Learn about OKRs, KPIs, how they are similar, and how they are different.

I did write, like a page of stuff on the difference between

OKRs and KPIs yesterday. Okay, if I know that I don't know how

that would fit in with the customer lifecycle. Somewhere,

but I just, it's in my head. So if you need me to riff for 10

minutes on that sort of stuff, I can do that.

The difference OKRs and KPIs.

Yeah. Or is there other ones that you're looking at?

Well, the only thing I was thinking of that is like

we can we can riff on that. I think the benefit would be. And

we talked about incorporating this into key results, but the

difference between committed goals, stretch goals, and

moonshot goals, you know?

Yes. I think that, that lies within that topic, our race. I

mean, because I think I looked at what are the similarities

with OKRs, and KPIs, but the difference is primarily being

the intent of those measurable like, they're both quantifiable

measurements and frameworks to measure performance. But a KPI

is often it's taken commonly across businesses are quite

common, and they're quite, they're not as adaptable. You

know, and they're, they're always committed. And they come

from a place where the HR people set them to determine

compensation. So they have this emotional attachment because

they're connected with money, whether an OKR, as you say,

could be a moonshot where you're not connecting someone's comp,

to heading 100% of the moonshot, you're simply setting it to

encourage one's ambition.

Right, which is where I think having that

distinction you can still use, I believe you can still use KPIs

within OKRs. There's a school of thought that sense to keep those

separate separation of church and state, right. Yeah. But the

people will always gravitate towards what's going to be

incentive incentivize for them. Yeah. What will be your typical

day to day KPIs? revenue generation, customer

satisfaction. I think that's where the like a committed key

result can be basically a KPI in disguise, versus a stretch. key

result is something that pushes the limitations versus the moon

shot. That's, that's my opinion of how those three should be

categorized. But yeah, the KPI the that's, that's a big problem

with a lot of these implementations, because they

just wild Why would I buy a do I care about some stretch? It OKR

I'm trying to hit my number.

Yeah, I dealt with it man. Like I lead the our team of

sales engineers, and we got given mandated a KPI from our

Chief Revenue Officer down. And then I wanted to try out OKRs

with the team, because there was six of us, and I thought I'd

give it a go. And people really found it difficult to say, I was

pitching them like OKR is this great framework where you can

prioritize what you need to focus on. It's like, it would

KJ, here's our KPIs. And here are OKRs. Now, which one do we

do? Like, do we do the one that gets us paid the bonus? Or do we

do the one that you're telling us to do? And ultimately, they

all chose the bonus. So they wanted to get their bounce?

Right? So it's really difficult to ask people and you undermine

your argument where OKRs will help you focus? Well, they

won't, if you have this other force called KPI is pulling you

in a different direction. So you have to have a reconciliation

between bolts, but what I was going to say about KPIs is that

I read this great good hearts law statement, which is any

observed statistical regularity will tend to collapse once

pressure is placed upon it for purposes of control. So in

essence, if you take a an observable measurement, like you

know, revenue or some sort of KPI and you place A lot of

pressure on it, for the purposes of micromanaging or controlling

someone underneath you, it immediately collapses. So that's

what KPIs I feel tend to be for the purposes of command and

control. Whether if you perceive OKR isn't that way, it's not

going to work, you have to use OKRs to empower people from that

should be autonomy of the measurement. And the

quantifiable measurement should be given to the person creating

the OKR. It shouldn't be your boss telling you to hit 100%,

that should be them deciding what they want to hit. It's a

different different sense, or a different intent. It's not for

commanding you and controlling you. It's for comparing.

Yeah, yeah, no, that makes sense. And the other piece

in terms of like, how do you reconcile the two is really, at

the end of the day, like a KPI is a lagging indicator. Yeah.

And key results. OKRs can be a powerful leading indicator, can

we execute just on these simple things? Can we to use a

marketing example? Can we improve our conversion rate from

four to 8%? That's a, that's a leading indicator, because you

can go off and you can execute any number of projects and

initiatives to see if you are moving the needle on that. Now,

your ultimate KPI might be the number of leads that you

generated. Yeah, right. And that's that number is what it

is. But before you get to that number, this is a great bridge

to get there. And it's incremental, too. It's like,

it's bite sized chunks if you're not trying to, like boil the

ocean. Like, what are the you know, our ultimate objective

here is we want to have a full pipeline. Okay, great. Are we

want to hit these revenue numbers? That's fine. The to get

there, it's gonna take a series of smaller steps to get to the

bigger picture. Yeah, that's how those two are combined.

Yes. Yeah, you're right. And combined, you get a more

holistic view of performance, you know, to like, if you want

to really evaluate someone's performance at their job. Don't

just take the lagging indicator. That's what most people do.

They'll obsess over the KPI like, did this sales man hit

this KPI quota? And if you did not, that's, then you're out

whether you have to take a more holistic view of this person's

contribution, not just the KPI. But how did they contribute to

the OKRs, which, as you rightly said, facilitate and foster

communication about how we're going to get to that KPI. They

facilitate collaboration with other people how to get there,

they facilitate experimentation. Because you set an OKR. And you

experiment and you say, maybe our hypothesis is, if we put a

cart button here, we might drive behavioral change to increase

conversion rates on the cart. Let's try it out. Let's develop

it. Let's do it. Let's design let's put it in, did it work?

Okay, it didn't, okay, great. Well, we'll just try something

else. OKR is allow for that. Or the KPI is the command or going,

you have to hit 100. The OKR is the one that kind of allows you

to be agile to get there. Yeah.

And the beauty of all this is when you look at it

all through the lens of the logic model. If you are

empowered to select your own OKR, select your key results,

the things that you believe will move the needle, that's great.

You still need to pick the right activities, and you can't do

everything you get you have to be very selective. And it's it's

a game of prior prioritization really, like what are the top

three or four things that I can actually tangibly work on today,

this week, this month, this quarter, whatever, to move the

needle, but even going before that is that's all well and

good. But you're only one individual or small team, do you

have the resources that you need to hit that to do the activities

that you desire to drive the impact on the key results to

ultimately lead to your KPI? So if we, you know, as a little

startup said, Hey, guys, we're gonna, our revenue goal for 2022

is $10 million. We would say, well, we just don't have the

resources to do that at all. It's a non starter. And that's

where a lot of frustration happens with like, tech

companies, marketing people, SAS salespeople, they just don't

have the resources or they don't have the features and

functionality or they don't have the manpower whatever it is. Do

the things they want to do. And so there's a disconnect. And I

think the logic model helps bridge that gap. And I think the

key results leading into KPIs helps to bridge that gap too.

Great. That's good. I agree. But tell everyone what, what

that logic model is an illustrate to us, you know, at

the end example.

Yeah, so every, every impactful outcome starts

with resources and resources as people, technology, finances,

any sort of asset, capital, yeah, capital. That's the

resources, the things that you can use at your disposal to do

the activities, the activities, the actions, we want to create,

you know, this number of articles, or we want to build

these types of features and functionality and that those

activities lead to output. So the number of activities that

you've done, and so we've created, you know, we've done 10

integrations, that's all well and good. But that leads to the

outcomes, which is the behavioral change that you're

seeking, you can build 10 integrations to keep using that

example, if nobody actually uses them, it's kind of a moot point

doesn't matter. And then ultimately, the outcomes lead to

impact. So those are more longer term. And those are related to

economic impact, environmental impact, societal impact. So if

you look at any sort of nonprofit company, they're

really tied to this model, because they're trying to drive

long term impact, like, how can we create a more sustainable

planet? How can we, you know, lower, reduce climate change?

How can we provide water and health care to you know, the

globe, whatever? How can we put a man on a different planet?

Like these are all long term, like three to 510 20 year

impact? Things are trying to move the needle? That always

comes back to the resources? Like do they have the money? Do

they have the people? Are we working on the right things? Are

we producing the right outcomes? Are we driving change? And if we

do all those things, we will make an impact? Yeah, that's the

logical model.

It's great. Yeah. Like it starts with sort of what assets

they have. Activities, how you deploy those resources and

assets. The outcome is the quantifiable measurement, we

deliver 10 integrations out the output is the quantifiable

performance 10 integrations, outcome is the quality, the

behavioral change, and the impact is closer to your is

closest, probably to a company's mission. Right? Yeah, impacting

society by you know, delivering better health care, whatever,

it's great. It's it really sums up everything in a very linear,

logical way.

That's why it's called the logical model.

That's what it's called, the logic model.

Maybe we can get into that one. Separately,

because there's more there that we can unpacked, especially from

a business standpoint, because every business leader wants the

the impact of their business to be a higher valuation. Yeah. How

can the value of my company be higher and higher and higher,

but you got to put in the work beforehand?

Yeah, it'd be great. We could do a session on diagnosing

the most common pitfalls of the model error where people really

struggle with it, I have a sense that people really struggle with

resources and activities, like they want or maybe resources and

outputs, they want a certain output. They want 10

integrations, but they don't pile up the resources or plan

the resources necessary to deliver the output. You know,

there's the probably, maybe there's the chink the chain,

there's more we can unpack there. But I think for

now, it's pretty good. By the way, this day in history, Ford

Motor Company, under Henry Ford in 1915. manufactures its 1

million automobile at the river rogue plant in Detroit. So 1

million automobiles.

That's output. Yeah. 1915 I think 15 Day at a million cars

built by 1915.

Yeah, that's the model, probably the Model T. So

that's your output. So your resources are your people and

your assembly line and your factories and for factory

workers. Yeah. And then you that's the number you create

that many can. That's the output and then but the behavioral

change the outcome is do people make the decision to buy these

cars and yes, overwhelming? Yes. And why? is the impact of all

that? Well, it's the Industrial Revolution. Yeah.

To say, just to say, Have you mobilized the earth's

population? Yeah.

Good job, Henry.

Henry. That's pretty shitty impact, to be honest, like I

could do that.

Yeah. I'd prefer to be running around on a horse.