How to choose between OGSM and Balanced Scorecard for your strategy

What are OGSM and Balanced Scorecard?

OGSM and Balanced Scorecard are two commonly used methods for structuring and measuring business goals. OGSM stands for Objectives, Goals, Strategies and Measures, while the Balanced Scorecard is a performance management framework that combines financial and non-financial measures.

OGSM offers a clear structure for defining an organization's overarching goal, quantified goals, strategies for achieving them and concrete measurement points. The Balanced Scorecard, on the other hand, looks at performance from four perspectives: financial, customer, internal processes, and learning & growth. Both methods help companies translate their vision into concrete actions.

The core principles of OGSM and Balanced Scorecard

OGSM is about focus and alignment. It forces organizations to make sharp choices and to focus all activities on the main objective. The strength lies in the simplicity and the direct link between strategy and execution. Every employee can see how their work contributes to the bigger picture.

The Balanced Scorecard emphasizes balance and coherence. By not only looking at financial results, but also at customer satisfaction, internal processes and innovation, a more complete picture of organizational performance is created. It helps companies align short-term actions with long-term goals and provide insight into cause-and-effect relationships.

Comparison between OGSM and Balanced Scorecard

While both methods aim to improve strategic management, they differ in approach and focus. OGSM is often more direct and action-oriented, with a clear hierarchy from goals to actions. The Balanced Scorecard offers a broader perspective and puts more emphasis on the interrelation between different performance areas.

OGSM is usually easier to implement and communicates the strategy clearly to all levels in the organization. The Balanced Scorecard requires more time and resources to set up, but provides a more detailed picture of organizational performance and helps identify areas for improvement in various business processes.

When do you choose OGSM?

OGSM is particularly effective for organizations that need a clear, action-oriented strategy. It works well in situations where rapid alignment and focus are crucial, for example with start-ups or companies in a turnaround phase. OGSM is also very suitable for project management and managing specific initiatives.

Choose OGSM if your organization is struggling with fragmented goals or if there is a need for an easily communicable strategy. It helps to translate complex plans into concrete, measurable actions that are understandable to everyone.

When do you choose Balanced Scorecard?

The Balanced Scorecard is ideal for larger, more complex organizations that want to get a holistic view of their performance. It is particularly useful when there is a need for a balanced approach to different performance areas and when it is important to understand the interrelationships between these areas.

Choose the Balanced Scorecard if your organization wants to work on long-term value creation and improve performance on multiple fronts at the same time. It is also a good choice if there is a need for a detailed dashboard for monitoring business performance.

Practical implementation of OGSM and Balanced Scorecard

When implementing OGSM, it is crucial to start with a clear, inspiring goal. Involve the entire management team in formulating the strategy and ensure that each department develops its own OGSM that matches the overarching plan. Regular reviews and adjustments are essential to keep the method effective.

For a successful implementation of the Balanced Scorecard, it is important to first clearly define the strategy and then select the right KPIs for each perspective. Invest time in developing a good IT infrastructure to collect and analyse data. Ensure broad involvement in the organization and use the insights to continuously improve.

Common challenges when choosing and implementing

A common challenge with both methods is finding the right balance between ambition and feasibility. At OGSM, it is sometimes difficult to define the right measurement points that are really indicative of strategic success. With the Balanced Scorecard, the complexity can be overwhelming, leading to analysis paralysis.

For both methods, cultural change is often a major challenge. It requires a different way of thinking and working. Consistent communication, training, and leadership are crucial for the new approach to succeed. Stay flexible and willing to adapt implementation based on feedback and changing circumstances.

Want to start with OGSM right away? Download our templates here!

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