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  • Lorea Lastiri

OGSM vs Balanced Scorecard: Understanding Their Roles in Business Strategy

Updated: Jun 18, 2023

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OGSM provides a big-picture view of an organization by linking long-term objectives with concrete actions. BSC provides a comprehensive view of performance by examining an organization from four perspectives. It develops objectives for each and outlines actions for achieving them.

Even the best corporate vision can become fancy dreams, except you employ management frameworks to design actionable and executable plans that turn corporate ideas and goals into reality.

There are several business models/ frameworks that you can use to make the leap from idea to reality in a practical way.

The OGSM and Balanced Scorecard (BSC) are popular strategic planning tools and frameworks for realizing corporate vision.

What exactly are OGSM and Balanced Scorecard, what is their role in the strategic planning process, and which framework is best for your organization? This article will answer these questions and more.

OGSM - Objectives, Goals, Strategies, Measures

OGSM stands for “Objectives, Goals, Strategies, and Measures.” The OGSM framework is a business model that helps organizations define what they want to achieve and outline exactly how they will achieve it.

OGSM helps turn vision into reality in four steps - define long-term objectives, translate objectives to measurable goals, outline actionable strategies for achieving them, and develop measures to track progress toward achieving them.

The role of OGSM framework in strategic planning

The OGSM framework connects big-picture strategic elements (vision, mission, and values) to operational elements (goals, initiatives, and measures).

You can implement OGSM in the following ways:

Define your objectives

The objective is a qualitative statement of where your organization wants to be in the long term (say, three to five years). Defining your objectives answers the question, “In what direction is the company going?

The objective statement describes the organization’s long-term visions and missions. It is a statement that indicates the direction the organization is headed and helps focus your thinking.

The best objectives include what the organization wants to achieve and how (at a high level) it expects to do this.

Consider an automobile manufacturing company. It is not enough to state the objective as “To be the global market leader in electric vehicle manufacture.”

To focus thinking and efforts, a high-level statement of how the company will become the EV market leader is also important.

Thus, a more effective objective statement would be: “To be the global market leader in electric vehicle manufacture through cutting-edge battery technology.”

Define your goals

After defining your objective, the next part of OGSM implementation is stating what success will look like. Defining goals answers the question, “What results need to be achieved to realize your objectives?

The goals are quantitative statements of what results your organization needs to achieve to realize its overall strategy. The best goals are as SMART as possible (SMART - specific, measurable, attainable, relevant, and time-bound).

For the automobile manufacturing company above, SMART goals would include:

  • Within the next 6 months, develop a battery capable of giving a medium-duty vehicle (8,501 - 10,000 lbs) a range of 500 miles.

  • Within the next 12 months, develop a production-ready EV prototype with the cutting edge-battery.

  • Within the next 18 months, develop a proposal for producing the EV at scale.

Develop your strategies

“Strategies” in this regard do not refer to the development of long-term plans but specific steps you need to take to achieve strategic goals.

After a quantitative statement of the desired results, the next step is to outline how you will achieve those results. Developing your strategies answers the question, “How will you achieve your goals?

For the automobile manufacturing company above, effective strategies would include:

  • Upgrade research and development resources to enable the production of the specialist battery pack.

  • Employ expert engineers capable of developing and integrating EV components.

Identify measures

The last step in the OGSM framework is to identify and define success metrics to visualize whether you are making progress toward achieving your goals.

Identifying measures answers the question, “How do we know we are on the right track?

This step helps OGSM defines success. Having quantifiable success metrics helps you know whether you are on track to achieve your goals or need adjustments.

The right KPIs (Key Performance Indicators) will depend on the strategies you’re trying to implement. However, effective KPIs to monitor progress and measure success must be:

  • Simple. KPIs should be easy to understand and measure.

  • Relevant. Each KPI should be appropriate to specific objectives.

  • Aligned. KPIs should not undermine one another.

  • Actionable. KPIs should have practical value and be easy to act upon.

  • Measurable. KPIs should be quantifiable.

Manually defining KPIs for objectives is often a long, tedious, and expensive process. Executives can spend weeks reviewing data from multiple sources to determine which metrics are most relevant.

The more time they spend identifying KPIs, the less time they’ll have for other important management tasks. Plus, forming KPIs correctly takes skill and experience, so manual KPI identification often results in generic, irrelevant, and unactionable KPIs.

Using AI can help you define the right KPIs for objectives always. Kippy is the only strategy software in the world that automatically generates accurate KPIs specific to your objectives (whatever they are).

Kippy gives you the right KPIs for your objectives in seconds, saving you weeks of effort.

Another aspect of the “identify measures” component of the OGSM model is breaking down goals into concrete actions, identifying required resources, and defining responsibilities.

During strategy implementation, actions will be taken depending on whether the measurement shows that you are meeting expectations.

Balanced Scorecard Framework

The Balanced Scorecard (BSC) is a business model that gives you a comprehensive view of your organization. It involves using both financial and operational measures to get a clear view of the results of your organization’s actions.

No single measure can provide a clear view of performance. So, examining an organization using only financial measures is ineffective.

The BSC model suggests examining an organization from four perspectives (financial, customer, internal processes, and learning/ growth).

In strategic planning, you develop objectives, targets, measures, and initiatives relative to financial and operational perspectives to give you a balanced presentation of the organization.

The role of BSC framework in strategic planning

Balance Scorecard is a strategic management performance metric used to identify and improve a business’ various internal functions and their resulting external outcomes.

Balanced Scorecard is one strategy for developing strategy maps to help executives see connections between different strategic objectives.

This is done by developing objectives, initiatives, and measures for each of the four perspectives on the strategy map (representing the different aspects of the organization).

The four perspectives are:

Learning and growth

The perspective looks at an organization’s training and knowledge resources. It examines how an organization captures information and how effectively it uses the information to gain a competitive advantage within the industry.

“Learning and Growth” is the foundation of the Balance Scorecard framework because increased employees' skills and knowledge drive smoother internal processes.

Consider an automobile manufacturing company that wants to become the market leader by producing low-cost vehicles.

When using the BSC framework to examine the company, the “Learning & Growth” section of the strategy map should answer the question, “How do we develop the capacity to produce low-cost vehicles?”

The objective statement will be to have an extremely knowledgeable staff capable of producing the vehicles. The goal would be to train 100% of design teams. Initiatives would include partnering with expert resources or institutes to provide requisite training.

Internal processes

This perspective examines how a company makes its products. It analyzes operations to identify bottlenecks, delays, waste, etc.

Know that improved internal processes create more value for customers, increasing customer satisfaction. Thus, in the BSC model, the “internal processes” perspective answers the question, “What business process do we need excellence in to satisfy our customers?”

The objective statement for our automobile company above could be to create an innovative low-cost vehicle. The goal would be to design a car costing less than $1,000. Initiatives could include cutting out electrically adjustable outside rear view mirror (ORVM).

Customer perspective

This perspective examines customer satisfaction with the company’s price, quality, product availability, etc.

The customer perspective answers the question, “To achieve our vision, how should our customers view us?”

For our example automobile company, the objective statement could be “as a producer of quality low-cost vehicles.” Initiatives could include adding features usually missing in low-budget cars, such as boot parcel tray and speed-sensing locks.

You can measure customer perspective using customer reviews. Know that improved customer satisfaction leads to more financial benefits.

Financial perspective

This perspective examines the financial performance of the company. It looks at sales, expenditures, and revenue.

The financial perspective answers the question, “To succeed financially, how should shareholders view us?”

The objective statement could be to increase revenue and profitability. The goal could include increasing net revenue by 10%. Financial statements are good measures of financial goals. Initiatives to achieve the goals could include developing customer-friendly credit policies.

What are the benefits of each in business strategy?

OGSM (Objectives, Goals, Strategies, and Measures) benefits an organization in many ways. These include:

  • It condenses an elaborate strategic plan into a one-page easy-to-follow document.

  • It ties everything in the strategic management process together, from vision to strategy execution.

  • Objectives are directly linked to actions for achieving them and measures for tracking progress, increasing the likelihood of success.

  • OGSM enables easy visibility and reporting on progress

  • OGSM makes it easy for people at all levels of an organization to understand the strategy plan, making it an excellent internal tool for communicating strategic plans.

The Balanced Scorecard framework also benefits an organization in many ways. These include:

  • It helps you pool together different critical information into a single report instead of dealing with multiple tools. This saves you time and money.

  • It helps you get a balanced view of the organization, as it examines both financial and operational perspectives.

  • It uses a strategy map, making it easy to visualize your strategy on a single page.

  • It improves strategy alignment, enabling you to see how a strategy in one area of the organization affects others. This helps every department, team, and individual work together towards a common goal.

  • BSC makes it easy to adapt to change. Since BSC gives a large picture of the organization, you can quickly see how events affecting a business function make your strategy unbalanced and quickly make adjustments.

  • BSC enables suboptimization, as it helps you identify operational gaps and inefficiencies that you can plug to achieve your vision.

Can you use OGSM and Balanced Scorecard together?

Whatever your industry or the size of your firm, you can use BSC and OGSM strategic frameworks to transform objectives into action plans. However, the BSC’s ability to adapt to change makes it particularly useful for firms operating in environments where uncertainty is high.

For example, while OGSM links objectives to goals, strategies (initiatives), and measures for achieving them, it is a future-oriented framework that provides a big-picture view of where the organization will be in the long -term (3 - 5 years).

However, BSC can analyze an organization over shorter cycles. You can set annual objectives for the different perspectives and develop initiatives and measures for achieving them.

Being future-oriented makes the OGSM model relatively inflexible. It may be unable to adjust to rapid market changes or volatility. However, when you use OGSM and BSC together, BSC can provide adaptability to changes within the long-term OGSM planning framework.

OGSM maintains a big-picture view of the organization, which makes it lack granularity. That is, when using OGSM, there is a risk that your strategies are too broad and do not capture all the necessary details.

Since BSC divides the organization into four aspects and develops objectives, measures, and initiatives for each aspect, BSC provides a more granular analysis and therefore complements OGSM.

Also, the BSC can be an overwhelming framework. Since it examines the organization from four different aspects, the sheer amount of material in the report can be mind-boggling. Thus, using OGSM and BSC together allows the OGSM model to provide a simpler view of strategy within the more detailed BSC strategy map.

Which framework is best suited for your organization?

The BSC and OGSM strategic frameworks can be used by firms of any size and in any industry. However, the BSC's ability to adapt to change makes it particularly useful for firms where uncertainty is high in its operating environemnt.

Thus, if your organization operates in an environment characterized by rapid market or environmental changes, the Balanced Scorecard strategy framework will serve you better than the OGSM model.

Takeaway: Use OGSM or BSC to turn corporate vision into reality

OGSM (Objectives, Goals, Strategies, and Measures) and BSC (Balanced Scorecard) are some of the most popular business models for turning company vision into reality.

OGSM helps an organization define what it wants to achieve in the long term (objectives/ visions), translate this into measurable goals, outline initiatives (strategies) for achieving them, and develop measures for tracking progress.

BSC uses financial and operational measures to get a broader view of an organization. It involves developing “objectives” for each of the different business aspects and outlining “initiatives” and “measures” for achieving them. The broader view allows better strategy alignment and flexibility to change.

The OGSM and BSC frameworks can drive the actualization of your corporate vision. However, critical to the success of either model is effectively monitoring progress and measuring success, and the foundation of this is defining the right KPIs for your objectives.

Thus, whatever strategy framework you employ to help you turn your corporate vision into reality, you need a strategic management tool to help generate the right KPIs. Interestingly, Kippy is the only strategy management tool in the world that does this.

Kippy uses AI to generate accurate and actionable KPIs and key results for each objective. Thus, you’ll be able to track progress and measure success toward achieving your goals.

Kippy also makes it easy to cascade your strategy to all levels of the organization so all team members understand what is happening and what is required of them. It also offers appraisal workflows for org-wide strategy-centric performance monitoring.

Whether you use OGSM or Balanced Scorecard, let Kippy make strategic management easier as you turn your corporate vision into reality. Request a demo today, and see how Kippy can help you.



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