Net or gross profit before taxes. Profit margins broken down by product, location, customer or segment. KPI stands for Key Performance Indicator. It's a specific measure that helps you track progress and ensure growth.
For example, it's hard to know when you've reached your goal if your goal is simply to gain more followers on Twitter. You could gain just one more follower and declare yourself successful, but it's not likely that one more follower will lead to the increase in earnings you're looking for. However, if your goal is to get 10,000 followers on Twitter, it's easier to know when you've achieved it and how those 10,000 followers will relate to business growth. The important thing to remember is that key results are results, while key performance indicators are measurements.
If your goal is to become a market leader, your key results are likely to be based on high revenue goals, larger staff size, and speaker attendance at trade shows and conferences. These key results are the quantitative measures it uses to support its qualitative objectives. I've read a lot about objectives and it's always bothered me that people use the terms metrics, KPIs and key results interchangeably, as if they all meant the same thing. At first, there may be some confusion among team members about the difference between key results and key performance indicators.
The combination of objective and key results often works best for larger organizations because it is stronger than a list of key performance indicators. In the real world, you'll have some gray areas. A shift in nomenclature can turn a key result into a KPI (or vice versa). Generally, an organization will have three to five high-level objectives and three to five key outcomes per objective.
I don't want to create confusion, but sometimes an organization's KPIs are the same as the key results that are used in an OKR framework. OKR is the acronym for objective and key results; more specifically, an objective is linked to key results. As your organization begins to outline what your strategic plan might look like, you will likely realize that you will need to reach a consensus on what your key performance indicators will be and how they will affect your organization. When setting your KPIs, you define the key areas of your business and use a metric (as well as a target value) to indicate the performance of that key area.
Key performance indicators are intended to create a holistic picture of your organization's performance in relation to the intended goals or objectives. A goal that seeks to increase revenues by 30% is likely to be followed by key results that involve obtaining new leads, converting them into new customers and increasing the conversion rate of potential customers. Those who study business performance have determined that business leaders can examine results using measures known as key performance indicators (KRIs) and implement corrective actions based on key performance indicators (KPIs). If you are a Perdoo user, I recommend that you save the current value formula in the key result itself (in the Description field).
