Goals are broad, overarching aspirations. They inspire action.
Objectives are specific, measurable steps to achieve those goals. They guide action.
KPIs (Key Performance Indicators) are metrics that track progress towards goals. They measure action.
Metrics are everything else that you track along the way.
Here’s where is gets confusing. OKR. MBO. MBR. BSC. 4DX. Yes, these are all real acronyms. They are all different planning tools. OKRs (Objectives and Key Results) is the most popular because it had the best GTM strategy (Google), influencer marketing (John Doerr), and it’s sufficiently vague on implementation details so “everyone kind of thinks they know how to do it.” If you want a real system, check out Business Operating Systems.
These tools all make people default to thinking about outputs instead of inputs. You can track outputs in your goals and in your metrics, so don’t do it with your objectives and KPIs! Tracking and understanding outputs by inputs is really the point of a business or system. You want to understand exactly how you can make more money, NOT just tracking how much more you made. The score takes care of itself. This is the basis of Amazon’s Weekly Business Review, Elon’s algorithm, Ohno’s Toyota Production System, Netflix’s A/B tests, P&G’s focus groups, Bill Walsh’s Standards of Performance, and every other effective system I’ve seen scale.
So how do you put this into practice? It seems organizations default between binary modes of “we don’t track anything” or “we are trying to track everything.” The good news is there’s likely only a handful of metrics that matter…which we’d call KPIs!! So, find your KPIs, make sure they’re mostly inputs not outputs, and call it a day.
There are really only three categories to pick from:
- Growth: Do more X (calls, tweets, leads, etc.)
- Quality: Measure how X is going (bugs, test coverage, customer satisfaction, etc.)
- Capacity: Do X faster (automation, hiring, cycle time, etc.)