Practical application of the minimalist OGSM framework for designing strategy scorecards by setting goals, defining performance measures, and cascading objectives.
History of OGSM
OGSM (Objectives, Goals, Strategies, and Measures) originated in the 1950s as an internal corporate planning tool at Procter & Gamble to align the company’s strategic objectives with measurable outcomes. There were no formal publications introducing OGSM; instead, it gained popularity through practical adoption by P&G and other organizations.
OGSM was later mentioned in works by A.G. Lafley, former CEO of P&G, and Roger Martin, a strategic advisor to P&G and then-dean of the Rotman School of Management. 1 2
Decomposition Method
As explained in the Comparison of Strategic Planning Frameworks, each business tool suggests its approach to breaking down complex challenges into specific tangible parts.
In the case of OGSM, the framework recommends focusing on various levels of abstraction regarding the aspirations of the organization. In practice, we can find two ways to do the decomposition for OGSM:
- Objectives
- Goals
- Strategies
- Measures
- Objectives :: Quantified by Goals
- Strategies :: Quantified by Measures
We placed OGSM in the quadrant that corresponds to the decomposition based on internal factors (objectives and goals in this case), and the cause-and-effect logic in the decomposition is also clear. Additionally, OGSM provides a simple structure to describe the strategy. Therefore, on the ecosystem diagram, we placed it in the strategy description segment.
Connection Between Goals and Measures
One popular interpretation of OGSM is to:
- View “Objectives” and “Strategies” as words, and
- See “Goals” and “Measures” as numbers
In other words, goals (think financial metrics) quantify the objectives, and measures (think operational metrics/KPIs) quantify the strategies.
With this approach, a reasonable question is whether the lower-level metrics should support the higher-level ones. For example, should customer satisfaction drive financial outcomes? Obviously, it should, but in this case, there may not be a direct connection between them.
If you implement OGSM in BSC Designer, you have two options for automation:
- Allow the tool to use lower-level metrics to calculate higher-level metrics, for example, as a weighted average, or
- Adjust the “Goal” settings (see “Performance” on the “Performance” tab and “Value” on the “Data” tab) to use the “Self-standing” option, meaning that from a calculation perspective, the goal will exist independently of its child items
Scaling OGSM with Cascading into Scorecards
The decomposition suggested by the OGSM framework is supposed to cover the entire strategy of the organization. However, considering the complexity of the current business landscape, this may not be practical and could result in a hierarchy that is challenging to maintain.
A practical solution to this is cascading into scorecards, where:
- Each scorecard focuses on the dedicated problem area.
- Scorecards connected by key objectives form a hierarchy.
While the most logical approach is that those scorecards follow the OGSM framework, in practice, we often see that when strategy is cascaded into the scorecards, various business frameworks might be combined.
In the case of BSC Designer, this is automated with cascading by normalized goals or perspectives.
Measurements in OGSM
Applying measurements to strategies (at the lowest level) allows for the calculation of aggregated performance at the goals level and the overall performance of each objective.
To enhance the performance measurement model:
- Focus on a combination of leading and lagging measurements
- Use weights to differentiate the importance of certain strategies over others
Definition of Risks, Hypotheses, and Rationales in OGSM
Since the introduction of OGSM in the 1950s, strategic planning science has evolved to include risks, hypotheses, and rationales as must-have supporting details for a strategy. While not specifically defined in OGSM, these concepts align well with the idea of supporting attributes for action plans.
For example, users of BSC Designer can align risks with their goals:
OGSM Disadvantage: The Challenge of Cross-Linking
With the established hierarchical structure of the objectives-goals-strategies, the question of cross-linking between different branches of the tree remains open for interpretation by practitioners.
What if the execution of the sub-strategy from branch A depends on how the strategy from branch B was executed?
Today, when automating OGSM with BSC Designer, we can use contextual and data connections to manage this, but there are no specific mechanics defined for this case at the framework level.
OGSM vs. OKR
In their essence, both frameworks suggest a pretty similar decomposition approach:
- Objectives-Goals in OGSM vs. Objectives in OKR
- Strategies in OGSM are explicitly mentioned, whereas in OKR, strategies are implied
- Measures in OGSM are exactly the Key Results in OKR
The slight difference can be noticed in how the initial decomposition is done:
- In OGSM, two levels are pre-defined high level (objectives) and lower level (goals), making it feel more like a “strategic” framework.
- In OKR, the objectives might be high-level ambitions of the stakeholders or lower-level team or personal goals.
OGSM vs. K&N Balanced Scorecard
The interesting part of the Balanced Scorecard (similar to, for example, Results-Based Management) is a more detailed look at the causality:
- Objectives might be driver-type (what is grouped under Learning and Internal perspectives) and outcome-type (what is grouped under Customer and Finance perspectives)
- Similar causality is implied at the level of metrics, introducing leading and lagging metrics
Implementing OGSM with the BSC Designer Software
To automate classical OGSM in BSC Designer, we can simply create a hierarchy of three levels (Objectives, Goals, Strategies) and add the final level with action plans and progress measurements. This structure serves as a perfect starting point for further discussions about strategy.
Each of these OGSM-based scorecards can be cascaded into a hierarchy of scorecards.
Accessing OGSM Template
You will find the OGSM template among other business frameworks available in your account. To access it:
- Go to the “My Scorecard” section
- Select New > New Scorecard > More templates
- Use search to find OGSM framework
OGSM Dashboard
A simple OGSM dashboard can be presented with two diagrams:
- The list of goals and objectives
- The list of action plans where one of the columns shows the progress of the “aligned indicator”
- Sign up for a free account at BSC Designer to access the scorecard templates, including 'OGSM Template' discussed in this article.
- Follow our Strategy Implementation System to align stakeholders, strategic ambitions, and business frameworks into a comprehensive strategy.
More About Strategic Planning
- Instituting a company-wide strategic conversation at Procter & Gamble, A.G. Lafley, R. Martin, Strategy and Leadership, 2013 ↩
- Playing to Win: How Strategy Really Works, A.G. Lafley, R. Martin, 2013 ↩
Alexis is a Senior Strategy Consultant and CEO at BSC Designer, with over 20 years of experience in strategic planning. Alexis developed the “5 Step Strategy Implementation System” that helps companies with the practical implementation of their strategies. He is a regular speaker at industry conferences and has published over 100 articles on strategy and performance management, including the book “10 Step KPI System”. His work is frequently cited in academic research.
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