Metrics, KPIs, OKRs - What Do You Really Need to Drive Success?

(A true story; the names of the woman and the company are changed).

Ana is the PMO director at Compagil, and this year, she is leading a strategic initiative.

In recent years, the company has carried out different initiatives. Some business areas have piloted Agile practices, and others have been Kanban. The usage of OKR has been studied at the strategic level. The COO advocates using Lean to improve process efficiency and reduce costs. The Talent and Culture area is focused on introducing a culture of collaboration, transparency, and customer orientation.

Despite all the pilots running in parallel, project management is still done and reported in a classic manner.

The people responsible for each initiative have their ideas and proposals of what management practices have to be introduced in the company. However, their conversations are not very fruitful; one feels they speak different languages.

So, Ana's goal is to harmonize the use of all the methods and terminologies and define the company's standard project management process and its tailoring guidelines according to the different project characteristics and circumstances in their execution.

"Defining a common language that accommodates the ideas and concepts of all these different methods in the company's vocabulary is a difficult task. However, the metrics issue is even more complicated," told Ana.

"All the methods bring their metrics, and in Compagil we use others historically. I do not understand the relationships between Agile metrics, Kanban, KPIs, and OKRs. It is impossible and counterproductive to measure everything and track every aspect that the methods suggest. So, what do we really have to measure without losing control over our projects?" continued Ana.

More and more often, I have this same conversation. Therefore, I thought that responding to these doubts in a post could help you, too. Of course, suppose you are in a situation similar to Ana's. In that case, you should involve your colleagues in different initiatives and develop the appropriate solution for your company.

OKRs, Metrics, KPIs: What Is It, and How Do You Use It?

Each company is unique. Therefore, I will concentrate on the main concepts and how to use them in developing your solution.

Define Objectives and Key Results (OKRs)

Essentially, an initiative of this type should resolve real organization's problems to be useful.

Therefore, start by identifying the main pain points.

Based on these, define the organization's objectives for the year, the next quarter, or another relatively short period of time.

Then, define what results would demonstrate progress or achievement of each one of the objectives. Think about tangible and measurable results, not just actions.

An example of objectives and key results is illustrated in the following image:

OBJECTIVE 1: Have Visibility of the Project Status

• Result 1: 3 business areas have their work boards in Businessmap.
• Result 2: 3 business areas visualize the following aspects of all their work on their workflow boards: the person doing it, status in the process, blockage (if any).

OBJECTIVE 2: Reduce Project Delays

• Result 1: List the top 10 reasons for blocking project work.
• Result 2: List the top 5 reasons for which the job stays 6+ months in progress.
• Result 3: Obtain delivery time data by type of work in the 3 business areas.

OBJECTIVE 3: Introduce the Culture of Collaboration

• Result 1: Identified 3 key areas of knowledge sharing.
• Result 2: Defined a list of appropriate actions to extend the culture of collaboration in the company.

Use the complete image of your objectives and key results to agree on what to focus the attention of your organization on. Make sure that you all have the same understanding of your objectives and results to be achieved and that these are aligned with your company's strategic direction.

Define Actions and Metrics

The next step is to define the appropriate actions to achieve the results. Following our example, these could be:

Now we come to the question, "What metrics related to the actions allow you to demonstrate / evidence the results?".

For example, to get the top 10 causes of workflow stops, we need to get the list of the causes for the blockages and the time the work items stayed blocked due to them.

Stay focused. If your tree gets too branchy, focus on the 3-5 most important objectives and 2-4 results/outcomes per objective. You can address the other aspects In the next improvement cycle.

You see the relationships between OKR and Metrics, don't you?

Define KPIs

KPIs (Key Performance Indicators) measure the completion of business goals. Therefore, they are called Key. KPIs indicate whether the business is healthy and developing well.

Typically, these indicators are related to the following:

• Meeting customer expectations
• Time to market; product and service delivery time, as well as customer delivery time
• Efficiency of key organizational processes
• Product and service quality
• Employee satisfaction

Improvement objectives (related to pain points) and KPIs can be defined for each level of the organization.

If any of your improvement objectives are related to a business goal and, therefore, to a KPI, mark it to make it explicit for the entire organization.

For example, let us assume that Objective 2: Reducing delays is related to the business goal of Reducing time-to-market. Then, the indicator for project delays is a KPI. Therefore, the Lead Time and Blocked Time metrics associated with this KPI are also key.

Now you have the complete map you can use to agree and focus the attention of the entire organization on what is important to you.

Mastering Objectives, Results, Actions, and Metrics for Organizational Success

To wrap up, the improvement objectives are related to current pain points, a specific need of the organization, or a business objective. The results demonstrate the progress towards the objectives. Achieving them requires taking some actions. The metrics allow monitoring and making the right decisions to achieve the objectives. KPIs are indicators and metrics that are related to the achievement of key business goals.

It is important to understand how to define the complete system of objectives – results – actions – metrics. It is even more important to use them effectively to achieve improvements for the organization. Therefore, concentrate on the few important objectives and vital results for your company.

Visualizing the relationships between objectives, results, actions, and metrics in a tool like Businessmap allows you to communicate and align around these objectives.