OKRs vs KPIs: Differences and When to Use Each

As a startup founder, you already face enough challenges when growing your business. Choosing the right metrics for business health and growth should not be one of them.

You probably have heard of metrics like KPIs (Key Performance Indicators) and OKRs (Objectives & Key Results). But what is the difference? And which one should you choose? Or do you need to use both?

These two frameworks serve different roles. KPIs measure your steady performance metrics, while OKRs elevate these measurements by connecting outcomes to your organization's mission. Major tech companies like Google, Intel, and LinkedIn demonstrate OKRs' success in rapid-growth environments.

Let's break down what you need to know to choose the right approach for your team.

Understanding OKRs vs. KPIs: Core Differences That Matter

What Are OKRs and Why Do Startups Love Them?

Objectives and Key Results (OKRs) are a goal-setting framework that links ambitious goals with measurable steps. Intel made them popular first, and Google adopted them later. Now, OKRs have become the go-to tool for startups that move quickly.

Google's co-founder Sergey Brin said it best after John Doerr's presentation: "Well, we need to have some organizing principle. We don't have one, and this might as well be it."

Startups naturally gravitate to OKRs because they bring order to chaos:

• Focus on what matters without complex processes
• Give everyone clear visibility into team progress
• Push teams to stretch with bold goals instead of playing it safe
• Let you adapt quickly as markets shift

What Are KPIs and When Are They Essential?

Key Performance Indicators (KPIs) show measurable values that reveal how well your company meets its objectives. They differ from OKRs because they are ongoing metrics that track business health and performance.

Your business needs KPIs when you want:

• Facts rather than gut feelings to guide decisions
• Simple ways to track progress toward specific goals
• Clear standards to measure improvements
• Performance tracking at every level of your business

KPIs help analyze business processes and make decisions based on real evidence rather than guesswork. Teams thrive with KPIs because they can see exactly how they perform at any moment.

Key Structural Differences

| Aspect | OKRs | KPIs | |--------|------|------| | Purpose | Drive change and improvement | Monitor ongoing performance | | Timeframe | Quarterly (typically) | Ongoing/continuous | | Nature | Aspirational, stretch goals | Operational, realistic targets | | Focus | What do we want to achieve? | How are we performing? | | Tool needed | Planning software | Dashboard | | Example | "Launch in 3 new markets" | "Maintain 99.9% uptime" |

OKRs for Planning vs. KPIs for Monitoring

Here's a crucial distinction that helps clarify when to use each:

OKRs answer: "What should we change or improve?"

• Requires breaking down into weekly priorities
• Needs active planning to achieve
• Drives new initiatives and projects

KPIs answer: "How are we performing on business-as-usual?"

• Requires monitoring and alerting
• Needs dashboards to visualize
• Tracks ongoing operations

When OKRs Need Planning Tools

OKRs are inherently about change—achieving something new or improving something existing. This means they require:

1. Decomposition: Breaking quarterly goals into weekly focus areas
2. Initiative planning: Deciding what actions drive progress
3. Weekly prioritization: Knowing what to work on each week

Without this planning layer, OKRs become just another set of goals that "collect dust" between quarterly reviews.

When KPIs Need Dashboards

KPIs are about maintaining and monitoring. They require:

1. Real-time visibility: Seeing current performance at a glance
2. Alerts: Knowing when metrics fall outside acceptable ranges
3. Historical trends: Understanding performance over time

A dashboard is the right tool for KPIs. But a dashboard alone won't help your team achieve ambitious OKRs.

Choosing the Right Framework for Your Growth Stage

Your startup's stage affects which framework will give you the most value.

Pre-seed to Seed: When Metrics Are Scarce

Early-stage valuations are all about hope, not metrics. Traditional KPIs become less relevant here. You should focus on indicators that show momentum rather than hype.

OKRs give better direction than KPIs for pre-product founders. When you don't have a lot of data, OKRs are one way to talk about the value you'll deliver and what "good" looks like. This helps you arrange future goals before you have solid metrics.

Focus on:

• Market validation metrics
• Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM)
• Qualitative feedback and learning goals

Series A and Beyond: Scaling Your Measurement Approach

The metric landscape changes after Series A funding. At this stage, you need both frameworks working together.

A hybrid framework works best:

1. Balanced Metrics Ecosystem: Set up both OKRs for strategic direction and KPIs to monitor performance. This creates a robust framework combining strategic goal-setting with ongoing performance measurement.

2. Unit Economics Focus: Investors will examine your LTV:CAC ratio (should be greater than 3), payback period (under 12 months), and Magic Number (above 1.0) to assess your go-to-market fit.

3. Departmental Metrics Structure: Create an organizational OS to prevent things from falling apart as you approach 20+ team members. Each department should track appropriate metrics.

Implementing OKRs in Resource-Constrained Environments

Small startups don't need big investments or complex processes to set up OKRs. A simple approach works best.

Lightweight OKR Implementation for Small Teams

Traditional OKR systems often overwhelm small teams because larger organizations designed them. OKR experts suggest focusing on fewer goals:

Quick check-ins every week or two help teams stay on track without extra red tape. These brief meetings prevent small problems from growing into big ones, and they keep everyone accountable.

New teams should start even smaller. Start with 1-2 Objectives and gradually become better at narrowing down your ideas to the most meaningful things a team can work on over the quarter.

For more on implementation, see our guide on how to plan the next quarter with OKRs.

Common OKR Pitfalls to Avoid

Startups often hurt their OKR success through simple mistakes:

• Setting too many OKRs: This tops the list. Teams trying to do everything end up doing nothing meaningful. If everything is a priority, nothing is a priority.

• Creating low-value objectives: These are OKRs where "Who cares?" applies even after completion. Your company's mission should guide every objective.

• Confusing tasks with key results: Key results should measure outcomes, not activities. Task-based results show that something has been done but not whether it has brought any real business value.

• Setting unrealistic targets: OKRs should stretch your team, but constant failure to reach goals (below 70% completion) kills motivation.

• No connection to weekly work: This is the biggest one. If OKRs don't drive weekly priorities, they become meaningless documents.

Tools That Won't Break Your Budget

There are many tools to choose from, some more expensive than others. You can use free tools to manage your OKRs, such as spreadsheets, Trello, or Notion.

However, these general-purpose tools don't help with the planning aspect of OKRs—breaking down quarterly goals into weekly work. For that, you need purpose-built OKR software.

We wrote a comprehensive guide to free OKR tools that covers the pros and cons of each option.

Setting Effective KPIs That Drive Startup Growth

Identifying the Vital Few Metrics for Your Business Model

Many founders track too many metrics simultaneously, which is a critical mistake. Too much data becomes overwhelming and hard to interpret. Your KPIs should:

• Align with your core business values and objectives
• Show valuable insights (not just interesting data points)
• Support your company's overall strategy
• Reflect your specific growth stage

By tracking the right metrics, you can better understand what works and what doesn't, enabling you to make data-driven decisions that propel your startup forward.

KPIs That Investors Actually Care About

Investors look at specific KPIs to assess your startup's financial health and growth path. Focus on critical startup metrics:

1. Unit economics: Your payback period should not exceed 12 months. LTV divided by CAC should be greater than 3 to justify investment.

2. Market potential: A believable Total Addressable Market (TAM) calculation shows your startup's growth ceiling.

3. Sustainability metrics: Gross margins, burn rate, and runway show how long your startup can operate before needing more funding.

Remember: good metrics aren't about raising money from VCs—they're about running the business in a way where founders know how and why certain things are working (or not).

Combining OKRs and KPIs: The Hybrid Approach

Many founders think they must choose between OKRs and KPIs—this viewpoint can get expensive. Combining both frameworks creates a powerful synergy.

When and How to Use Both Frameworks Together

Understanding each framework's distinct purpose makes the hybrid approach work best:

• Use KPIs to track business health (retention, CAC, revenue, etc.)
• Set OKRs to improve those KPIs that need attention
• Use OKRs to test new initiatives before they become standard KPIs

The Planning Dimension

Here's what most hybrid frameworks miss: OKRs need active planning to succeed.

The typical failure pattern:

• Q1 Week 1: Team sets ambitious OKRs
• Q1 Week 4: Team is drowning in operational work
• Q1 Week 12: OKRs are "collecting dust" and incomplete

The solution: Connect OKRs to weekly priorities. Every Monday, your team should know what to work on this week to move OKRs forward—not just what's urgent operationally.

This is where purpose-built OKR planning tools (like Loach) differ from OKR tracking tools. Planning tools help you bridge the gap between quarterly OKRs and weekly work.

Quick Reference: OKRs vs KPIs

| Question | OKRs | KPIs | |----------|------|------| | What do they measure? | Progress toward ambitious goals | Ongoing business performance | | How often do they change? | Quarterly | Rarely (updated, not replaced) | | Who sets them? | Teams (aligned with company) | Leadership/Finance | | What tool do you need? | Planning software | Dashboard | | When to use? | Driving improvement | Monitoring operations | | Failure mode | "Collecting dust" if not connected to weekly work | Ignored if not visible or actionable |

FAQs

Q: What are the main differences between OKRs and KPIs?

OKRs (Objectives and Key Results) are strategic and forward-looking, focusing on change and innovation with quarterly cycles. KPIs (Key Performance Indicators) measure current performance, emphasizing consistency and compliance over longer periods.

Q: When should a startup use OKRs versus KPIs?

Early-stage startups benefit more from OKRs, which help align teams around future potential when concrete metrics are scarce. As companies reach Series A and beyond, KPIs become essential for proving scalability and demonstrating growth to investors. Most scaling companies use both.

Q: Can OKRs and KPIs be used together effectively?

Yes! Many successful companies use a hybrid approach. KPIs track ongoing business health, while OKRs provide direction for improving those metrics when needed. This combination creates a powerful synergy that drives growth beyond what either framework could achieve alone.

Q: What's the ideal number of OKRs to track?

Less is more. When you first start with OKRs, aim for 1-2 Objectives, each with 1-3 key results. Once you're competent with setting and achieving OKRs, go for 3-5 objectives with 3-5 key results each. Quality over quantity!

Q: Why do OKRs "collect dust" in many organizations?

Because there's no connection between quarterly goals and weekly work. Teams set OKRs in January and don't look at them until March. The solution is to use OKRs to drive weekly planning—every Monday, teams should know what to work on to move OKRs forward.

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Conclusion

Startup founders don't have to choose between two performance measurement frameworks—you can use both strategically.

• KPIs excel at tracking current business health through measurable metrics
• OKRs provide the strategic direction needed to achieve ambitious growth

Your company's growth stage largely determines which framework works best at any given time. Early stages favor OKRs for alignment; later stages need KPIs for investor credibility. Many thriving companies use both frameworks together.

The key insight: OKRs need planning tools, not just tracking dashboards. If your OKRs are "collecting dust" between quarterly reviews, you have a planning problem—not a goal-setting problem.

Whatever framework you pick, connect it to weekly action. Goals that don't drive daily work are just wishes.

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Related resources:

• What Are OKRs? — Complete introduction to OKR fundamentals
• How to Set Effective OKRs — Templates and step-by-step framework
• OKR Software Guide — Planning vs tracking tools comparison

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Ready to turn your OKRs into weekly action plans? Get started with Loach →