambitious improvement goal stands behind it.
KPIs as Health Metrics
In the OKR context, KPIs often become Health Metrics – metrics watched alongside OKRs to ensure that pursuing ambitious goals doesn't damage ongoing operations.
Examples of Common KPIs
- Sales: Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC)
- Product: Daily Active Users (DAU), Feature Adoption Rate
- Support: Average Response Time, Customer Satisfaction Score (CSAT)
- Engineering: Deployment Frequency, Mean Time to Recovery (MTTR)
- HR: Employee Satisfaction, Turnover Rate
KPIs and OKRs in Northly
Northly lets you track KPIs as Health Metrics alongside your OKRs. You maintain oversight of ongoing operations while simultaneously pursuing ambitious change goals with OKRs – all in one platform.
Related Terms
OKR (Objectives and Key Results)
OKR stands for Objectives and Key Results – an agile goal-setting framework that helps organizations define ambitious goals and track measurable outcomes. Developed in the 1970s at Intel by Andy Grove and later popularized worldwide by Google.
Key Result
A Key Result is a quantitative, measurable outcome that indicates progress toward an Objective. Each Key Result has a clear metric, a starting value, and a target value, answering the question: "How do we know we're on the right track?"
Health Metric
A Health Metric is a metric monitored alongside OKRs to ensure that pursuing ambitious goals doesn't negatively impact critical business functions. It serves as a guardrail for OKR execution.
Frequently Asked Questions
What is the difference between KPI and OKR?
KPIs monitor ongoing performance continuously (e.g., "Churn rate stays below 3%"). OKRs drive strategic change in quarterly cycles (e.g., "Reduce churn rate from 3% to 1.5%"). Both complement each other.
Do OKRs replace KPIs?
No. KPIs and OKRs serve different purposes and work best together. KPIs become Health Metrics in the OKR context, monitoring stable operations.
When does a KPI become a Key Result?
When you pursue a significant improvement. "Customer satisfaction stays above 4.2" is a KPI. "Increase customer satisfaction from 4.2 to 4.7" is a Key Result.
How many KPIs should a team have?
3 to 7 KPIs per team is a good guideline. Too many KPIs dilute focus. Concentrate on the metrics that have the greatest impact on business success.