5 min read

OKRs Vs Balance Score Card

But We Already Use a Balance Score Card, Then Why Choose OKRs?

In a recent study highlighted in Harvard Business Review, strategy execution was cited as the number one challenge CEOs face globally, topping innovation, geopolitical instability, and top-line growth. It is no surprise that this keeps executives up at night, especially considering at least two-thirds (and by some estimates a much higher percentage) of companies struggle to execute their strategy effectively.

 

How then, do the top performing organizations overcome this disturbing statistic?

 

During the past 20 years, the Balanced Scorecard (Hereafter referred to as BSC) emerged as the pre-eminent tool in helping organizations bring their unique strategy to life. The premise is simple: ‘To execute strategy, you must translate it into a balanced set of objectives and measures which you then use to hold yourself accountable for successful execution.’ 

 

Thousands of organizations around the globe have benefited from the BSC methodology, but as with all business ideas, what was once an inferno of interest and use eventually receded. While BSC is still prominent (and unquestionably effective) it is viewed by many as a 20th century framework in a world of 21st century challenges.

 

Enter OKRs (Objectives and Key Results)

 

Similar to Balance Score Card, OKRs assist organizations in executing strategy, by helping them identify what’s most important (objectives) and how will  you measure progress made towards objectives & also how will it 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, not just interest, but also use has seen a dramatic peak, making its humble beginning in Silicon Valley and quickly fanning out to all parts of the globe. OKRs are more like a fuel & distance meter, they don’t indicate progress made later on, you know it real time, as you are taking the steps & the routes to your destination.

Everything , almost everything about OKRs is in the now. This doesn’t mean that there wouldn't be any lag indicators that OKRs measure/use, but they tend to be few, because if you wait for the end of the quarter to fix things in OKRs, you most probably have missed the bus. The framework encourages looking at the current focus, how it would drive strategy execution & how it would help in moving the needle.

The concept of Check-ins was built into OKRs for this very reason, when you have weekly or bi-weekly check-ins built in as a culture, you discuss the progress & the hindrances on a regular basis & try to address them then & there, rather than for the end of cycles. The fact that you work with teams & try to find the best solutions to problems also builds a lot of cross-functional collaboration, thereby breaking silos. 

 

Is one model “better” than the other? 

 

Perhaps a more appropriate question is, “What’s the difference?” Brett Knowles, CEO - Hirebook Technologies,  covers that query very nicely in this post. What we definitely concur is on his basic conclusion that it is difficult to discern any significant differences between the two models, and it is always a better choice to encourage would-be users to carefully consider each, with respect to their unique needs. 

 

Authors & experts on Balanced Scorecard could extol the virtues of the model to great lengths and undoubtedly, we believe it has great value, when implemented effectively, as a  transformational tool. Equally, those with experience in implementing OKRs feel the same way about the OKRs framework. However, 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 on the contrary, 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.

Companies & teams most often than not have faced situations, where inability to make changes to the goals/targets results in force fitting, calibration and readjusting of milestones to make things work. The flexibility that 90 day cadence in OKRs is that it allows you to reconsider & reprioritize your priorities.

Many times based on changing customer needs, sometimes based on changing market trends & of course sometimes based on some ad hoc decisions company leadership teams make. Allowing this flexibility gives teams the chance to retune their priorities and focus on what matters most at that time & how it helps in aligning to the overall company strategy. 

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, the more important aspect is how you define your strategy & how does the framework you choose really contribute to moving the needle.

Also, non-negotiable in each of these frameworks is the discipline in making sure it is followed well and every stakeholder contributing to executing strategy understands the methodologies & benefits well, else it's just another brick in the Wall of Fame of all Performance Management Frameworks. 

 

Want to know more on how OKRs contribute to your Strategic Direction? Talk to us today!