For companies and businesses to excel in a highly competitive market, they need to set and meet goals in a timely and organized fashion. While this sounds achievable, without a system or methodology in place, companies may:
- Derail off their targets
- Incur losses
- Disrupt their activities.
Over the years, reliable frameworks for setting, tracking, and achieving objectives have been developed to boost productivity, accountability, transparency, and growth and to give a competitive edge in the market.
In this article, we shall briefly compare two frameworks for goal setting and execution; OKR and OGSM. Read our dedicated blog posts on both methodologies to learn more.
What are OKRs?
OKRs stands for Objectives and Key Results. It is a framework developed by Andrew Grove in the 70s. One of its principles is simplifying objectives and desired outcomes into achievable tasks- This is done by setting smart goals and measurable outcomes.
The beauty of this framework lies in its simplicity, ability to cascade duties, and ensure unilateral cooperation in meeting set outcomes. Companies like Google, Amazon, LinkedIn, and Asana all use OKR.
Unlike other goal-tracking frameworks, OKR focuses on the outcomes and not the activities or strategies required to meet results.
What is OGSM?
OGSM is a goal management framework that was developed in the 1950s. It stands for objectives, goals, strategies, and measures- Let us look at the core elements of OGSM.
Objectives: The first step to OGSM is to set an objective(s) in line with the company’s vision and long-term plans.
Goals: After setting clear objectives, the company will brainstorm and provide a list of clearly stated goals-There should be a maximum of 5 strategies per goal.
Strategies: Strategies refer to clearly laid out plans or actions required to meet goals. In this phase, the planning team will delegate tasks, set targets, and allocate resources to different departments.
Measures: The final step entails evaluating the performance of strategies by monitoring key metrics.
Similarly to OKR, establishments leverage OGSM software to improve collaboration, transparency, monitoring, and achieving set goals.
Companies like Procter & Gamble, Reckitt Benckiser, Honda, and Coca-Cola adopt the OGSM system.
Examples of OKRs and OGSM
OKR focuses on two things, the objective, and the key results. The objective must be clear, time-bound, and concise enough that it can be memorized. The Key results consist of less than five statements that can be measurable. For example, a startup company looking to Improve customer satisfaction ratings by 30% by the next quarter can set objectives.
The company may then set key results such as:
- Hire three new staff in the user experience team by the end of the first quarter.
- Increase Net Promoter Score by 20% by the end of the first quarter.
- Collect survey reports on 80% of pre-existing users by the end of the first quarter.
Example of OGSM.
A long-term goal for a company can be to:
Increase market share in America by 5% in the next three years.
Its goals can be to:
- Optimize all processes by 50% during the next three years.
- Launch two innovative products each year.
- Hire 10 employees to improve marketing and sales operations.
What’s the main difference between OGSM and OKR?
Although both frameworks help a company achieve its objectives faster and more efficiently, they have intrinsic differences.
OKR offers flexibility for different levels- meaning it can be implemented on the company, department, team, or individual level. OKR is also well-suited for startups and small-scale businesses. The method allows companies to either use a top-down approach or bottom-up alignment.
OGSM works best for long-term planning and is best suited for a top-down approach. One can also argue that OKR doesn’t facilitate frequent check-ins and a more robust monitoring and tracking system than OGSM.
It is important to note that each system is not without its flaws.
How often are OKRs and OGSM set?
Another vital difference between these two frameworks is the duration required to achieve desired targets. Based on the nature of the OKR, companies have to modify their actions, strategies, or required results frequently- this is usually done quarterly.
Companies that adopt the OGSM approach can make changes to their framework as often as they dictate, depending on whether they accomplish set targets- this usually takes longer than OKR, e. g annually, biannually, or longer.
Which methodology is better?
Making the right choice depends on your needs, practices, and organizational framework, as both methodologies, have their strengths and specific use cases. OKR is a more modern framework for short-term goal setting, tracking, and execution, while OGSM is suited for achieving long-term goals and objectives. Given that every company has long and short-term objectives, combining both methods may give a robust goal management system and yield better results. For instance, managing and overcoming unexpected changes and challenges (OKR) while keeping track of your company’s vision (OGSM).