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Hi everyone. Here is Ricardo Vargas, and this is the 5 Minutes Podcast. Today, I'd like to talk about the difference between OKR and KPI. Many, many people think that we are talking about the same thing because both of them are measurements. People think that maybe OKR is part of KPI or KPI and OKR are the same thing. Saying that is the same thing as saying that a ruler and a scale are the same thing because they both measure something; it's not because the scale and the ruler measure something that they are the same thing. We need to understand that KPIs and OKRs have very different meanings. Let me start by explaining KPIs or Key Performance Indicators. KPIs are specific metrics that help us to measure the performance of an ongoing process or activity. Usually, the KPI can be seen as the pulse of our business or project. They give us a real-time look at how things are working, for example, in the project management concept. KPIs are often used to track the progress of a project execution. For example, I want to know the delivery rate, or I want to know the delays, or for example, when I'm using earned value, and I use the SPI Schedule Performance Index or CPI Cost Performance Index. They are both great measures of KPI. They are saying how the project is going in terms of time and in terms of cost. KPIs will help us maintain control and ensure that everything is running smoothly. But when we think about OKRs, we are talking about different things. Okrs are objective and key results, and unlike KPIs, OKRs are goal settings, and they are part of a framework designed to push our team towards a target and usually an ambitious target. And OKRs are made of two parts: the objective you want to reach and the key results that support and reinforce that you achieved or not that objective. So OKRs can be used, for example, to evaluate the benefit and the value delivered by your project or by your PMO. For example, let's suppose your project management office is implementing AI tools to foster and speed up, for example, the delivery of the benefits of your project. So, you create some key results for the projects in your PMO that your PMO supports. And you attach these key results to a specific objective, for example, an enhanced project management process through the use of AI. And then, for example, you can create a key result: Reduce the average project planning by 20% by using the XYZ AI tool. This is an example of OKRs, and what is important is that most of the time, KPIs are not time-bound. This means that you measure and use KPIs for the amount of time you want. For example, a company that is using a KPI to track the level of accidents in the project environment. So, this KPI will be used until the day you want to stop using it. But the OKRs are time-bound. For example, when you reach that objective, that specific set of key results, they become irrelevant because you already reached your goal. Then what happens? You create a new set of OKRs and then a new set of OKRs. For example, when you reach that objective, a new set of objectives will be created with a new set of OKRs. What is super important, and I heard this recently and this hurted me, it's when people said that OKRs are a subset of KPIs. This is not true. You can call them cousins. You can even say that they are, I would say, you know, relatives, but they are not the same thing, and one does not belong to another. And again, it's the same thing that you think that a ruler and a scale are interchangeable because they both measure. It makes no sense. Think always about that; they are both absolutely great indicators for your projects and your objectives, but they measure different things, and they have different intentions. Think always about that. It's critically important that we measure the results of our project, but we need to measure them with the proper measurement tool. Think about that, and see you next week with another 5 Minutes Podcast.
