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Balanced Scorecard or OKRs: Which Tool Will Help You Execute Strategy?

Contributor: Paul Niven
Posted: September 10, 2017

measurement

In a recent study highlighted in Harvard Business Review, strategy execution was cited as the number one challenge facing global CEOs, topping innovation, geopolitical instability, and top-line growth. Little wonder it keeps executives up at night when you consider that at least two-thirds (and by some estimates a much higher percentage) of companies struggle to execute their strategy.

So how do the top performing organizations overcome this disturbing statistic?

The Balanced Scorecard

During the past 20 years, the Balanced Scorecard emerged as the preeminent tool in helping organizations bring their unique strategy to life. The premise is simple: in order to execute strategy, you must translate it into a balanced set of objectives and measures you then use to hold yourself accountable for successful execution. Thousands of organizations around the globe have benefited from the Scorecard methodology, but as with all business ideas, what was once an inferno of interest and use eventually recedes. While the Balanced Scorecard is still prominent (and unquestionably effective) it is viewed by many as a 20th century framework in a world of 21st century challenges.

OKRs (Objectives and Key Results)

Enter OKRs. OKRs also assist organizations in executing strategy, through the identification of what’s most important (objectives) and how they’ll be achieved (key results). Ironically, the lineage of this tool predates the formal introduction of the Scorecard, but it is only in very recent years that it has reached the mainstream, thanks primarily to its much-celebrated use at Google. Since then, both use and interest have increased dramatically, beginning in the Silicon Valley and quickly fanning out to all parts of the globe.

Is one model “better” than the other?

Perhaps a more appropriate question is, “What’s the difference?” Fellow consultant Brett Knowles covers that query very nicely in this post. I agree with his basic conclusion that it is difficult to discern any significant differences between the two models, and encourage would-be users to carefully consider each, relative to their unique needs.

As a Balanced Scorecard author and consultant I could extol the virtues of that model all day long, and I continue to believe that, when implemented effectively, it can be a transformational tool. Those with experience implementing OKRs feel the same way about that framework. But there is one difference between the two systems that may be important for some potential users.

Balanced Scorecard objectives and measures are not intended to be static stakes in the ground that never change. On the contrary, as business conditions inevitably change and you update your strategy accordingly, you should also re-work the key elements of your Balanced Scorecard to reflect the new realities. However, in the “normal” course of activities, it is uncommon for most organizations to alter their Scorecard objectives and measures more than once a year.

More typically, once you have a Strategy Map of objectives and Scorecard of measures, targets, and initiatives in place you monitor results on an ongoing basis to gauge success in executing your strategy. OKRs adhere to a fundamentally different timeline, with virtually all pundits recommending they be updated each quarter.

This three-month cadence conveys immediacy, which is very attractive in our “What’s trending this minute” Twitter-verse. But more importantly, a quarterly rhythm may prove beneficial when you consider how fast circumstances can change, and the vital nature of embracing agility and rapid pivoting – regardless of the industry in which you compete.

Choosing whether to use the Balanced Scorecard or OKRs ultimately depends on the organization itself; it’s goals for an execution methodology, current lifecycle, and experience with Performance Management. Regardless of which you choose, it’s an exciting time to work in this field and I’m anxious to further explore the field of OKRs. 

This column originally published on OKRsTraining.com -- To learn more, read Objectives and Key Results by Paul Niven and Ben Lamorte.