Comparison of Strategy Management MethodologiesMar 25, 2023
The best strategy management methodologies like Balanced Scorecards (BSC), Objectives Key Results (OKR), Management by Objectives (MBO), and Objective-Goals-Strategies-Measures (OGSM) have many similarities.
They help connect the strategy parts in a logical and systematic way.
Increase strategy alignment and communication to managers and employees.
Finally, track and monitor strategy execution. If we compare the main elements of all above four most-used methodologies, this is what we get:
1. BSC: Objective > Measures > Initiatives
2. OKR: Objective > Key Results (Key Results includes quantifiable targets)
3. OGSM: Objective > Goals > Strategies > Measures (Strategies covers initiatives)
4. MBO: Objective (Objective monitored with measures and quantifiable targets)
1) The Balanced Scorecard (BSC) scope is wider than the other three methodologies. BSC links objectives, measures, and initiatives (or projects) in a way that measures performance from four different balanced perspectives (Finance, Customer, Internal Process, and Learning & Growth). It combines parts of strategy such as milestones and project completion as opposed to OKRs which focus on operational efforts and results. Companies that use the BSC appreciate its overall approach to strategy. BSC focuses on top-down leadership styles which are bit counter-intuitive for younger companies and some industries.
2) Objectives and key results (OKR) is a goal-setting methodology driven by outcomes. OKRs are often used to guide outcome-based success. Using outcomes instead of tasks as a driver, OKRs encourage accountability in every step of achieving success through indicators. OKRs are hierarchical. Employees set their goals and progress upward through the ranks. The idea is that when employees achieve their goals then managers achieve theirs from bottom up. OKR methodology seeks to establish a few goals, typically between three and five and then assigns the same number of objectives to measure and analyse performance.
3) OGSM is a world-class older strategy methodology that transforms objectives, goals, strategies and measures into actionable and executable plans. OGSM brings alignment, transparency of priorities and metrics that define success. OGSM frames what the business needs to achieve and how it’s going to get there. The OGSM defines success and helps groups work together across functions, geographies and up and down the line. “Strategies” in OGSM guide the work activities (initiatives) and allocation of limited resources across the organisation.
4) Management by Objectives (MBO) aim to improve company performance by defining objectives to which both management and employees agree. The theory encourages objective-setting and participation. In addition, it creates a level of commitment on behalf of the employees which theoretically motivates them more. Most companies that deploy MBO-style performance management review its performance at an annual basis. Objectives (and related measures and targets) are set at the beginning of the year and then evaluated at the end. Objectives tend to be broad and strategic versus focused and tactical.
In all above four methodologies, “Targets” are set at multiple layers in the organisation using KPIs, Measures, Metrics, or Indicators (different terminologies refereeing to almost same meaning) OR imbedded in Objective/Goal names.
SMART Validation Tool
To make sure that Objective (or Goal) in all four methodologies are well selected and drafted, most professionals use SMART validation method. SMART Objective (or Goal) are essentially a very basic guide and set of concrete rules for teams and business people that want to use objectives (or Goals) to aid in progressing their business. SMART tool focuses on building structure. SMART tool represented by five key criteria:
Specific: What do you really want to achieve?
Measurable: What level of effort, time, and cost will it take to reach that goal?
Attainable: Is the goal really attainable after weighing all the pros and cons?
Relevant: Is the goal really relevant to you and your business?
Timely: What are your deadlines, timelines, and measurable time restrictions?
An effective implementation of any strategy can transform an organisation by turning planning into action using any of the above four proven methodologies. Choosing the right methodologies depends on the needs of the organisation, level of performance maturity, and strategy IT system.
kippy.cloud can serve all mentioned four methodologies. It is flexible and has the main functionalities to contain all common strategy elements including Perspectives, Objectives (Goals), KPIs (Measures or Metrics), Projects (Initiatives or Strategies), Milestones (Tasks or Activities), and Employees Appraisals.
Dr. Rachad Baroudi
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