Here at Elate, we are fortunate enough to work with some of the best high growth strategy and operations leaders. From our Aspiring Ops Podcast to our work with leading companies like Jobvite, Lessonly, and Rheaply, we have a front row seat to how companies are reimagining strategy and operations as a growth engine for their business.
However, even with all of the progress and excitement around how strategy and operations can serve as a secret weapon for high growth companies, one area that continues to be a struggle for companies is figuring out an operating framework that works for their business.
With the wave of different frameworks, from OKRs and V2MOm to EOS and 4DX, companies are trying to figure out what works best for them, and how any of these frameworks work alongside traditional methods of measuring goals and results. Some of the more traditional methods that are commonly used include KPIs (Key Performance Indicators) and MBOs (Management by Objectives).
Recently, we've seen the OKR framework emerge as one of the more popular goal-setting methods. For those that might not be familiar with OKRs, we previously wrote about everything you need to know about OKRs.
But for a quick summary, OKR stands for Objectives and Key Results. The OKR methodology has become popular recently after John Doerr's book 'Measure What Matters' highlights how high-profile companies like Intel and Google implemented OKRs as a goal-setting framework. The OKRs Google implemented helped push the company into a structure that allowed the company to make aggressive bets, and measure the outcomes of those initiatives across the business.
As more and more companies look to implement real OKR examples at their companies, they are trying to figure out how OKRs and KPIs or MBOs work together.
For the debate on OKR vs KPI vs MBO, that is likely bringing too many cooks into the kitchen. So for today, we are going to focus on the debate of OKR vs KPI, and why instead, we think the best method is to think about it as OKR and KPI. In the past, we've outlined how to manage both OKRs and KPIs, so we also wanted to take some time to share why we believe both measures can work in unison to help your company scale.
As we've shared, OKRs are a goal-setting framework designed to align your entire company and unify the work and effort of every team member around a long term vision. However, from working with some of the leading strategy and ops leaders at various stages, we’ve seen there are always going to be KPIs that should be top of mind and central in how you review the ongoing health of your business.
From Annual Recurring Revenue and Retention Rate to NPS and Upsells, certain KPIs are essential to your business and need to be reviewed, reported, and discussed regularly.
And while most of these metrics might live as Key Results tied to an Objective, the reality is there might be a season or quarter where your business doesn't have company level objectives that tie to these metrics. Further, as you start to think about metrics, such as gross margin, run rate, cash on hand, etc, these are financial metrics tied to the operating health of the business. However, these might not be tied to team objectives or even metrics you feel comfortable reporting to the entire company.
For high growth companies, understanding the unit economics of their business and the underlying financial data is critical. Often these financial data points won't live directly on OKRs, but they will live on dashboards highlighting KPIs that are impacted by the Objectives your company is focused on for the quarter.
At Elate, to solve the question of OKR vs KPI, we built a platform that helps bring together both in an actionable solution.
Too many of the companies we were working with had BI tools or dashboards built for their KPIs, that were rarely reviewed or provided no actionable next steps. Similarly, they often purchased an OKR software to capture company objectives, only to find that just like their KPI dashboard, this became nothing more than an OKR warehouse where employees built OKRs, never to revisit them.
Elate was built for today's strategy and operations leaders to help them navigate the challenges and opportunities they face in their business. The leading strategic planning platform, Elate helps drive accountability for goals and outcomes, automate follow-up and communicate your company’s vision to the whole organization.
For us, the question of OKR vs KPI isn't as much about whether one is right or wrong. But rather, how do both work in unison to provide actionable steps to help keep your company on pace, and provide proactive insights that help you build a better plan as you continue to scale.
If you'd like to learn how Elate is working with other strategy and operations leaders to successfully implement and run their operating frameworks, reach out to our team today. We'd love to share more!