A KPI, Key Performance Indicator, is a metric that continuously measures a relevant performance dimension. KPIs describe the current state, not a target. They form the foundation on which Key Results are formulated and run continuously, while OKRs change on a quarterly basis. The relationship is clear: KPIs measure ongoing performance, Key Results set a target value for a specific period.
An example illustrates the difference. The KPI is the current NPS of 42. The Key Result reads: raise NPS from 42 to 55 by end of Q3. The KPI exists independently of the OKR cycle and continues to be tracked even when there is no Key Result targeting NPS. Good KPIs cover different dimensions such as customer satisfaction, revenue, cycle time, or error rate. Teams should limit themselves to a few truly meaningful KPIs, because too many metrics lead to disorientation rather than clarity.
The KPI concept traces back to the Balanced Scorecard by Kaplan and Norton, published in 1992. The often-cited principle that what gets measured gets managed also carries risks: when the wrong things are measured, the wrong things get optimized.
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