Here we are in the middle of planning and people are talking about OKRs and KPIs, but what's the difference between them and when should you use one over the other?
Starting from the definition, OKRs are Objectives and Key Results, while KPIs are Key Performance Indicators. Sounds similar, no? Key Results and a Performance Indicators sure sound like the same thing. And your KPIs might be some of your Key Results, but they're absolutely not Objectives
And that's where the important difference is. Very much like the difference between a vision statement and a mission statement. A vision statement defines the goal, the end state, the objective. On the other hand, a mission statement defines what you do to enable the vision, and the KPIs/Key Results measure how well you're doing in that mission.
Or put another way, the KPIs are how you define done. Like everything else we do, the most important thing to do is decide what to do (the objective), and the second most important is to decide what it means to be done/succeed (the key results).
Objectives come in a few flavors, but the big ones are existential and aspirational. Existential ones are the ones that you need to do to keep going. Things like RTR and NVO. Down here in the engine room it's things like "Increase Capacity" and "Secure the Data". If we fail to do those things we hit a wall and everyone has problems.
Aspirational objectives, on the other hand, are longer term, and progress is important, but not reaching the end state at the specified time is not fatal. These are things like "Replacing personal car ownership" or, for Infra, "Workloads seamlessly and transparently transition between on-prem and cloud datacenters". We won't get there this year, let alone this quarter, but we'll make progress.
Similarly, KRs/KPIs often fall into two categories. actionable and vanity. Actionable metrics let you know what's going on quickly and accurately and can help you make decisions through uncertainty. Vanity metrics look and sound impressive, but don't really tell you much. As an example, consider a simple website, It's got a handful of static pages and a few images from a database. Vanity metrics are epitomized by that hit counter at the bottom of the page. It just keeps going up. Millions and millions of views. Or maybe you're a little more advanced and you're tracking P95 page load times. And it's always under 100ms. That's great, right?
Not necessarily. On the surface those metrics look wonderful, but they don't tell you anything. Actionable metrics would be unique daily user counts, or even better, unique daily user trends. PLTs are important, but since you've got a 50ms timeout on your database calls that p95 doesn't mean much. You should be looking at 2XX vs 4/5XX responses. And not just raw numbers, because 1 error out of 3 is really bad, but 1,000 errors out of 100,000,000 isn't bad at all (but still might not be acceptable), but could indicate a brewing problem you need to take action on.
So as you think about planning, not just for Q4, but longer term (1, 3, or 5 year plan) as well, think about how you choose your Objectives and Key Results and the Key Performance Indicators you're going to use to measure yourself. Are they really driving you where you want to go?