KPIs in Gtmhub and going beyond OKRs

Aren’t OKRs and KPIs just different ways of doing the same thing?

No.

Why not?

Let’s imagine a person, and to keep it simple, we will reduce that person to only two important numbers: resting heart rate and bank balance .

Those two numbers are KPIs or Key Performance Indicators. Resting heart rate indicates health and bank balance indicates wealth . It is usually a good idea to keep track of those two values at regular intervals – let’s say once per week.

Now, let’s imagine that the person has a resting heart rate of 55 (excellent) and the bank balance is $14. In that case, the person should focus on increasing wealth – perhaps save more or take a second job. Health is in an excellent state, but the person is in a state of poverty. If that person decides to increase wealth over some period of time, that would then become an OKR .

Improve all the things?

Often, the question appears – why not improve all the KPIs all the time? For example, in business, it may sound logical that we should always try to increase revenue.

If that is true then we could say that every quarter we should have OKRs designed to “improve” every single KPI .

There are many reasons why this doesn’t work. Actually, it can be quite harmful.

1. Many KPIs have optimum values 
Take the heart rate example. If we are 55, we could try to “improve” it all the way to 0 – but that is generally not advisable. In SaaS business, for example, the optimum for LTV/CAC is 3:1. If this ratio is lower, it indicates that you are not efficiently acquiring customers; if it is higher, it indicates that you could grow faster, but are being too cautious.

2. KPIs are interdependent 
In other words, “improving” many KPIs will have adverse effects on other KPIs. In our personal example, we may decide to join the gym to improve our resting heart rate, but that will also mean another expense – which will decrease our bank balance. In sales, we often track ACV (Annual Contract Value) or ASP (Average Selling Price). On the surface, it may look like the higher those values the better – so, we should always try to increase them. However, increasing ACV / ASP will also usually mean that your sales cycle will be longer, that your TAM (total addressable market) is smaller, etc.

3. The Law of Diminishing Marginal Utility 
Simply put, the Law of Diminishing Marginal Utility means that the more we improve something, every subsequent improvement will bring us fewer benefits. In our personal example, if we reduce our resting heart rate from 55 to 54, the benefits we will reap from this will be very small. On the other side, if we increase our bank balance from $14 to $2000, our personal welfare will increase greatly.

4. Low hanging fruit 
It is usually much easier to improve things that are very broken, than those that are near perfection. For example, it is way easier to learn to play chess than to go from master to a grandmaster title. So, not only that you will reap bigger benefits because of the Law of Diminishing Marginal Utility, but focusing on things that are broken will also be easier.

5. Output vs Input 
Many KPIs are what some call output variables or lagging indicators. For example, every business will track revenue as a KPI – but that doesn’t make revenue a good OKR or a goal, as healthy revenue is the result of many other things over which we have direct influence (e.g. pricing, product, customer service, marketing, etc)

So, as we have seen – many KPIs will from time to time become OKRs , if we decide to improve them in some ways, but in no way are all KPIs also OKRs .

We use KPIs to understand the performance and OKRs to improve targeted elements of the performance . Both are necessary. 

How we do it at Gtmhub?

At Gtmhub we use Gtmhub to manage OKRs and track KPIs .

We have divided our business in three different groups:

  • Product
  • Growth
  • Distribution

Each of these three groups has its own KPIs defined that we track on weekly basis. For example, the Product group will track things such as 30-day NPS or DAUs (Daily Active Users); the Distribution group will track KPIs such as bookings or pipeline and so on.

KPIs of Gtmhub Engineering team

Gtmhub allows us to create any number of KPIs , group them into categories , view KPIs in different intervals such as weeks, months, or quarters. Most importantly, Gtmhub allows us to automate our KPIs the same way it works with OKRs so that the values can constantly be updated from actual business systems such as Salesforce, Jira, or Intercom (we support over 150 systems).

Gtmhub supports over 150 integrations with other business systems

Each of the three groups (Product, Growth, Distribution) meets once per week and first order of the business is to go over KPIs . Tracking KPIs in real time makes it really easy for us to decide on our OKRs , as it gives us a real-time insight into everything about our business.

For example, if we see that the number of Open Critical Bugs keeps growing week after week, then we know we have a problem with quality – but, also a problem with customer service. This becomes a natural OKR for the engineering team, where the objective is to “Improve Quality” and key results would have to do with open critical bugs, SLAs, number of new bugs, etc.

Answers are easy, questions are hard

When people just start with OKRs , one of the initial hurdles they face is – what should I do for my OKR? The logical, albeit not very helpful, answer is to ask: “Well, what would you like to improve?”

Without having the baseline of the current state that KPIs provide, it is indeed very hard to create OKRs .

Or, in other words…

“Would you tell me, please, which way I ought to go from here?” 
“That depends a good deal on where you want to get to,” said the Cat. 
“I don’t much care where–” said Alice. 
“Then it doesn’t matter which way you go,” said the Cat. 
“–so long as I get SOMEWHERE,” Alice added as an explanation. 
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

Alice’s Adventures in Wonderland, Chapter 6 

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