OKR vs KPI: What's the Difference and When to Use Each [2026]

"Should we use OKRs or KPIs?"

It's one of the most common questions startups ask as they grow past their first handful of employees. The team is getting bigger, priorities are multiplying, and someone suggests implementing a framework to keep everyone aligned.

But here's the thing most articles won't tell you: this is the wrong question. OKRs and KPIs aren't competitors. They're different tools for different jobs. And both of them are incomplete without a third piece that most companies overlook entirely.

Let's clear up the confusion once and for all.

Quick Definitions

Before comparing, let's define each concept precisely. These terms are often used interchangeably (incorrectly), so clarity matters.

What Is a KPI?

A KPI (Key Performance Indicator) is a quantitative measurement that tracks how well you're performing against a specific business objective. Think of KPIs as your business vital signs—they tell you whether things are healthy or not.

KPIs are typically:

Examples of KPIs:

What Is an OKR?

An OKR (Objectives and Key Results) is a goal-setting framework where you define an ambitious Objective (qualitative goal) supported by 2-5 measurable Key Results. OKRs were popularized by Andy Grove at Intel and later adopted by Google through John Doerr.

OKRs are typically:

Example OKR:

Objective: Become the preferred retrospective tool for remote engineering teams

Key Results:

Notice the difference in ambition: a KPI says "maintain 5% churn" while an OKR says "reduce churn from 5% to 2% this quarter." KPIs maintain; OKRs transform.

The Key Differences Explained

Purpose: Maintenance vs. Transformation

KPIs answer: "How are we doing right now?"

OKRs answer: "Where are we trying to go?"

KPIs are your rearview mirror and dashboard gauges — they tell you speed, fuel level, engine temperature. They keep you safe and informed. OKRs are your GPS destination — they give you direction and ambition.

A business that only tracks KPIs knows its current health but has no strategic direction. A business that only sets OKRs has ambition but might miss early warning signs.

Ambition Level: Targets vs. Stretch Goals

KPIs expect 100% achievement. If your target churn rate is 5% and you hit 5%, that's success. Missing a KPI target signals a problem that needs investigation.

OKRs expect 60-70% achievement. If you set a Key Result to grow from 500 to 1,200 teams and hit 900, that's solid performance. OKRs that are always fully achieved weren't ambitious enough. Google famously calls these "moonshots" — if you aim for 10x and achieve 5x, you've still done something remarkable.

Timeframe: Ongoing vs. Quarterly

KPIs run continuously. You don't stop tracking revenue or churn at the end of a quarter. They're always on, always reporting.

OKRs reset every quarter (typically). At the end of Q1, you score your OKRs, learn from them, and set fresh ones for Q2. This creates a natural rhythm of ambition, execution, and reflection.

Scope: Operational vs. Strategic

KPIs focus on operational excellence — keeping the machine running smoothly. They tend to be department-specific: sales KPIs, marketing KPIs, support KPIs.

OKRs focus on strategic change — moving the needle on what matters most. They can cascade from company-level objectives down to teams and individuals, creating alignment across the organization.

When to Use KPIs

KPIs work best when:

1. Tracking Ongoing Business Health

Every business needs vital signs. Revenue, churn, cash flow, customer satisfaction — these never stop being important. KPIs keep these in view.

2. Measuring Steady-State Performance

When a process is working and you want to ensure it stays working, KPIs are perfect. "Keep conversion rate above 12%" is a KPI job, not an OKR job.

3. Holding Teams Accountable to Standards

Support team should respond within 4 hours? Sales team should close 20% of qualified leads? These are KPI targets — clear standards that teams are expected to meet consistently.

4. When You Need Simple, Clear Accountability

KPIs are easy to understand. "Hit this number" is unambiguous. For operational teams, KPIs provide clear expectations without the complexity of the OKR framework.

When to Use OKRs

OKRs work best when:

1. Driving Strategic Initiatives

When you need to move the business forward — launch a new product, enter a market, improve retention dramatically — OKRs provide the structure for ambitious change.

2. Aligning Multiple Teams

OKRs cascade beautifully. A company Objective like "Become the market leader in remote retrospectives" can break down into team-level OKRs for product, engineering, marketing, and sales — all pushing in the same direction.

3. When 70% of Ambitious Is Better Than 100% of Easy

OKRs encourage stretch thinking. "Grow revenue by 50%" as an OKR, achieving 35%, may be better than a KPI target of "grow revenue 15%" fully achieved. The ambitious framing pushes teams to think bigger.

4. Creating Quarterly Focus

OKRs force prioritization. You can only have 3-5 objectives per quarter, which means saying "no" to everything else. This focus is invaluable for growing companies drowning in opportunities.

How OKRs and KPIs Work Together

Here's where most guides stop — listing differences and calling it done. But the real value is understanding how these frameworks complement each other.

KPIs Can Become OKR Key Results

If a KPI is underperforming, it can become an OKR Key Result for a quarter. Churn is at 8% (KPI target: 5%)? Create an OKR:

Objective: Dramatically improve customer retention

Key Result: Reduce monthly churn from 8% to 4%

Once achieved, churn goes back to being a KPI you monitor — not an active OKR you're driving.

OKRs Can Create New KPIs

When you launch a new feature via OKR ("Launch async retro feature, 30% adoption"), the adoption rate might become an ongoing KPI after the OKR quarter ends.

The Rhythm

Think of it as two loops:

KPI loop (always running): Track → Compare to target → Alert if off-track → Investigate → Adjust

OKR loop (quarterly): Set ambitious objectives → Execute → Score at quarter-end → Learn → Set new objectives

Both run simultaneously. KPIs keep the lights on. OKRs push you forward.

The Missing Piece: Your North Star Metric

Now here's what almost every OKR vs KPI article misses entirely.

Both OKRs and KPIs are powerful frameworks. But neither one answers the most fundamental question: "What is the single metric that captures whether our business is creating value and growing sustainably?"

That's your North Star Metric. And without it, both OKRs and KPIs can drift.

The Problem Without a North Star

Imagine a company with great OKRs and KPIs but no North Star:

Each looks reasonable in isolation. But are they all pushing toward the same definition of success? Maybe the blog traffic brings the wrong audience. Maybe the 50 deals are low-value customers who churn quickly. Maybe the 3 features don't address retention.

Without a North Star, OKRs and KPIs can be individually successful but collectively directionless.

The Metric Hierarchy

Here's how the three frameworks stack together:

Level 1: North Star Metric — Your single guiding metric. "Weekly active teams completing retrospectives." Everything ladders up to this.

Level 2: OKRs — Quarterly strategic initiatives that move the North Star. "Increase weekly active teams from 500 to 1,200 by improving onboarding and launching async retros."

Level 3: KPIs — Ongoing operational metrics that keep the business healthy. "Maintain less than 5% churn. Keep response time under 4 hours. Sustain 15% trial-to-paid conversion."

The North Star gives direction. OKRs provide quarterly thrust. KPIs ensure operational health. Together, they form a complete system.

How It Works in Practice

Your weekly team meeting might look like this:

Notice how the North Star frames the conversation. OKRs drive the strategic discussion. KPIs catch operational issues. All three working in harmony.

For Startups: Do You Even Need OKRs Yet?

Here's an unpopular but honest opinion: most startups under 20 people don't need OKRs.

Why? OKRs add process overhead. Setting them, cascading them, scoring them, learning from them — this takes real time. For a team of 5 where everyone sits in the same room (or Slack channel), the overhead isn't worth it.

What Small Startups Should Do Instead

Focus on your North Star Metric and 3-5 supporting KPIs. That's it.

Review them weekly as a team. When a KPI dips, talk about why and what to do. This gives you 80% of the alignment benefit of OKRs with 20% of the process cost.

When to Graduate to OKRs

Consider adding OKRs when:

At that point, OKRs provide the structure you need. But until then, don't add complexity for complexity's sake.

Common Mistakes to Avoid

Mistake 1: OKRs That Are Just KPIs in Disguise

"Objective: Maintain 5% churn rate." That's not an OKR — that's a KPI wearing an OKR costume. Real OKRs drive change. Real KPIs maintain standards. Don't confuse them.

Mistake 2: Too Many KPIs (Dashboard Overload)

If your dashboard has 40+ KPIs, nobody looks at it. 5-7 KPIs per team is plenty. If you can't explain your KPIs in a 5-minute standup, you have too many.

Mistake 3: Changing OKRs Mid-Quarter

OKRs are a quarterly commitment. If you change them every few weeks, you don't have OKRs — you have a to-do list. Finish the quarter, learn, then adjust.

Mistake 4: Setting OKRs Without a North Star

Without a North Star, OKR-setting becomes a political negotiation. Each team lobbies for their objectives. The CEO picks winners. Nobody feels fully aligned because there's no shared definition of success.

Mistake 5: Treating KPI Misses as Failures

KPIs are signals, not report cards. When a KPI dips below target, the response should be curiosity ("Why?") not punishment ("Who?"). Create a culture where KPI misses trigger investigation, not blame.

A Decision Framework

Not sure which to use? Here's a simple guide:

Use a KPI when:

Use an OKR when:

Use a North Star Metric when:

In practice, most growing companies use all three: NSM for direction, OKRs for quarterly ambition, KPIs for operational health.

Find Your North Star Before Anything Else

If you take one thing from this guide, let it be this: before setting OKRs or debating KPIs, find your North Star Metric.

It's the foundation that makes both frameworks work. Without it, you're organizing a journey without knowing the destination.

YMWT helps you find your North Star Metric in 15 minutes. Once you have it, your OKRs write themselves and your KPIs become obvious. Stop debating frameworks. Start with what matters.